How is Singapore's foreign labour market 5 years after unveiling tighter policies?

Employment growth is teetering at a 4% jump.

The Economic Strategies Committee (ESC) has been fighting to drum up sustainable growth by managing foreign labour, but if the last five years are anything to go by, the policies are suspected of doing more harm than good.

The raised minimum income and education qualification requirements, levies, and workforce quotas have stunted Singapore’s employment growth, according to a recent report by Nomura Holdings Inc. In the years succeeding the implementation of ESC’s foreign labour policies, employment growth has crawled to a 4% increase, which is a far cry from the 6.7% pre-crisis average. The smaller supply of workers has employers scrambling to fill job vacancies as the well of the local labor force runs dry.

Meanwhile, lower-productivity sectors-- such as the construction sector, which relies heavily on foreign labor-- holding higher employment shares and failed investments have dragged labour productivity growth to negative.

“In this context, higher labour supply constraints as a result of changes in foreign labour policy may have exacerbated the deterioration in, rather than helped support, productivity growth,” Nomura posited.

Singapore seems to be getting in its own way in its pursuit of economic sustainability. Given the current pace, completing the economic restructure agenda is unlikely.

“The government is likely to find it necessary to adopt a flexible enough approach to take into account seemingly more volatile external economic conditions, but at the same time to continue to signal firmly to firms that there will be no U-turn in the restructuring agenda, including no further relaxation of foreign labour policy,” Nomura advised.