Christopher Pang
Gilbert Goh of the National Solidarity Party leading an unemployment demonstration
There has been much resent against the influx of foreigners into Singapore brought about by the ruling party’s liberal foreign immigration policy, most notably about foreigners taking our jobs. Let us take a look from a libertarian perspective on this issue.
They took our jobs?
Such a claim is preposterous from a libertarian perspective. Firstly there is no such thing as “Singaporean jobs” because jobs are not owned. Jobs are merely opportunities offered by employers with exchange of monetary benefits for labour. Employers should have the liberty to choose his employee of his choice based on qualities he values the most. Employers are merely consuming services of labour provided by worker. If the same non-discriminating logic is applied on equal opportunity employer for not discriminating race, age or gender, then there is no basis Singaporeans should be hired just because they are Singaporeans. It is an outright discrimination against other nationalities.
Employment, in simple terms, is the supply and demand of labour, with workers providing supply and employers providing demand. In a truly free labour market, workers has the option of choosing the employment which they derive the most utility from job satisfaction, salary or working environment and employers will choose the employee that provide the highest value(productivity, skills, education level and knowledge etc), as compared to the cost(wages). Whether the bargaining power lies with the employer or employee depends on the individual job requirements and the individual employee’s capability.
Hire Local Buy Local
“Hire Local” is a form of protectionism, similar to “Buy Local”. Can “local” be defined as my estate or town? My GRC? My country? Can a shop owner in Tampines discriminate against Singaporeans residing in Jurong who respond to his recruitment advertisement for an assistant? There is no difference between losing a job to a foreigner or a local if we extrapolate this outwards to a national level instead of within a community or town. If a consumer has the freedom to choose between locally produced vegetables versus imported vegetables based on quality versus cost, then an employer should have the same freedom to employ an employee/worker based on value (productivity, knowledge, level of education, etc) versus wages.
If every country in the world embarks on a “Hire Local” policy, everyone in the world would certainly be worse off than before. Singaporeans who are working overseas would be replaced with inferior locals at either a higher cost or lower capability or both. These displaced Singaporeans would then return home to find a job that mismatches that capability as everywhere else is required to hire locals. These returning Singaporeans will then either replace a fellow Singaporean in a similar position for a lower pay or replace a foreign talent who could have been working at lower wages or having higher capability or both. The consequence is that standards of living everywhere will be lower as a result of this protectionism because everyone is paying more in terms of cost as compared to value derived.
We would not be able to enjoy the many different brands of imported beer and can only consume Tiger beer. We would not have so many successful local musicians, like Lin JunJie, Stefanie Sun, Tanya Chua and Kit Chan because Taiwan would no longer be receptive to foreign singers and they cannot break out of the Singapore music industry. Singaporeans can only watch the plot less Mediacorp drama and many Singaporeans would have starved to death in Singapore because there is insufficient land to grow enough locally grown produce to feed them all. This list could go on forever.
Other considerations
There are some attributes which employers should consider before hiring foreign workers. For instance, I walked into a hardware shop, with an intention to buy a drill bit and the store assistant, a foreign worker from China, could not understand English. I was unable to translate “drill bit” into Mandarin and I walked away because I valued the time I would have spent searching for something which could be bought elsewhere quite easily. The visible savings from the lower wages paid to the foreign worker is what the shop owner sees but what is not seen is the potential sale which he has lost.
Communication skills, ability to relate to customers (for service sector) and familiarity with local roads and driving regulations(bus drivers) are important attributes in many of these positions that Singaporeans compete with foreign workers, which was clearly demonstrated above. These attributes can most likely only be provided by native Singaporeans. Local employers should determine what their customers value most and hire based on this value. It should not be a one dimensional comparison between wages of foreign worker against wages of a Singaporean worker because non-monetary attributes do contribute monetarily and to the sustainability of business in the long run.
If employers do hire foreigner workers on lower wages, the displaced workers are worse off in the short run, but in the long run they are better off. (Keynes would argue, “In the long run, we’re all dead”) Because comparative advantage will be more thoroughly exploited on a global scale, wages everywhere will rise. Workers must face the reality that job security is a thing of the past and retraining is essential to seek new opportunities to be reemployed. Global is now the new local.
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Photo courtesy of Sharon Ng.
But what about the other countries which do impose economic protectionism of the hire local sort? The current global climate is particularly receptive to these sort of measures.
Without the freedom to move elsewhere (to the same degree that other nationals may have in moving here), Singaporean nationals are restricted and find themselves squeezed.
A rational argument can be made for the removal of protectionist, “Local First” policies but implementing it right now is untenable.
In any given economy, there are always more consumers than workers because there are retirees, children, unemployed, handicapped and homemakers. The end is always consumption, how to make goods/services better and cheaper in more abundance. A job is just a means to the ends (consumption). Our government understands this but cannot explain itself using my explanation because every other country is doing it. The only reason why other countries are doing it is for political reasons. As usual good politics is bad economics.
The problem with having a libertarian perspective is that Singapore is far from a libertarian society. If the government did not penalize me for being a singaporean by taking away 2.5 years of my life and making me uncompetitive in the job market with reservist liabilities, I wouldn’t mind scrapping the singaporeans first policy. Something is needed to be put in place to compensate for these artificially government induced disadvantages.
Anyway you also miss out other macro effects when the labour market gets too free. For example, the structural unemployment that you see in manufacturing jobs in the developed world. That has serious consequences especially when the economy is driven by consumption like in the usa.