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Even the WSJ gets it

with 2 comments

Coincidentally, a day after my previous post the WSJ published this article which confirms what many have been saying for a long time.  But don’t expect the Singapore government to take note. Some excerpts:

Between 2005 and 2009, Singapore’s population surged by roughly 150,000 people a year to 5 million—among the fastest rates ever there—with 75% or more of the increase coming from foreigners. In-migration continued in 2009 despite expectations it would collapse because of the global recession.

By some estimates, a third or more of Singapore’s 6.8% average annual growth from 2003 to 2008 came from the expansion of its labor force, primarily expatriates, allowing Singapore to post growth more commonly associated with poor developing nations.

At the same time, though, foreign workers have driven up real estate and other prices and made the city-state’s roads and subways more congested. Their arrival has kept local blue-collar wages lower than they would be otherwise, exacerbating Singapore’s gap between rich and poor.

Some economists say the most damaging effect of the immigration is that the influx appears to be putting a lid on productivity gains, as manufacturers rely on cheap imported labor instead of making their businesses more efficient. Labor productivity, or output per employee, fell 7.8% in 2008 and 0.8% in 207—a phenomenon that could eventually translate into lower standards of living.
Relying on foreign labor to help boost growth is unsustainable, adds Choy Keen Meng, an assistant professor of economics at Singapore’s Nanyang Technological University. He says a better model would involve the reining in immigration and accepting that Singapore is becoming a more mature economy like the U.S. or Europe, with a long-term growth rate of 3% to 5% a year.


Written by defennder

January 15, 2010 at 1:25 AM

2 Responses

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  1. Foreigners & expatriates are unsustainable and unreliable forces to rely on. Take Dubai as an example, its population is made up of more than 80% foreigners. In the event of national crisis such as the credit crunch turmoil, many expatriates just pack their bags and rush back homeland, leaving Dubai to beg for help from its Emirates’ big brother Abu Dhabi.

    To me, Singapore’s foreigners population is still manageable at this stgage. Therefore we can see Singapore government is trying all means of danggling red carrots to attract them to be PR or residents. The impact of foreigner forces is fast to the economic and property sector. However one need to be mindful in the event of crisis, the foreigners will be the first one to leave the nation in lurch.


    January 15, 2010 at 9:34 AM

  2. Hi Keith,

    I strongly believe Singapore has to reverse and reduce its dependence on foreign labour in order to grow at a sustainable pace. Unfortunately I am not certain if it has reached a stage where it is still possible to do so without jeopardising its economy.

    It’s odd to me that all too often public policy in Singapore is taken to extremes such as the population control policy of the 1960s to 1980s, the export-oriented dependence characterising much of Singapore’s growth, or in this case liberalised immigration and labour laws. It looks like Singapore’s government which prides itself as being pragmatic rather than idealistic, has not steered the steady moderate pragmatic course it so proudly declares adherence to.

    A big difference between Singapore and Dubai is that Singapore doesn’t have an Abu Dhabi to rely on. Perhaps the closest it has to an Abu Dhabi would be Singapore Inc.


    January 18, 2010 at 7:12 PM

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