Regionalization, economic restructuring and labour migration in Singapore

This paper documents the impact of economic development on changes in employment and labour migration in Singapore. High export-led growth and the relaxation of immigration policies in the late 1960s enabled employment of substantial numbers of unskilled foreign labour in manufacturing, construction and domestic service sectors. Unskilled foreign labour in Singapore now totals about 350,000 or 20 per cent of the labour force. It has made possible an augmentation of domestic labour supply and skills which helped Singapore to achieve higher rates of economic growth. On the negative side, the influx of foreigners has been cited as one possible cause of low productivity growth in the 1970s. In addition to the increased demand on housing, the social costs of crime and the potential economic consequence arising from strained diplomatic ties with the source countries are also areas of concern. Economic development in the 1990s, characterized by the regionalization drive which relocates relatively resource-intensive operations of Singapore-based companies overseas, has led to increased retrenchments and a moderation of demand for foreign workers. The upgrading of remaining production operations in Singapore is expected to increase demand for workers with higher skill levels. Emigration of highly educated and skilled professionals from Singapore became a national concern in the late 1980s. However, with regionalization, the new challenge in the 1990s has become one of encouraging Singaporeans to temporarily take up overseas positions. The future foreign labour pool in Singapore is expected to comprise a growing proportion of skilled workers to sustain the 7-8 per cent economic growth rate in the medium term. Slower economic growth in the developed economies and the internationally competitive salaries paid to professionals in Singapore are expected to continue to reduce the outflow of permanent emigrants from Singapore.