02 May 2011

Foreign Workers and Reasonable Economic Growth

Minister for Trade and Industry Lim Hng Khiang reportedly said on 1 May 2011 that the Government would keep foreign workers to one-third of the workforce, even though it was a very severe limitation to the country.

As a result, the Government had to be very selective and take in investments that didn't bust that constraint.

When Singapore took in a "bumper crop" of investments in 2006 and 2007 from multinationals such as energy giants Shell and Exxon-Mobil, which required more foreign workers, the economy expanded by about 7 per cent.

But with the current limit on foreign worker numbers, Singapore would have to aim for lower growth of 3 to 5 per cent.

What is wrong with 3 to 5 per cent growth?

According to the Report of the Economic Strategies Committee, which was accepted by the Government:

"GDP growth at 3 to 5 percent per year will be healthy for an economy at our stage of development — it exceeds that of most advanced countries, which typically grow by 2 to 3 percent.  Growth in some years will be higher, reflecting the global economic cycle.  Realistically, however, on average and taken over the ups and downs over the next decade, GDP growth is not likely to match the 5 percent achieved over the last decade.  But it will generate the resources needed for social investments in health, education and schemes to help lower income citizens move up, and to safeguard our security."

Let's not be greedy.  3 to 5 per cent growth is healthy.  Fast growth is unhealthy, unless it is productivity driven or the unemployment rate is high.

In any case, Mr Lim told Parliament on 11 April 2011 that economic growth this year was expected to be in the range of 4.0 to 6.0 per cent, unchanged from the forecast announced in February 2011.  Has he forgotten, or has the prognosis deteriorated in the past three weeks?


1. Limits on Foreign Workers will Crimp Growth The Straits Times Breaking News (2 May 2011).

2. The Report of the Economic Strategies Committee (Feb 2010).

3. Singapore Parliament Report (11 Apr 2011).

This is an update of an earlier version of this posting published on the same date

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