Singapore increases aid to poor, boosts wages of older workers

Singapore said it will increase aid to its poorest citizens and boost wages of older workers as the government seeks to defray rising living costs and reduce dependency on foreign labour, reported Bloomberg.

The government will cut the proportion of overseas workers that companies can hire and may consider increasing levies of foreign workers further, Finance Minister Tharman Shanmugaratnam said in his budget speech in Parliament today. Employers will be partly reimbursed for hiring older workers, and low-income and elderly households will receive cash and rebates yearly to limit the impact of the goods and services tax.

Prime Minister Lee Hsien Loong has signaled a shift toward addressing public discontent over rising prices and an influx of foreigners, after his ruling party suffered its smallest electoral win since independence in 1965. The government has previously taken steps to increase the cost of hiring overseas workers at hotels, factories and construction sites.

“We are making important moves to build a fair and inclusive society,” Shanmugaratnam said today. “We have to reduce our dependence on foreign labor, and do much more to build an economy driven by higher skills, innovation and productivity, as the basis for achieving higher incomes for Singaporeans.”

Competition for Jobs
Singapore, ranked by the World Bank as the easiest place to do business, has cut taxes in recent years to spur investment, prompting companies to hire hundreds of thousands of foreigners.

The immigration has contributed to crowded public transportation and more competition for jobs, public housing and places in schools, fueling voter anger and charges by opposition parties that the large numbers of foreign labourers have depressed local wages.

Foreigners and permanent residents make up more than a third of the nation’s 5.2 million-strong population. The city has added about 1 million people since the beginning of 2005, official data shows.

The government will reduce the maximum proportion of foreign workers that companies can hire in the manufacturing and services industries, Shanmugaratnam said. From July 1, companies won’t be allowed to bring in new foreign workers beyond the new ceiling, he said.

“We have no alternative but to slow down the growth of our foreign workforce,” the finance minister said, adding that the increasing dependence is unsustainable.

“It will test the limits of our space and infrastructure, despite our efforts to build more housing and expand our public transport system,” he said. “We must therefore take further measures to reduce the inflow of foreign workers, and help our businesses adapt to the permanent reality of a tight labor market.”

Companies will have to pay more into the pension funds of employees aged 50 years to 65 years, who are currently receiving lower rates of employer contribution than younger workers, the finance minister said. Singapore’s state-run pension fund system can be used for mortgage payments, hospital bills, education fees and investments in assets such as stocks, funds and commodities.–The Edge