Singapore May See 200,000 Foreigners Leave, Credit Suisse Says
By Shamim Adam
Jan. 20 (Bloomberg) -- Singapore’s population may shrink in the next two years as “sizeable” job losses amid the city- state’s deepest recession force 200,000 foreigners to leave, Credit Suisse Group said.
About 300,000 jobs may be lost by 2010, two-thirds of which are held by foreigners and permanent residents, economists Cem Karacadag and Kun Lung Wu wrote in a report received today. The number of people on the island nation may fall by about 3.3 percent to 4.68 million by 2010, Credit Suisse said.
Companies in export-dependent Singapore are firing workers as demand for goods and services ebb. More than 10,000 people were retrenched last year and a worsening economy may result in job losses tripling in 2009, reaching numbers not seen since the Asian financial crisis a decade ago, the government said.
“The contraction in exports and output and consolidation in financial and business services could lead to sizeable job losses, which, in turn, may drive as many as 200,000 foreigners and permanent residents out of Singapore,” the economists said. “These levels of job losses and population decline would be unprecedented.”
Singapore’s economy may shrink 2.8 percent this year, Credit Suisse predicts, making it the Southeast Asian nation’s worst annual contraction in its 43-year history. The government says gross domestic product may decline as much as 2 percent.
Last week, the National Wages Council, which represents government, employers and union groups, advised companies affected by the deepening economic slump to freeze or cut pay rather than fire workers.
About 30,000 workers were retrenched in 1998 and some 26,000 lost their jobs in the 2001 downturn, acting Minister for Manpower Gan Kim Yong said yesterday.
Immigration is a key component of Singapore’s population strategy, as incentives offered since 1987 to arrest a declining birth rate by offering tax breaks, subsidies and cash bonuses failed. Singapore, a quarter the size of Rhode Island, has no natural resources and the government relies on the skills of its populace to generate economic growth.
The nation’s population jumped 17.6 percent in the five years to June 2008, and foreigners made up three-quarters of the increase, the Credit Suisse report said. Foreigners and permanent residents filled 61 percent, or 484,700, of the 796,000 jobs created between 2004 and the third quarter of 2008, the analysts estimated.
Singapore’s employers added more than 435,000 workers to their payrolls in the seven quarters to September 2008, according to the Ministry of Manpower.
“As harsh as our assumptions may seem, they only imply that the economy gives up all of the jobs it created in 2008 and a portion of the new jobs in 2007,” the economists wrote.
About 160,000 positions in the services industry may be lost, while manufacturers may fire 100,000 workers, Credit Suisse predicts. The construction industry may cut 40,000 workers, it said.
“The potential drop in employment and population would have far-reaching implications for the economy,” wrote Credit Suisse analysts Sean Quek and Kwee Hong Ching. “Private consumption could contract in both 2009 and 2010.”
The unemployment rate, at 2.2 percent as of September 2008, may rise to 5.6 percent by 2010, the highest in more than two decades, they said.
Job cuts rose “significantly” last quarter, and both unemployment and layoffs are expected to be “substantially higher” in 2009, the National Wages Council said last week.
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