WORK PERMIT HOLDERS AND LABOUR SHORTAGE

Dr S. Vasoo asked the Minister for Labour (a) if he will give the number of work permit holders as at the latest convenient date; and (b) what are his Ministry's plans to meet the labour shortage in some employment sectors.

The Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, there are over 150,000 work permit holders in Singapore today.

The latest indicators show that there is some easing of the labour market. The number of job vacancies declined in the third quarter of 1988. Employment growth was less rapid in November last year. Some production workers were retrenched recently and released to the labour market. Over the next few months, there will be new entrants to the labour force from our schools and vocational institutions. Employers should therefore find it easier to recruit the workers that they need.

As a small nation we are faced with various resource constraints as we strive to upgrade our economy and create better paid jobs for Singaporeans. Our labour supply is an important constraint. The local workforce is growing at about 1 to 2% per annum. With yearly productivity growth of 3 to 4%, our sustainable long-term growth rate is 4 to 6% per annum. If we try to grow faster than that we are bound to encounter labour and other constraints.

Beyond this sustainable growth rate of 4 to 6%, each 1% additional growth requires an additional 12,000 workers. Thus, if we try to push the growth rate up from 6% to 10% per annum, we will need to import an additional 50,000 foreign workers each year or 250,000 in five years, and this is on top of the more than 150,000 who are already here. The situation will be clearly untenable, with enormous social and economic costs.

Instead, we must upgrade our economy and make better use of our population. The Government will continue to allow a carefully regulated inflow of foreign workers to loosen our labour market and to act as an economic buffer. However, the whole economy must accept the limits of our indigenous labour force, plus a contingent, not an army, of work permit holders as buffer. It is not possible to let all employers get as many workers as they wish without serious social implications. Instead, they must increase productivity through automation, better work methods and restructuring. They should also employ more older Singaporeans and housewives.

A liberal inflow of foreign workers will depress wages, attract labour-intensive, low value-added industries and raise demand for unskilled workers even further. We must therefore maintain a careful balance between higher economic growth and increasing reliance on foreign workers.