Singapore’s Immigration Struggles

The government tightens restrictions on immigration. How will it impact growth?

At the end of 2012, Singapore could boast the world’s thirty-seventh economy, an almost negligible unemployment rate of 2%, and one of the highest incomes per capita among leading industrial economies. Yet any recent arrival to the Lion City quickly notes a seething undertone of resentment and dissatisfaction across significant segments of the population. The ruling People’s Action Party (PAP), which together with Japan’s Liberal Democratic Party is one of the two longest-serving ruling regimes in Asia, was returned to power in the last general election with its smallest share of the vote since independence.

“They (PAP) run Singapore like a company. They bring people from all over to come here and do our jobs,” said one of the many taxi drivers who act as a barometer of sorts, relaying to baffled foreigners the subterranean discontent of the local community in a country that has had its long traditions of political protest deadened by decades of PAP rule.

The driver’s disgruntled suspicion of foreign labor might seem misplaced in an economy with such low unemployment, but his misgivings are not entirely out of sync with recent developments. In 2011, of the 122,600 jobs created last year, more than two thirds, or 84,800 positions, were taken by foreign professionals, according to data from the government itself. Singapore already has a non-resident population of 1.46 million, and almost 40% of the island’s total population were born abroad. Although no serious analyst of Singapore’s political situation expects the ruling party to fall from power anytime soon, it is taken for granted among the general populace that its share of the vote will decline even further in the next general election.

The Men in White – as PAP politicians are known, after the lily-white shade of the party's campaign uniforms – were quick to perceive the shift in public opinion and have acted accordingly, tightening the requirements for those wishing to employ foreign-born workers in Singapore. Until 2011, those hoping to apply for a Personalized Employment Pass (PEP), a special category of work visa that is not tied to a specific employer, could do so if they earned an annual salary of more than S$34,000. Now the minimum yearly income for PEP candidates has been raised to $144,000 – more than four times what was previously required. Foreign worker quotas for companies in all sectors of the economy have been cut. S-Passes, the employment passes issued for mid-level employees, are increasingly hard to come by, given that after the recent change in quotas, S-Pass holders can now only constitute up to 20% of a company’s workforce. One British human resources executive confessed: “I’ve had to let go of many promising candidates after our S-Pass requests were rejected by the Ministry of Manpower.”

Since the adoption of these new restrictions, frustration among high-level executives has been mounting. Their main gripe with the immigration issue is that, in spite of decades of impressive economic stewardship and massive investments in education on the part of the PAP government, multinationals still have a very hard time finding promising local candidates for some positions, especially those higher up the corporate ladder. Worse, Singapore’s compulsory social security schemes raise the cost of local workers considerably. American investor Jim Rogers, in an interview with Forbes, was blunt: “Singapore needs immigrants.” Confided another European businessman, “If it goes on like this, we might soon move elsewhere.”

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

A recent government “Population White Paper” has been much maligned for projecting a population of 6.9 million in 2030 (from the current population of 5.3 million). Given the very low fertility rate of 1.29, only an intense influx of foreign labor would be able to sustain such growth. Nicole Seah, a member of the opposition and the youngest female candidate in the last general elections, published a widely read article lambasting the governing party’s “smugness” and its “overconfidence in predicting the future”. The PAP, in the other hand, argues that the opposition has failed to offer a credible alternative. 

Singapore’s rise from a malarial fishing village to one of Asia’s wealthiest nations was helped by foreign labor and capital. Western specialists such as the Dutch professor Albert Winsemius, the former leader of the UN Survey Mission to Singapore, partnered with Lee Kwan Yew’s government to help formulate the policies that give rise to a developmental state second only to Japan in its success. It remains to be seen what impact the PAP’s current policies will have on the upcoming general election and on the island country’s growth prospects. Voters, in the meantime, seem less than pleased.