In an article in the Straits Times on Saturday, 12 September 2009, Professor Ivan Png makes an argument that data produced by the Ministry of Manpower (MoM) confirms that the foreign worker buffer is working as intended (“Foreign worker buffer is working”, p. A34).
He argues that “when the economy booms, Singapore attracts more foreign workers; when the economy weakens, foreign workers are laid off and return to their home countries.” And, “to the extent that this buffer works as intended, unemployment among foreign workers would be lower than among Singaporeans.”
He then produces a chart that shows that Singapore resident unemployment has always been higher than total unemployment from 1999 to 2009 and concludes “the resident unemployment rate is always higher than the total unemployment rate, thus confirming that the foreign worker buffer is working as intended.”
It is unclear that the evidence produced supports his argument. If foreign workers serve as a buffer through economic cycles, the most direct measure of this would be the proportion of Singapore residents as a fraction of total employment. That is, if foreign workers serve as a buffer:
a) During good times, more Singaporeans are employed, and more foreign workers are employed (because there are too many jobs and not enough Singaporeans). Therefore, the proportion of employed Singaporean residents as a fraction of the total workforce would be lower since the total workforce base has been enlarged.
b) During bad times, if many more foreigners are sent home than Singaporean residents are retrenched, the proportion of employed Singaporean residents would rise, since the size of the total workforce is reduced, but more Singaporeans retain their jobs.
All the data necessary to prove or disprove this is available to the Ministry of Manpower, and MoM should analyse it and publish the results to remove all doubt.
There is, in fact, some evidence that foreign workers do not serve as a buffer. In the last year, the manufacturing sector has been one of the most affected by the global slowdown. Yet figures published by Ministry of Manpower show that the manufacturing sector shed 4,600 local jobs while adding 24,100 foreign jobs in the year 2008 [1].
When asked in Parliament why this was the case, the Minister of Manpower, Mr Gan Kim Yong replied:
In 2008, total employment in manufacturing grew by 19,500. The growth came largely in the earlier part of the year. Although some companies had cut their headcount, others were still growing and expanding. Given the tight labour market then with record local employment rate of 77.0%, manufacturing companies which were still growing had to recruit foreign manpower to meet their needs. However, as the economic downturn deepened, both foreign and local employment in manufacturing fell towards the end of the year. Job losses in the manufacturing sector were more than offset by jobs created in other sectors as overall local employment grew by 64,700 in 2008.
Two statements, in particular, stand out: When the economy was growing, manufacturing companies which were still growing had to recruit foreign manpower to meet their needs. When the economic downturn deepened, both local and foreign employment fell.
Does this not show that foreign workers don’t serve as a buffer? The data presented, that foreign jobs are added in manufacturing while local jobs are lost, implies that the proportion of locals in the manufacturing sector must decrease over time. And this is indeed the case – figures published by the MOM show that the proportion of Singaporean residents employed as a fraction of total employment in manufacturing fell from 62% in 2003[2] to less than 50% in 2008[1].
Comparing resident unemployment rates against total unemployment as a measure of the effectiveness of foreigners as an employment buffer is probably requires a number of intermediate steps and assumptions. Perhaps Prof. Png could publish his methodology, so that an independent assessment of its soundness may be obtained.
Astute readers would also note the contrapositive to Prof. Png’s conclusion: “If the foreign worker buffer is not working as intended, then the resident unemployment rate would always be lower than the total unemployment rate.” If this is the case, most Singaporean residents would probably want the foreign worker buffer to not work as intended.
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[1] Labour Market 2008, March 2009, Ministry of Manpower, Manpower Research and Statistics Department
[2] Derived from data pubslished in “Employment Trend and Structure”, May 2004, Ministry of Manpower, Manpower Research and Statistics Department (Paper 2/2004)
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Read also: Foreign Talent in Singapore
Read also: Foreign Workers act as buffer during Economic Slump
Thank you for the article. While I consider myself to be quite a logical person, I was baffled by the reasoning as well. The argument is too stretched to draw that conclusion.
If foreign worker buffer is working, than in every retrenchment, foreign worker must be retrenched first. Only when there are no foreign workers left to be retrenched, than and only than Singaporeans get retrenched.
I do not believe that Singaporeans do not have the skills of foreign workers. I do not buy the excuse that Singaporeans are unwilling to work because they are already working in the organisation which are retrenching.
Surprised that this person can be a Professor!
There is an obvious lapse in logic when jumping from “when the economy booms, Singapore attracts more foreign workers; when the economy weakens, foreign workers are laid off and return to their home countries.”
to the conclusion of “to the extent that this buffer works as intended, unemployment among foreign workers would be lower than among Singaporeans.”
Firstly, he has to define who he considered as foreign workers. Based on his other term of “resident” workers, I take it that foreign workers are those on EP, S-Pass, and WP. All these 3 classes of work visa requires an employer to sponsor the application. The only time these foreign workers are “unemployed” would be the grace period starting from resignation/termination/retrenchment to the date at which their work visa expires and are required to leave Singapore. Thus, this group is forced to leave Singapore quickly after the short grace period and therefore dropped from the “unemployment statistics”.
Regardless of a good or bad economy, the foreign workers unemployment statistic would therefore be lower than Singaporeans (here, I take it that Prof refers to both citizens and PRs). How the Prof deduce from this lower number that the foreign worker buffer is working as intended, baffles me.
Tongue-in-cheek. Why does the MSM publish professors who are unable to present/speak-up for their views logically? E.g. Thio Li-Ann.
obviously that prof ivan png is clutching at straws to justify govt policy. curry favour a bit lar.. later no tenure.
He is probably already tenured. But making statements like this to pacify stupid Singaporeans into believing the justifications of foreign intake is another way to move into management level of Sing.Corp. to make quick million-dollar profits.
‘Resident unemployment’ data published by the government includes Permanent Residents as well as Singaporeans. There is no employment data on Singaporeans alone. There is no meaningful conclusion.
“unemployment among foreign workers would be lower than among Singaporeans”
Wouldn’t this be the case if foreign workers were not being retrenched during a downturn? Meaning, the unemployment rate for foreigners remains constant and the Singaporean unemployment rate goes up as more Singaporeans lose their jobs.
Seems like this is a closed-loop argument where the outcome is guaranteed – ANY scenario WILL lead to an unemployment rate for foreigners that is lower than for Singaporeans anyway.
…because birds of a feather flock together.
Thank you for this article Joseph since I did not read Prof Png’s piece in the ST. It does seem to me that the data is insufficient for Prof Png to affirmatively draw the conclusion he does. Perhaps the government can help him?
This article has been amended since it was first posted. As the author, I strongly object to the modification of my statements in such a fashion as to completely alter my argument. For readers, the words DO NOT have been excluded from paragraph 8, and NOT have been excluded from the last sentence.
Para 8 should read “There is, in fact, some evidence that foreign workers DO NOT serve as a buffer.”
The last sentence should read “If this is the case, most Singaporean residents would probably want the foreign worker buffer to NOT work as intended.”
The correct version of the article may be found at oneindependentanalyst.blogspot.com
The government does publish some statistics at http://www.singstat.gov.sg/ actually. However I’m not sure whether this particular thing you’re looking for can be found there. The statistics they publish is quite limited.
Joseph,
As per the email I sent you, I apologise for the omissions. Also, as i explained, it was most probably a formatting problem which led to the words being left out.
In the original article you sent us, on word doc, the words were underlined. When the article was published, somehow the underlined words went missing. I can only conclude that it was a WordPress/formatting error.
There was no intention to edit your article so that it had a different meaning or gave a different perspective from the one you intended.
The errors have now been rectified.
My apologies.
Andrew Loh
Is Mr.Gan saying that;
“when good times, we hire the foreigners and in bad times, we fire both the Singaporeans and some of the foreigners”?
The ratio described in the article can be constructed quite easily from data publicly available in the MOM website. I’ve done a quick calculation but encourage others to do so.
By my calculation using seasonally adjusted numbers, the ratio of resident employed to total employed fell in Q12009, but rose in Q22009. It appears that residents took the big hit in Q12009, but non-residents took the big hit (and many left the labour force) in Q22009. Thus, the evidence is mixed.
I learnt something from an ex gov official. Keep your man stupid.
Only when they are stupid then u can manage them well.
See the point.
I see spirits behind all the politician. A smiling face but with horns
growing inside.
Surprise to hear the reply from MOM . The labour market already bad and it is a fact. Since 5-10 years back this was already highlighted to the talented Ministers and MOM refuse to adhere to the streetsmart.
What they are hearing from the employers whom are appointed or sitting at key position feed back is totally one side of the story. No workers we need to import and MOM supported their views. In the interest of MOM every imported employees is a gain in $$$$ monetary (labour levies).
Todate, MOM should walk the street knock on household to find out the true employment rate (local Singaporean vs the Foreigner and PR). The figures are fightening . Is too late now , many Singaporean are without jobs.
Complaints from the local are turn off or away.
1) Coffee shop importing China workers to replace the local. The FT are working 12 to 14 hours at $800 to $1000 vs the local. Are they PR or resident here . Moreover under the MOM law every 4 Singaporean workers they are allow to employ one FT. Look around their operations to justify the FT employment.
2) Working beyond the 44 hours stipulated under the employment act. Why no action taken by MOM. Are they sleeping ????? Because MOM alllow the employers to go free and this is the main reason local are without jobs even as a cleaner or a helper in the coffee shop. What has the Association of Coffeeshop Owners done todate. ???
3) Even some local offices are engaging FT . Are they PR or under professional visa. or under social visit visa. Highly questionable. Clerical position ., Customer Service jobs etc. The operations dont justify engaging FT base on MOM local regulations ( 4 is to 1 ration ).
4) Look at SMRT customer services officer topping up the ez-link card. Mostly are from China and the part-timer replacing the exlink card. Student from China.
Why ?????? Is a show of discrimination vs the local . Many local are applying for the position even the wages are low or on contract but they are denied. The local HR are bias toward the local. All this job should be given to the local instead of the FT, PR or PR convert. Even a 45-55 is eligible to be sitting there as long they are proficient to do the simple task. Instead they are pass over and the only jobs for the 45-55 are security, cleaners, petrol pump attendant .
5) If the local are able and still able to contribute to the nation why are employers replacing them for younger. We dont need FT to support the greying citizen. if the grey citizens( age 40-75) are gainfully employ and are given a decent wage to support themselves why do we need the FT to support the greying population. There are many healthy and still active greying citizen.
The social problems is cause by the system. The stigma placing on the middle age citizen from the emploers end . This too ome from the civil service as the HR mindset are not tune. Heard from many all “NATO” talk of employing the middle age . All are talks and no action or just featuring a few to cover the whole pictures. Good media public relation showing a handful to blind the citizen.
6) CPF for FT are much lower than the local . Why ????? If they are talent , CPF should set the rate same as the local and not allowing employers to enjoy lower FT contributions.
The fact is that there are too many FT and is out of control . MOM is passing the torch from one Minister to another and just getting the torch moving around. At the end of the day is also a political objectives to convert the FT to local citizen for “votes”.
End result the true local born and breed Citizen are suffering. Suffering from
a) Under the thumb of the FT . Reason they are willing to accept lower wages for a start and move up. At the end of the day the FT support their own FT citizen and local Singaporean will be denied an opportunity.
b) FT on top holding key management position. Might encourage or propose company to relocate to justify cost and expenses. This is at the expense of the local too.
c) Born and breed Singaporean are deny a 2nd and 3rd passport. FT are highly mobile and global. No contrainst and restraint in this aspect. Look at the Farang or Ang Mo or the FT . They come and go to where the pasture are good and green .
d) Our educational standard is forever improving and raising. But the FT standard are ?????? where. Yet they are pay close or the same wage as Singaporean.
e) Local are deny an University education. Due to limited places and also the high school fee. Be it now or 15 years back (only one Singapore University and NTI) vs many universties in FT countries. Hence many miss out of this opportunity and is now heading to nowhere. Unemployed and stuck. The system problem- education, political as well as funding.
For whatever the good or bad reasons for cpf,
the fact remains, it is a cost to employers making FTs more attractive.
not happy with my view? convince me.
21) David on July 8th, 2009 11.50 am It appears that our govt lies are not very consistent with each other.
They used to boast about Singapore being an educational hub filled with skilled people. But when it comes to job, they lament we have no talent and used it as an excuse to bring in FT (including foreign farmers) in the hope to mitigate the lower birth rate here. When the jobless rate gone up & wages depressed because of FT policies, they started to blame & shame Singaporean with higher education for not wanting jobs with low wages. Thereafter smoked us that such low jobs requires exceptional skills too and than came up with spur to tease our intelligence. So they tell us to put aside all decades of our tertiary educations, past experiences in MNCs and go into training to become cleaner, security guards, waiters, and other kind of labourers for a small sum just enough to feed the govt but not us. Afraid that the people will protest, they enacted laws to silence us, tie us with it and beat us into submission to accept their statistic as it is with falsified rosy picture, & pap newspaper were also quit to jump in, wanting the people to show praise and gratitude for their job “well done”. The whole system is a well-plotted and co-ordinated group of bullies and take on Singaporeans who are grieved. Is this the type of mandate we want that they do not wish to bow to talented Singaporean but continue to bootlick FT (including 3rd world farmers).
Such bitterness only the ground can feel but it won’t be long when election comes.
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22) prettyplace on July 8th, 2009 1.29 pm Even the SPURS numbers reported in CNA was wrong…
from 83,500 + 43,600=124,100. Somehow, they managed to get 124,500.
Wonder what happened to the 400.
Their lies are so blatant….Restructuring was mentioned in year 2000, i guess….and till now with all their training programmes they have not managed to restructure….
what nonsense……almost 10years and they cannot reskill people…..I am sure they will mention the same story again…
The only way out for Singaporeans is to VOTE PAP OUT….send a clear message….Stop the bullshit….make them work for us……not shame us….or test our intelligence….
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23) ACACIA on July 8th, 2009 2.23 pm Yes 22) , I’ve always said this, Vote the PAP out. Singaporeans have to be brave and now is the time. The opposition are more than capable today and many would join to help us through this mess this country and people are facing.
It seems too that the policies that come out are not well thought through. Who finally approves these policies, the ministers, perm secs …..?
People are smarter now to see through the errors of policies. They are not perfect but they cannot be one sided too.
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I see this article differently from most people here. To me, the conclusion of the article is to show the purpose of the government’s push to import so many foreign labour. The foreign workers will help to meet insufficient labour supply during boom times and reduce the unemployment figure during bad times. That is the meaning of the “buffer” here. It a buffer to unemployment rates so it looks better for the government. It’s really simple maths here.
In good times, most of the foreign workers will get hired and the unemployment ratio will drop faster than normal (eg, 3/8 to 2/9 compared to 2/8) as we are increasing the denominator of the unemployment ratio. In bad times, the foreign workers that lose their jobs will leave the labor market and the unemployment ratio will rise slower than normal (eg. 3/9 to 4/8 compared to 5/9) as we are decreasing the denominator of the unemployment ratio.
This is the reason why foreign labor is a “buffer”. But this is just cosmetic cover-up of the real unemployment situation which in facts gives the government more incentive not to tackle the unemployment situation head-on.
I do not think there is anything wrong with the conclusion drawn by the professor. But I suspect the editor of the ST does not realise that he/she is putting up an article that actually exposes the fallacy of the government’s labor policy rather than support it.
17) Sue-Anne Hoong ,
I imagined for a minute what if the CPF is not applicable for new entrants to the workforce .
1. existing people relying on cpf to pay and pay their house not affected. But their cost remains a cost to employers. As they age, they continue to face competition from FTs.
2. 1st time workers are as competitve in terms of salary cost to employers as FTs. Potentially, this might secure them more job opportunities. But would they come to realise living in a costly city is their pay on par with other costly cities? But at least, maybe they are less of a cost issue than the existing older workers in the cpf scheme.
this is just a hypothetical scenario.
any comments?
it is also evidence that the academia has also lost its independence – just like the judiciary and media – and have become corrupted and prostituted, ie compromising its integrity and purpose – by the PAP
19) sgpirategame on September 18th, 2009 10.23 am,
Whenever you bring in FTs (and with such levels of indiscretion), it’s never purely about maths (or arithmetics), but about how the employment dynamics play out. This means if you have 10000 jobs, and 5000 are occupied by locals, it doesn’t mean the other 5000 are automatically taken by the FTs. So the term ‘buffer’ is not correct entirely. The actual calculation is many times more complex than the simple maths they used. If it were that simple, I can do it as a primary school kid and charge taxpayers less than a million dollars a year.
19) sgpirategame,
Interesting analysis, and do allow me to extend your observation.
It is perculiar (though hardly surprising) that the bureaucracy’s perception of “buffer” could be fundamentally different from that of a Singaporean’s. While a one party is concerned with how the “buffer” can help alleviate the unemployment pressure off Singaporeans, the other party is only concerned with how the “buffer” can help to paint a better picture to the public at large.
22) kf on September 18th, 2009 10.58 am
Agreed that the “buffer” is not really one that benefits the people of Singapore, but serves only to justify the performance of the ruling elite. My point is that the professor’s article is but a scholaristic assessment of a statistic disguise that ignorant editors and politicians have mistook for an affirmation of the effectiveness of the government’s labour policy. The majority of the readers of this article have read the headline and started criticising. The problem is with the government’s policy, not the maths. But until people, and more importantly the politicians, start to see that distinction, we cannot begin to understand the problem in deeper detail.
Dear Jason (comment 14),
When I get a chance, I will try to get a longer timeseries for the figures. I also looked at this issue in the last recession in 2003 and wrote to the then Minister for Manpower about it.
I suspect the “better” figures from Q2 come in part because of the greater enforcement of the workpass rules in the last 6 months (prosecutions of employers who blatantly violate the rules). I will tell you that after the first arrest, the three Chinese nationals performing foot massage at my HDB estate were replaced with locals. This brings to question why the rules were not enforced earlier.
My point to the Minister in 2003 – foreign workers do not naturally form a buffer. Government policy which specifically limits the use of foreign workers, and its stringent enforcement is necessary to ensure that it happens. By creating an effectively infinite supply of labour in Singapore, the government artificially depresses wages of Singaporeans.
Does the govt care for the locals who are jobless ?
in the good news of ECONOMIC RECOVERY, and WE NEED FOREIGN TALENTS, the unfortunate locals are simply treated as non existent.
Does the govt care for the locals who are jobless ?
drown in the good news of ECONOMIC RECOVERY, and WE NEED FOREIGN TALENTS, the unfortunate locals are simply treated as non existent.
24) sgpirategame on September 18th, 2009 11.49 am,
Yes, it’s largely the policies (I mentjoned in other articles). To be exact, self-serving policies (under the pretext of national interests), covering up their series of blunders, and putting the balls in the citizens’ courts. We are seeing a growing number of remarks that the emperor is not wearing new clothes :-)
“”"He argues that “when the economy booms, Singapore attracts more foreign workers; when the economy weakens, foreign workers are laid off and return to their home countries.” “”
Are FTs laid off? how many only?
I see so many of them.
Talk is cheap. Show me the numbers that are independently auditable.
Hi #30,
Its been recently reported there are foreingers still flocking in to find jobs and getting them.
All this is qualitative. They need to show solid numbers to proof what they saying.
We Singaporeans are just puppets being control by them. MOM is just trying to show the Singapore Citizens that they really “CARE” during the downfall by increasing the quotas caculation to encourgae local workers, but the very fact is they turn around to increase the levies of the employers who hire uneducated PRC just to suck more money from the citizens. So what if we are unhappy and we voiced out here? Do u seriously think that will take action or bothers about how we feel!
Many of Singaporean not able to find job due to the abundant PR. Should not Singapore introduce levy on PR.