It was only two weeks ago that former Malaysian prime minister Mahathir Mohamad praised Singapore as the only country really ready to be part of the much-hyped Asean Economic Community. A week later, the city-state did something that seems decidedly anti-integration.
The government of Singapore last week announced the establishment of a central “job bank” as part of a plan to give priority to hiring local citizens. Discrimination of this sort is something that few people associate with an economy as free as that of Singapore.
Companies must now post certain openings with the job bank for two weeks before they can look at hiring foreigners. They need to be able to prove that they tried to hire someone local.
The jobs that the bank is targeting are in professions that currently pay at least S$3,000 (75,000 baht) a month, an amount that will be raised to S$3,300 by January 2014. The law will not apply to companies with fewer than 25 employees, or for jobs that pay more than S$12,000 a month.
Manpower Minister Tan Chuan-Jin said the government was on track with its four-year plan 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.
Singapore, which has seen its population grow dramatically as the government tries to offset the falling birthrate, has been the centre of attraction among expatriates looking to work in the region.
The city-state’s population has jumped by more than 1.1 million since mid-2004 to 5.3 million, driven by immigration, and there are plans to push up the population to 6.9 million by 2030.
But the rising cost of living and intense competition for jobs have resulted in relatively high unemployment (when compared to the region) of 2.1% as of the second quarter this year. Among permanent residents the rate is as high as 3%. That “translates to 50,000, 60,000 Singaporeans without jobs”, said Mr Tan.
“What the regime allows is that there may be a better matching of demand and supply” between companies and job-seekers, he was quoted as saying by newspapers.
He said Singapore had studied employment policies in markets including Hong Kong, the US and UK before developing its framework.
If the job bank is not enough, the government will also identify businesses “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 discrimination complaints.
All this may sound good to Singaporeans, but most people think the city-state’s strength is its openness (and in some cases its secrecy; did I imply the banking sector here?).
Here are some facts: Singapore placed second for a third straight year in the World Economic Forum’s Global Competitiveness Report 2013-14 ranking of 148 economies, thanks to strong financial market development, infrastructure and institutional frameworks. It ranks first for goods market efficiency and labour market efficiency.
The report ranked Singapore second for its ability to attract talent, while Hong Kong ranked fifth. But Hong Kong came in seventh for its ability to retain talent, ahead of Singapore by one place.
The report said that one big issue in Singapore was its restrictive labour policy, and the new rules won’t help in that regard.
As the region heads toward a more open economy and one that would allow greater movement of people, any restrictions by the country deemed “the most prepared” for the AEC, which is only 27 months away, represent a setback to the entire Asean plan.
Singapore’s move could even be considered unnecessary as the talent level of most Singaporeans is far higher than in many other markets. Every country should develop its local talent to be more skillful, so that when it comes to hiring, companies think twice before looking at foreigners.
Hiring an expatriate is not that easy in most cases. Apart from the usual higher salaries that businesses have to pay, they have to incur various other costs such as housing and travel (apart from a million other things). The fact that companies in Singapore are looking outside to fill some vacancies and not hiring local citizens should be a clear indication that there is something wrong with the talent pool available in the city-state.
This is something that Singapore should look into rather than study the labour laws of other countries and try to adapt them to its own circumstances. Placing such restrictions on the labour market will only pull the country down from its enviable high ranking as a place where the free market works well, thus giving competitors such as Hong Kong an edge.