How S’pore’s Labour Market Protected Local Jobs During The Pandemic

Much has been said about Singapore’s resistance to the economic hardships caused by the Covid-19 pandemic – in large part thanks to its deep reservations that provided the resources needed to keep the economy afloat, without forcing the government to back down. go into debt to bail out. local citizens.

But there is another feature of Singapore’s economy that has gone largely unrecognized, and ironically, is also often the target of contempt from some Singaporeans and budding local politicians: its labor market.

singapore unemployment rate
Singapore’s labor force in 2020 / Image credit: Ministry of Manpower

With an overall unemployment rate of 3 percent and 4.1 percent for residents, the country is the envy of the world, where rates are currently at least two to three times higher.

Despite the severity of the crises, it is also lower than what the country experienced ten years ago, following the financial crisis in the United States.

Learning from “ disabled ” countries

rory sutherland ogilvy
Rory Sutherland, Vice President of Ogilvy UK / Image credit: Mexy Xavier

Rory Sutherland, vice president at Ogilvy and a man who has dedicated his life to studying human behavior (turning it into a gold mine for the famous ad agency), once noted that to research innovative ideas, you have to look at the extremes.

One example he gave in an interview referred to improvements in modern mobile devices and apps, and how it could pay off to look at them as if you had only one hand.

How useful and accessible are they then? How to make them simpler, smaller, thinner, etc. to be easier to use if you can’t use both hands?

Examining these outliers can provide improvements for all users. It also works as a good analogy for entire countries.

You will find a lot of good ideas among those who have less or who are constrained by adverse circumstances – as if they are, for one reason or another, disabled.

Take Japan, for example. It is a country ravaged by earthquakes, which has few natural resources and yet is one of the most developed and innovative in the world.

The same logic applies to Korea, Taiwan or even Singapore, while resource-rich countries like Russia, the Arab Gulf States and neighboring Malaysia lag behind. Their greater natural wealth has not turned into greater creativity. Quite the contrary in fact; it made them complacent.

After all, the world was once colonized by relatively small European nations, which competed with each other for resources and trade with lands far away – and much more populated – in Asia.

Britain, the collection of rocks windswept in the Atlantic, was not so long an intercontinental empire on which the sun never set. A nation of 10 million people (circa 1800) conquered India, humiliated over 300 million from China, and was the source of the industrial revolution that transformed the planet.

Therefore, it pays to look to smaller countries – which are limited by geographic circumstances but still do well against all odds – for inspiration and what their successes tell us about future trends.

Singapore is such a country in many ways, but its immigration policies and the resilience of the labor market are seldom highlighted.

Where is Singapore located The East-West divergence

When you look at labor markets, the developed world is now broadly divided into two groups of countries: those who try to embrace immigration and fail (struggling to cope with the various socio-political and economic consequences of the importation of millions of migrants), and those who refuse or find it difficult to open up, although they may soon be forced to do so by circumstances.

The first group is of course, Europe and North America, which are seeing an influx of immigration which is very necessary for their aging societies. Yet it proves to be extremely problematic to manage, leading to instability, crime, political polarization and poverty.

japan older workers
Japan’s aging workforce / Image credit: Financial Tribune

This goes against East Asian countries, like China or Japan, which are also aging at a rapid rate. However, due to their island cultures, strong ethno-national identities, and difficult languages, they are not open to foreign immigration – which can have serious economic consequences in the future.

They will simply lack a skilled workforce, with an ever-increasing number of retirees who will only consume, but no longer produce.

Singapore is a notable outlier, straddling this great divide. It is a developed, predominantly English-speaking country based in Asia, with a large local Chinese majority (around three quarters of local citizens).

With the lowest fertility rate in the world, he is aging rapidly; Yet it is open and welcoming to immigration from all walks of life and from all destinations, provided they have the required skills and a job offer.

Its measured approach has created a mosaic of ethnicities, cultures and religions – by far the most multicultural country in the world – which is also the safest and most prosperous in the world. He has already achieved what no one else has done.

Prioritizing job security for Singaporeans

Before the pandemic, out of 5.7 million people in the country, only 3.5 million were citizens.

The remaining 40 percent or so were made up of various groups of migrants – permanent residents, holders of a skilled employment pass and an S pass, as well as holders of lower work permits, including women from room and construction workers.

Singapore has limited space, so it could never afford the bounty of open borders we have witnessed in Europe or America. Like in the example I mentioned above, it needs to work with one hand and get the most out of it.

He cannot simply allow all new workers to bring their families with them. Only top-level immigrants with considerable qualifications and likely to be in short supply locally can both secure the necessary wages and be considered valuable enough to be allowed to relocate with their families.

This carefully designed system allows for remarkable flexibility that provides resilience to the local labor market and is the best compromise for all participants, while protecting the core resident workforce.

This has enabled the small city-state to attract much-needed world-class talent, as well as hundreds of thousands of relatively inexpensive workers doing menial tasks that locals no longer want to do.

It has helped raise the quality of the local workforce, ensuring that the smartest people can call Singapore home, regardless of where they were born.

Meanwhile, physical workers can make a lot of money here, while helping families in considerably less expensive places in India, Bangladesh, Pakistan, Philippines, Indonesia, etc.

In the event of a crisis making them superfluous, this creates fewer problems locally (unemployment and resulting poverty), while allowing them to fall back on a much cheaper life at home until the situation returns to normal and that they can come back. It is a victory for all, which allows flexible and fair working conditions for all.

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Foreign workers / Image Credit: Shubham Verma via Unsplash

As a result, quite remarkably, overall employment for Singaporean residents increased by 15,000 at the end of 2020, with foreign workers most affected by the cuts induced by the pandemic. More than 180,000 people lost their jobs during the year, mostly in low-end construction and manufacturing jobs, which were hardest hit by the crisis.

You may think that it is I who am the cruelest and the most cruel. After all, they are also people, with lives, families and careers.

But the truth is, the situation would have been much worse if they had lost their jobs and had to support themselves and their families in Singapore instead of finding temporary refuge in their home country. It is generally much more affordable to live, where they can count on a much larger circle of friends and relatives.

It would be bad for Singapore as the country would have to support them in one way or another. It would be bad for them too, as they would have a hard time finding a job to support the much higher cost of living. Poverty and crime would likely follow, as is generally the case elsewhere.

Due to the regulated nature of Singaporean immigration – which does not allow you to settle in the city unless you can really afford it and your skills ensure sufficient income (and benefits to the country) – it spares people much more painful experiences during economic crises.

At the same time, he never closes the doors for their return. They can do this when the situation improves and more workers are needed.

It is a strictly needs-and-merit-based system that prevents pockets of poverty and social exclusion from emerging during downturns, while prioritizing job security for local residents.

A glimpse of what the future holds

Singapore’s labor market is years ahead of all other countries, foreshadowing the future of employment in developed countries.

As entire nations become both richer and older, they will have to tackle labor shortages at all levels of the economy. To fill them, they’ll compete for talent who is able and willing to do those jobs – from street sweeps to nuclear physics.

At the same time, they will be forced to deal with the social ills that often accompany mass immigration, which can fuel nationalist sentiments and pit societies against newcomers, especially if their influx is not carefully managed.

To avoid these problems, immigration must be tied to available employment and associated privileges, and it is limited by a person’s ability to fend for themselves and that of their dependents – as is. the case in Singapore.

When managed properly, a large migrant workforce will not be a problem, but it also uplifts the local economy and protects the jobs of local residents. Their lives are surrounded by a protective buffer of flexible employment for migrants, which can be adjusted quickly in times of crisis.

Featured Image Credit: AFP

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Jothi Venkat

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