Singapore’s fintech bumps up against immigration curbs

Singapore • Singapore’s goal of becoming a high-tech financial hub is running into real-world problems of labour supply and demand.

Technology start-ups in many countries are fighting to attract skilled workers like software engineers. Yet, in the tiny city-state of Singapore, with a population of 5.6 million, the dearth of talent is particularly acute. The nation’s universities and polytechnic schools churn out what the government estimates are 400 graduates a year with the right qualifications, well short of plans to add 1,000 financial tech (fintech) jobs annually, according to the Singapore Fintech Association (SFA).

As a small, open economy, Singapore relies on foreign talent to help meet its skills needs. Yet, a gradual tightening of immigration rules in recent years is putting pressure on a labour market that’s already feeling the crunch. The number of employment passes — which are granted to foreign professionals in jobs that pay at least S$3,600 (RM10,721) a month — declined last year for the first time in at least five years.

Official data puts demand for technology jobs in financial services at more than 26,200 in 2016, a record high. Surveys by the SFA back up the view of a skills crunch, with 47% of members citing insufficient talent in the country. Data scientists, blockchain developers and computer programmers are most in demand.

The government says it’s trying to strike a balance between an approach that protects local jobs and labour rules that give flexibility to employers in industries where skills short-ages are most severe.

It has specific initiatives to ease the talent crunch in those sectors, such as the capability transfer programme, where companies can seek funding of salaries for foreign specialists. Still, more could be done, said Chia Hock Lai, president of the SFA.

“It would be great if the government can consider experimental schemes”, including a one-year employment pass for technology workers who are vetted by industry associations, “in order to address the immediate talent shortage gap”, he said.

“This would be a balanced approach to protect jobs for locals, which should always be a priority, while still allowing Singapore to capture emerging global opportunities in the area of fintech and blockchain,” he said.

Ravi Menon, MD of the Monetary Authority of Singapore, who is spear-heading the nation’s fintech efforts, said the talent crunch is a global problem and the biggest challenge for the city-state’s burgeoning industry. The central bank is building capacity in the industry through upskilling programmes, but that’s not enough.

“We have to admit and acknowledge that there are some talents or skill sets we just don’t have and we have to remain open to foreign talent,” Menon said at a fintech event in May.

Singapore tightened immigration policy following the 2011 elections, when residents voiced worries that an influx of foreign workers in the past decade had strained services, driven up competition in the property market and threatened the jobs of native-born workers.

A rapidly ageing population has coincided with a slowdown in productivity, and though the government is taking steps through automation and robotics to address that, economists said those moves aren’t going to be enough.

“A more open immigration policy is absolutely necessary to make good the government’s 2%-3% real gross domestic product growth target over the next decade and to sustain Singapore’s economic dynamism,” Mohamed Faiz Nagutha, an economist at Bank of America Merrill Lynch, said in a research note. — Bloomberg