Rich World’s Biggest Jobs Growth Nears End in SingaporeSharon Chen
Tony Cousens spent more than S$100,000 ($79,000) to find waiters and housekeepers for the Ramada and Days Hotels in Singapore. Months after the two establishments opened, he is still about 100 people short.
Cousens’s plight underscores the new reality for an economy that probably delivered the biggest employment surge among 33 advanced economies in the decade to 2014, according to data compiled by Bloomberg. Singapore’s annual jobs growth may halve in the coming years from a 2007 peak as the island widens a clampdown on foreign workers, Bank of America Corp. estimates.
“This tightening of the foreign-labor market won’t go away,” said Cousens, general manager of the two hotels in the city that charge as much as S$320 a night. Jobs take longer to fill, “especially if you’re very demanding on the culture and the behavior of the individuals and specifying Singaporeans,” he said.
The shortage is set to worsen as Prime Minister Lee Hsien Loong pursues a four-year campaign to reduce the reliance on foreign workers, whose growing presence pushed up home prices and spurred a voter backlash. The government may tighten rules on hiring non-Singaporean medium-skilled workers after previous measures restricted cheap overseas labor, according to DBS Group Holdings Ltd., Mizuho Bank Ltd. and Bank of America.
An estimated 58.4 percent of Singapore’s population will be employed in 2014 compared with 49.5 percent in 2004, the largest increase among the 33 markets, according to an analysis by Bloomberg Rankings. The study divided the number of working people in each country by its population, based on data from the International Monetary Fund.
“The jump in employment stems from the fact that the government essentially opened the floodgates and welcomed foreign talent with open arms,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. “I expect employment to start to slow over the next few years” as the most onerous tightening measures take effect in 2014 and 2015, he said.
Singapore will probably add about 100,000 jobs annually in the coming years, down from a record 234,900 in 2007, said Chua Hak Bin, a Singapore-based economist at Bank of America. Government statistics show a 10.1 percentage-point increase in the employment ratio for its total population from 2004 to 2012, compared with a 8.98 percentage-point gain from 2004 to 2014, based on IMF projections.
The Manpower Ministry said employment climbed in the past decade because of the city’s efforts to build a conducive environment for both global and local companies, which created job opportunities.
“We recognize that our employment rates will not increase indefinitely,” the ministry said in an e-mailed response to queries. “Like many developed economies, our population is aging, which means that our local workforce will grow more slowly.” The ministry said it will upgrade workers and keep unemployment low.
Malta was ranked No. 2 with an estimated 5.58 percentage-point increase in the employment ratio in the 10 years to 2014, followed by Taiwan’s 5.24 percentage-point gain, the data compiled by Bloomberg showed.
The growth in Singapore’s workforce will slow to 1 percent to 2 percent a year through 2020, from an average 3.3 percent in the past three decades, the government said in January.
Lee is trying to steer the economy through an aging population and the declining foreign-labor supply by prodding companies to produce more with less manpower and hire older Singaporeans, as well as increasing the birth rate. The need to address those challenges while balancing demands for affordable housing, better public transportation and assistance with living costs have often featured in his speeches.
Lee is due to make his annual televised National Day Rally speech to the nation on Aug. 18.
Singapore’s exports fell the least in six months in July, declining 0.7 percent from a year earlier, a report showed today. Elsewhere in Asia, Sri Lanka held interest rates. Taiwan’s economy grew a revised 2.49 percent last quarter from a year earlier, exceeding economists’ estimates, and Hong Kong’s expanded 3.3 percent.
The European Union’s statistics office will probably say euro-area inflation in July was in line with an initial estimate of 1.6 percent, while the U.S. may report housing starts climbed in July to an annualized rate of 900,000, Bloomberg surveys showed.
Under the latest labor-market tightening measures announced in February, companies must pay higher levies for lower-skilled foreign employees over the next two years and cut the proportion of overseas workers in some industries.
“Choking the supply of all these low-wage foreign workers is creating difficulties for many companies, corporates and also, it is inflationary,” said Irvin Seah, an economist at DBS. “They have already been shifting the focus of the tightening towards the mid-skilled foreign workers,” he said, adding it will remain the direction in coming years.
The city’s unemployment fell to a five-year low in the last quarter of 2012 as companies hired more local workers.
Further tightening will lead to an “incremental increase in time to fill mid-level positions, and likely increased pressure on wages,” said Bhavya Sehgal, Asia-Pacific head of research at Frontier Strategy Group. “Many multinationals still import ‘ready-made’ mid-level professional talent rather than investing to close skill gaps in local talent.”
Responding to feedback from Singaporeans that some companies are choosing to give jobs to foreigners over locals, Deputy Prime Minister Tharman Shanmugaratnam and Acting Minister of Manpower Tan Chuan-Jin met with senior management in a number of financial institutions to emphasize that they should make a concerted effort to develop a local talent pipeline, Tan said in Parliament in March.
“In terms of addressing some of the frustrations and fears, I think it’s really the mid- and upper-mid” skilled jobs the government will target with restrictions, said Vishnu Varathan, an economist at Mizuho in Singapore. “The tightening in the low-wage and lower-skilled sector, part of it stems from their productivity drive rather than the fact that Singaporeans are hankering for such jobs.”
That shift may be an obstacle for David Soon, head of a Taipei-based industrial computer manufacturer’s Singapore office, who hired foreigners this month for two sales positions he had advertised in May, offering a monthly pay of S$2,600 to S$2,800.
“For every one local application, we have 50-plus foreigners that are applying,” Soon said. “The local graduates really feel that if they have a choice they would work for big multinational companies like Hewlett-Packard, IBM -- as for the rest, they probably would not even want to bother.”