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Immigration on/off switch needs fine-tuning

Updated On: Jan 26, 2010

Jan 26, 2010
By Dawn Dekle & Thanneermalai Lakshmanan , FOR THE STRAITS TIMES

IMMIGRATION is an especially sensitive subject in Singapore. Instead of viewing immigration as a tap, turning it on when the economy is booming and turning it off when there is a downturn, Singapore should consider other factors important for a successful immigration policy.

Immigration has accelerated in the Republic in the past few years, resulting in the population growing from 4.2 million in 2005 to five million now. In the same period, the gross domestic product (GDP) per capita grew from roughly US$28,000 (S$39,250) to US$38,000. Some estimates attribute two-thirds of this economic growth to immigrants, who contribute significantly to finance, high-tech industry and construction.

Singapore plans to increase its population to 6.5 million. But it faces some challenges in doing so. First, its fertility rate of 1.28 ranks among the bottom five worldwide. Second, its population is ageing; roughly 20 per cent will be over the age of 65 by 2030. Third, 6,000 to 7,000 Singaporeans leave every year to live and work overseas. Fourth, the global financial crisis has led to retrenchments of both skilled and unskilled foreign workers, who have since returned to their home countries. Fifth, many Singaporeans, even those recently retrenched, do not wish to take some jobs - requiring low skill levels, pay little and have long and sometimes unusual hours - that foreign workers are willing to do. All of the above factors are causing a labour shortage, and immigration is necessary to make up the shortfall or Singapore will risk losing its competitive edge.

However, there is much unease in the community about the influx of immigrants contributing to problems such as overcrowding in public transport, more littering and vandalism and an increase in petty crimes. All this is exacerbated by a lack of fluency in English among some immigrants. Further, many believe immigrants are taking jobs from Singaporeans, and even causing a housing bubble. There is also the perception that expatriates receive better employment packages and that employers are replacing older Singaporeans with younger, cheaper immigrants, especially from China and India. In addition, there are anecdotes of employers favouring immigrants since they do not have to take time off work to do reservist training.

Yet Singaporeans have traditionally not felt resentment towards immigrants and have, in fact, welcomed them. The concern now seems to be the increase in the number of immigrants from 10 per cent of the population in 1990 to 36 per cent now, and how this is changing the 'face of Singapore'. The United Nations 2009 Human Development Report ranked Singapore No. 10 in terms of the proportion of immigrants in the population.

One argument in favour of slowing down the immigration rate is the impact it has on low-income Singaporeans. But it is important to note that as immigration increased over the past few years, so has household income - though the lowest 20th percentile has admittedly had a slower growth rate than the rest. The Government has taken steps to address this problem, through income tax relief (lower income groups pay very little or no income tax), Workfare, ComCare, the Skills Redevelopment Programme and Skills Development Fund.

The growing income gap here is not due entirely to immigration. In Singapore, as well as in most of the developed world, there has been a shift from manufacturing (which needs many unskilled workers) to a knowledge-based and services economy (which needs many skilled workers). This change has resulted in a segment of society lagging behind others due to a mismatch in job skills.

Restricting immigration is not a viable option if Singapore is to keep up with the rest of the world. The key is to have safeguards to absorbs the 'shocks' associated with immigration.

Immigration policy has not kept pace with the realities of day-to-day life in Singapore. It is a sensitive topic, but to move forward, all Singaporeans must grapple with this issue. As an example, various grassroots and self-help organisations, such as the Chinese Development Assistance Council, Mendaki, Sinda and National Integration Council, have offered assistance. They are helping immigrants to settle into the community, with the Government allocating $10 million to these integration efforts.

Singapore could consider applying the findings of some recent research on the factors contributing to successful immigration. The research indicates that the rate of immigration (not too many at once), the visibility of the immigrant groups (some degree of assimilation is critical), the timing of immigration (not during a recession but rather in a period of growth), and support of the political leadership, are all important factors in a viable immigration policy.

Immigration has reached a critical point here. If the proportion of immigrants in the population goes much beyond one-third, it could cause a backlash. However, stopping immigration abruptly will stifle Singapore's competitiveness. Changing the on/off setting of the immigration switch to a more nuanced, steady trickle, while addressing the concerns of Singaporeans, could provide the reassurance currently absent on the street.

Dawn Dekle & Thanneermalai Lakshmanan
About the author: 

The writers are from the S.P. Jain Center of Management.

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