Correlation between Tightening of Foreign Worker Quotas and Hiring of Singaporeans at Higher Pay

To ensure good employment outcomes for Singaporeans, it is important that our policies enable firms to access foreign workers who can complement the local workforce, so that firms can grow and can create more opportunities for locals.

To support policymaking, the Government regularly conducts impact assessment studies on a range of policies, and of course, this includes foreign workforce policies. The Government publishes some of these studies every quarter through the Economic Survey of Singapore.

One key finding of our internal studies on foreign workforce policies is that tightening access to lower-skilled foreign workers is more likely to have a positive impact on local employment outcomes, compared to tightening access to higher-skilled foreign workers. This is because businesses will then be able to substitute lower-skilled but cheaper foreign workers with locals, and therefore, improve their production processes accordingly. This has informed our approach of remaining open to high-quality, foreign professionals, while maintaining a disciplined stance in regulating the number of Work Permit holders through quotas and also levies.

It is important to note that these studies are but just one input to the policymaking process. These studies have their limitations, for example, they are unable to account for less quantifiable effects of having foreigners in our workforce, such as the knowledge spillovers to locals and other network effects.

The impact of the interventions studied might also change if they are applied beyond a certain scale or at a different time period. As such, they need to be interpreted carefully alongside other sources of information, including more recent labour market statistics, as well as industry feedback.

I thank the Minister for that helpful reply. Just two supplementary questions. Firstly, just to make sure that I have the right understanding. The Minister was saying that, based on the impact studies that have been conducted in the past, for lower-skilled workers, when the supply of foreign manpower, when that tap is tightened, that tends to lead to better employment outcomes for Singaporeans at the lower end of the wage scale – I just wanted to clarify that. Because that is an interesting finding.

For the other observation that the Minister made about the studies that for more highly-skilled foreign professionals, that that correlation does not really apply so much as it does to the lower-skilled workers. Would the right conclusion to draw from that, be that, we, in Singapore, are not producing enough highly-skilled or qualified professionals to fill the job vacancies that the economy is creating?

I thank the Member for his supplementary questions. The first point, in terms of the studies' findings for low-skilled workers, is that up to a certain point, the studies have shown that, if you tighten at the lower-skilled segment, the net result is that we do get substitution and our locals can take on these jobs, but at slightly higher levels. To a point.

Because of the size of our population and the size of our workforce, up to a point, if you continue to tighten, it can actually have a worse-off effect for the development of our country, in terms of our economic progress, as well as industry development.

For the higher-skilled, again, you cannot infer from the studies that for higher-skilled workers, we are not doing enough to produce high calibre, local Singapore talent. We are already doing significantly more to improve their prospects, in terms of moving them, in terms of investing in their training, and in upskilling and upgrading. But again, because of the fact that there are all these accelerating changes, economies and industries are evolving very rapidly, and coupled with that, significant disruptions are happening.

So, to keep pace and to keep ahead pre-emptively, in terms of making sure that we are ahead of the competition, we not only need to develop our own local talent, we will also need foreign workers to come alongside with us and complement us as we move forward. I hope that answers the Member's question.