Benjamin Mak and Thng Yi Ren - Economic Society of Singapore

Strategies for the long run
Perhaps the fact that Mr Tharman Shanmugaratnam now coordinates both economic and social
policies highlights the dualist approach needed to exploit the opportunities and arrest the challenges
of immigration.
Having shown how Singapore has largely succeeded in exploiting the opportunities created by
immigration-led population growth, it is the challenges posed by immigrants that form the
predominant concern of our suggestions. We clarify that it is not the eventual elimination of
immigration that is desired, but reduced dependency on immigrants to facilitate the development of
autonomous capacity within the Singapore economy.
Blue Collar: Costlier but better
Though populist measures like minimum wages may temporarily alleviate the plight of jobless
Singaporeans, they sidestep the underlying problem of raising labour mobility and productivity
here. Furthermore, empirical studies of Western European welfare systems show that such measures
„diminish the incentives to look for jobs‟. 14
Consequently, the way ahead for less-educated Singaporeans is to enhance their labour mobility and
productivity through schemes like the Skills Package and Upgrading for Resilience (SPUR)
programme. Strong governmental support is required since „employers are not keen to provide
training‟ 15 to workers which requires a huge investment of time and resources and may not be
recouped if the worker moves to another firm. Such a productivity drive is necessary despite
Singapore‟s success having been fuelled by total factor accumulation 16 , because our ability to
generate growth from this has diminished over the long run. Indeed, some has gone so far as to argue
that immigration has „put a lid on productivity gains, as manufacturers rely on cheap imported labour
instead of making their businesses more efficient‟, as seen in Chart 2. 17
14 See Doudejins et al (1998).
15 See Chew & Chew (1995).
16 See Krugman (1994).
17 See Barta & Wright (2010).
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