Singapore’s economy will contract and go down in a tailspin said Finance Minister

FILE PHOTO: A kitchen assistant takes a break next to an outdoor seating area of a closed restaurant, amid the coronavirus disease (COVID-19) outbreak, in Singapore July 14, 2020. REUTERS/Edgar Su

SINGAPORE (Reuters) - Singapore's finance minister Lawrence Wong said on Tuesday companies would move their business to other places if the financial hub's policies turned overly restrictive, which would send its small and open economy into a tailspin.

"If we are not careful, decades of hard work to build up our business hub will be wasted, our economy will contract and go down in a tailspin," Wong said in parliament. "We will end up with far worse problems and it is not the foreigners but Singaporeans who will ultimately pay the price."

Foreign labour has long been a hot button issue in Singapore, but uncertainties due to the COVID-19 pandemic have increased employment worries among locals as the city state recovers from last year's record recession.

The government has been tightening foreign worker policies for several years while taking steps to promote local hiring, including by raising the salary threshold for issuing work permits.

Wong said the government will continue to ensure qualifying salaries for foreigners keep pace with local wages and is studying how to improve the framework.

Just under 30% of Singapore's 5.7 million people are non-residents, up from around 10% in 1990, according to government statistics. But fewer foreigners pushed the overall population down 0.3% last year due to travel curbs and pandemic-related job losses.

A large chunk of the foreigners are low-paid domestic helpers or manual labourers, but it is the numbers of those in higher-paid professional jobs that have been questioned by opposition parties.