Singapore businesses addicted to cheap foreign labor

Foreign workers breakdown

Foreign workers breakdown

The latest government-linked business organization to join the call to ease foreign labor is the Restaurant Association of Singapore(RAS).  RAS have called for the government to review the curbs on foreign workers and threatened that “Singapore may also lose its reputation as a global city with a vibrant food and beverage (F&B) sector”. The Ministry of Manpower tightened the foreign worker quota and raised the foreign worker levy in a bid to increase salaries and employment for Singaporean low income workers. While the latest policy have its limited impact to improving the life of the low income workers, the reversing of such policy to the days where cheap foreign labor were easily hired will only spell doom for low income Singaporeans.

RAS have also threatened higher food prices and a drop in quality due to the lack of manpower. They also fully support the White Paper which has recently been passed in a landslide vote of 77 to 13. Their reasoning goes that a larger population can have a positive impact on the economy and the government which derives its revenue primarily from various forms of taxation, such as Consumption Tax, Income Tax, and Property Tax. Joining the call to easing foreign labor access are the Singapore National Employer Federation(SNEF) and Association of Small and Medium Enterprises(ASMEs). Business associations have been pressured by their employer members to urge the PAP government to allow more cheap foreign labor for them to be exploited. The adverse effects of an influx of foreigners were seen during the period of 2006 and 2011, where salaries across the middle and low income earners were stagnated and more Singaporeans were displaced out by their cheaper foreign counterpart. Productivity has also taken a dive with the influx of cheap foreign labor.

What Singapore is in need today is not a larger population, even though domestic demand will be strengthened and Singapore will be less susceptible to the global market fluctuations. Singapore needs more productive people to bring value to Singaporeans and chart a healthy GDP that is not inflated by property sales. It is no surprise businesses have an insatiable appetite for cheap foreign labor, especially when strikes are illegal and unions are non-existent. The PAP government have a responsibility not only towards the businesses, but also towards the people who are largely employees.

RAS, SNEF and ASMEs could only see from the profitable point of view, but they are no business leaders the likes of MNCs which see employees as the most precious resources in a company. Human resource practices in Singapore leave much to be desired, especially for many Small and Medium Enterprises(SMEs) bending MOM’s regulations by practicing salary-payback and under-declaring overtime work. S-Pass holders in Singapore are mandated by law to be paid at least $2000 a month, but many SMEs especially in the service and FnB industries make their S-pass workers pay back up to $500 or threaten that the workers be sent back to their country if they don’t comply. The MOM have no solutions to such underhanded tactics and the common Singaporean loses his allure as a quality worker simply because his salary is too high. A typical construction worker from China and Bangladesh on a work permit earns about $800 a month.

The more competent businesses are charting record profits every year and the mediocre ones are merely surviving from the savings they made from the cheap foreign labor. If the PAP government refuse to tighten the foreign worker quota further, more Singaporeans will be jobless and salaries will depress further. The loss of income will directly affect family planning and birth rate, which is already at its record low since Independence. Not only are the private sector companies addicted to cheap foreign labor, government-linked companies like SMRT and SBS also maximizes their foreign worker quota in a bid to save on manpower costs.

While manpower costs may be a factor, it is baffling why aren’t the government-linked business associations calling for a reduction in transport costs and rental. Property and transport prices remain the bugbears to both small and big businesses. Such business associations remain far from independence given their relations with the government.

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