Benjamin Mak and Thng Yi Ren - Economic Society of Singapore

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Myth 1: Foreigners Spur Inflation Foreigners are often accused of promoting demand-pull inflation, driving the prices of housing and other necessities up. Proponents of this view cite the fact that in the first half of 2010, foreign purchases accounted for about 25% of the total residential property sales transactions 3 . Insofar as the primary housing market Singaporeans are concerned with is Housing Development Board (HDB) housing however, such arguments are groundless. Under HDB policy, only Singaporean Citizens or Permanent Residents can buy Build-to-Order (BTO) Flats or resale flats. Since the bulk of foreign purchases are concentrated in private property, they cannot be held responsible for the recent public housing bubble. Similarly, attributing overall inflation primarily to foreigners is mistaken, due to the confluence of exogenous factors including seasonal variations and oil price shocks depicted below 4 . Chart 1 This diagram illustrates the contributors to inflation in Singapore in early 2011. 3 See Global Property Guide (2010). 4 Monetary Authority of Singapore (2011) 4
Myth 2: Foreigners steal Singaporean jobs Since foreigners took up 48% of the total number of new jobs created between 1998 and 2008 5 , many argue that Singaporeans are squeezed out of the job market at both the top and bottom tiers of employment by foreign talent and foreign workers, suggesting that Singaporeans are uncompetitive in terms of skills and wages respectively. Under close scrutiny though, this view is unfounded. In both middle- and top-tiered jobs, Finance Minister Tharman Shanmuguratnam reported that 80% of managerial positions are now held by Singaporeans in a Channelnewsasia political forum aired on 2 April 2011. Furthermore, when firms hire foreigners at the Integrated Resorts while suitable local talent is being sourced for and trained for example, Singaporeans will eventually benefit from enhanced employment opportunities. Immigration: the real concerns ‘Wealth is not his that has it, but his that enjoys it’ Benjamin Franklin Nevertheless, there are genuine challenges for Singapore‟s economy upon deeper examination of immigration-led population growth. First, most immigrants were employed in lower-skilled jobs 6 , precipitating wage depression for lower-income Singaporeans, with real median monthly incomes of the bottom 20% of employed residents by income being static from 1996 to 2009 7 . Though we cannot isolate the individual contributions of the multifarious factors contributing to wage depression, including „new technologies, the decline in manufacturing jobs, drop in unionization, globalization and recessions‟ 8 , this is worrying because most of our lower-income workers tend also to be part of the rapidly ageing segment of our society. It is also striking that the educational level of unemployed Singaporeans has risen steadily over time. Whereas managers, professionals and technicians formed just 7.6% of unemployed residents in 1976, this figure nearly quadrupled to 30.3% by 2003 9 . Inasmuch as population growth has raised Singapore‟s wealth, it remains doubtful as to whether most Singaporeans feel this. 5 See Hui, Weng Tat. “Rethinking Singapore's Social Safety Nets .” 2010. Civil Service College, Singapore. p.1 6 Ibid., p. 2. 7 See Hui (2004). 8 See Henderson (2011). 9 See Hui (2004), p. 82 5
Page 1 and 2: "A New Nation of Immigrants Challen
Page 3: Introduction ‘The most superficia
Page 7 and 8: Strategies for the long run Perhaps
Page 9 and 10: Chart 4 This illustrates the extent
Page 11 and 12: Final thoughts Immigration looks se
Page 13 and 14: —. Study to set up possible expor

Benjamin Mak and Thng Yi Ren - Economic Society of Singapore

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