Tiny Singapore's population is expected to decline by 200,000 as companies lay off a massive number of foreign workers during a worsening recession, Swiss banking giant Credit Suisse said.
The job cuts, which would include highly-paid expatriates and permanent residents, will hurt domestic consumption and help push the economy into its sharpest decline since independence in 1965, said the report received by AFP on Tuesday. A loss of 200,000 jobs would amount to more than four percent of the population.
Credit Suisse said the economic slowdown in the trade-sensitive city-state had so far been driven by a sharp decline in exports, while domestic demand held up. But for this year, "consumption growth should also slow, in part because of our expectation that Singapore's population will potentially drop by 200,000 by 2010" due to job losses, it said.
"Historically, Singapore's foreign population has tended to expand during high growth periods and contract during recessionary periods," the report said. "Given the strong foreigner population growth in recent years, this trend is unlikely to change in this downturn."
Of the 800,000 jobs created from 2004 to the third quarter of last year, Credit Suisse estimated that more than 500,000 were filled by foreigners and permanent residents. About 200,000 of those jobs were in manufacturing and almost another 200,000 were in the financial and business services. Most of these jobs were filled by expatriate workers who earn more than the average Singaporean, it said. "As a result, job losses are likely to hit the Singaporean economy hard because they affect more highly paid workers and could result in a semi-permanent drop in the population," the report said.
As of mid-2008, Singapore had a total estimated population of 4.84 million people, including 3.64 million citizens and permanent residents, Statistics Department data showed. The rest, more than one million, are foreign workers and their families.
With the impact of falling domestic demand exacerbating declining exports, the economy was likely to contract by 2.8 percent this year, Credit Suisse said.
This would leave the economy in its worse shape ever, after 2001 when it shrank by 2.4 percent. The economy grew 1.5 percent last year compared with 7.7 percent in 2007. Despite the expected layoffs, Singapore's Acting Minister for Manpower Gan Kim Yong said the city-state would still need overseas labour. Gan said that foreign workers allowed Singapore companies to remain globally competitive and contributed to keeping jobs within the country. "If companies become uncompetitive in Singapore, they may decide to relocate to other countries and we will lose more jobs. This will be a lose-lose outcome," he said in parliament Monday.
Source: SINGAPORE, Jan 20, 2009 (AFP)