Andrew Work (SCMP, 3 August 2007)

A woman arrives in Hong Kong and receives 3 job offers from high end services firms.  She graduated from the best training institutions for her profession.  This Japanese Canadian is perfectly fluent in English, Japanese and French.  Yet she leaves with no job.  The Hong Kong businesses lose clients, particularly from the high spending Japanese.  Why?

Free movement of money and goods through our city has been the cornerstone of our economic success for decades.  Ironically however, as a services economy, we fail miserably when it comes to free flow of people and services.  Previously, if one could ‘touch-base’ – dry land – they could stay.  This generation ‘under the Lion Rock’ started in tin-roof sheds and built Hong Kong into the greatest city in Asia.
 
Our immigration attitude shifted during the dark years from the Asian Financial Crash to our recovery from SARS.  ‘Protecting jobs’ became a subtle new mindset, long familiar to the zero-sum mentality exhibited by socialists. When government restricts labour markets by limiting employers’ freedom to compensate and hire and fire employees, jobs become scarce.  Combine this with generous handouts that entice new arrivals into joining the welfare state, and you have a recipe for xenophobia.  Immigrants are portrayed as either stealing jobs or depressing wages by working illegally.  Simultaneously, they are branded as perennial welfare cases, draining the state coffers and becoming a burden on taxpayers.
 
This is not limited to the low end of the pay scale.  The Medical Council has used its government policed and enforced powers to steadily restrict who can practice in Hong Kong.  At one time, doctors from around the world could come and practice.  Now, Hong Kong is full of very talented medical professors who teach our students – but can’t practice here.
 
In modern economies, political leaders often bemoan the demographic problem whereby we lack enough workers to support our aged in the future.  Common political responses include pro-family policies such as tax breaks and baby bonuses for parents.
 
However, we need more workers, not babies.  Employers know it.  Governments are starting to realize it.  Singapore has declared its intention to grow its population to over 6.5 million by more than doubling its expatriate population[i].  They are serious about making Singapore more attractive to skilled, educated workers by creating new jobs, lifestyle and residential options.
 
This is more sensible than the ‘protect our limited jobs from foreigners’ mentality.  But there is a serious flaw here:  Immigration officials are terrible predictors of future human resource needs.  If they weren’t, they would make much more as human resource and executive search professionals. But their mentality is backwards and their powers the opposite of what it takes to attract wealth creators.  Theirs is the power to say “NO!”  No one is hired by immigration – only denied the opportunity to work.
 Sir John Cowperthwaite resisted giving statistics on unemployment to British officials for fear they would attempt central planning of labour.  He said, “In the long run, the aggregate of  decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government, and certainly the harm is likely to be counteracted faster.”

Unfortunately today, his words go unheeded.  Immigration officials fall prey to the fallacy that central planning works.  All the skills based immigration programs in the world today would reject the younger Hari Harilela, Allan Zeman and Li Ka Shing.  They had no PhD’s, no specialized skills and no reason to impress any immigration official.  And yet they are among Hong Kong’s greatest wealth generators.
 
The woman in the opening paragraph is a hairdresser.  Wealthy Japanese executives can and do send their wives back to Japan to get their hair done by people who speak their language and know their fashion.  Business owners know they need this woman to keep this business in Hong Kong.  Our hairdresser lobby has convinced immigration that they are underemployed and need protection.  This woman could train Hong Kong professionals in the latest techniques and fashion, keep business in Hong Kong and make this city more attractive for high spending tourists and executives.  Businesses propose.  Immigration departments dispose.

If new workers are gainfully employed and have little to no access to the welfare system, there is no reason to deny them the opportunity to work here.  Employers know what they need, who they need, and at what price they need it.   Our government’s role is to provide law and order, not attempt the impossible task of centrally planning the labour market.  It is time to heed Cowperthwaite’s words, abandon immigration planning and open our doors again to honest hard-working people of the world, for their sake and ours.

Kingsbury, Kathleen Singapore’s New Look Time Online.  Thursday, May. 24, 2007, http://www.time.com/time/magazine/article/0,9171,1624897,00.html