(This is a shortened article of the article that I had published yesterday.)
On May 4 this year (2013), Prime Minister Lee Hsien Loong was quoted to have said that, “Polytechnic students have many good options after graduating and need not just aim for a university degree.”
National Development Minister Khaw Boon Wan had also said that, “If they cannot find jobs, what is the point? You own a degree, but so what? That you can’t eat it. If that cannot give you a good life, a good job, it is meaningless.”
Minister for Social and Family Development Chan Chun Sing also said that, “It’s not the degree or the diploma… that is most important.”
But the truth of why the ministers are saying these is perhaps best captured by what Khaw had said: “What you do not want is to create huge graduate unemployment.”
Since 1998, the unemployment rate among Singaporeans who have tertiary education have grown tremendously to be the highest among all the high-income countries now (Chart 1).
Chart 1: World Development Indicators
Things are even clearer when you look back to 1985 – from having one of the lowest unemployment rate among the high-income countries then, Singaporeans with tertiary education now face the highest unemployment (Chart 2).
Chart 2: World Development Indicators
Interestingly, this also coincided with a sudden boom of people in Singapore with tertiary education, when there was a sudden spike between 2007/08 and 2009/10 (Chart 3).
Chart 3: Global Education Digest
But do you know that even though we have one of the highest proportion of tertiary educated people in Singapore, the proportion of Singaporeans enrollment into local public universities is actually one of the lowest? Singapore actually has one of the lowest enrollment into public universities, as compared to the other high-income countries.
Thus if there is comparatively so much fewer students going into local public universities but there is such a massive proportion of people with tertiary education in Singapore, then where is this huge additional pool of tertiary-educated workers coming from?
(1) Singapore’s CECA Agreement With India Does Not Protect Singaporean Workers
First, as I had discussed before, do you know that in the Comprehensive Economic Cooperation Agreement (CECA) between The Republic Of India And The Republic Of Singapore, there are clauses which allow easy access for foreign workers from India to work in Singapore, because Singapore is not allowed to “require labour marketing testing” for the entry of these workers – so Singapore is not allowed to enact policies that protect Singaporean workers over foreign workers (Chart 5).
Also, these workers have “been allowed to bring in their spouses or dependants (and Singapore is required to)… grant the accompanying spouses or dependent of the other Party the right to work as managers, executives or specialists.” (Chart 6)
Of course, it wouldn’t be illogical to assume that India would not be the only country where such clauses exist to protect foreign workers over Singaporean workers. Of the other agreements that Singapore had signed with the other countries, which other agreement would also allow for such an easy entry for their workers to compete with the Singaporean workers in the job sector of “managers, executives or specialists” – jobs which Singaporean PMETs also take on, but would thus face significant competition due to the lax border policy?
(2) The Lack Of Levies And Quotas For The Employment Pass Disadvantage Singaporeans
Second, do you also know that when companies hire workers on Employment Passes (E Pass), they do not need to pay additional levies on these workers or adhere to any quota (Chart 7)?
Chart 7: Ministry of Manpower Levies & quotas for hiring Foreign Workers: E Pass employment is exempted from levies and quotas
To qualify for the E Pass, foreign workers are required to “earn at least $3,000“. This means that workers on E Passes would directly compete with Singaporean university graduates and PMETs, whom starting pay is $3,000.
Thus as there are no levies or quotas to hire workers on E Passes, there is no restriction or disincentive for companies to hire foreign workers over Singaporeans in positions which require a degree – and this would necessarily put Singaporeans at a disadvantage. Has this contributed to the over-influx of tertiary-educated workers and the resultant high unemployment?
Not only that, the Ministry of Manpower had also explicitly stated that, “spouses of Employment Pass holders can (also) work in Singapore, adding to the competition.”
(3) The Fair Consideration Framework Will Not Protect Singaporeans
Third, the PAP government had recently announced the Fair Consideration Framework which they would like to use to “persuade” employers to consider Singaporeans fairly before hiring Employment Pass (EP) holders”.
But as I had written previously, this “framework” doesn’t have any bite because the MOM had said that it “does not review the merits of a firm’s hiring decision, as the firm is best placed to decide on which candidate can do the job“. Essentially, this “framework” does not fundamentally change the nature of hiring practices in Singapore. Employers are still allowed to advertise on different platforms on job openings, they are still allowed to interview foreigners concurrently with Singaporeans, or even interview foreigners only, and they are allowed to hire foreign workers without any justification.
Thus the broad policy measures created by the PAP government will in no way protect the employment of Singaporean degree holders over competition from other countries.
(4) Over-Influx Of International University Students In Singapore
Finally, as I had discussed in an article earlier this week, the PAP government is bringing in foreign students on scholarships – 20% of each batch of undergraduates are foreign students, of which 52% are given scholarships. Are the rest of the 48% also on some form of financial assistance? Also, “upon graduation, scholars are obliged to work in Singapore or Singapore companies for up to six years,” which again is competition with the Singaporean university graduates.
Playing our role in educating our friends from neighbouring countries is a role that Singapore can admirably perform but the question to ask is – if there are also deserving Singaporean students for scholarships, why is it that only less than 6% of Singaporeans are on scholarships, when 52% of foreigners are on scholarships? And if there is already a saturation of degree holders in Singapore, shouldn’t the PAP government focus on grooming the students in Singapore instead of creating a glut of degree holders in Singapore, by importing even more foreign students in Singapore, who eventually compete in jobs that Singaporeans are losing?
This is no wonder that Lee, Khaw and Chan would go to such great extent just to convince Singaporeans that a polytechnic diploma is a more viable “option” than a university degree – there is growing unemployment among tertiary-educated Singaporeans but instead of managing the inflow of foreign students and workers in Singapore, they have instead asked Singaporeans not to further their education. Is this what a responsible government should do?
Not only that, if “a diploma holder’s average starting salary is $2,000, while that of a degree holder is $3,000 (Chart 8)”, then by the PAP ministers asking Singaporeans to not pursue a degree, are they asking Singaporeans to also put up with earning lower incomes?
As I’ve written before, Singaporeans already earn the lowest wages among the high-income countries. Thus this means that for degree graduates, their wages are already depressed, which would be even more so for diploma graduates. Diploma graduates are also more likely to see their wages depress or stagnate over their lifetime.
What this means is that if the PAP is serious about wanting Singaporeans to see a polytechnic diploma as a viable “option”, they would also need to ensure that Singaporeans are paid wages that are also “viable” to the standard of living in Singapore.
Finally, the more important question is not whether Singapore should produce more university graduates but whether our graduates have the skills and flexibility to work in the labour market?
Indeed, in the The Global Competitiveness Report 2013–2014 report, when compared to the other high-income countries, among the “most problematic factors for doing business”, a higher proportion of employers voted on Singapore as having the most insufficient capacity to innovate (Chart 9).
To sum up, the increasing unemployment among tertiary-educated Singaporeans can also be attributed to the lax agreements that Singapore had signed with other countries and the labour policies enacted that can be exploited through the inherent loopholes. The solution would be to ensure that the agreements and labour policies provide stringent protection for Singaporean workers.
However, it is clear that the PAP government is resistant to do so. As such, they have decided to take the easy way out to persuade Singaporeans not to take university degrees. But this is at the expense of educating your own citizens and strengthening the local core and pool of tertiary-educated Singaporeans. It is surprising that the PAP government would be willing to compromise on the people’s education and Singapore’s long term future – a core population that is weakened in their education will threaten the foundation that prop Singapore up.
Lee, Khaw and Chan have not addressed the right question when they try to persuade Singaporeans to see polytechnic education as a viable “option”. Just because there is increasing unemployment among tertiary-educated Singaporeans doesn’t mean that the immediate solution should be to reduce the number of tertiary-educated enrollment. This is short-sighted, a knee-jerk reaction and not well-thought through.
Instead of the PAP ministers saying that Singaporeans should opt not to enter universities, the more apt response would be to look at how universities can be made more relevant to the needs of Singaporeans and to the job market. The Ministry of Education had noted that, “in Finland, the government expanded the higher education sector by creating a distinct tier of polytechnics/universities of applied sciences (UAS),… (where) their mission was clearly defined as providing vocational and professional training for labour market and industry needs… Students would typically graduate with a Bachelor degree after three to four years of study.” Thus there is a need to relook our understanding of what a university education means, and how it can be redesigned to not only expand the opportunities for Singaporeans, but to ensure that a university will continue to be relevant to the job market.