Singapore may cap low-skilled foreign workers 

Singapore will be less welcoming to low-skilled job seekers from abroad as it seeks to cap the proportion of foreigners in the workforce at current levels of about one-third amid growing unhappiness among its citizens.

Singapore depends on foreigners to staff its factories and construction sites but the numbers have risen sharply in recent years. About one-in-three of Singapore's three million workforce is now foreign compared with about 10% back in 1990.

"We cannot increase the number of foreign workers as liberally as we did over the last decade, or else we will run up against real physical and social limits," an economic strategies committee led by Finance Minister Tharman Shanmugaratnam said in a report on Monday.

"We want to maintain the current balance as it is," Manpower Minister Gan Kim Yong, another member of the committee, told a media briefing.
 
The committee recommended gradually raising the levies firms must pay to hire foreigners to restrict demand and raising productivity among locals and foreign workers already in Singapore. The measures will affect foreigners earning less than $S2,500 ($NZ2,503) a month.

The proposals underline Singapore's efforts to reinvent itself in the face of competition from China and India. In recent years, the government has promoted new industries such as pharmaceuticals, private banking and casinos by lowering taxes and providing other incentives.

Tharman said the measures proposed were "nuanced" in that foreign workers were critical to Singapore and the city-state needed to attract highly skilled people from overseas to attain its goal of becoming a global business hub.

Singapore set up the economic strategies committee in May 2009 at the height of the city-state's worst-ever recession. The key recommendations have been accepted by the government and will be discussed during the Feb 22 budget debate.

Other recommendations include shifting the country's port further west to create land for a new development next to the existing central business district.

The large influx of foreigners in recent years has become a sore point among local Singaporeans who fear the newcomers compete for jobs and push down wages.

The government has announced steps to reduce housing, health, childcare and educational benefits enjoyed by foreigners who hold "permanent residency" status ahead of a general election that will likely be held this year. The People's Action Party has been in power since 1959.

"As elections are looming, the government needs to address the public grievance and comes up with populist policies to please the voters," said an Asian diplomat who declined to be named. "Foreigners are an easy target to pick."

Song Seng Wun, an economist with Malaysia's CIMB, said demand for construction workers would fall as major projects like the country's two multi-billion-dollar casino resorts are near completion. But other sectors still need foreign labour.

"I am not sure how Singapore can get by with less foreign workers unless of course they are turned into permanent or local residents," Song said.

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