Thursday, December 10, 2009

Falling productivity : Need to wean off Foreign Labor...

Productivity has fallen by 6 straight quarters from the last quarter of 2007. In the 1st quarter of 2009, it fell a whopping 14.7 percent.

"One is the slowdown in investment in innovation and productivity measures. When the economy grows very rapidly, companies have alot of opportunities to benefit from the growth and the expansion of the economy. So the focus on productivity may be lacking behind. So it is important to refocus attention of companies on productivity growth. There are many measures we can put in place to encourage enterprises to invest in innovation, to invest in research, to invest in benchmarking so that we can raise the overall productivity effort in our economy."- Manpower Minister Gan Kim Yong[Link]
Minister Gan blames it on the economic growth and worker's training. But our productivity has been falling during the economic slump while that of other developed countries like US has been rising[Link]. In manufacturing and hotels and restaurants in particular, productivity has been on the decline since 2006. This is about the same time foreign workers started entering Singapore in larger numbers[Link].

"One reason for the lower productivity may be the large influx of foreign workers in recent years. With more workers available, each worker doesn't have to work as hard."
-Singapore Economist[Link]

Businesses want foreign workers mainly because they are cheaper. You can hire 1.5-2 foreign workers instead of a Singaporean. It is easier for managers to get more workers to do the same job rather than train and motivate fewer workers to work more efficiently. Business will always clamor for cheaper labor rather than invest in training, automation and innovation. There will always be sources of cheap labor because the cost of living is so much lower in developing countries. This a vicious cycle as import more foreign workers, these businesses depend on cheap labor will profit, grow and want more foreign workers. These business compete for limited resources like office and industrial space with business with higher levels of automation that hire highly skilled (hence highly paid) labor. The more foreign workers we import to generate growth in these industries, the more foreign workers we will need to bring in the future to maintain our GDP. In 2000, there were about 600,000 foreign workers in Singapore, constituting 27% of the total work force. Today it is 36% of the workforce or 1 million. But the demand for foreign workers keeps increasing [See report below]. The PAP govt took the easy way to expand the economy aiming for high GDP growth by expanding the workforce. In the past they allowed only "foreign talents" with selected skill sets to work here. These days it is anyone from the coffeeshop help to the IT support guy. Falling productivity means a large segment of Singaporeans will their income falling - and an unlucky few will form the ultra-underclass in Singapore....and this race to the bottom has not ended yet. Like the PAP 2-child policy, the PAP govt will keep going even as the problems become apparent to everyone else. By the time they stop, the damage is done and permanent - but nothing ever happens to the PAP for such bad policies, given our political system, the blame, pain and burden can always be passed on to ordinary Singaporeans...
SingaporeHome > Breaking News > Singapore > Story Dec 9, 2009

Foreign workers in demand
Almost half in SCCCI poll say business growth hit by quota on such workers
By Cassandra Chew Contractors and manufacturers, companies that rely on foreign workers, want the Government to allow them to hire more of them. -- ST PHOTO: ASHLEIGH SIM

COMPANIES that rely on foreign workers want the Government to let them hire more of them, according to a survey. The call is particularly intense from contractors and manufacturers, who feel the quota should be adjusted for specific sectors. Foreign workers form up to 70 per cent of the workforce in these two sectors. Overall, almost half of the businesses surveyed are unhappy with the foreign worker quota policy. They want it raised in order for them to meet orders, which have been increasing in the past few months as Singapore's economy claws its way out of the red.But such a move could hurt Singapore's competitive edge, said economics professor Davin Chor from Singapore Management University. 'Long-run growth depends on the capacity of our economy to consistently improve on our productivity and the way we tap into cutting-edge technologies,' he said.


Anonymous said...

I thought the Minister should not be baffled by the drop in productivity. Our economy has shifted from a manufacturing base which is highly scalable to a more service base which is not scalable at all. I will expect productivity to continue dropping because of that.

Anonymous said...

i see a parallel fall in productivity of our cabinet.

ministerial salary +++
number of ministerial posts +++++
number of policies benefitting singaporeans -----

time to kick out some ass

Anonymous said...

CHEAPER to hire foreigners, BETTER to retrench singaporeans who are over 40s, FASTER to import cheap foreigners else the quota will change..

Anonymous said...

An event horizon seemed to be looming ahead of us. The last chance of hammering some sense into the incumbent will come next GE...I'm planning on actually MOVING out of my walkover estate just so I can cast my vote!

Lim Leng Hiong said...

This is a worrying trend; as a small country we must have a efficient and innovative work force and cannot continue to have declining productivity.

Otherwise we end up competing with bigger countries by brute force labour strength - a game which we will definitely lose.

Import a few million cheap foreign workers? They already have a few billion! And no social integration issues!

In addition, I feel that the falling productivity rates is partly due to workers in Singapore becoming dejected and losing confidence in the system.

If efficiency and innovation is not rewarded because company bosses can just throw more cheap workers at a problem, and if workers who voice their dissatisfaction can be kicked out anytime, eventually they will learn to give up and do the minimum work that will keep them out of trouble.

"You can higher 1.5-2 foreign workers instead of a Singaporean."

Lucky, I think that's a typo (hire).

Anonymous said...

Hey anon 09:11, can you tell me of any other economy that suffers a similar drop?

The US as it changed from industrial to service? Hong kong? do you feel its productivity is much lower than 30 years ago?

cy said...

First come the innovators,then the imitators, finally the fools who copied wholescale w/o thinking.

FT was initially a good idea,no rational person will object, but then it went awry and extend to all occupations and salary levels.

buffett says he is more worried abt a good idea than a bad idea, because a bad idea will be killed fast but a good idea turns bad slowly and thus ppl won't notice until it is too late.

Anonymous said...

hopefully, a day will come(maybe it already when these foreigners will contribute part of their income(either directly or indirectly) to welfare programs for our senior citizens who have built a factory mill of human sweat which provided the opportunities for them to earn decent wages and raise a family back in their country of origin.

a nation where the people can kick back,drink coffee and knit sweaters as our foreign servants do most of the work so we can be happily "unproductive", especially from menial work, in the ultimate swiss standard of living.


Anonymous said...

Please,this is the guy who could not even get the foriegn student figures right when in MOE. I would take what ever he says with a bucket of salt. We need to pay "out of this world salary" to have division one team of Ministers and yet our own highly productive workers are blamed for demanding too much pay and are replaced by foriegners. I am sure we get replace Mr Gan with Hilary and stillhave some savings.

Anonymous said...

More foreigners please.LOL.

Anonymous said...

"... but nothing ever happens to the PAP for such bad policies, given our political system..."

That's why PAP, with MM Lee as Mentor, knows how to maintain the political system very well. Get this right and everything OK already.


Anonymous said...

As far as the leaders are concerned, everything is going well.

Now they can get justify more foreign workers because the companies demand it.

More foreign workers mean
- government gets more levies
- property values go up (guess who are the ones owning multiple properties?)
- more people to buy stuff (guess who are the ones owning businesses that benefit from bigger population)

Anonymous said...

thanks for telling us that Sg is not a good place to retire, have family, have children or build a home.

Anonymous said...

Foreign Labour keep the singaporeans alive. period! it has been discussed to the ground! it is not the cost of labour that drives singaporean employer but the commitment levels.

Singaporeans employee have a entitilement mindset and put their jobs in the last place. The pressure they are facing are well deserved.

Very soon all the ultra underclass will only have one kidney, cause the poor bastards will sell it to rich westerners for $10,000 a kidney.

That would be well deserved!

Anonymous said...

Foreign workers/Labour is not the problem.
It is a fact that we need maids(domestic help), construction workers, etc.

The problem is the high cost of living (flats, medical, etc).

Why bother about abstract concepts like productivity?
Its the availability of jobs and income (minus expense) that matters.

Anonymous said...

So many Ministers and helpers in the PM's Dept to lighten the PM's job yet plus increased costs so that the PM is left concentrating on how to fix the opposition, isn't that a very good example of falling productivity ?

yamizi said...

Don't they have training for ministers to be better minister?

Anonymous said...

All thanks to the Free Trade Agreement signed back in 2006. What a coincidence that FT started flooding in after that.

lim said...

@anon 10/12/09 16:44

>> Foreign Labour keep the singaporeans alive. period!

How naive.. Well, with cheap foreign labours, such as china bus drivers, we are still seeing increases in transport fares, so tell me, what has gone up that justify fare increases?

Diesel price? So savings in manpower not sufficient to offset diesel price increases?

Super dupe system to track bus arrival times? I prefer more buses than knowing when next bus will arrive, since I am not going to go anywhere once I am at the bus stop..

>> it is not the cost of labour that drives singaporean employer but the commitment levels.

So tell me, how committed are the foreigner sales staff.. Remember the complaint by the austrialian tourist, Lilian Reutens...

Anonymous said...

Haha...our government is advising Japan to follow its way. We are a good example and our government is so talented that our country is hailed a success. The rest of the world is just plain stupid. How come we are so lucky that the best government officials are born in Singapore? Other countries no horse run for their $$$ worth. The lsw minister also said the same things.....they really sacrifice a lot for us...I wonder how much the US and other first world countries are offering them so that they will not leave us....I am so grateful : )

Anonymous said...

Anon 11.54

I am a layman when it comes to the economy so cannot really comment about US and HK trends. However I do think that the National productivity figure is proportional to the GDP and inversely proprotional to the number of workers. When we move to a more service oriented industry, probably the same number of people as compared to the manufacturing industry, cannot produce the same ouput in monetary sense. Hence productivity is weighted down by the service sector, however if Singapore continues to have a strong industrial output growth then the stronger productivity figures in this sector may offset the lower figures in the service sectors. Sadly that is not so.

Abstract from an article "Not only has U.S. productivity been poor by international standards but it is highly heterogeneous at the disaggregated industry level. Manufacturing has continued to do well while nonmanufacturing has done poorly, especially the services. Within services, apparel retailing has done well while food retailing has done badly; railroad productivity has accelerated while airline productivity has decelerated."

Also when the productivity figure is dropping, current wages cannot be sustained.

From Anon 9:11

Anonymous said...

"Our economy has shifted from a manufacturing base which is highly scalable to a more service base which is not scalable at all. I will expect productivity to continue dropping because of that."

You are right. There is always a minimum local cost point, up to a level you can no longer or very difficult to do value addition work once other people (from other countries?) start to catch up or close the gap.

Ultimately & once your competing countries realize home advantage & capitalize on that, service will always follow production.

Anonymous said...

"Foreign Labour keep the singaporeans alive. period!"

And why don't they stay in their own countries to keep their own countrymen & themselves alive there.

Towkay said...

This simply means Singaporean workers, and current foreign workers are not hungry enough.

Time to get hungry Africans in.

Anonymous said...

These foreigners are economic refugees lah.

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This basically implies Singaporean specialists, and current outside laborers are not eager enough.Time to get ravenous Africans in.

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