Wednesday, December 09, 2009

Over-reliance on Foreign Workers - Addiction

I seriously think that the over-reliance on foreign workers (whether you like to call them as talents or workers is your preference) is, and will continue to be a problem for the economy.

The news highlighted the hiring difficulties for manufacturing and construction sectors in finding workers, both local and foreign. Thus the companies are asking the government to relax on the hiring policies of foreign labour. What is obvious to me is that the easy supply of foreign workers over the past few years have made these companies addicted to these cheap sources of labour. Without more of such cheap workers, these companies cannot compete effectively in the global landscape.

It is not sustainable. Put it simply, if our companies are growing at developed economy rate by relying on developing economy labour supply (and prices), they are blatantly not competitive in the global market! The supplying country's workforce will eventually return to their own country with what is Singapore's current competitive edge, i.e. technology and management skillsets, and compete direct with these Singapore companies.

Thus the influx of foreign cheap labour is merely a tactic to buy time for our companies to upgrade and move up the value chain.

I don't think that is working.

It is a tactic that has lasted for many years. Continued reliance on such a tactic is making our companies behave like drug addicts, i.e. they will have to continuously look for even cheaper sources of labour, since the current supplying countries will have companies who are the competitors tomorrow, with just as if not cheaper input costs.

The case of over-reliance on foreign workers to the detriment of our economy is not a current phenomenon. Another news article contained comments from a Malaysian who felt that Singapore is a case of borrowed success built upon Malaysian talents. The writer highlighted that Malaysian talents are conversant in multiple languages (Mandarin, Malay, English, and even dialects) which is a competitive edge in the service industry. He also pointed out that there are many of his compatriots in Singapore, occupying positions of various levels. He has since returned to Malaysia, and is feeling proud of his Malaysian heritage.

This case reminded me of a comment by a PRC Chinese, that 'they' will take over our economy in 20 years time. I don't think the PRC Chinese is arrogant, he is just being factual, because he also sees his compatriots at all levels of management, and in all sectors of our economy.

So we have relied on Malaysia in the past, and now China, as sources of cheap labour. The Malaysians are no longer satisfy with what we can offer, and many have since returned or move to other greener pastures. Let's be realistic, the perks of being a Singaporean is not sufficient to persuade them to stay. We are seeing the same scenario being played for the PRC Chinese, i.e. they are moving back to China (remember the girl who gave up her blue NRIC?) or to other countries.

So where next to source for labour that can satisfy our addicted companies? Africa? There is serious discontentment (see this forum) that some companies are openly discriminating against Singaporeans when it comes to recruitment. Cheaper, better, and faster (slogan by the higher-up), can only be a stop gap solution and in the long run, Singapore authorities have to decide which two of these three attributes should our workforce (both local and foreign) subscribe to. It is not possible to have all three attributes since the market economics will force an equilibrium based on just two of the attributes in the mid to long term.

The companies have voiced their preference, i.e. cheaper and faster, and it is up to the authorities to decide. If we want to remain as a 'developed' country, we better settle for better and faster instead.

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