Publications

Introduction

Though the rapid growth that has characterized the countrys economy has slowed over the last year, Singapore, one of the four "tigers" of Asia (with Hong Kong, South Korea and Taiwan), still offers many attractive opportunities for Western companies. It also presents human resource issues that Western employers must fully understand if they are to successfully pursue the opportunities that Singapore offers. These human resource issues include the nature of the local work force, compensation practices, the most effective ways to recruit skilled candidates for managerial and professional positions, and the business culture of Singapore.

Gateway to Southeast Asia

A thriving commercial and industrial center in its own right, Singapore enjoys a strategic location at the tip of the Malay Peninsula, between the Indian Ocean and the South China Sea, making it a regional hub and gateway to the rest of Southeast Asia. Singapore consists of a main island and some 58 islets. With a total area of 247 square miles, Singapore is three-and-a-half times larger than Washington, DC, but slightly smaller than the five boroughs of New York City. With a population of 3.7 million, Singapore is crowded, for it has an average population density of 14,881 residents per square mile. Singapores population is about 76 percent ethnic Chinese (the largest percentage concentration in Southeast Asia), 15 percent Malay, 7 percent Indian and 2 percent of other origins.

Although the tropical island is mostly low and swampy, almost half of its land area is urban. Singapore has no natural resources apart from its deepwater natural harbor and strategic location. Consequently, the country relies largely on its own human capital and resources to generate economic success and wealth.

Singapore s democratic government and social system operate under the influence of the Confucian ideological system, which requires deference to ones superiors in rank. Sundry social controls exist in Singapore, for the government claims as its duty to limit those activities that it deems contrary to the common good. Many Singaporeans see authoritarian controls, however, as necessary for a clean environment and sound social order.

Economic Outlook

Singapore was one of the world's most vigorous economies in the first half of this decade.This dynamism began in the mid-1960s, when the republic initiated an effort to build an active and internationally oriented trade, manufacturing and service economy largely from scratch. Within a 30-year span, it became by far the most modern, successful, stable and sophisticated economy in Southeast Asia.

The economy grew at an average annual rate of 12.2 percent from 1970-1992. Not long ago Singapores economy began to cool, showing 6.9% growth in 1996 and 7.8% growth in 1997. Though smaller than previous figures, these growth rates were still above those of many other industrialized countries. Per capita GNP in 1997 was S$39,310 (US$23,123), almost nine times the level of 1970.

Source: Singapore Bureau of Statistics

Of course, Singapores economy has been affected by the recent downturn in the region, causing its growth to moderate over the past year. 1998 proved to be the worst year for the countrys economic growth. In 1998, the GDP grew by only 1.2%, and it is predicted to decline further in 1999. However, this figure indicates the GDP for the entire year, and it should be considered that Singapores economy started slowing down in the last half of 1998. Since much of the development in East Asia depends on Japan, who is the major importer and investor in the region, Japans economic stagnation is impairing others in the region from recovering. Also, economic, political and social difficulties in Indonesia will affect Singapore; if the situation worsens, investor sentiment towards the region will become more pessimistic. Tied to the recent economic slump is the announcement by the Monetary Authority of Singapore that bank loan growth fell in July 1998 to 1.6 percent, for the ninth consecutive month and the largest monthly decline in the year. The growth of loans has been sliding since around October of 1997, when it stood at 14 percent. The number of families seeking public assistance jumped by 58 percent during 1998; business bankruptcies also rose dramatically.

Source: Monetary Authority of Singapore

In order to strengthen their position in the world economy, Singapores government is considering a number of alternatives, including lowering Central Provident Fund contributions for employers, managing its exchange rate more flexibly, and making further investments in education, infrastructure, and the continued training of workers. Singaporean officials realize that the changing nature of the economic situation in Asia means that they will have to hone skills as well as costs in the labor market.

With regard to exports, Singapore is a leading producer of organic chemicals, office and data processing machines, electrical machinery, petroleum products, telecommunications equipment, industrial machinery, and apparel, among many other items. For imports, Singapore needs a wide range of agricultural and industrial raw materials, intermediate components, and specialty items to feed both its own active industries and those of the regional economies it serves.

For investors, Singapore is one of the world's most attractive business venues. A pro-business government imposes few restrictions and manages well-established procedures in a stable system. With modern plants and an excellent business infrastructure, Singapore offers a competitive base for a variety of outsourcing needs. Increasingly, Singapore is managing production for some of its less-developed neighbors, particularly in the "Growth Triangle" it forms with Malaysia and Indonesia.

Because of its heavy dependence on external trade, the strength of its currency compared to others in the Southeast Asian region, and its high wage scale, Singapore must struggle to compete with its lower-cost neighbors. Therefore, Singapore continues to encourage a shift from labor-intensive and value-added manufacturing to high value-added industries and services. Singapore is refocusing its economy on high technologies, value-added clean, capital-intensive products, and sophisticated business and financial services. To encourage foreign participation in these emerging areas, Singapore offers substantial tax breaks, operating exemptions and other incentives.

Labor Force

Singapore 's labor force of more than 1.87 million is generally recognized as one of the most industrious in the world, based on factors including workers' productivity, attitude and technical skills.

One of the most critical labor issues that Singapore faces, however, is ensuring an adequate supply of workers. The unemployment rate has normally been at or below 2 percent since 1989. In June of 1998, unemployment hit 2.3 percent, and officials at the Ministry of Manpower expect it to increase further by year-end. Compared to the United States, however, whose unemployment rate has been around 4.5 percent during 1998, this figure is indeed small. In addition, the number of job vacancies fell to a new low in June. The ratio of job vacancies to unemployed persons is now 0.8, the lowest it has been since the countrys last recession in 1985, far lower than the average ratio of 2.5 over the last four years. Most industries have reported difficulty in recent years in recruiting workers, particularly in the lower level service sector and among production and semi-skilled workers in small-to-medium-sized companies. The construction sector has typically felt this lack of workers the most. Because of the recent economic stagnation in the region, however, Singapores government has been encouraging its workers to be more open in their job selection to ensure that unemployment remains low.

Due to the limited size of its workforce and low unemployment rates, Singapore must either demand more of its local labor force or bring in additional workers from other locations. Singapore already has a significant population of foreign workers; nonresidents generally comprise close to one-fifth of the labor force. Although many foreign professionals (expatriates) are employed in Singapore, the overwhelming majority of foreigners work in blue-collar and domestic positions.

In the face of growing public sentiment against opening the country's doors any wider, government officials are reluctant to admit or recruit more foreign personnel. They contend that a large influx of foreign workers will bring additional social problems. Accordingly, Singapore's policy-makers seek to enhance domestic labor resources whenever possible. Efforts in this direction include upgrading workers skills, continuing education for career advancement, attracting women to the work force, extending the retirement age, and limiting wage increases. In addition, in April of 1998 the Ministry of Manpower was formed to coordinate duties concerning labor that had until then been shared by several government agencies. Its goals are to enhance the quality of Singapores laborers in order to encourage economic growth, to elevate the skill level of laborers, and to maximize the efficiency of the countrys foreign worker recruitment strategy.

One dilemma facing policy-makers is how to reconcile the need for more working women with the government's goal of encouraging marriage, childbearing and traditional family values. The government encourages companies to adopt flexible work schedules so working women can still be the primary caretakers for their children. Firms are generally open to hiring women, but they still face barriers to advancement in a working environment traditionally dominated by men.

In other governmental efforts to aggrandize the number and variety of opportunities available to Singapores workers, the Ministry of Manpower has encouraged companies to start part-time work programs, causing the number of part-timers to increase dramatically. These new part-time opportunities have served to lure women as well as recent retirees back into the workforce. The government in 1993 promoted another worker retention program called "flexi-benefit," in which employees are given the freedom to choose from a range of benefits those which most accommodate their desires.

 

Size and Sector Distribution

As noted earlier, Singapore's labor force totaled 1.87 million in 1997. It is now growing at an annual rate of 3.5 percent. The growth is due primarily to increased numbers of foreign workers, married women and older workers. In 1997, 29 percent of workers were employed as craftsmen and laborers, 21 percent as professionals and managers, 18 percent as technicians, 15 percent as clerical workers, 13 percent in service occupations, and 4 percent in other fields. Employment has been growing in professional and technical occupations and declining in agriculture.

Job Turnover

Despite a heavy influx of foreign workers, Singapore's declining birth rate has put increasing pressure on labor resources. Over the last five years, increasing job turnover in certain occupations and industries is one of the most worrisome trends for employers. Production, technical, accounting and clerical workers have ordinarily been the most likely to change jobs. However, in response to the recent downturn in several Asian economies, workers have become less willing to switch jobs. Many professionals feel the threat of downsizing looming in the near future, and are rushing to build seniority in their current positions rather than attempting to move into a different field or new position.

Because of the economic stagnation, many Singaporean companies are facing the prospect of layoffs in skilled and unskilled sectors alike. In fact, more workers were downsized in the first six months of 1998 than over the whole of 1997. The services sector accounted for 27 percent of these retrenchments. This will have a positive effect for employers, for in the next year the pool of job seekers in skilled and semi-skilled areas will grow. These workers will be less demanding about both salaries and benefits than they were previously. This will prove to be an important opportunity for those foreign companies who are looking to set up a regional office in Singapore for the first time.

Foreign Workers

Singapore 's small work force of 1.87 million limits the labor supply at all skill levels. The local workforce usually can meet requirements for skilled technical and professional personnel. To make up for the lack of sufficient production and assembly line workers, however, the government selectively allows firms to bring in foreign workers, mostly from neighboring Southeast Asian countries.

Firms must pay a per capita fee to the government to use foreign production and assembly workers. The fee varies by skill level and industry. In the construction industry, employers pay a monthly levy of S$100 (about US$59) for skilled workers and S$470 (about US$276) for unskilled workers. Fees in the maritime industry are S$100 and S$385 (about US$226) for skilled and unskilled workers respectively. In the manufacturing industry, the permit fee for a foreign worker is S$330 (about US$186) for the first 40 percent of a company's work force and S$400 (about US$235) for the next ten percent of the employers workforce. Individuals who employ a foreign maid pay a monthly fee of S$345 (US$176).

To compensate for the shortage in certain fields of professionals and skilled technicians (often defined as those earning more than S$1500 per month), the government encourages foreign professionals to work in Singapore. There is no limit on the number of skilled professionals who may enter the country provided employers receive approval from the government's Economic Development Board (EDB). There is usually little difficulty for upper-level managers of foreign corporations, well-qualified specialists, or personnel required for the start-up of a new industrial, financial or service venture.

Local Workers

Singapore relies heavily for its economic success on the talents and skills of its own people. To maximize its human resources, Singapore tries to follow three basic strategies:

• educate each individual to his or her maximum potential;
• develop skills that meet the needs of industry and business; and
• promote continuous training and retraining.

Workers in most fields and at most skill levels are known for their competence and familiarity with the latest technologies. International firms consistently rank Singaporean workers among the highest in the world for industriousness, efficiency and adaptability.

Education and Training

The government believes that the only way Singapore can compete with other developed countries is through heavy investment in education and the continuous upgrade of labor skills through training and development programs. Around 39.5 percent of Singaporean workers have not finished their secondary education, and only slightly over 30 percent of Singapore's labor force has any level of post-secondary education and/or a degree, which is well below the ratio of South Korea and Taiwan.

Source: Labor Force Survey, MOM

 

Singapore 's investment in education and training amounts to about 20 percent of the government's spending annually. Primary education is free and more than 93 percent of children between the ages of 6 and 17 are enrolled in school. The adult literacy rate in 1997 was 92.8 percent. Most Singaporeans speak English, which is the language of business and government. For most, however, English is a second or third language after Mandarin and other Asian languages. Many young people also learn French, German and Japanese.

Singapore s students have often been criticized by onlookers in the business world as lacking creativity. Various reasons are cited, from the rigid control of the government over the lives of its citizens to the existence of the examination system and Confucian principles. In order to combat this perception, the government launched the "Thinking Schools, Learning Nation" program in June of 1998, which hopes to encourage Singapores students to foster their creativity and critical thinking skills.

In addition to public primary and secondary schools, there are some 25 international schools in Singapore, from preschool to college preparatory, established to meet the needs of foreign and local residents alike. Moreover, local universities, technical and vocational institutes produce about 22,000 graduates annually in a variety of fields.

Worker training is as important as formal education in Singapore, evidenced in the fact that the government has devoted the resources of an entire government agency, the Ministry of Manpower, to the refinement of workers skills. The main objective of such continued training even after workers have found employment is to prepare the countrys workers with the skills needed to compete in the growing fields of the future. Singapore's policy-makers are promoting creation of a training system involving businesses, government agencies, labor groups and various training institutes.

Special government training programs operate in cooperation with corporations to make use of their expertise and technical knowledge. Many international manufacturing corporations have cooperated with the EDB in a program to train engineers and technicians in applying new technologies in various industries.

To encourage firms to retrain workers on a continuous basis, the Singapore government established the Skills Development Fund. It is financed by a required payment by employers of 1 percent of base pay of any worker earning less than S$1200 (about US$706) monthly. Firms may then qualify to use money from the fund to finance training programs. The government has asked companies to spend 4 percent of their payroll on training but the request is non-binding.

Wages

Wages and salaries in Singapore are comparable to pay in other industrialized countries including Japan and the United States. Today, the National Wage Council (NWC) is contemplating whether to recommend a wage freeze or even a wage cut to help Singaporean companies stay in business in the current harsh economic climate.

The salaries of managers, executives, and professionals vary considerably with ability, experience and type of business. Annual bonuses and other benefits can add significantly to base salaries. Bonuses are common at all levels of employment and usually are equal to at least one month's wages or salary after a year of service. But bonuses can be as much at two to four months' pay.

The government exerts much control over wage policy and other matters affecting labor conditions through the National Wage Council (NWC), which includes representatives from government, business and labor. The NWC sets guidelines for annual wage negotiations between employers and workers. However, government dictates have been relatively ineffective in this area in the past, for the labor shortage has caused employers to inflate wages in competition for scarce employees.

In the mid-1980s, the government introduced the flexi-wage concept, under which annual wage increases lag behind productivity growth. Firms performing well reward employees with higher bonuses instead of wage increases. The measure seeks to relieve companies of pressure to constantly raise wages and to motivate workers to take a direct interest in their company's profitability.

Average Weekly Earnings by Industry for Blue-Collar Workers 1991

Industry	S$ US$
All Industry	327.36 192.56
Manufacturing	306.38 180.22
Construction	279.68 164.52
Commerce	278.40 163.76
Transportation	329.12 193.60
Finance	423.36 249.04

Source: U.S. Department of Labor

Average Weekly Earnings by Industry for Blue-Collar Workers 1997

Industry	S$ US$
All Industry	620.00 364.71
Manufacturing	621.75 365.74
Construction	497.75 292.79
Commerce	522.00 307.06
Transportation	645.25 379.56
Finance	751.00 441.76

Source: Singapore Bureau of Statistics

Benefits

Social Security

In addition to basic pay, employers are required by law to contribute 20 percent of an employee's base pay to the Central Provident Fund (CPF), a government-managed social security program.Employees also pay 20 percent of their base pay to the fund. Many businesses are now petitioning to the NWC that employer contributions should be cut between 5 and 10 percent during the current economic slowdown. The Ministry of Manpower has asserted, however, that the percentage required for contribution to the fund is not likely to be cut as much as it was in the last recession in the mid-1980s, when employer contributions were sliced by 15 percent. Singapores government will ultimately make the decision for such cuts.

Monthly contributions are subject to a cap of S$1050 for the employer and S$1350 for the employee (about US$618 and US$794 respectively). These figures are based on a pay ceiling of S$6000 (about US$3529) per month. To encourage the continued employment of older workers, rates of contribution start to decline at age 55. For workers between 55 and 59, the employer pays 7.5 percent and the employee pays 12.5 percent. The rate drops to 7.5 percent each for workers between 60 and 64 and to 5 percent each for workers 65 and older.

Most foreign employers and workers are also required to contribute to the CPF, although foreign nationals with employment or professional visit passes (as opposed to work permits) may apply for an exemption. If these foreign nationals decide to take up permanent residence in Singapore, they are allowed to contribute to the CPF at a reduced rate for the first two years of their residency. After this time, they and their employers are required to pay the full 20 percent each.

The CPF covers workers' health insurance and retirement. Employees may draw from their CPF savings when they reach the voluntary retirement age of 55. (In view of the worsening labor shortage, the retirement age may soon change to 60.) Employees also may withdraw their savings if they leave Singapore indefinitely, become permanently disabled, or lose their sanity.

The CPF also may be used to purchase government-built housing, to purchase life insurance coverage, to pay hospitalization expenses, to buy catastrophic illness insurance for CPF members and their immediate families, to make approved investments, and to finance the further education of CPF members or of their children.

Accident Insurance

In addition to the CPF benefits, the Workmen's Compensation Act requires employers to carry accident insurance for workers who suffer work-related injury or illness. A worker who sustains temporary injuries receives normal pay for the first 14 days of recovery (extended to 60 days if the injury requires hospitalization), after which the worker receives two-thirds of his normal wage. For permanent disabilities, the minimum compensation is S$49,000 (about US$28,824) and the maximum is S$147,000 (about US$86,471). When death results from work-related causes, compensation ranges from S$37,000 (about US$21,765) to S$111,000 (about US$65,294). These minimums and maximums are meant to reflect the median monthly wage for workers covered by the Workmens Compensation Act. The employer is not liable for any injury caused deliberately by the worker. Further, non-manual workers whose total earnings exceed S$1,600 (about US$941) per month and outworkers (those who contract work from another business and perform the required duties at home or somewhere not under the control of the person who gave the assignment) are not eligible for this type of compensation. If either the employer or the worker disputes the amount awarded by the Act, he or she can appeal to the Commissioner for Manpower within 14 days. If the amount is not disputed within this 14-day period, then both sides are deemed to have agreed on the amount awarded.

Working Hours

The Employment Act limits normal working hours to 44 hours per week. Typically, clerical staff work an average of 40 to 42 hours per week, excluding overtime. Overtime pay (in excess of 44 hours per week) is one-and-a-half times the basic hourly rate. Pay for time worked on holidays and normal days off is two-and-a-half times the normal rate. In theory, overtime may not exceed 72 hours per month.

Vacation

Under the Employment Act, all workers are entitled to seven days of paid annual vacation during their first year of service and an additional day of paid leave for every year after that. This applies to a maximum of 14 extra days, or 21 days total.

Vacation for executives and senior managers is not covered by the Employment Act and is usually determined in individual employment contracts. Top local managers and executives usually take three to four weeks of paid vacation a year. Top foreign personnel typically have four to six weeks.

Special Leave

The Employment Act provides guidelines for employee sick leave and maternity leave for women. After one consecutive year of service with the same employer, a worker is entitled to 14 days of paid sick leave per year and up to 60 days if hospitalization is required. In the case of the death of a member of a full-time employees immediate family, an average of three days leave is normally given.

A female employee is entitled to maternity leave of four weeks before childbirth and four weeks after with full pay, provided that she has been at the same company for at least 180 days before taking leave. This policy applies only to a woman's first two children. Paternity leave of one to two days is also quite common. The employer pays for medical examinations during sick leave and maternity leave. Some companies extend this benefit to members of an employee's immediate family.

Under the Employment Act, eleven days are designated legal paid holidays:

• New Years Day January 1
• Chinese New Year Variable
• Good Friday Variable
• Labor Day May 1
• Vesak Day Variable
• Hari Raya Puasa (Malay Holiday) Variable
• National Day August 9
• Hari Raya Haji (Malay Holiday) Variable
• Deepavali (Indian New Year) Variable
• Christmas Day December 25

Holidays that fall on a Sunday are observed as a paid holiday on the following Monday.

Termination of Employment

Under the Employment Act, employers terminating an employment contract must give one day's notice if the individual has been employed for less than 26 weeks, one week's notice for 26 weeks to two years, two weeks' notice for two to five years, and four weeks' notice for five or more years of employment. Employers who do not follow these minimum guidelines can be required to pay compensation to the worker.

Labor Relations

In 1997, there were 82 registered employee trade unions with 260,130 members. The unionization rate has dropped steadily since the 1970s, but it has risen slightly in the past two years. In 1997, 14 percent of all workers belonged to a union. Workers are not required to join a union but worker representation is usually common at large companies, especially in the manufacturing industry.

Singapore has seen little labor unrest. Except for one work stoppage in 1986, there have been no strikes since the late 1970s. The government makes it difficult for unions to strike and generally supports management. The Industrial Relations Act provides the framework for collective bargaining, negotiations and conciliation.

Business Culture

Singapore 's business environment is dominated by people of Chinese descent, who comprise close to 76 percent of the population. Their mentality still is shaped largely by the teachings of Confucius. The basic tenets of Confucian thought are obedience to and respect for superiors and parents, duty to family and loyalty to friends, humility, sincerity and courtesy.

In general, the word "individualism" has a negative connotation in Chinese, and people can create resentment by standing apart from the crowd. Conservatism, group consciousness, and unquestioning acceptance of the status quo are norms of Confucian behavior.

Appearances are critical in the Chinese business culture. Having face is a mark of personal dignity that includes having a high status in the eyes of one's peers. Foreigners can ruin business prospects and even invite retribution if they do anything that could cause someone to lose face, either through insults or criticism in front of others. Another way to cause someone to lose face is to treat him or her as an underling when his or her official status in an organization is, in fact, high. Giving someone face should be done whenever the situation warrants. Nonetheless, it is not a good idea to praise others too much, for that can make one appear insincere.

As in China, Taiwan and Hong Kong, little or no distinction is made between business and personal relationships. To succeed in Singapore, a foreign businessperson must cultivate close personal ties with business associates and earn their respect and trust. The best way to make contact with potential business associates is to have a mutual friend serve as an intermediary and initiator. Further, Chinese give gifts to express friendship and symbolize hopes for prosperity in future business ventures. Although this is not an absolute requirement, foreign businesspeople should spend time selecting appropriate presents before traveling to Singapore.

Recruiting Strategies

As in the other "tigers" of Southeast Asia ( Hong Kong, Taiwan, South Korea), employers have three basic recruiting options: they can hire individuals educated and trained locally, "returnees" (locals educated and trained abroad who want to return home), or expatriates.

Locals

Hiring local residents has both benefits and drawbacks. One benefit is that they know the language and culture and often have connections to local institutions or government agencies that can be helpful to employers. It is usually slightly less expensive to hire locals because, in general, they have somewhat lower salary requirements than returnees or expatriates and no relocation costs are incurred.

On the other hand, some Singaporean locals may be unfamiliar with western business practices and unable to communicate well in English, thereby requiring training. Moreover, a severe shortage of skilled labor often makes local recruiting difficult. Furthermore, as noted before, many have noted the lack of creativity and inability to perform without clearly defined goals that thus far has characterized Singapores labor force.

Many local and foreign companies recruit directly from local colleges and universities. While these institutions are a good source of entry-level staff, they may not fulfill companies' needs for professionals experienced in management, finance, marketing and human resources.

Another recruiting technique is newspaper advertising, which may be inexpensive but sometimes presents translation problems. Also, a large backlog of advertising might cause delays in publication of ads. These ads are likely to bring applications from unqualified candidates. However, once a company identifies the potential capable candidates, confirming their qualifications and checking references can be done relatively easily because records often are complete and language barriers generally do not hinder communication.

Personal connections sometimes lead employees to suggest other candidates. But a foreign business that hires employees based solely on these connections and references may risk hiring incompetent personnel or persons who are difficult to fire without bruising sensitivities and creating conflicts among other employees.

Foreign companies seeking to recruit qualified local employees must customarily offer better salary and benefits packages than those provided by local employers. They also must offer other incentives, including opportunities for advancement, career development projects, and the like. Foreign employers must also overcome other disadvantages that local managers might perceive in working for non-Singaporean companies. These may include an absence of the types of personal relationships with peers and superiors that they would find in a local company, a foreign company's weak reputation or image in the local economy, or even a company's uncertain business prospects. In addition, a foreign company must convince its employees that it is in Singapore for the long-term and as such is willing to invest time and money in training its employees.

With a scarcity of qualified candidates for managerial and professional positions, international companies often "poach" experienced locals from other companies. Recruiting companies often utilize this strategy successfully. To get desired individuals to leave their current employers, however, companies must pay significantly more, either in salary or non-salary perks. This practice drives the wages of skilled local workers even higher.

Returnees

Foreign employers often recruit returnees, who prefer to join a foreign company or joint venture in their native country because they offer a higher salary and better career opportunities than they may find in the U.S. or Europe. Returnees can be desirable candidates because they are familiar with western business practices, as well as their native culture and business environment. A returnee who has studied in the U.S., Canada, Australia or England presumably knows English better than most locals. Returnees might have connections with local government agencies or other organizations that could be helpful to foreign employers. Also, they may be able to find relatively inexpensive housing without much difficulty through relatives or friends.

Expatriates  

Expatriates also may be desirable job candidates. Skilled, with previous work experience in their home countries or elsewhere, they can be particularly useful to a company just establishing operations in Singapore. Indeed, the "expat" may already be familiar with the organization and its business activities. Singapores government has already recognized that in order to compete in todays marketplace, foreign workers are a necessity. Singapores perennial labor shortage occurs at all skill levels, so the country has endeavored to make itself more open and attractive to expatriate workers. The government hopes that these foreign nationals will bring with them both the skills that they acquired while training and working in their home countries and also the willingness to share these skills with the local worker population.

Expatriates, however, generally require significantly larger compensation packages than locals or returnees, including salary, housing benefits, a car, education for their children, medical care and "hardship" allowances. These perks can dramatically increase the cost of hiring expatriates. Also, there is no guarantee that an expatriate from a western country can function successfully in the Asian business culture. However, since Singapore is quite Westernized, this is less of a problem than it is in other Asian countries.

Conclusion

As is the case elsewhere in Asia, Singapore faces political uncertainties, particularly with respect to the influences and actions of China. In addition, the economic instability that currently characterizes the region will, at least in the short term, continue to obstruct Singapores economic expansion. Nevertheless, its continually growing economy and increasing western sophistication bode well for its future. Western businesses that come to terms with its human resources issues can only enhance their prospects for success.

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