Even With a Low Birthrate and Full Employment, Singapore Has Doubts About ...

Global Economics

Photograph by Suhaimi Abdullah/Getty Images

Like Japan, South Korea, and other more-developed Asian economies, Singapore has a baby shortage. The birthrate is low, with the government reporting in September that the total fertility rate was 1.29 last year. That's well below the replacement level of 2.1. While the government has tried to encourage Singaporeans to have larger families, the country for now relies largely on immigration for its population growth.

But Singapore has another problem: In a country with a population of 5.4 million are 1.1 million foreign workers-and many Singaporeans aren't happy with having so many foreigners in their midst. In February, thousands of Singaporeans gathered in a downtown park to protest a government proposal to allow more foreigners to work in the city-state.

The opposition to immigration is putting pressure on the government, which has been tightening its policy on foreign workers for several years. In September, the government announced its latest move, a new policy to encourage white-collar employers to look for locals first. Now, a week after hundreds of foreign workers rioted in the worst unrest in decades, the government is sticking with a plan to make it more difficult for foreigners to work in the country, Acting Manpower Minister Tan Chuan-Jin told Bloomberg Television today. 'We are continuing to tighten our manpower policies,' he said in an interview, 'because we do want to move to a leaner approach.'

To an outsider, the worry about immigration might be puzzling, since very few people in Singapore can't find work. Indeed, the city-state has one of the world's tightest job markets. The unemployment rate for Singapore citizens was just 2.8 percent in the three months ended September, the government announced on Friday. The overall unemployment rate in the quarter was just 1.8 percent, and the city-state added 33,100 jobs, better than the government's earlier estimate of 28,100.

Also, more jobs are available. According to the Manpower Ministry, job vacancies increased 5.9 percent in the quarter, with the seasonally adjusted ratio of job vacancies to jobless people at its highest level since 2007, the year before the Lehman bankruptcy and the onset of the global financial crisis, the Straits Times reported on Saturday.

Still, many local residents are anxiously following the wild ups and downs of the Singapore economy since global financial crisis began. Growth plunged in the first quarter of 2009, contracting almost 9 percent, and then soared the following year, with growth just shy of 20 percent. More recently, though, were a stagnant quarter in 2012 and another this year.

The short-term picture is improving. The economy will grow between 3.5 percent and 4 percent this year, according to the Monetary Authority of Singapore. And growth will be 3.8 percent next year and 4.2 percent in 2015, said in a forecast published on Dec. 11. Tomorrow, Singapore will announce its foreign trade numbers for November, and expects a 7 percent increase thanks largely to a recovery in global tech demand that has already helped other electronics-heavy exporters such as Taiwan. 'Steadily improving prospects in the U.S. and stability in the euro zone are encouraging firms to invest,' Moody's economists write in a report published today. 'A cyclical recovery in pharmaceutical exports likely gave Singapore's exports a further boost in November.'

Of course, more economic growth may make the job market even tighter-and add to demand for more workers from outside the country.