Singapore aims to fill a shortage of overseas workers within the next few months as it progressively eases border restrictions, according to Finance Minister Lawrence Wong.
Priority will be given to workers in the construction, marine and process sectors, Wong said Wednesday as he addressed issues raised from February’s budget, which was approved by parliament.
The availability of manpower is “a key concern for many businesses,” Wong said. “We should be able to clear the shortages within the next few months.”
As the city-state eases Covid-19 restrictions and activity picks up, business have warned of labour shortages, which is feeding into rising consumer costs.
Singapore’s central bank last week warned that “the domestic labour market should continue to tighten and lead to strengthened wage pressures over the course of the year” as it reported its core inflation measurement hit the highest since September 2012. Wong said the Monetary Authority of Singapore will continue to consider appropriate steps to ensure medium term price stability.
Singapore’s reliance on overseas workers across sectors, from laborers to executives, has been a recurring political and economic pressure point. It was a hot-button topic in the 2020 elections due to the perception of hiring practices that were unfair to locals and low wages for blue-collar workers facing rising living costs.
Expat Sentiment
Meanwhile, public discomfort over job competition from foreigners during the worst economic hit of the pandemic put the government on the defensive to explain the need for open borders.
“We must never let anti-foreigner sentiments take root here or give the impression that we are becoming more inward looking,” Wong also said Wednesday, cautioning that some lawmakers “have been shrill on this subject.”
Singapore has tightened requirements for foreign workers in recent years, most recently raising minimum salaries again, to “ensure that the workers coming in are of the right calibre” to help grow the economy, Wong said. He warned that Singapore is appearing in media reports to become less welcoming to foreigners.
“If global investors conclude that this is so, Singapore will become less attractive to them,” he said, “and it will be ordinary Singaporeans who suffer the most.”
Wealth Taxes
Wong spent time explaining the country’s position on wealth taxes, and rebutting alternative suggestions proposed by the opposition Workers’ Party, which has objected to the planned increase in the goods and services tax.
Under the budget, the GST rise will be spaced out over two years -- increasing to 8% in January 2023 and to 9% in January 2024 -- with programs to help lower income groups. Alongside this hike, the government also plans to raise taxes aimed at its richest residents with levies on some incomes, property and luxury cars.
Wong argued that imposing measures such as taxing dividends or capital gains may hurt Singapore’s competitiveness and affect jobs, since other places in the region do not have such tax regimes. The country will continue to study experiences of other jurisdictions and explore other options to tax wealth effectively, he said, pointing out that a broad-based consumption tax is the best way to raise revenue fairly.
“The bottom line is that we cannot sustain a tax system where the bulk of all of the burden is borne by a small group of people at the top end,” Wong said. “It will not be possible to hold our society together if only a small group of people are required to pay more taxes all the time, while the rest simply get to piggyback on their contributions to enjoy more benefits.”