Wednesday, April 6, 2011

Why the focus on foreign workers and productivity?

I was contemplating whether to add this portion into my previous post about the debate here but I decided against it as it will make the post too long.

I believe some people will wonder why the government is always talking about foreign workers and productivity, and why it is a necessity. The reason is simple. It's all because of the economy.

Why must the economy grow? Simply put, to keep pace with inflation. All our salary increases, bonuses, etc are all signs of the economy growth, and it's usually proportionate. In boom times, you get big salary increases, big bonuses, etc. In recession times, you may not even hold on to a job. Some people call it the virtuous cycle, and some say the vicious cycle depending on your perspective of life, but that's the way life goes on in this current century.

To grow the economy, the industries must be able to grow. Based on my personal opinion, there are only 2 ways in which an industry can grow:
  • Hire more people to produce more goods and services
  • Train the staff to produce more goods and services with improvement in processes / technology.

Take a look at the unemployment statistics below that was released by the government.

Unemployment Rate (Annual)
Overall (%)
Resident (%)

* unemployed person refer to persons aged 15 years and over who did not work but were available for work and were actively looking for a job during the reference period. They include persons who were not working but were taking steps to start their own business or taking up a new job after the reference period.

Our unemployment rate has been quite constant except for the blip in 2009 due to the great recession. So what happens when the country is close to full employment? The result will be that the country will try to import more workers, and focus on productivity and having babies, which is exactly what the current government is doing. The focus is on increasing output to boost the economy.

However, the unfortunate side effect of "importing" more workers in is the downward pressure on the locals salaries. This is inevitable because foreign workers will by nature be more productive. If you're in a foreign land with no family, most will work their butts off, earn as much as possible, and return home and enjoy life. How can locals compete with that, with our strong commitments to our family and friends?

So is this a chicken and egg problem? May not. Maybe the focus should be on the type of jobs created, not the type of workers needed.

On a side note, 2009 was where the Jobs Credit was introduced. Looks like more locals were being retrenched at that time than the foreign workers. Interesting statistics.

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