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SINGAPORE : Singapore's Parliament kicked off its annual Budget debate on Tuesday.
Key themes include enhancing productivity and steps to encourage more companies to venture abroad.
But one subject got much attention - the increase in foreign worker levy as a means to control the number of foreign workers here.
There are some 856,000 foreign workers in Singapore, and their levies are set to go up over the next three years.
Jessica Tan, GPC Chair, Finance and Trade & Industry, and MP for East Coast GRC, said: "From a timing standpoint, although the rise in levy is graduated over three years, there is concern expressed by some business leaders that this may impede the ability of companies to leverage and capture the opportunities of the recovery as their capacity will be impacted.
"Productivity improvements of local talent will not be immediate and it will take companies some time to innovate and achieve greater productivity.
"This is further exacerbated by the fact that it is difficult, in the short term at least, to change the mindset of Singaporeans to take up certain jobs in industries like construction which are seen as strenuous and dirty, and some services jobs that require long hours of standing."
Another concern is that the increase could damage the growth of some industries.
Teo Siong Seng, Nominated MP, said: "If we do not have enough manpower and other resources to take added new orders in the world markets, we may lose all our customers and business opportunities to our competitors very quickly."
Inderjit Singh, MP, Ang Mo Kio GRC, said: "I recognise that there are some areas where we cannot do without foreign workers, but if we need to bring them in, then why not focus on bringing them in the key sectors where they are most needed? That way, we can finely balance between supplementing the talent in our workforce, yet calibrating the flow of foreigners and leaving some jobs aside only for Singaporeans.
"By leveraging on the existing Jobs Credit Scheme, we can provide incentives to employers to hire more Singaporeans. By offering companies some monetary incentives, you also help them allay some of the cost increase incurred by the levy increase, provided they hire Singaporeans."
Opposition MP Low Thia Khiang felt one way to achieve productivity growth is to remove the levy completely and rely on the dependency ratio instead.
The MP for Hougang said the government can decide on the ratio in consultation with industry and set realistic targets on productivity growth in different industrial sectors by gradually reducing the ratio.
Mr Low said: "The savings in foreign worker levy can then be used by companies to provide employment for local workers when the dependency ratio is reduced, upgrade the production process or send workers for training to upgrade their skills.
"My view is the foreign worker levy...becomes an opium; opium for the government because it collects money from the levy, opium for businesses because it is a soft option out for them, because instead of paying local workers with a higher salary, raise productivity, they can bend on paying levy and continue to have low productivity and lower labour costs to compete in the market.
"With the government's determination to expand the economy using productivity growth so that Singaporeans workers can finally achieve real wage growth and income levels comparable to developed economies, it should take a bold step to remove the foreign worker levy completely.
"The government should just use the dependency ratio to control the growth of foreign workers in Singapore. The dependency ratio can be refined according to industry sectors and the size of the company to allow foreign workers to supplement local manpower when necessary."
Unionist MPs described Mr Low's suggestion as a disastrous one and said it should be rejected.
Josephine Teo, assistant secretary-general, NTUC and MP for Bishan-Toa Payoh GRC, said: "I am puzzled by the member's description of the foreign worker levy and comparing it with opium. Because earlier he had said that there is no denying that our economy needs foreign workers. To try and introduce an alternative system to a pricing mechanism is a very dangerous suggestion to make. It opens up a whole pandora box of the difficulties we have to overcome.
"I am quite shocked by Mr Low's suggestion to remove the foreign worker levy altogether. How does Mr Low propose that the government allocate the foreign workers quota efficiently to businesses without a levy mechanism? Would it be right for civil servants to pretend to know all about market demand and supply? Removing a levy is turning a blind eye to the social disparities they create."
Ms Teo said that without the levy, foreign workers will be cheaper and more attractive to businesses, and some will find loopholes to get round the quotas, to get cheaper workers, affecting jobs for Singaporeans.
She said: "I can speak on behalf of the union leaders that we totally and firmly reject Mr Low's disastrous suggestion that we remove the foreign worker levy as it will harm our workers' interest."
Singapore's long-term objective is to increase productivity rates by between two and three per cent annually.
Besides depending less on foreign workers, the government will also be giving a bigger push to continuing education and training, so that Singapore's workers are well equipped to take on higher skilled jobs in the ever-changing economic landscape - something which will be examined in detail by the newly-formed National Productivity and Continuing Education Council. - CNA/ms
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