Labor Shortage Imperils Singapore’s Economy

A 36-year-old housewife waiting for her three youngsters to return from school glanced at the deluge of newspaper advertisements begging for job applicants.

Enticements such as free retraining, premium salaries and opportunities with prestigious international corporations failed to spark even a hint of enthusiasm.

“I want to work only on weekends and during school holidays,” said Tan Lee Eng, “when the children don’t need me at home.”

Such inflexible job candidates are no longer ignored by desperate employers grappling with a labor shortage threatening to choke the country’s surging economy.

New companies from the United States, Europe and Japan are looking elsewhere for manpower sources while government officials are pleading with housewives and retirees to at least take part-time jobs.

The recovery from Singapore’s worst recession since independence is creating a tight labor situation that could overheat and undermine the recovery itself, economists warn, with American manufacturers among those who would suffer the most.

The 8% unemployment rate of 1985 has been replaced by an acute shortfall in the most critical industries. With Singaporeans able to pick and choose, job-jumping is becoming epidemic, particularly in the electronics industry.

Even more worrisome are the predictions of population planners that the republic may never generate enough workers to fill the gap between the indigenous supply and the actual numbers needed to keep manufacturing moving.

Trade and Industry Minister Lee Hsien Loong fears “calamitous consequences” if birth rates continue to fall, with Singapore’s current population of 2.6 million starting to shrink around the year 2010.

“If we don’t reverse the trend, Singapore will be nothing but old folks clubs,” he said.

To address the immediate labor problem and the population slump, Lee and other officials are encouraging women to juggle a three-child family with a job and are urging employers to pave the way through part-time and flexi-time arrangements. Scrapping the 55-year-old retirement age is also under consideration.

Many multinationals are nearing expansion limits because of a lack of manpower. A recent survey of U.S. investors in Singapore found the biggest constraint to current expansion was the “limited labor pool, which could restrict future growth.”

Total employment in American companies “appears to have leveled off” because of the difficulty in hiring sufficient numbers of employees, researchers said.

Although the U.S. Embassy evaluation of 407 companies indicated that the firms still plan to invest at least another $202 million, complaints centered on job-hopping, difficulties in finding third-shift workers and delays in government approval of foreign worker permits.

“The number of applicants remains high, but when it comes to the interview, many of them either disappear or make excessive or unreasonable demands, like refusing to work shifts or to do certain types of work,” a personnel manager said.

With the United States the largest source of direct foreign investment here amounting to $7.55 billion, authorities agree that it is essential to tap a large portion of the 745,799 economically inactive residents to meet expanding demands at a time when population growth is stagnant.

The government has even started allowing factories to bring in workers from China, although there are no diplomatic ties between fervently anti-communist Singapore and China.

So far, National Semiconductor Pte. Ltd., a subsidiary of National Semiconductor Corp., has hired 100 Chinese contract workers. Another company is hiring, and a third has reportedly sent recruiters on an evaluation mission.

Permitting the Chinese workers may be an indication of how seriously the government regards the labor shortage, economists said.

After three quarters of steady expansion in 1987, the Ministry of Trade and Industry’s own report said the economy is “beginning to hit against the labor supply constraint.”

“Despite the entry of about 30,000 school leavers and graduates into the labor market in the first half of the year, the labor market became increasingly tight,” the report said.

Third-country nationals, primarily Malaysians, form about 10% percent of the work force of the American firms with a total of 62,000 employees. But electrical and electronics companies are finding it harder to recruit production workers now that the Malaysian economy is rebounding.