I am the third-generation in my family who has moved country to follow opportunities. My grandfather moved to Hong Kong, my father moved to the UK. Lastly I relocated to Singapore five years ago to follow where the opportunity was. I ask myself will this continue?
Over the last five years in Singapore, there has been a continuation of a global shift towards protectionist immigration policy. Although this shift is not new, it seems to have gathered pace and is certainly one of the factors determining the outcomes in recent UK, US and Singaporean elections, to name a few. There is clearly a need for governments around the world to protect their own citizens and ensure that they are able to obtain meaningful employment. However, it can be a double-edge sword. And so, I would like to provide some food for thought around foreign talent.
- Globalisation of the talent pool: Jobs will follow where people are located rather than people migrating to where the opportunity is. My generation will therefore be the last generation required to relocate for work.
- The benefits of foreign talent: Foreign talent can bring economic growth to Singapore, employment for Singaporeans and, naturally, tax revenues to help replenish recently drawn upon reserves.
- Making Singaporeans the foreign talent: Sending more Singaporeans overseas will make them the foreign talent that Singapore needs.
- Encouraging entrepreneurship: More home-grown businesses gives Singaporeans control of their own destiny.
In summary for Singapore to grow its economy, support its people and replenish its reserves post pandemic it should:
- Recognise that the local jobs market is becoming a global jobs market and so the government should ensure that Singaporeans continue to upgrade their skills. Tax rules around remote workers are likely to mean that businesses will continue to hire in country rather than remotely. Therefore, Singapore continues still has a great opportunity to use its competitive advantage to attract businesses, and therefore job opportunities, to Singapore.
- In order to continue and enhance its competitive advantage, the government should implement improved incentives to bring the right foreign talent into Singapore. It should replace the recently removed Not Ordinarily Resident (NOR) relief with tax reliefs and improved benefits to attract the right foreign talent to Singapore. For example, an introduction of a flat rate tax, improved NOR scheme, approved corporate pension schemes and tax incentives on long term incentive plans will encourage more decision makers into Singapore.
- Encourage Singaporeans to gain work experience abroad before returning as foreign talent.
- Encourage entrepreneurship in Singapore as the more business decisions are driven from Singapore will help drive economic growth in Singapore as it creates jobs, new innovations and stimulates competition which in turn boosts Singapore’s advantage in the world’s economy.
Globalisation of the talent pool
Will my generation be the last generation to follow the employment opportunities abroad?
I tried to write this piece without mentioning the C word but unfortunately, it is unavoidable as the COVID-19 pandemic has had an unprecedented impact on the global workforce. It has led to companies scrambling to dust off their Business Continuity Plans and find, or create, their Work From Home (WFH) policies which in turn has led to the biggest global live WFH experiment ever. It is incredible to see how people can change their working behaviour when they are forced to! Many people have not only embraced WFH (despite its limitations) during the pandemic, but many would like to continue working from home in full or in part going forward. Several businesses have reacted by implementing updated and ongoing WFH policies whilst we, Grant Thornton Singapore, are exploring what options balance out the needs of our business, our people and our clients.
This ability to WFH does pose Singapore another challenge. If everyone can work from home, why do businesses need to set up in Singapore; or why do businesses need to hire people in the same country as themselves? Channel News Asia’s article after the Fortitude Budget explores how the global jobs market may change once the pandemic settles down. Firstly Singaporeans need to up-skill themselves to compete in a global employment market. Secondly, the article explores the future of work and the “cataclysmic shift” in how we view remote working which sound new, but in reality, we have already seen this starting to happen. We have steadily been seeing a growing number of employers employ people outside of their country, including many digital nomads who appear to be living in places like Bali. With the pandemic, clearly there have been an increased number of people stuck overseas who may revisit how they see what they call their office. Will their laptop, rather than a physical workplace, be their office going forward?
What the article does not consider is how prepared companies are to address the age-old issues of permanent establishments and employer reporting obligations as tax rear its ugly head in these situations. This will continue to be a challenge for companies wanting to hire people who work from a foreign location. In many situations, hiring someone is a foreign location is not as easy as issuing an employment contract and sending them salary each month. It could lead to a taxable presence for the company, employer reporting and withholding obligations in the foreign location. This has historically discouraged employers from hiring employees who continue to live overseas. The future of the workplace and workforce will continue to evolve.
People are social beings and therefore face-to-face meetings and being in country as important as it ever has been in the past. The office will continue to thrive as people need social interaction to share ideas, collaborate, train new talent and develop trust when building new business relationships. This combined with the fact that Singapore still has so much to offer businesses from transport links, a highly educated workforce, stable political and business environment to name but a few, means that Singapore will continue to attract both businesses looking to set up to attract talent and for foreign talent to relocate to.
Summary: It is important to ensure that Singaporeans continue to upskill themselves to ensure that they are competitive in an increasingly globalised jobs market. Although it is easier to work remotely tax rules are likely to restrict the amount of remote employees. Therefore, it is important for Singapore to continue to attract businesses to set up in Singapore so that there are job opportunities within Singapore for Singaporeans.
The benefits of foreign talent
Foreign talent can bring economic growth to Singapore, employment for Singaporeans and, naturally, tax revenues to help replenish recently drawn upon reserves.
The term foreign talent was coined and debated in parliament back in 1988 when the government were looking to supplement the local workforce. The phrase was originally used for the Eminent Entrepreneurs/Professionals Scheme which granted permanent residence to 81 professionals from Hong Kong. It was subsequently expanded to include high-skilled workers from around the world. This was to boost the local economy with the “skills, enterprise and drive’ of ‘high calibre and trained people”. I don’t have to remind everyone how well Singapore has grown since its independence, and its ability to bring foreign talent in to complement the existing local workforce has been a large part of this.
Why do we need foreign talent? Simply put, there are not enough Singaporeans. This causes both a lack of available manpower but also a shortfall of Singaporeans with the right skills to meet the growing and widening demand of businesses. These factors, combined with the low fertility rate which fell to 1.14 in 2019 (far below the 2.1 rate needed to have a self-sustaining population) means that if foreign talent is not brought in, we will see Singapore shrink! In order to support Singapore’s continue growth and competition at a global level, foreign talent is needed to complement the local workforce. Without this, businesses will be unable to compete or must move their businesses overseas to find sufficient people with the necessary skills to run the businesses – this could reduce the number of jobs available in Singapore for Singaporeans!
More emphasis should be put on bringing in foreign talent who can bring business, technical knowledge, or expand existing businesses. Businesses often set up in new locations because they can bring in their own talent and hire suitable talent. This will not only build on Singapore’s historic economic success but also bring more jobs for local Singaporeans. The introduction of a new Tech.Pass to attract “founders, leaders and technical expert with experience in established or fast-growing tech companies” is highly welcomed and shows the government also agrees with our analysis.
However, this only targets a specific sector and I think more should be done to help businesses attract foreign talent to Singapore. These are the people who will bring jobs with them and so I ask why the Not Ordinarily Resident (NOR) Scheme was withdrawn. Singapore is undoubtably a hub for the ASEAN powerhouse which is projected to be the 4th largest trading bloc in the world by 2050, as well as further across the APAC region. I would encourage the Government to consider reintroducing the NOR scheme or go further and introduce new measures to encourage the decision makers of these global organisations to set up and base themselves in Singapore. With decision makers in Singapore, jobs are likely to follow. Alternatives to a new and improved version of the NOR scheme could include a lower flat rate tax, improved pension provisions for expats (see article entitled “Setting up for retirement” for further discussions on this) and tax incentives on long term incentive plans (equity or otherwise) which are based on building up economic value in Singapore.
Summary: Encourage the right foreign talent, i.e. decision makers, through targeted reliefs such as a new and improved NOR Scheme, a lower flat rate of tax, corporate pension schemes and long term incentive plans based on building the economic value in Singapore.
You may ask how we should protect jobs for Singaporeans
MOM has already implemented a Fair Consideration Framework to ensure that Singaporeans are fairly considered for jobs before they are allocated to foreign talent which I fully support. This can be further tweaked or more emphasis put on enforcement. However a fine balance must be struck to ensure that it does not get in the way of businesses getting the right talent in order to build their business in Singapore.
Making Singaporeans the foreign talent
We have talked a lot about foreign talent, and rightly so. However, foreign talent is limited to non-Singaporeans Singapore already sponsors and encourages Singaporeans to study overseas and to bring that knowledge back to Singapore. The government should sponsor and encourage Singaporeans to work overseas and to bring that knowledge back to Singapore as foreign talent.
Many countries overseas have incentives to attract expatriates to work in their countries and they would jump at the opportunity to bring in highly educated Singaporeans. We should encourage Singaporeans to take these opportunities up, for example:
- Provide employers with grants and incentives to second Singaporean employees overseas for a number of years. Singapore already has grants in place to encourage businesses to expand overseas (e.g. Overseas Marketing Presence), so why not employees?
- Provide Singaporeans with grants and incentives for going overseas to work, e.g. additional contributions from the government into their CPF for working overseas will both incentivise Singaporeans to go overseas and also to force them to save for retirement,
- arrange secondment/exchange bubbles... As mentioned at the start, a global shift towards protectionism means that host country immigration is often an obstacle to moving talent around globally. Could the Government come up with bubbles where a business could exchange a UK employee with a Singaporean employee which would allow more international exposure for Singaporeans.
The Singaporean Government can separately encourage Singaporeans who have left, to bring what they have learned back as ‘foreign talent’ to Singapore. As Singaporean students see more and more Singaporeans return as foreign talent, this should create a self-perpetuating situation where Singaporeans want international exposure to gain the experience to land lucrative jobs back in Singapore.
Summary: Singapore’s government should prioritise making Singaporeans become the foreign talent. Incentives for Employers to send Singaporeans overseas, as well as incentives for Singaporeans to travel overseas before returning should be considered.
I have one final concluding thought about Americans which Singapore could learn from…
One thing I have always been envious of about the American culture is the American dream. This dream, I believe, encourages entrepreneurship, which has been a driving growth behind America. Eng Min is exploring how Singapore can encourage entrepreneurship and starts-ups in her article “A HELPING HAND FOR THE BUSINESS VICTIMS OF THE PANDEMIC” and I fully believe that doing this will increase wealth for Singapore. This is because it creates jobs creates innovation and stimulates competition. Successful businesses also continue to put Singapore on the global economic map and bring more businesses and entrepreneurs wanting to come and set up in Singapore, creating a self-perpetuating cycle of success.