SINGAPORE'S largest business grouping yesterday sounded its loudest alarm yet over the Government's tighter labour policies.
The Singapore Business Federation (SBF), representing more than 18,000 firms, warned that the foreign worker policy could stifle economic growth, drive some businesses to the wall and others overseas.
It said the Government's goal of higher productivity could not compensate for labour shortages in the short term.
The SBF also warned that the official 2 per cent to 3 per cent a year productivity growth target may not be achievable in a developed nation such as Singapore.
The Government has progressively imposed tougher restrictions on foreign worker numbers and urged firms to focus on productivity.
"Given the shortage of local workforce, foreign manpower is integral to the workforce," SBF said. "Singapore should continue to keep its door open to them. This approach will enable the Singapore economy to remain competitive and dynamic to fuel higher standards of living for all Singaporeans."
It said the "foreign manpower policy should be calibrated in a targeted approach".
The Government has acknowledged the tight labour market.
In a blog post yesterday, Acting Manpower Minister Tan Chuan-Jin said that overall, the labour market will continue to remain tight, if not become tighter, next year. "The pressure on businesses to expand through product innovation and making their workforce more productive will be more intense," he said.
The SBF held a briefing to present its wide-ranging position paper on population issues. It had been invited to give its views by the Government's National Population and Talent Division.
SBF chief operating officer Victor Tay warned of the side effects of the tighter foreign labour policy such as higher costs for businesses and residents.
Innovation will be hampered, and the service sector could suffer from a lack of manpower, leading to a drop in service standards at hotels and restaurants.
In charting population policy to meet Singapore's economic and social needs, SBF talked of taking a short-term, mid-term and long-term approach to the issue.
In the short term, SBF said local firms recognise Singaporeans should be the core of the workforce, and suggested that the Government offer more help to firms to tap on retirees and housewives.
But it wants Singapore to remain open to foreign labour, pointing out that their presence can help locals move up the economic value chain.
For the mid-term, SBF urged a focus on productivity. It called for the development of industry clusters, where big firms can transfer knowledge and raise the productivity of their suppliers.
In the long term, a good-quality local workforce can be achieved with the Government's support of marriage and parenthood.
Some economists said a return to a liberal foreign labour policy would be unnecessary.
United Overseas Bank's Mr Francis Tan said: "We can meet our economic targets by continuing the programmes of increasing labour productivity by using technology and better systems design - all without the need to have more foreign workers."
Companies are adapting by continuing to move lower-value operations to neighbouring countries like Malaysia and Indonesia. "I think this will continue now in a more accelerated fashion," said SBF chief executive Ho Meng Kit.
Printing firm Winson Press' CEO Tan Jit Khoon said he has difficulty in hiring for some positions."Productivity growth needs time to realise," he said, adding that he is not asking for a reversal of the policies but hopes that they will not be tightened further.