Delivered in Parliament on 14 September 2021
Mr Speaker sir, I support the amended motion put forth by the Leader of the Opposition Mr Pritam Singh and my Parliamentary Colleague, the member for Sengkang Ms He Ting Ru.
Free Trade Agreements
Sir, Free Trade Agreements or FTAs are important for our economic development and hence the well-being of our people. FTAs are always a compromise. As in any negotiation, we give something away to get something back.
Singapore has import duties on hardly any categories of physical goods so we have little to give away, unless we open up our services sectors or our labour market further. I am glad the government has clarified that it maintains and intends to continue maintaining close control over the granting of foreign work passes without any FTA provision diluting that. And this is a commitment that this House will, I am sure, hold this government and future governments to.
Because FTAs are a negotiated compromise at one point in time, it is necessary to review these agreements from time to time to ensure that what we have given away has not proved too much and what we are getting back is as good as what we expected.
Therefore, I echo the calls made by the LO and my colleague Sengkang MP Ms He Ting Ru to regularly study the impact of our FTAs, to engage research to quantify the net economic benefit over costs.
Furthermore, it is vital that the government engages our SMEs when negotiating FTAs and FTA reviews. I raised this at the MTI COS in March 2020 and through a PQ in March 2017. The reply stated that there were roundtables and engagements conducted but numbers were not given.
Anecdotally, some SMEs on the ground do not feel that their views factor substantially into FTA negotiations, which they perceive may be conducted more from the perspective of creating incentives for MNCs to hub in Singapore to invest abroad. I believe more can be done to gather feedback from SMEs to bring into FTA negotiations, something countries like New Zealand when defending its dairy industry in the TPP negotiations, for example, seem adept at.
Moreover, the government should regularly assess local FTA utilization rates and perceived benefits, to see if the other country is delivering on its market access commitments. FTA utilization rates by SMEs should be published to help all stakeholders assess our efforts.
Many SMEs do not fully utilize FTAs when they go abroad, for reasons that range from lack of awareness to lack of administrative bandwidth. More can be done to make these FTA benefits visible and usable by our local firms – for instance, the idea of a one-stop whole-of government portal which could allow SMEs to transact with government and utilize government schemes, that I have spoken about in this House in the past. Such a portal could be used to allow our SMEs to gain visibility on FTA benefits in different countries, and enable them to transact to realize those benefits. At this stage, I declare my interest as the CEO of an international research consultancy that conducts studies related to FTAs and SME development, among other topics.
The Foreign Talent policy and the deficit in three “Ts”
Sir, I shall devote the rest of my speech to the anxieties that exist around the granting of work passes to foreigners.
In the decades after Singapore’s independence, there was no mass anxiety about the role of foreigners in our economy. It was widely recognised that they play a useful role. The same is not true of every country in the world. Singapore’s attitude towards the presence of foreigners on fixed-term stays and those who choose to make Singapore their permanent home used to be more liberal, to my mind, than those in some Asian countries I can think of. That culture was shaped by 200 years of history as a free port and open trading economy. The sense then was that the rising tide of liberal economics would lift all boats.
This is no longer the case. There is widespread anxiety, frustration and angst about the role of foreigners in the economy, as all the motions put forth in this House today acknowledge.
I want to share two stories about how these anxieties came home to me.
§ I met a delivery rider in full uniform at a coffee shop in the Serangoon ward of Aljunied GRC who told me, at length, with tears in his eyes, that he was laid off from his job as an aerospace engineer whereas some foreigners were not, and he is now struggling to keep his family afloat.
§ I met an SME business owner who said that she cannot find Singaporeans to do trades jobs so she is frustrated at curbs on foreign manpower – and if I know of Singaporeans who want to do such jobs, can I give her a list of their names
Mr Speaker sir, these concerns revolve around three “Ts”.
a. a deficit in Trust – the sense some Singaporeans have that they face some degree of discrimination on the job market by foreign talent hiring their compatriots.
b. a deficit in Transferability – the sense that there are poor pathways for Singaporeans to learn skills from foreign talents and advance. This current mood is very different from the sense people had in the 1970s and 1980s with foreign investment from America, Europe and Japan, to my mind. Back then, there was a palpable sense that skills and know-how were being transferred by foreign companies and foreigners to locals, through in-house training and foreign-Singapore joint training institutes, for example.
c. a deficit in Transparency – there is angst about why foreigners seem to leapfrog Singaporeans in some contexts, in spite of our much-vaunted education system, even though those foreigners sometimes come from countries with less recognized education systems. I should say that the transparency deficit is also felt by another group – local business owners. They wrestle with the issue of hiring talent and often say that Singaporeans don’t want to do trades jobs so why is the supply of foreigners for those jobs being curbed?
Sir, one antidote to the trust deficit is anti-discrimination laws, something that the Workers’ Party has championed in its GE2020 manifesto and in this House. I am glad that the government is now moving in this direction.
One antidote to the transferability deficit is fixed term employment passes, a suggestion I made in this House previously. These would be foreign work passes granted for a fixed term with the understanding that the job has to be localised in that term and the pass, as a default, would not be renewed, unless the employer can demonstrate strong extenuating circumstances to appeal for a renewal.
This differs from the current Employment Pass system where many employers assume that they can renew their EPs and there is no assumption that the EP would definitely not be renewed as a default. Sir, to be sure we are not arguing for all EPs to be made fixed-term but for some of them to possess this feature. Fixed-term work passes should be one tool in our tool-kit to nudge us to advance transferability of foreigners’ skills towards locals.
There are other tools that can be used to advance transferability that Workers’ Party MPs in this House have argued for – such as stimulating cross-border, remote working internships for our students and young adults with cutting-edge MNCs abroad who are not present in Singapore, for example.
As for the antidote to the transparency deficit, the key is not just more public dialogues and communication between government and citizens. The key is to set out long-term goals and clear policies to advance those goals.
Let me expand on this issue of transparency.
Addressing the lack of transparency about the ends and means of policies
Sir, many Singaporeans are pained and confused about our foreign talent policy because they don’t understand the rationale, the mechanics, the ends and the means.
One major area where this angst is being felt is when it comes to education. Singaporeans don’t understand why the government keeps praising our education system but in some employment contexts, foreigners seem to dominate the better-paying jobs. Has our education system groomed us with the wrong skills and attributes? We need to interrogate the gaps in our education system that contribute to these aspects of our employment landscape and address them aggressively. My Parliamentary colleague Mr Gerald Giam will elaborate on what needs to be done on this front.
For the remainder of my speech, I will speak about two areas of government employment policy where the public, I sense, feels angst from a lack of transparency and whether the system is working in their best interest. First, the notion that hiring foreigners is necessary to create good jobs for Singaporeans, even if the foreigners constitute a high share of the better paying jobs. I shall call this the numerical multiplier argument. Secondly the subject of trades jobs that SMEs perceive Singaporeans no longer want to do. I’ll call this the trades jobs problem.
The Numerical Multiplier argument – hiring foreigners to hire Singaporeans?
Firstly, the numerical multiplier argument. The government has articulated this argument before inside and outside this House. If I were to summarize it, at the risk of over-simplification, it is the view that we don’t have enough Singaporeans and not of the right skills and talent to do all the cutting-edge economic activities we want to do as a global hub city. So we need to import foreign talent. If we do that well, this creates good jobs for Singaporeans. We try to upskill and “up-wage” Singaporeans, but if foreigners account for a large share of the better-paid jobs, it’s still OK because the Singaporeans are in good jobs that they might not have if the foreigners were not here. So the Singaporeans are absolutely better off even if, sometimes, they are relatively worse off in the employment hierarchy. Or to put it another way, this argument is saying – if Singaporeans want to always hog all of the better paying jobs, we will end up poorer in purchasing power terms.
This argument stands on solid ground in the field of political philosophy. It reminds me of the Rawlsian theory of justice I studied as an undergraduate. According to the philosopher John Rawls in his seminal work “A Theory of Justice”, inequality could be justified if that inequality causes the least well-off person in a society to become better-off in absolute terms.
Honestly, there is much to be said for the numerical multiplier thesis and it can be found as the subtext to employment policies in many countries. But to delve deeper to the empirical reality, what is of concern to many Singaporeans about this argument is a few things.
One is the pathway to skills transfer. Another is fair employment practices in a foreigner-heavy workplace. I have spoken about these.
But there are deeper and more subtle problems with the numerical multiplier argument. A large population of foreigners to create jobs for Singaporeans places burdens on our scarce resources of land, healthcare capacity, road capacity, public transport and so on. It also runs the risk of entrenching work cultures that disadvantage Singaporeans in the longer-term, especially if the foreigners start off from a higher skills base in a new industry. Initial endowments of resources like skills do weigh heavily on ultimate outcomes downstream. Being very reliant on foreign labour also means we are vulnerable to global events that may make these foreigners less willing to come and work here one day.
How do we get our workforce profile towards a ratio of foreigners and locals that would better address these issues?
Sir, I would like to suggest that the EDB and our economic agencies, together with our Institutes of Higher Learning (IHLs), work in synch to do a few things that would optimise this ratio – that would create good, well-paying jobs for Singaporeans while managing the size of the population of foreigners and hence overall population pressures.
a) Firstly – attract FDI projects that are better matched to existing skill sets of Singaporeans, or skills sets that Singaporeans can easily acquire.
b) Secondly – catalyse Continuous Education and Training (CET) platforms to train Singaporeans in new skills for FDI “ahead of demand”. By ahead of demand, I mean to attract Singaporeans to train for skills in industries that are nascent, confident that the government is working with investors to groom and build those industries, using all the tools in the toolkit. The JTC and EDB building physical infrastructure ahead of demand was the key to our industrial success in the 1960s. The key to our Industry 4.0 success in the 21st century would be catalysing soft infrastructure, ie skills ahead of demand.
c) Thirdly- tie Foreign Direct Investment incentives to a number of fixed-term EPs to ensure Singaporeans a pathway into new industries, as discussed already.
d) Fourthly – can we examine if we need to expand university educational places for locals in disciplines necessary for future industries, thus managing the need to import foreign manpower with degrees from less highly ranked universities than our local ones. This ties to another Workers’ Party manifesto point on expanding university capacity to 50% of the cohort size.
“Trades” jobs that it is said Singaporeans don’t want
Lastly, Mr Speaker sir, I want to speak about trades jobs that it is said Singaporeans don’t want.
By trades jobs I mean carpenters, plumbers, highly skilled construction workmen and supervisors, air-conditioner technicians and so on. There is a huge transparency deficit here with our local business owners.
In the decades after independence, many of these trades jobs were done by Singaporeans. But now, many SME owners believe that Singaporeans simply don’t want such jobs.
If this is true, it could be due to the overall growth of the economy and population base, coupled with our low Total Fertility Rate. It could also be due to the expansion of other more attractive jobs in other sectors. There is also the fact that many of our Polytechnic and ITE graduates, as well as older PMETs, are going into gig work rather than a trade.
Many SME owners are adamant that even if they paid more for these jobs, Singaporeans don’t want to do them. No ifs, no buts.
One of them said that when he attends construction training courses as a guest speaker, the only Singaporean trainees there are those with white hair.
Yet on the other hand, another older gentleman I met on a market walkabout said that he was gainfully employed in the construction industry as a supervisor in his 20s and 30s but now all the jobs in this line have gone to foreigners and even though he is willing to take a 50% pay cut from his last drawn construction industry pay, he cannot get a job. So he became a private hire car driver.
How do we reconcile these two different and seemingly contradictory perspectives?
Sir, the Workers’ Party has supported moves such as the past tightening of DRC quotas to curb over-reliance on foreigner manpower. However, that cannot be the only solution. We need to deeply address the reasons why SME business owners say Singaporeans don’t want to take up trades jobs. Quotas alone should not be the solution.
To move more Singaporeans into trades jobs sustainably needs us to go beyond quotas to tackle a few things deeply, and here I move to my suggestions. I am not saying that these ideas are not already being looked at or have not been attempted. But clearly the results are not there and we are far away from success in outcomes rather than just efforts.
a) Firstly – implement an across-the-board minimum wage as the Workers’ Party has called for and PWMs to ladder and upgrade wages on top of that. We do need to accept that prices have to rise as a result, to ensure that businesses can survive.
b) Secondly- implement job redesign to upskill these jobs, with state support for productivity-enhancing investment in a more ambitious way than has been done thus far, with both carrots and sticks. For example, can we introduce harder productivity conditions for government contracts. And there should be clear long-term time-lines for phasing out low productivity work – not ad hoc short-term changes to foreign manpower quotas done in an unpredictable fashion. Our low construction productivity has not brought low construction costs, as the Workers’ Party has argued before. With the right policies there is no reason why we can’t attain developed country productivity in trades jobs to justify higher pay.
c) Thirdly – investigate and fix negative non-wage characteristics of these jobs. For example, do employers provide adequate equipment to ameliorate the physical down-sides of such jobs, like proper gloves, boots, tools? Are trades jobs persons given proper break times and reasonable expectations on hours and working at short notice? Are they treated by bosses with respect? Are they given enough paid leave? These should all be studied and addressed, as I argued in this House a few months ago. No Singaporean will take a trades job at high pay if he or she knows that they will be treated with disrespect and have to put up with awful conditions. They may prefer to do gig work or a lowly-paid office job, with all the attendant dangers of obsolescence from technology.
d) Fourthly – we need to enhance the prestige and standing of “trades” jobs. I do not have the luxury of time to elaborate on this during this speech. But more can be done to try to shift expectations and attitudes. And we do see tremendous respect for trades jobs in some countries – some continental European countries and Japan spring to mind.
e) Fifthly – we need to create pathways for some good “trades” persons who are foreigners to become citizens, in small enough numbers not to suppress but to supplement locals moving into these sectors, and then nudge those new citizens to transfer skills to more locals in the ways we have spoken about. Are such trades persons given the opportunity to become citizens now, even if they have no university degrees?
f) Sixth, and this is another call the Workers’ Party has made – we need to measure under-employment so that we can tackle it, as just alluded to by the Leader of the Opposition and by my Party Chair Ms Sylvia Lim in the past. Some gig jobs are at long-term risk from technology. Today’s under-employment can be tomorrow’s unemployment. Can we shift locals from some of these at-risk gig jobs to redesigned trades jobs?
In conclusion sir, every country struggles to find the right balance between foreigners and locals in their economy – and that balance changes from one era to another.
In other developed countries, one often finds a more relaxed and liberal attitude towards foreign talent in big cities like London and New York where even those in relatively lower income trades jobs like taxi drivers and restaurant staff have benefitted from the rising tide that foreigners contribute to.
But go to the towns and cities where living standards have stagnated or nose-dived, like some of the opioid-ravaged Mid-western towns in the US, and you sometimes find bitterness towards foreigners and the cancer of racism, together with the Far Right, nativist politics that go along with that.
With the right policies, goals and mindsets, Singapore can return to what it was in a previous era – a country of citizens who are confident enough about their present and their future to welcome foreign talent that genuinely complements our strengths and adds value to our lives.