14 October 2012

Calibrating Immigration and Foreign Worker Inflow — What Does It Really Mean?

It seems increasingly fashionable nowadays to use the word "calibrate".

Here's a recent example.

We must complement our resident workforce with a calibrated rate of immigration and foreign worker inflow, said the Ministry of Trade and Industry in its paper MTI Occasional Paper on Population and Economy (September 2012).

What does the Government mean by a calibrated rate of immigration and foreign worker inflow?

What does the public think the Government means?

Second Minister for Trade and Industry S Iswaran said recently, "[A] calibrated approach to immigration, a calibrated approach to bringing in foreign manpower and having a sustained economic policy means being able to grow at a rate where on the one hand, the additions to our local population mix is done at a rate which we can sustain as a society and we can move with that and adapt to it.  But at the same time, it is done at a rate where our economy can continue to generate opportunities for our Singaporeans."

Defining Calibration
Calibrate, in science usage, means to standardise (as a measuring instrument) by determining the deviation from a standard so as to ascertain the proper correction factors or to measure precisely, especially against a standard.

Calibrate, in non-science usage, means to adjust precisely for a particular function; to adjust (experimental results) to take external factors into account or to allow comparison with other data; and to plan or devise (something) carefully so as to have a precise use, application or appeal.

If the Government is calibrating immigration and foreign worker inflow, it must be adjusting the inflow against something, some conditions or some factors.

What conditions or factors?

According to MTI, "Singapore is located in a fast growing region this brings us more economic opportunities but also increased competition.  We need to calibrate our policies carefully in order to maintain our competitiveness, and yet grow at a sustainable rate so that all Singaporeans can enjoy an improving quality of life."

Is maintaining Singapore's competitiveness the determining factor?

Or, is it growing at a sustainable rate?

Or, is it a rate that can be sustained as a society in order to generate opportunities for citizens, as Mr Iswaran said?  What does it mean, though?

Let's look at how the Government has managed the rate of immigration and foreign worker inflow in the past.

1985-2000
After the 1985 recession, the Economic Committee projected that the Singapore economy could grow at an average of 4-6 per cent per annum in the medium term, comprising 3-4 per cent productivity growth and 1-2 per cent labour force growth.

As it turned out, the actual average annual growth during the 1985-2000 period was 7.3 per cent per annum, comprising productivity growth of 3.5 per cent per annum and labour force growth of 3.8 per cent per annum.[1]  Fifteen years are a very long period over which the workforce grew, or was allowed to grow, at 2 to 4 times the planned rate, especially if it was due mainly to the inflow of foreign workers, rather than higher citizen participation.

2000-2010
The Economic Review Committee 2003 believed that Singapore's sustainable growth rate barring external shocks was 3-5 per cent per annum, comprising productivity growth of 2-3 per cent per annum and labour force growth of 1-2 per cent per annum.

While our doors must be kept open to foreign workers, the Committee stressed that the inflow must be managed carefully to benefit the economy and ensure that foreign workers complement rather than displace Singapore workers.

In 2010, however, the Economic Strategies Committee found that the Singapore economy had grown at an average rate of 5 per cent per annum in the preceding decade, comprising 1 per cent per annum productivity growth and 4 per cent per annum employment growth.[2]

2011-present
The Economic Strategies Committee 2010 nevertheless believed that Singapore could grow 3-5 per cent per annum, with two-thirds of this being derived from productivity growth.

What has happened since?

In the three years 2008-2010, the economy grew 5.0 per cent per annum CAGR but labour productivity fell 0.2 per cent.  Total employment (excluding foreign domestic workers) grew 4.5 per cent CAGR, comprising employment of citizens and permanent residents which grew 2.9 per cent and employment of non-residents (excluding foreign domestic workers) which grew 8.3 per cent.

In 2011, the economy grew 4.9 per cent.  Labour productivity grew 1.0 per cent.  Total employment (excluding foreign domestic workers) grew 4.1 per cent, comprising employment of citizens and permanent residents which grew 1.9 per cent and employment of non-residents (excluding foreign domestic workers) which grew 8.8 per cent.

In 2012, the economy grew 1.5 per cent in Q1 and 2.0 per cent in Q2.  Labour productivity fell 2.3 per cent and 1.9 per cent, respectively.  Total employment grew 3.9 per cent and 4.1 per cent, respectively.[3]

Calibrating?
From the experience cited above, it is difficult not to conclude that growing the economy was the Government's primary focus when managing the immigration and foreign worker inflow.  The Government wants to raise labour productivity, but this is not something within its direct control, and not even within its indirect control unless it restricts immigration and foreign worker inflow.

The Government is creating more jobs than Singapore has people to do them.[4]  That's nice, from a macroeconomic perspective.  But, does this mean ever more immigrants and ever more foreign workers to match the excess of jobs created over available citizens?

The Government should tell us how immigration and foreign worker inflow have been calibrated in the past, and how they will be calibrated in the future.  Calibration should not be a woolly, ill-defined and imprecise philosophical concept.

Otherwise, a calibrated rate of immigration and foreign worker inflow may mean one thing to the Government and quite another to the rest of the people in Singapore.

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Notes

1. Source: Economic Review Committee 2003.  The Committee probably intended to refer to employment growth, rather than labour force growth, as the latter term includes the unemployed.

2. The degree of precision (or imprecision in this case) of the numbers is as given in the Committee's report.  Also, the labour productivity growth differs from the 1.8 per cent per annum for the period 2000-2010 cited in Economic Survey of Singapore 2011 p65.

3. Figures are year-on-year percentages.  Year-on-year comparison of resident and non-resident employment growth is not possible because non-resident employment data for Q1 and Q2 2011 were not available.

4. National Day Rally speech 2012.

1 comment:

  1. What a terrific piece.

    Re lang: The govt has a way of seizing on certain words and phrases and repeating them ad nauseum. The word "passion" is one such. It should be totally banned, as just the vaguest flicker of interest is now elevated to passion.

    Re productivity and foreign labout: What leads you to conclude that the govt would actually like to see higher productivity, other than the fact that it keeps stating so? You have not provided any proof of this here.

    From your analysis, it has focused mainly on growing the foreign component of this equation.
    And by astonishing percentages, even as it has been "calibrating" this growth, whatever that means.

    And then there's this trivial matter of improving the quality of life for Sporeans. Mine, and I believe that of quite a number of others, has been going downhill for a couple of decades now, despite all the calibration. But perhaps that wasn't part of the calibration.

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