Introduction:
In the globalize world today, the immigration has
become a trend while the immigrate workers has played a crucial role in
maintaining the economic growth and development as well as simulating the
international trade and integration. With her unique geographical condition and
dramatichistory, Singapore has always known as a nation of immigration. Since
the establishment of British east India Company in 1819, Singapore has been a
destination of foreign workers. Numerous of labor workers from China, India and
Malaysia has flowed in Singapore during the colonial era which bring up
Singapore population and development. The immigration flood in Singapore was
restricted during 1950s to 60s when Singapore aimed to gain her self-governance
and grabbed the independent in 1965. However, not long later when Singapore
started to industrialize in 1980s, the immigration flood of foreign workers to
Singapore returned and dramatically increase which continues its trend until
today (Yeoh and Lin,
2012).
In
2010, permanent and non-permanent residents in Singapore consisted of 36.4% or of
total population (3,230,719 people in 2010),While the
foreign labor forces were 34.7 % (1,088,600 people) of total labor force
which were3,135,900 in 2010 (Singapore
Department of Statistics, 2011). With this large proportion of immigration, it
draws the attention on what could it effects on theeconomics of Singapore. This
paper is going to explore how immigration effect on Singapore economic and
development?
The
immigration to Singapore could be including citizens, permanent residents and
non-resident. Citizens (except naturalize citizens) refer to the foreigner who
got citizenship from Singapore government. Permanent residents are the
immigrants who receive the right for living permanently in Singapore. Then,
non-residents are who would just live temporary in Singapore such as
studentsandsome workers (Yeoh and Lin, 2012). This paper includedonly the permanent
resident and non-resident workers (including skilled and unskilled workers) into
the discussion, and aim to find out the effect of this immigration on the
economic growth, inflation, wage and employment situation in Singapore.
Singapore’s
limited citizens and low fertility bring it hard to full fill the need for its
speedy growing industrial, while the immigrated worker could fill in those
needs. Singapore needs those foreign workers to her development. Therefore, the
immigration could help maintain the economic growth and development in
Singapore.
Related Studies:
With the increasing trend in immigration and the
increasing immigrated labor mostly in developed countries, there are many
studies on the economics effect of host countries. Some claim that the
immigrated skilled workers could bring about improvement in education and
economic as filling the gap of domestic human capital (Stark and Wang, 2002) while others argue that the
immigration lead to inflation, wage gap and unemployment (Rowthorn, 2004).
In Bojars study (1995),
immigration surplus was claim as pushing up the income of host countries
population since the low labor force cost of migrant worker could lead to more
capital investment and migrant skilled worker could contribute to the increase
of the productivity as well. He also stated that the amount of immigration
surplus is depend on the difference skills or types of job of
migrants worker (unskilled or skill workers). Then, the immigration surplus
could be maximize only when the migrants flow go into completely difference
work force of local workers so that it could form a perfect complement and gain
the productivity of the host countries. However, Bojars revealed a potential
issue hidden under the immigration surplus which is the unequal distribution of
income of host countries population. While the immigration surplus go to the
employers (the employers enjoy the low cost migrant labor), the native workers
was suppress from the lower wage post by the employers.
Other study stresses the
negative impact of low skilled labor on the technology innovation in the
productivity. In his study, Lewis (2005) found out that the technology adopted
in the firm in United State has been seriously impact by the low cost migrant
labor. The firms lost courage to adopt new technology into the production
process which cost more than the labor base and even adjust the technology according
to the ability of low skilled workers. Then in the Singapore case study, Thangavelu (2010) claim that the migrants labor respond
negatively to capital investment rate.
The firm lost incentive to invest more capital and technology because the labor
would be more productive when there is less capital and technology insert.Moreover,
Thangavelu (2012) found out that immigrated worker especially skill workers had
a positive effect on Singapore economy in innovative sectors (refer to the
sector that respond in conducting research and development new products).
Robert Rowthorn, in his report (2004), claims that the immigration of
unskilled workers have negatively impact onnative workers. He raised the case
of the South British workers who find hard to get jobs while demanding high
wage from the employers, since the employers reject and show favor to the
migrant workers who demand lower wage. In this case, he accused the employers
on forming a fake shortage of human capital while truly greed for cheaper
labor.This imply thatit could lead to increase the unemployment of native
worker when there are large amount of foreign workers inflow.
The problems posted by immigration:
The
large inflow of immigrants might lead to inflation which results as the rising
of cost of living. The sky-high price of housing is always the major concern of
Singaporeans. When there is increasing demand of housing posted by the
immigration, along with the limited land supply and housing units, the price of
house significantly increase. Singapore real estate price has grown 50.5% in 5
years from 2006 to 2011, and the average of primary property is $25,600 per square meter which is the highest
in South east Asia (Naidu-Ghelani, 2012).
This cause Singaporean find difficult to afford the house especially young
people and newlywed which require a home for their independent life. Beside the
house, other living cost such as medical care, transportation and education
also increase in the similar logic.
There
is also the problem of widening the wage gap. Unskilled Singaporeans find hard
to compete with the unskilled migrant workers who demand lower wage. The low
wage of unskilled migrant workers relatively effect to wage of unskilled
Singaporeans. The wage of unskilled worker become lower and lower, so that it
widen the gap between high salary skilled worker bigger and bigger. This kind
of inequality wealth distribution could lead to many problems in the society
such as class division, jealousy and discrimination (David Yin, 2012).
Economic
benefited brought by Immigration
The
Total Fertility Rate among Singapore residents was only 1.2% in 2012
(Population in brief, 2012). Seeing the example of Japan who restrict on
immigration, it now become an aging society. With low Total Fertility Rate,
Singapore might turn into small population and aging society. According to the
report on Cannel News Asia, “Without immigration
that often exceeds the natural yearly growth, Singapore’s economic growth rate would
be as sluggish as Japan’s” said by Mr.
Lee Kuan Yew (Ting, 2011).Therefore, the government need to
liberal immigration policy to maintain a young and dynamic society. Moreover, Singapore economic growths today
depend on the service sector which requires large amount of human capital in
the sake of maintaining both the productivity and sustainability. Singapore’s GDPgrowth outlook for 2013 would
contribute byManufacturing around 20% of and Final service about 12 percent (Lim,
2013). Singapore
also face shortage of human capital to supply the uprising industrial such as
medical tourism, so the pulling of talent from abroad is needed for the complement
of shortage. With the increase demand of
labor force, foreign employment run up by 84,800 in 2011 from 59,700 in 2010 (Ministry
of manpower, 2011).
The
immigration could increases the human capital stock in Singapore and assists
her development plane. Because Singapore is scare in natural resource so in
order to keep the growth up, she needs to enhance her high valued added manufacture
and service. Singapore aims to become a Knowledge Base Economy (KBE) which her
economic growth would depend on largely“idea” instead labor force. However, those
sector demand large number and high skilled human capital. Nevertheless,
Singapore faces the problem of shortage in talent which could bring up the
plane (Chia, 2000). Therefore, foreign talent immigrants along with the government
liberal immigration policy would fill up the need and set off the plane. Moreover,
the skilled workers are not only increase the human capital directly but also
indirectly by transfertheirknowledge to Singaporeans. Skilled migrant workers
could also bring the distinguish knowledge which could link Singapore to globe
and achieve a sustainable development.In tertiary institutions such as Nayang
Technology University (NTU) and National University of Singapore (NUS) ,there
has beenmany talented foreign professors and school presidents have believed in
serving as a linkage to internationalinstitutions and bring new educational
system to Singapore (Leow, 2010 ).
The immigrant worker
also could help in reducing inflationary pressure on Singaporean. They could simulate
some costs of living of Singaporean. Some said that the immigrant workers steal
the jobs of native Singaporean. However, the ministry of manpower claim in
their paper that the immigrant labor force flow into the sector that Singaporean
unwilling to do. For example, the constructing sector Importing cheaper foreign
labor could allow companies gain more by cheaper of input cost in the
production. The construction companies need to pay higher wage to Singaporean
if there are no immigrant labor forces. Then, when the company cost more in
inputs, it would result in higher price in outputs which mean that the price of
house would be increase. According to DBS group research, restricting the immigrant
worker inflow could lead to higher labor cost and higher inflation (2012). Therefore,
immigrated worker play a critical role in maintaining the price of property in
Singapore.
Some
said that the immigration lead to the unemployment of the native workers.
However, the immigrant workers mostly only take the jobs which unsavory by
Singaporeans. Then, according to the report of ministry of manpower, the unemployment rate is about 2.0% overall, which the residents is about
2.9% and Singapore citizens is about 3.0% in
2011. These set of rate was claimed to be the lowest recorded in 14
years (Ministry of manpower, 2011). Obviously, while the immigrants’inflow
keeps increase, the unemployment hasn’tparalleled increase as claim above.
Therefore, the accused on the immigrant workers as the cause of unemployment of
native workers seem to be wrong.
Conclusion:
There are many studies
on the effect of immigration on the economy of host countries. The study of
Bojar (1995) claimed that the immigration bring positive impact on economic growth
while others claimed that the unskilled worker post negative effect on native
workers (Rowthorn, 2004)
and capital investment incentive (Lewis,
2005; Thangavelu, 2010; 2012). In the case of Singapore, there
are some problem lead by immigration such as inflation, and widen wage gap.
However, the immigration is believed to bring more benefits than cost to Singapore.
The immigration could maintaina young and dynamic Singapore society
give ease to her further development. Moreover,the immigration could lead to
increase human capital and assist Singapore development plane and goal of
becoming a KBE. Also, the skilled immigrant workers could produce more human
capital throughtransferringtheirknowledge to Singaporeans. Furthermore, the
unskilled immigrant workers could reduce inflationary pressure on Singaporean
by preventing the higher cost of input in the production.
Immigrant workers
remain an important source for economic growth and development, and maintain
Singapore competiveness in global market. Even some problem might occur along
the way, various solutions and adaptation could be made. However, the
immigration to Singapore could never be eliminated. Since pre-independence of
her land until her day of a developed independent state, Singapore was and
always a nation of immigration.
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