The Budget square and population circle

March 4, 2013
Singapore Democrats

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Singapore Democrats

In his Budget speech 2013 last week, Finance Minister Tharman Shanmugaratnam announced that he would continue with the Government’s plans to reduce the number of foreign workers coming into Singapore.$CUT$

This, he said, is in line with the recommendations made by the Economic Strategies Committee that he chaired in 2010.

The minister noted that the number of foreign workers in Singapore had dropped to 67,000 in 2012 compared to the previous two years. He admitted that this number was still high and promised to curtail it further.

But how is Mr Tharman going to square the circle? The recently released population White Paper which was debated and adopted by Parliament stated that by 2020, the projected population size is 6 million.

This means that this island would have to take in about 60,000 foreigners per year between now and 2020. How is Mr Tharman’s pronouncements going to meaningfully address the problems of an already overcrowded city?

As in the previous Budget, the Government announced that it would increase the foreign worker levy as a disincentive for employers to hire foreigners.

At the same time, however, the Finance Minister presents the new Wage Credit Scheme (WCS) where the Government would pay employers to raise the wages of workers earning $4,000 and below. With the subsidy, employers can use the savings to make up for the levy increase. How does this help to reduce our dependence on foreign workers?

In fact, the measure will make matters worse – increasing wages without lessening our reliance on cheap foreign labour (and, therefore, a rise in productivity).

In addition, the WCS is in place only until 2016 (just in time for the next elections). What happens after that?

Such a piecemeal measure is emblematic of the present administration’s approach to problem-solving. Long-term planning seems to be absent and the Government is just lurching from one debacle to the next.