S’poreans and foreigners both paying the price

On 4 December at a National Trades Union Congress (NTUC) forum for employers and unions, NTUC chief Lim Swee Say and Acting Manpower Minister Gan Kim Yong were both reduced to imploring employers to retrench foreign workers before Singaporean workers, in order to minimise job losses for the latter, who make up a sizeable bloc of voters in every general election. This is a truly sorry state of affairs in Singapore’s employment landscape.

Firstly, it appears the government has taken a cold, utilitarian attitude towards foreign workers. It is as if these workers are soulless machines, who should be simply discarded when they are no longer needed. In fact, each of these workers is probably the sole breadwinner whose remittances support a large extended family back home.

Secondly and more importantly for Singaporeans is the fact that if the government has to beg employers to retrench foreigners first, it implies that their policies so steeply favour foreigners, such that if left to market forces, employers would naturally want to shed Singaporeans first.

Mr Lim said it “makes business sense” to release foreigners first during a downturn if a Singaporean could do the same job equally well. His reasoning is that when the economy recovers, it will be easier to source for foreign labour than compete for local talents with business rivals.

The Minister evidently has never been a business owner himself. If both can do the job equally well, it will make better business sense to axe the Singaporeans first, since they carry the extra loaded costs of reservist duty (for men), maternity leave (for women), employer CPF contributions and paid childcare leave (for both). In addition, family responsibilities and higher costs of living compel Singaporeans to ask for higher wages to meet their living expenses. They will also be less willing to work overtime or commute to far flung factory locations as this will take away time from their families (or their second jobs, in many cases). Foreign workers, who are here without their families, have less reason to make such demands. It should therefore be the government’s duty to its citizens to ensure that the total cost of hiring a foreign worker is not lower than the cost of hiring a Singaporean.

The government’s argument is that foreigner workers — referring to blue collar workers, not “foreign talent” — provide low cost labour for our companies in good times, preventing these companies from uprooting and moving to lower cost countries like China and Vietnam, which will result in even more Singaporean job losses.

While this argument sounds good to the ears on the surface, it obscures the fact that no matter how lowly we pay our workers, the cost base of Singapore is still much higher than in China and Vietnam, or even Malaysia. Human resources firm ECA International Asia recently reported that Singapore has leapt 27 places up the global rankings of the world’s most expensive places to live in.

For most companies with operations here, the highest business expense after wages is office rentals. High rentals are caused in part by the government allowing “market forces” to run amok in the 1990s and property prices to rise so steeply that it has rendered our economy uncompetitive. Of course, the government will not admit that rentals make us uncompetitive — they will insist that our wages are the culprit. Nevertheless, even wages, while kept low for blue collar workers, have risen significantly over the past few years for senior managers and “foreign talent”, and this undoubtedly accounts for a large portion of companies’ wage bill.

The pittance paid to foreign workers has effectively suppressed the wages of Singaporean blue collar workers. At the end of the day, not only do Singaporeans lose out in wages and jobs, but so do foreign workers, whose living conditions and low salaries (after deducting the government levy) leave much to be desired for a developed country like Singapore which claims to uphold migrant worker rights.

The only ones who benefit are the corporations and their shareholders — and of course the people whose bonuses are tied to the country’s GDP growth rate, not the unemployment rate.

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3 thoughts on “S’poreans and foreigners both paying the price”

  1. “The government’s argument is that foreigner workers — referring to blue collar workers, not “foreign talent” — provide low cost labour for our companies in good times, preventing these companies from uprooting and moving to lower cost countries like China and Vietnam, which will result in even more Singaporean job losses.”

    I’ve never found this argument to be very convincing. While this argument may be true for the manufacturing industries, the fact remains that a large portion of Singapore’s economy is service-based which cannot be shifted. Will insisting on Singaporean-only bus drivers result in the SBS moving to China? Will restricting the employment of foreigners in the retail sector really drive retailers to Vietnam? Will F&B businesses close down if they had to hire more Singaporean workers?

  2. While I am not totally convinced by the govt’s argument, I also would not want to see discrimination against locally anchored companies. Ultimately, there has to be a mindset shift regarding how much we pay workers. Are we willing to pay construction workers a minimum wage of say $1,300? If so, I’m sure there will be Singaporeans working in the construction industry. It may drive wage costs up, but that is the price we may need to pay for a more equitable society. I think other costs like rentals and executive salaries can be brought down to offset the increase in low wage earners’ salaries.

  3. “While I am not totally convinced by the govt’s argument, I also would not want to see discrimination against locally anchored companies.”

    Some discrimination may be necessary in order to improve the employment conditions of low-skill local workers. Unlike manufacturing, many service industries do not experience drastic cyclical business conditions. For instance, the size of the transport industries is fairly constant. People don’t change their commuting habits during a boom or during a recession. Thus, it would be possible to restrict the inflow of foreign labout into industries like transport, public utilities, healthcare, dining, etc.

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