Jobscentral: Easy access to foreign labor depresses salaries

“In spite of the uncertain and rather slow global economy, Singapore employers are still faced with a very tight local labour market. This means that employers find it hard to even replace staff who resign and even harder to recruit new staff for expansion. This problem is further compounded by our overall shift towards less reliance on foreigners.

The situation is especially bad for SMEs, who may not have the resources and ability to compete with MNCs or the government in terms of compensation, benefits and career development and who have traditionally relied on foreigners. Certain sectors like the retail, hospitality and healthcare section face a tough time getting the people and employment permits they need to run their businesses,” ~Mr Lim Der Shing, CEO of JobsCentral Group.


Mr Lim Der Shing, the CEO of a leading job portal highlighted that the government’s recent measure to slow the rapid intake of foreign labor has hurt Small and Medium Enterprises(SMEs) badly in human resource. He pointed out that this is exceptionally true for SMEs who have traditionally relied on foreigners and those who offer lesser salaries and remunerations. Hence it is apparent that an easy access to foreign manpower will depress wages.


Many Singapore SMEs are kept alive from the savings on salaries when they hire foreign employees, while the competent ones get to chart record profit. The PAP government has always emphasized its pro-business stance, which have collaborated with these businesses by giving some 1 million foreigners employment over the past decade in the name of tripartism. Employers in Singapore have no worries knowing full well the PAP government is behind them providing a secure supply of cheap labor which eventually entrench an unhealthy human resource practice of hire-and-fire. As a result, disgruntled employees who are unhappy with their salaries are shown the door, causing salaries across all levels of jobs to be depressed as employers have free access to foreigners from 3rd world countries who are more than happy to work in Singapore for half the local’s pay.


As the PAP government has always condemned protectionism for its citizens, even going to the extent of calling ‘welfare’ a dirty word, the average Singaporean employees become exploited and demoralized from the low salary. Productivity and quality take the backseat as Singapore companies cares more about its cost-control over its people. The cheap foreign manpower hired performed worse as they are unqualified and unaccustomed to Singapore’s way of work. Singapore’s productivity index has since consecutively fallen every year for 8 years since 2004.


However despite statistics and warnings from economists, the PAP government remain oblivious on the foreign manpower labor. It is recently reported in the Straits Times that the number of  S-Pass holders has grown 12.46% in just 6 months from end-2011 to June-2012 [Source], or according to the Manpower Minister Tan Chuan Jin himself: a whopping 286% increase in the 4.5 years between end-2007 and June-2012 [Source].


The heavy reliance on cheap foreign labor in Singapore over the past 5 years has resulted in a low purchasing power which is believed to have spiraled a series of social problems with the more important ones like the low birth rate and loss of retirement. Singapore’s workforce has relegated to be one of the worse in the world and the reputation damage done has repelled foreign high quality and high value industries from investing in Singapore. The aerospace industry in Singapore has failed to attract plane makers like Boeing who have classified Singapore as a “second-tier” country in Southeast Asia for plane assembly [Source].


It is understood that the PAP government collects hundreds of millions of foreign worker levies every month [Source], and it is widely believed that they do not want to lose this source of “income” to cushion the investment losses made during the 2008 subprime crisis by Temasek Holdings.


One thought on “Jobscentral: Easy access to foreign labor depresses salaries

  1. Pingback: » The West Coast tragedy Wiki Temasek

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