Singapore will widen foreign-worker curbs to professional jobs as the government clamps down on companies that hire overseas talent at the expense of citizens, stepping up efforts to counter a backlash against immigration.
The Southeast Asian nation said yesterday it will set up a job bank where companies are required to advertise positions to Singaporeans before applying for so-called employment passes for foreign professionals. The unprecedented policy will target jobs that currently pay at least S$3,000 ($2,400) a month, an amount that will be raised to S$3,300 by January.
“There are concerns among Singaporeans, which I think is fair, and so it’s timely for us to introduce this,” Acting Manpower Minister Tan Chuan-Jin said in a Bloomberg Television interview yesterday. “There are Singaporeans out there, well-skilled and capable, who are looking for jobs and I think this step would actually facilitate that process.”
The country is persisting with a four-year campaign to reduce its reliance on foreign workers, after years of open immigration policy led to voter discontent over increased competition for housing, jobs and education. The move has led to a labor shortage and pushed up wages, prompting some companies to seek cheaper locations.
“We have been tightening up on foreign workers because we want to control the numbers but it has hurt businesses significantly,” Prime Minister Lee Hsien Loong said on Channel NewsAsia today. “We will have to be very careful because if we go too far then businesses will suffer badly and Singaporeans will take the hit.”
The job bank will be set up by mid-2014, the Ministry of Manpower said in a statement yesterday. Companies with 25 or fewer employees will be exempt from the new rules, as well as jobs that pay a fixed monthly salary of S$12,000 or more, it said. The cap was set as that would include 95 percent of the local workforce, it said.
“This is a step up from the government’s efforts to tighten the quality and the quantity of the foreign worker inflows,” said Chua Hak Bin, an economist at Bank of America Corp. in Singapore. “We’re moving to another phase now where they’re looking to ensure that opportunities for the middle-income Singaporeans are maintained.”
The nation’s unemployment rate rose to 2.1 percent in the second quarter, with the resident jobless rate at about 3 percent.
That “translates to 50,000, 60,000 Singaporeans without jobs,” Tan, the minister, said. “What the regime allows is that there may be a better matching of demand and supply” between companies and job-seekers, he said.
The government will also identify firms “that have scope to improve,” such as those with a lower concentration of professional Singaporeans compared with industry peers, or those that have faced nationality-based discriminatory complaints, the ministry said.
“It makes a lot of sense to hire locally from the communities that we operate in,” said Audrey Tan, a Singapore-based spokeswoman for Pratt & Whitney, the jet-engine unit of United Technologies Corp., where Singaporeans make up 75 percent of its more than 2,000 workforce in the city.
Responding to feedback from Singaporeans that some companies are hiring foreigners over citizens, Tan and Deputy Prime Minister Tharman Shanmugaratnam met with senior management in a number of financial companies to emphasize that they should make a concerted effort to develop a local talent pipeline, the manpower minister said in Parliament in March.
Citigroup Inc. (C:US), which has about 10,000 employees in Singapore, said citizens and permanent residents make up 82 percent of its workforce.
“It is essential that we strike the right balance,” Adam Rahman, a Singapore-based spokesman at the bank, said in an e-mail. “It is important to have some foreign talent who have global perspectives, expertise and skills to complement the overall development of Singapore as an international financial hub.”
Standard Chartered Plc (STAN), which has 7,600 employees in the city, said it will study the impact of the framework, which it expects will create more opportunities for locals. “The new portal will provide greater transparency and continue to promote fairness in hiring processes,” Peter Hatt, head of human resources for Singapore and Southeast Asia, said in an e-mail.
Singapore was ranked the most-favored expat destination based on economic factors such as income and housing in a 2012 survey of more than 100 countries released by HSBC Holdings Plc. Including the criteria of lifestyle and well-being of children, Hong Kong topped the list.
“Hong Kong and Singapore vie for talent on an ongoing basis,” said Marc Burrage, regional director of Hays Plc (HAS) in Hong Kong. “If these changes are going to make it harder for expats to find work in Singapore, then what that could mean is that people will start to consider Hong Kong whereas in the past it may have been their second choice in Asia.”
Singapore’s inflation rate quickened to 2 percent in August. Domestic cost pressures are expected to persist amid continuing tightness in the labor market, the central bank and the trade ministry said in a statement yesterday.
“Further tightening on foreign labor participation should place upward pressure on wages and therefore core inflation,” said Daniel Wilson, an economist at Australia & New Zealand Banking Group Ltd. (ANZ) in Singapore.
The city’s population has jumped by more than 1.1 million since mid-2004 to 5.3 million, driven by immigration. A proposal to boost the population to 6.9 million by 2030 prompted thousands to protest in February.
The framework “is designed to placate the electorate,” said Lee Quane, Hong Kong-based regional director at ECA International, which provides research on employment, relocation and compensation. “The impact is going to be negligible. Singapore has almost full employment.”
The city studied employment policies in markets including Hong Kong, the U.S. and U.K. before developing its framework, the minister said.
“We’re very mindful that there’s no one silver bullet that solves everything and we’re also mindful that every country has their own slightly different circumstances,” Tan said.
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