SINGAPORE, Feb 3 - Fewer foreign workers, but better productivity to drive a smaller growth rate in the Gross Domestic Product.

This strategy has some Singaporeans wondering to what extent it was economically or politically motivated. And what makes this productivity drive different from previous ones?

The Economic Strategies Committee (ESC) sub-committee on fostering inclusive growth noted in its report yesterday that the "large" foreign worker presence has "incurred infrastructural and social costs".



And its recommendation to raise the quality of foreign workers, it added, will "improve locals' perception and acceptance" of foreigners and industries or jobs with a high foreign worker presence.



National University of Singapore economist Shandre Thangavelu believes there are both political and economic elements to the strategy.

Besides the trade-offs between economic benefits and social costs, there are economic costs to having a large pool of foreign workers. "Cheap foreign labour adopt less innovative technologies", he said. Hence, employers have no incentive to innovate.

This is why Singapore cannot maintain the current level of foreign workers and improve productivity just through innovation, said Associate Professor Thangevelu.

"Productivity isn't just about innovation, it's also about improving middle management structure and worklife balance," he said.

The ESC sub-committee recommended increasing the differential between the levy rates for skilled and unskilled workers to raise productivity.

The move to reduce foreign worker dependency began last year with the Skills Programme for Upgrading and Resilience and the Jobs Credit scheme, noted SIM University's head of business analytics Randolph Tan.

But higher foreign worker levies could translate to higher construction costs and housing, he said.

Still, economists told MediaCorp that hiring cheap foreign labour would still lead to lower growth in the long term.

As to how the latest recommendations differ from past productivity campaigns, those whom MediaCorp spoke to said that previous campaigns were more industry-driven, particularly for the manufacturing sector, while there is a more macro approach now, involving all sectors and workers.

"I think the focus on productivity was there, but we deviated away from it," said Mr Douglas Foo, CEO and founder of Apex-Pal International.

"When our focus was on manufacturing, we had the National Productivity Board to look at keeping productivity high, but when we moved to services we lost track of that, so I think we have the basic structure in place to look at the issue, and it's timely to do so now."

United Workers Electronic and Electrical Industries general-secretary Cyrille Tan added: "In the past, productivity drives were spearheaded by only companies, but now it's both the unions and employers."