THE IMPACT OF FOREIGN WORKERS ON WAGES AND PRODUCTIVITY IN SINGAPORE

Abstract

Singapore's record of economic growth over the past two decades has been very impressive, attaining an average growth rate of 7.8 per cent. Her rapid progress since the late 1960s has profoundly changed the island's labour market. The economy that was once suffering from unemployment has been transformed into one that is fully employed and dependent on foreign labour, both skilled and unskilled. The government has played, and will continue to play, an important role in the labour market. On the demand side, the government influence is strong especially in the field of wage determination. On the supply side, its influence is felt through policies on fertility, female labour force participation, training and retraining of workers, employment of older workers and also, the importation of foreign labour. The reliance on foreign labour is not a new feature to our Singapore economy. The increased employment of immigrants, from as early as 1813, was largely due to the excess demand for labour than could be supplied by the citizen labour force, particularly in unskilled labour-intensive industries like construction and shipbuilding. As Singapore is now gearing towards a new phase of economic development to take her to the same standard of living as that in the United States. The labour market will continue to play a crucial role in economic restructuring. This academic exercise examines one important aspect of labour market transformation in Singapore. It analyses the market for foreign workers, focusing, in particular, on their impact on economic growth in terms of wage and productivity.