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The Canadian Press - ONLINE EDITION
Singapore PM Lee warns fewer foreign workers will spark inflation, slow economic growth
By: Alex Kennedy, The Associated Press
SINGAPORE - Singapore faces a higher inflation rate and slower economic growth as the government allows in fewer foreign workers, Prime Minister Lee Hsien Loong warned Monday.
A tight labour market has hindered the expansion plans for many companies and some businesses may leave Singapore, Lee said. Meanwhile, growing demand for workers should boost wages, which will increase business costs, undermine competitiveness and quicken inflation, Lee said.
"We are running up against land and manpower limits," Lee said in his annual May Day message.
The government has struggled to stem the inflow of foreign workers in the last couple of years amid a voter backlash against stagnant wages, crowded transportation infrastructure and higher housing costs. After their numbers surged during the last decade, foreign workers now account for about a third of Singapore's workforce.
The government said in February it would lower the percentage of foreign workers that manufacturing and service companies can employ and continue a four-year scheme to increase immigrant worker levies. Singapore doesn't have a minimum wage, and opposition parties argue foreign workers have helped keep salaries low, especially at the expense of poorer Singaporeans.
Discontent over the cost of living, growing income inequality and immigration policy helped cut the total vote won by the ruling People's Action Party in last year's parliamentary elections to its lowest since independence in 1965.
"My grocery and petrol bills have gone up, and we think twice before we eat out," 60-year-old homemaker Pauline Koe said. "I don't know if the government understands that this is a big problem. It makes me worry for my sons and their children."
The inflation rate has remained stubbornly high, jumping to 5.2 per cent in March from 4.6 per cent in February, the highest among major Asian economies besides India and Vietnam. Earlier this month, the central bank sought to slow inflation by allowing the Singapore dollar to strengthen, which would lower the cost of imports.
"There's a significant risk that the persistent strength of inflation will become entrenched in price and wage expectations," said Robert Prior-Wandesforde, an economist with Credit Suisse in Singapore. "This is a dangerous situation for any country, not least for one that is so internationally exposed."
Singapore's economy relies on manufacturing, finance and tourism to fuel one of the highest living standards in the world. The government expects the economy to grow as little as 1 per cent this year from 4.9 per cent last year.
Lee said Singaporean companies and workers must improve skills to increase productivity and help expand the economy.
"Raising productivity is more important than ever in our mature economy, because it is the only way to upgrade ourselves and our lives," Lee said.
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Singapore PM Lee warns fewer foreign workers will spark inflation, slow economic growth
By: Alex Kennedy, The Associated Press
SINGAPORE - Singapore faces a higher inflation rate and slower economic growth as the government allows in fewer foreign workers, Prime Minister Lee Hsien Loong warned Monday.
A tight labour market has hindered the expansion plans for many companies and some businesses may leave Singapore, Lee said. Meanwhile, growing demand for workers should boost wages, which will increase business costs, undermine competitiveness and quicken inflation, Lee said.
"We are running up against land and manpower limits," Lee said in his annual May Day message.
The government has struggled to stem the inflow of foreign workers in the last couple of years amid a voter backlash against stagnant wages, crowded transportation infrastructure and higher housing costs. After their numbers surged during the last decade, foreign workers now account for about a third of Singapore's workforce.
The government said in February it would lower the percentage of foreign workers that manufacturing and service companies can employ and continue a four-year scheme to increase immigrant worker levies. Singapore doesn't have a minimum wage, and opposition parties argue foreign workers have helped keep salaries low, especially at the expense of poorer Singaporeans.
Discontent over the cost of living, growing income inequality and immigration policy helped cut the total vote won by the ruling People's Action Party in last year's parliamentary elections to its lowest since independence in 1965.
"My grocery and petrol bills have gone up, and we think twice before we eat out," 60-year-old homemaker Pauline Koe said. "I don't know if the government understands that this is a big problem. It makes me worry for my sons and their children."
The inflation rate has remained stubbornly high, jumping to 5.2 per cent in March from 4.6 per cent in February, the highest among major Asian economies besides India and Vietnam. Earlier this month, the central bank sought to slow inflation by allowing the Singapore dollar to strengthen, which would lower the cost of imports.
"There's a significant risk that the persistent strength of inflation will become entrenched in price and wage expectations," said Robert Prior-Wandesforde, an economist with Credit Suisse in Singapore. "This is a dangerous situation for any country, not least for one that is so internationally exposed."
Singapore's economy relies on manufacturing, finance and tourism to fuel one of the highest living standards in the world. The government expects the economy to grow as little as 1 per cent this year from 4.9 per cent last year.
Lee said Singaporean companies and workers must improve skills to increase productivity and help expand the economy.
"Raising productivity is more important than ever in our mature economy, because it is the only way to upgrade ourselves and our lives," Lee said.
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