Three months since taking over the reins at the Manpower Ministry, Mr Gan Kim Yong talks about the headaches and highlights of his job. Excerpts from the interview:

Inflation and income

Mr Gan: 'We have learnt from our experience in the 1970s and 1980s - when wages rise in response to inflation, the outcome is not desirable.

Then, when prices increased, pressure on wages went up and employers had to raise wages. Employers' costs went up and they had to raise prices further to support higher wages.

This created a wage-price spiral and led to further inflation. So wages will never be able to catch up anyway.

We understand the pressures employees face when prices go up. That's why the Government has measures like the Workfare Income Supplement scheme and Growth Dividends scheme to cushion some of this impact.'

Local versus foreigner debate

On the continuing need for foreign workers 

Mr Gan: 'Foreign workers will continue to feature in Singapore's labour market as they play a useful role. Some are doing jobs that fewer Singaporeans want to do, especially in construction. Some are filling in the talent gap we may have. Some are here to provide the vibrancy, the diversity and allow our economy to be competitive.

We need to help Singaporeans understand that foreigners are here to make contributions to our nation, so they are able to accept them.'

On views by some academics and retired top civil servant Ngiam Tong Dow that Singapore is too welcoming

Mr Gan: 'Even during Mr Ngiam's time, we had a significant number of foreign workers from the construction sector.

If we want to restrict numbers, there can only be two ways: Force Singaporeans into that sector or slow down development and have fewer construction projects. Instead of building the integrated resorts in two years, let's take four or five years to do so. It's possible, but not desirable.

We are not too open. We have a quota system. When the economy is slowing down, we tighten the quota so there will be more jobs for Singaporeans. When the economy is expanding, we adjust accordingly.'

On allowing in only foreigners who add value

Mr Gan: 'Mr Ngiam talked about whether we should draw a line - that those whom we take in must be better than Singaporeans. But again, there would be some jobs that fewer Singaporeans want to do, like construction. It's not practical to draw a line. Then who's going to do construction jobs?'

On improving earnings for low-wage workers like cleaners and labourers

Mr Gan: 'Many new workers have come into the market. Some of them are doing part-time work. So they slow down the increase in the lower end of the jobs.

These jobs also reflect the operating cost of companies; so they have to make sure their costs are managed. Thus, some of the wages may not increase as fast as that in other jobs.'

On the view that foreign workers depress such wages

Mr Gan: 'I don't think foreigners are to blame. By getting rid of foreigners, it does not mean the salaries of such workers will automatically increase if it doesn't come with increases in productivity.'

This article was first published in The Straits Times on 10 July 2008.