There is suddenly a lot of interest on Minimum Wages, thanks to a Facebook post by Jamus and many criticizing him on this.
In case you have missed, I am re-sharing a speech I made during GE2020 devoted to Minimum Wage and Fighting Poverty. The Workers’ Party makes no apologies for making our case for Minimum Wage, something that has been in our manifestos over multiple GEs already (https://www.youtube.com/watch?v=4y49Vv7uZZ8).
Minimum Wage is Budget neutral, i.e. it will not impact government spending unless the government chooses to subsidise increase in costs or wages.Minimum Wage is also discussed in A levels economics. I had a tea session with a JC Econs teacher today. Econs was my favourite subject at JC but too bad I did not continue at the varsity level. It is under the topic of Microeconomics under government interventions to markets. In a market driven model, wages will be set according to demand for and supply of labour. Theoretically, when the Minimum Wage is set at a higher price than where demand intersects with supply, then it will lead to a drop in quantity demanded and hence there will be some loss of jobs. How much the drop will be will depend on the elasticity of the demand curve. In practice, in many countries where Minimum Wages have been established, there has not been significant job losses. It may lead to an increase in cost of services. In a recent survey, 8 out of 10 Singaporeans expressed a willingness to pay more for essential services. Ironically, almost all of the 100,000 or so whose salaries fall below our recommended $1,300 take-home Minimum Wage are essential service providers. The government is also not alien to the concept of Minimum Wage, except that they practice it for selected industries only via the Progressive Wage Model. That has also led to some increases in cost for certain services, for which Singaporeans had been prepared to pay for. It might take a very long time for the government to move PWM to all sectors, so having a Minimum Wage is a good signal that we wish to leave no workers behind.If we call ourselves a First World country, we must be more equitable in the way we treat lower wage workers. Singapore’s share of GDP for wages is very low compared to other developed countries.
During the TV debate, Jamus had unapologetically made our case to want to push for a higher share of GDP for workers, in line with that of developed countries. If Singaporeans complain that Jamus has misled that we did not say that Minimum Wage may lead to higher cost, I can guarantee that when our GST is raised to 9% (and it certainly will be raised because the PAP had already promised so if it gets the mandate), the costs of everything will immediately rise. The impact will be far greater than Minimum Wage. Singaporeans are prepared for 9% GST but not an increase in wages for the lowest 100,000 of income earners in Singapore?
Note: This article was first written as a Facebook post and re-posted here for easier future referencing.
He made several strong points. Here is an extract from his piece on one part which I wish to follow up on:
“President Halimah Yacob’s in-principle approval was sought and granted for past reserves to be used. …
Approving the use of the reserves is an important task, but it is also equally critical to make sure that it was used for their intended purposes.
Do the elected presidency (EP) and CPA have these monitoring powers? I could not find anything in the Constitution regarding this. But it seems to me that some review has to follow.
If you approve funds for a particular scheme, you should want to know its result, and what action was taken if it did not achieve its objective or fell short. …
The EP’s primary role as a second key safeguarding the country’s reserves is intended to prevent a future rogue government from raiding it. To do this job well, it should have some review powers over whether those funds were used for the purposes which it had approved and if they had achieved their objectives.”
The government’s reply? “I am surprised that both Mr Faisal and Mr Dennis Tan had to ask. It is public information that under our Constitution, the President has access to information about the size of reserves. Under Article 22F of the Constitution, in the exercise of her functions under the Constitution, the President is entitled to any information regarding the reserves. In addition, on the MOF website, it is already mentioned that the President has full information about the size of the reserves.”
Well done then. So it will not take the Accountant-General “52 man-years” to produce the list of physical assets of the Government, something which our first (oops, second – things are sometimes confusing in Singapore) Elected President, the late Mr Ong Teng Cheong had to struggle with the Government on. I am not sure if he ever got his answer.
The mystery of the size of our reserves aside, Mr Han raised the important question of accountability in the way money is spent. No one will question that we need an extraordinary budget to deal with a major global crisis that will impact jobs and lives. Speed is important as the crisis is immediate and widespread. All four budgets were approved in quick time. The combined size of our response to Covid-19 is nearly double the annual government budget. How well will the money be spent? How effective have they been to address the situations they were intended for?
These are important questions because we will need to know for better response to a future crisis on this magnitude. Could the Jobs Support Scheme (JSS) be better designed? Companies that continued to do well or even better during this period, such as the supermarkets, got the JSS too. Some companies have stepped forward to return the money or donate them to charity. Yet, many companies continue to close even with JSS. Jobs continue to be lost. There is no perfect solution. Some form of JSS is necessary, but some post-mortem certainly can be done. How well did the major recipients of the funds respond? Mr Han cited the aviation sector. Yes, they need help for sure. How did they use the money and were they effective? We do not know how much the government has and will continue to spend on fighting the explosive spread of Covid-19 in the crowded foreign employees dormitories. Did we fairly apportion enough of the huge intervention costs to the dorm operators? Did we let off too easily the operators who have not done well in implementing measures to manage epidemic which they should have been doing? Did we execute the rent relief properly such that the money did flow down fast enough to tenants? The list goes on.
The President approved $52 billion from the reserves (the balance are from budget surplus and from borrowings which have to be repaid by the next government). What roles will the President have in scrutinizing how well the money have been spent and how effective the schemes have been. I hope it will be a big and important role. ‘Ownself check ownself’ is not always the best.
Prime Minister Lee addressed the nation yesterday on Singapore’s future in a post COVID-19 world. His speech is the first in a series of national broadcasts with five other Cabinet ministers laying out future plans for the country.
I have a few areas which I’d like to see for Singapore post Covid-19.
(1) First is on domestic wage reforms. Business leader Ho Kwon Ping brought this issue up in an IPS talk in 2012. He presented data in a refreshing way. Ho asked IPS to compile data on the wages of various professions across 9 of the most developed economies in the world.
The finding? Singapore is the MOST UNEQUAL of all developed nations. On average, we pay doctors about four times more than nurses and 11 times more than construction workers. Doctors represent the top end of professional work, nurses the middle range and construction workers represent the low wage. In other developed countries, the disparity is far smaller. Doctors and lawyers were paid slightly better in Singapore than the average elsewhere but the startling fact was how badly we paid the low wage workers. In Germany and Australia, a construction worker is paid HALF that of the average doctor! Hong Kong, a small and open economy like ours, paid nurses a third that of doctors. Construction workers earned a quarter that of doctors!
Ho called it the incomplete wage revolution. It began in the 1980s as we reformed the export-oriented industries. Factories that relied on low wage workers shifted out. We had to move up the value-added chain with higher wages. Today, we have high value-added export and services industries that pay decent wages. The trouble was with our domestic industries. There are some industries that cannot be shifted out – we will need to have cleaners, gardeners, security guards, construction workers and retail assistants in Singapore. Instead of also increasing wages gradually and allowing companies to figure how to make workers progressively more productive, we had large-scale import of low wage migrant workers. The situation started to explode in the 1990s where we grew from 311,000 migrant workers in 1990 to over 1.42 million by 2019, the vast majority of whom are low wage. Foreign workers account for 38% of our workforce today, stretching the limits which a small country like Singapore can take.
The large influx of migrant workers over such a sustained period depressed the wages of local low skilled workers who had remained in the domestic industries. Employers continued to fill with migrant workers as the demand went up. Levies started increasing when the government wanted to force companies to hire locals and be less reliant on foreigners. I believe many of the measures were done too late. We were already having many low wage migrant workers willing to work for very little. The better and more experienced migrant workers can find better paying jobs in other countries. The higher levies and accommodation costs made businesses look for cheaper workers, never mind that their skill levels are not there and that they do not speak much English.
Today, Singapore face a rapidly changing world with lots of technology disruptions and with our neighbours also hungry for success. We are now presented with the disruptions due to the pandemic. We have China and USA on hostile relationship that is impacting world trade. These are all known facts. Even before the pandemic started, we were already seeing higher retrenchments amongst PMETs and challenging operating environment for our companies. There is mismatch between training and employment opportunities. With the pandemic, more jobs will be lost. More companies will close down.
We can use this current period of job stresses to transform certain domestic industries. It will take big government interventions but we can make certain jobs more viable for Singaporeans, to progressively pay better for technical skills like in other developed economies, and to gradually move the industry up the productivity path. We should seriously state our intent by setting Minimum Wages. We want to match the Swiss standard of living but our model for growth had so far been that of Dubai’s and not Switzerland’s.
(2) I am concerned as to our strategy on low wage migrant workers. This is an old issue, raised by experts from time to time. Even our founding leaders such as the late Dr Goh Keng Swee and the late Mr Lee Kuan Yew had warned about becoming over-reliant on migrant workers or having too many of them. We have blown past all the numbers they had warned about. In the 2013 Population White Paper debate, we were told to accept 1-2% increase in migrant workers each year or face economic decline. The numbers continue to rise after that debate. We could reach 6.9 million population in 10 years’ time and far more after that. This would result in a society with much higher income and wealth inequality, higher pandemic risks, as well as probably much higher xenophobia, social divisions, overcrowding, less social well-being and less social capital and national solidarity.
Beyond providing better accommodation, we need to look at how to bring in more productive foreign workers so that we can have a better starting base and can pay them better. I am not an expert. I suspect there are lots of low hanging fruits we can pluck by first recruiting better. Currently, the middleman makes big bucks bringing able-bodied workers in from low wage countries willing to pay the huge fees to come to Singapore. Many may not have relevant skills. Many come saddled with debts, desperately afraid of being sent back home.
Singapore has done some small scale setting up of ITE-type of training in neighbouring countries on government to government relationship. I think if we can look at places where we recruit large number of migrant workers. We can put our vocational training expertise to good use. If we can have more productive workers already trained at source; familiar with the tools, processes and automation needed in Singapore, I believe we can jump start productivity. Having such institutions at source can also offer better transparency and links for recruitment. The implementation may need more thoughts and strong government backing to be workable. I think this can uplift productivity and wages at the low end, and allow us to do with fewer numbers of workers. And I believe that if we can build up a strong pipeline of skilled overseas workers, coupled with aggressive investment in better construction processes and automation, we might even be able to create globally competitive Singapore construction companies.
The welfare of workers can also be better taken care of. We can think of careers for them to move upwards while in Singapore. A few months ago, I came across a former foreign domestic worker who did part time studies in early childhood when in Singapore (she had a very supporter employer), and is now a trained preschool teacher here after finishing her domestic helper contract. Such stories are few and far in between. Most come, work hard with outdated and low productivity methods and return home with some savings to do other things. I believe few low wage migrant workers make it up the career ladder in Singapore. Many years ago, Singapore thrived because we provided opportunities for our low wage migrant workers. The innovative and hardworking ones climbed in their career and even start businesses in Singapore. Many of our big local institutions had started that way.
(3) We need to free up the Singapore spirit. We are victim of our past successes – we have grown risk averse. We celebrate innovation only when it meets the government’s agenda but clamp down on alternative views. I wrote about this last month – Monopoly of wisdom will cripple Singapore. I cited Sonny Liew as an example.
Be open. Be free spirited. Be bold. Our past leaders were so. PM Lee’s speech yesterday recounted how Singapore had overcome. Yes, we did. We overcame the lack of an armed forces with a modern force built on national service and modernisation. We overcame housing problem by being socialist – mass land acquisition from the rich and building HDB flats for as many Singaporeans as possible. We cleaned up the Singapore river, and more. Sure, we can do it again. There was boldness in the early leaders. There were no past successes to safeguard, only a future to aim towards. Bold ideas had to be tried.
These days, I noticed that many have become afraid to take risk. There are tried and tested ways to succeed. Just follow rules. Leaders in the government service or political office bearers are rotated frequently. We become wary of projects that may take years to see results or that cut across ministries or are seen as ‘risky’. We become afraid to let smaller start-ups have a go at projects in case we have to answer if projects fail. We award at higher costs to companies with big names so that if they fail, it will not be the fault of the evaluation team.
If we are to build world leading companies, to pioneer big brands that can fly the Singapore flag all over the world, we need to free up our spirit, not mute it. Our reforms cannot start only when Singaporeans enter the workforce. It must start from school. In education, we are again victims of our past successes. Our schools were earlier reformed to make the education processes more efficient to train up workers for incoming investments and to fill up jobs. We thought we had figured out the formula for sorting out students by abilities and then fast track them along career paths. We cannot rely on model answers, for the new world economy may not conform to known models. We need to celebrate ambiguity in education. We need students to be bold to ask questions. We need them to create.
(4) I believe Singaporeans are resilient. In recent years, with the growing mismatch between jobs and training, more have switched to the gig economy. Food delivery and private hire driving are not easy work. Yet PMET Singaporeans, many retrenched or in low paying jobs, turned to these trades to find a way to make a living. We will need to reclaim PMET jobs for Singaporeans and to work out viable career paths for Singaporeans in domestic industries, many of which are too low-paying to sustain the high costs of living in Singapore.
Being more resilient also means better preparedness in food and other supplies. Yes, it is great that we have Polish eggs and Arabian shrimps. MTI is doing right by seeking new sources of food and essential supplies. I think it would be just as great if Temasek takes the lead to invest aggressively so that we own critical food sources overseas. Sure, we might still be hit with supply restrictions such as what had happened over masks in Taiwan recently. To overcome our smallness in size, we may need to expand more aggressively into ownership of critical resources outside of Singapore.
Let’s look forward to a more resilient, more creative, more productive and more egalitarian Singapore post Covid-19.
Note: The views are that of the author. I had an earlier discussion with Ku Swee Yong where we found that we share similar ideas about having some ITE-type institutions in countries with large number of migrant workers bound for Singapore.
He explained his calculations as follow: Singapore now has 300,000 construction workers. IF a Singaporean is three times as productive, then we will need 100,000 Singaporean workers. And over a 40-year period with Singaporeans replacing the foreign workers, we will need 2,500 a year, or about 8% of our babies each year.
He argued that therefore Singapore cannot cut down on foreign workers as other countries had because of our small size and lack of natural resources.
The Minister seems to suggest that this high reliance on foreign workers situation is inevitable. A few weeks ago, I wrote about Singapore’s journey to nearly 1.5 million migrant workers detailing the 30 years journey we took that saw this rapid explosion in number of foreign workers, especially the low wage workers. I will leave you to read that and will focus on looking at the construction sector in response to the Minister’s statement.
Let’s look at the Minister’s reasoning.
(1) The Minister has a way of exaggerating. His mathematics is based on 100% replacement of all workers in the construction sector by locals. Singaporeans are practical people. We are not calling for total replacement. We are calling a stop to this over reliance and ever-increasing number of migrant workers. We are calling for deliberate steps to correct the process and to seriously make careers in construction viable for Singaporeans so a more sizeable number can be in the industry.
The Minister’s question and the tone of it seems to make construction as a shunned career. It sadly adds to the poor image the industry is already having because we can only think of the low wage and low skilled migrant workers. The reality in many places is that skills in a strenuous job can pay well. Many of these jobs are not shunned by the locals in say Japan, Australia, Switzerland or Finland. And some aspects of the construction sector do include skilled specialists and trained experts.
(2) The Minister assumed that Singapore construction workers can eventually be three times as productive as currently. This figure is probably arrived at by looking at the best in class, where in places like Australia and Japan, the locals are indeed three times or more productive than a construction worker in Singapore currently.
It is a big ‘IF’. We are currently so far off the chart in productivity compared to other developed countries. Why are we not even attracting Singaporeans into this industry?
Singapore took a different path from other developed countries as we started to prosper in the 1990s. Entrepreneur Jack Sim shared some interesting observations in his Facebook post recently. Jack shared that when he started in the construction industry in 1979, there were very skilled Master Craftsmen, trained Skilled Craftsmen and Apprentices. Jack lamented that ‘the Shanghainese Masters have now passed away. The Singaporeans Master retired. The Malaysian Masters have returned home. The Thais who replaced them also returned home. The Japanese and Korean have also returned home.’ He observed that Singapore started to bring in many who ‘have never done a day of Construction work’. Jack Sim’s presentation involves some generalisation but we can all relate to our present-day situation. The salaries of the migrant workers in construction are low but the cost to employers is not low because of huge levies and accommodation costs. The effect of such a large-scale replacement of skilled craftsmen with low wage workers effectively made these jobs unattractive to locals.
Today, it is a fact that the productivity of construction workers in Singapore pales in comparison to locals in developed countries. We can only compare ourselves with our ASEAN neighbours. It is one thing to say in theory about how productive Singaporeans can be but another thing to do so in practice because what Australia and Japan have achieved took tremendous efforts. Where are we in this process today?
(3) Next, let’s examine the effect on construction cost in countries with high local participation and high-productivity. The Minister noted that ‘in many other countries, a proportion of local workers is allocated to the construction industry. In some cases, this leads to these workers becoming more expensive, and in other cases, projects take much longer to complete due to the lack of manpower.’
In the Turner & Townsend International Construction Market Survey 2019 (report available upon submission of request to company, relevant figure extracted below), we find that the construction cost of comparable projects are quite similar between Singapore, Australian and New Zealand cities and Tokyo. In another report by Rider Levett Bucknall on the international construction market 2016 (figure extracted below), the cost per sqm of gross floor area shows that total cost is quite similar between Singapore and Australian cities. An Australian construction worker earns an average of AUD$63,830 per annum. How much do construction workers in Singapore get?
Source: Turner & Townsend International Construction Market Survey 2019 (pg 17)Source: extracted from Rider Levett Bucknall International Report on Construction Market Intelligence (3Q 2016). Note that prices are in local currencies AUD, NZD and SGD when comparing across Australia, NZ and Singapore.
If we look at Japan, their processes in construction are highly integrated and efficient. According to the Japan Construction Information Center Foundation, there is tight integration in the industry. When the construction specialist for foundation works is done, almost without delay the next team doing structure can be onsite the following day to start work. Their planning and project management tools can talk across companies. They also need to construct to withstand earthquakes and typhoons, which makes it a lot more challenging than construction in Singapore. Yet their overall construction costs are comparable to Singapore as well.
Higher wages local workers may not lead to much higher overall costs. Top local businessman and hotel magnate Ho Kwon Ping shared in an interview in 2011 that his company has construction development experience in Australia, New Zealand, Thailand and so on. He was shocked that when they built their hotel in New Zealand, the number of workers they had to engaged was about 10 percent of what they did in Thailand — because the workers were well trained.
(4) The Minister is correct to say that Singapore has a small population. Well, so do New Zealand, Switzerland, Finland, Hong Kong and other small developed countries with high local participation in construction. The Minister also said, “If we lose out in that relative game compared to other people, then unfortunately, I think the future of Singapore will not be what we expect it to be.”
Some of these countries are globally competitive too despite relying mostly on locals for their construction industry. Some are in fact competing fiercely with Singapore to be regional hub and to be a financial centre.
Having said all these, what can we do now? I believe we cannot leave it to the market to correct itself. I recently shared in my Facebook about the preschool sector which I am more familiar with. I will use this as an example.
I recall in the 2000s, the preschool sector was shunned by young Singaporeans. In 2007, I was invited to be on a national workgroup on education and human capital. At the first meeting, we were discussing possible areas for the committee to focus on during our two-year term. Many topics from K-12 and higher learning were discussed.
Then I shared a story. My wife met by chance a former staff of a preschool we had previously operated. The teacher had already attained diploma in teaching and in leadership and was a senior teacher with us until we sold our centre. My wife had not met her for several years and asked where she was working at then. She had become a masseur and her basic pay as a rookie was already higher than what she commanded as a senior teacher after more than 10 years in the industry and after having gone for the training required for the industry.
Those who were not in the industry in the committee were shocked. They probed further about pay and prospects in the sector. In the committee, we had another long-time leader in the industry. She confirmed the situation and added her own stories. Staff turnover was high and it was tough to attract good locals to the sector. There were increasingly more foreign teachers in the sector as employers could not find locals. That sharing decided what we were to focus on for our committee’s term. Several bold recommendations were made after extensive research into the sector. Unfortunately, the government was not ready then for these changes. It was only after 2011 that a national drive was put into the sector, including the government running their own kindergartens, massive training and scholarship opportunities for pre-service and in-service teachers, merging of MOE and MSF preschool sectors into an agency (ECDA) and lots more funding. All these were actually recommended by our committee earlier and the boldest and what we felt were most necessary of our recommendations, were then turned down.
The effect of the massive government push is that the preschool sector today attracts young Singaporeans. There are now good career prospects. My daughter for one, decided to take up early childhood on her own when choosing what to study at the polytechnic. She was attracted to the scholarship for her studies and the security of the job. She found that she liked the industry and has stayed on and even went for further studies in the same field.
My niece is a nurse. She had excellent A levels results but she chose nursing. This was another industry that used to suffer from poor image and low pay. After much concerted effort at developing the industry at the ITE, polytechnics and universities level, added with scholarships, better pay and improved career prospects, coupled with aggressive marketing, young locals are moving into this industry once more. Even the SAF used to be unable to attract people until it was rebranded and career prospects became better.
Today, when there is talk that we have become too reliant on migrant workers, the industry associations quickly responded to say that cutting down on migrant workers would kill businesses and destroy the economy. They are not totally wrong. The situation has become so bad that we cannot just leave it to the market to correct itself. We cannot just tell employers to be more productive with their workers, cut staffing and to find their own ways to hire Singaporeans. The companies that try to do this now may find themselves priced out of business in the short run. We will need to tackle sector by sector, those sectors with low productivity, mostly untrained workers and low take up interest from Singaporeans. Many aspects of the whole system are broken. We need to fix it at the national level with a big push from the government side, including perhaps to take the lead in several areas. The recruitment and training aspects for foreign workers is messed up. Middleman make huge money and the workers coughed up large sums to come here, laden with debts. Many have not even worked in construction or the trade they are recruited for in their own country. Dormitory operators make huge profits housing migrant workers in what many consider as crowded and relatively poor living conditions.
Singapore had taken a different path from other economies as we started to prosper. Australia, New Zealand, Japan, Hong Kong, Switzerland, Finland, and many other developed economies do not have this huge reliance on low cost migrant workers, such as in construction. There is decent pay for their locals in the sector and they are better trained, more productive and manage automation better. These have evolved over the years because their government had decided that they cannot rely on low cost migrant workers from the start. To correct decades of neglect in Singapore, we cannot just ask the market to correct itself. Private companies are forced to accept the current market situation because each by itself cannot correct the industry. For years, the preschool sector could not correct itself and was moving towards the path of large number of foreign teachers, poor pay relative to peers, and low interest by locals to be preschool teachers. Painful and difficult though it might be, the situation has to be changed with major government interventions.
In case I am being accused of simplifying the problem, I acknowledge that this is a monster of a problem to solve, way more difficult than the other sectors I had cited. I am not an expert in this industry. I am gleaning data from around the world to look at the problem we have created for ourselves in order to offer my views. It will take many years to correct the unfortunate path we had taken to become too overly dependent on low wage migrant workers. We pride ourselves to pay the best in the world to have the Team A in government (and with constant reminders that Singapore can never have a Team B). We pride ourselves to plan 20, 50 and even 100 years down the road.
But the experience of other developed countries like Japan, Australia and Europe shows us it is possible to have a higher skilled, more productive, largely locally-manned construction industry that pays decent wages and where construction work is a skilled and respectable profession. While we may take years to get there, it is clear that it will take a concerted industrial upgrading effort by government to do so. If anything, this Covid-19 crisis has underlined the important strategic need to do so both in construction and in other industries which have through our misplaced labour intensive growth policy, created a low wage industry far too dependent on migrant foreign workers and low wages for working class Singaporeans.
We need to start somewhere and start it in a massive and decisive way. Let’s not use mathematics and rhetoric to brush the problem aside for the next generation to solve.
Note: Written by Yee Jenn Jong. The views expressed here are that of the author.
——— Additional notes ——-
In response to some online comments on my FB post, I decided to summarise the solutions. I am posting them here for those who are interested to follow up on what solutions we can have. As mentioned, these are purely my personal views on a topic I had become interested in since the 2013 Population White Paper Debate when I had the chance to look deeper into the numbers and speak with experts.
(1) Recognise we have a deep and urgent problem that requires immediate attention.
(2) Market cannot resolve this mega problem anymore. Not even the industry association can solve this.
(3) As what had been done in other industries, it has to be a big national effort. This is way more complex than preschool or nursing.
(4) Make construction viable as a career for Singaporeans again – start at the schooling level. Make pay decent enough, and even support with scholarships, career pathways, some sort of wage subsidies for Singaporeans in initial phase, etc.
(5) government may need to intervene in some of the processes at national level such as recruitment, training (even at source countries), dormitories, etc. Learn from the Japanese how they integrate the whole project management processes for swift handover between teams and companies on a project with technology.
(6) Lastly, the gravity of this situation due to decades of neglect is so bad that it will take years to solve and has to be across ministries and with specialised agencies to drive the initiative. The worrying thing from the Minister’s statement is that the government does not seem keen to want to start in a serious manner. It is such a big problem warned by experts from years ago and will have to be a mega national effort. The earlier we start, the better for our future.
官委议员特斯拉副教授（NMP Associate Professor Walter Theseira）最近在新加坡大学政策研究所的论坛上指出，新加坡对此客工的依赖，从1970年代占新加坡总劳动力的约7％增加至今天的约38％。目前，这些客工中有72.4％持有工作准证（WP），而14％持有特别准证（SP）。从数字上看，客工人数从五十多年前的6万人增长到如今惊人的147万。其中大部分约123万人持有WP和SP（资料来源：新加坡人力部和美国移民政策研究所）。
In today’s interview with Bloomberg News, Minister for Trade and Industry Chan Chun Sing that there’s “not much time” left for Singapore’s government to hold its next general election as the city-state has to dissolve parliament in January, months ahead of an April deadline.
Mr Chan also said, “Coming up against a hard deadline to hold elections, there’s actually ‘not much time’. We would like, when the opportunity arises, to have a strong mandate because the challenges that we are going to face in the coming years will indeed be the challenge of an entire generation.”
When the time to vote does come, Mr Chan thinks Singaporeans “are wise enough to look at the government performance not just on an episodic event”, but how it has done in the long term.”
My thoughts on this are:
1. The PAP has been given a super strong mandate since 1968, I believe the strongest for any country with democratic elections even in their worst performance. The current strong mandate that the PAP had been given certainly allows it to do whatever had been required to in the fight against Covid-19.
2. Yes, we should not judge based on just an episodic event, even though the government themselves had admitted that they could have done better in the explosive Covid-19 infection outbreak amongst migrant workers, if they had hindsight, etc.
The issue with migrant workers though, is actually a long term one that has become worse and worse each year. In the Population White Paper debate, Singaporeans had given their views very strongly yet the move towards the 6.9 mil ‘cap’ continued. The 2013 Little India riot cast a spotlight on migrant workers again. The key response was to curb drinking, especially among the migrant workers past 1030 pm. The Foreign Employees Dormitories Act (FEDA) was passed in 2015 but three manpower ministers later, some key parts of the bill appeared to be unimplemented, including the appointment of a Commissioner to oversee safety, maintenance, health and other issues across all large foreign workers dorms. We now know that half of the large dorm operators flout regulations yearly, thanks to questioning by MP Png Eng Huat. Singaporeans are paying a huge cost in now trying to control the situation at the dorms. How much we are paying is not yet clear but the government had said they will fund the additional costs that the already very profitable dorm operators have to incur for the required additional Covid-19 safety measures. Should Singaporeans fund dorm operators especially if they had cut costs and constantly flouted regulations previously and yet made huge profits each year?
3. In researching on this issue for an earlier blog post on how Singapore grew to nearly 1.5 mil migrant workers, I found that several of our prominent first generation leaders including the late Mr Lee Kuan Yew and the late Dr Goh Keng Swee had been against the idea of growing our migrant workforce beyond what we can manage, for many good reasons – our space cannot handle the large numbers that the PAP wanted, the negative impact on our culture and society, that over-reliance on cheap foreign workers will kill the push for innovation and entrepreneurship, etc. Dr Goh had warned that Singapore’s growth will one day come to a grinding halt if we become too reliant on these low wage workers. This is a long term issue that must be urgently addressed. The explosive number of Covid-19 cases has put a timely spotlight on our over-reliance on these migrant workers, living in what I believe are overpriced, poor and crowded conditions.
Former GIC Chief Economist Yeoh Lam Keong cited a IPS study in 2014 which projected that if our labour force was allowed to grow at just 1.7% annually, Singapore would hit 10 mil population by 2050, just 30 years from now. Can we handle this? Will more migrant workers issues explode in our face in the coming years after GE2020? Will we come to a grinding halt as warned by Dr Goh? Will the wealth and income inequality become too crazy to handle as we overpopulate? Can we even have a Singapore culture with local-born as minority?
Yes, there are indeed long term issues Singaporeans should be concerned about in the coming GE. It will certainly be the challenge of an entire generation as we seek to deal with a very tricky over dependence on low wage migrant workers problem and other issues caused by years of grow-at-all-cost..
We need to be mindful of privatising profits and socialisiing costs.
It was recently report that the government will absorb additional operational costs for dormitory operators during the circuit breaker. Responding to queries from The Straits Times, the Manpower Ministry (MOM) had said that the Government will offset the increase in operating costs for operators of purpose-built dorms, factory-converted dorms and construction temporary quarters owing to the longer hours workers now spend in their residences.
To qualify for additional relief from the government, the criteria certainly must be more than what is the operators’ normal running cost versus the additional costs incurred due to measures required due to Covid-19.
Firstly, the operators would, like all businesses in Singapore, qualify for Jobs Support Scheme (JSS), support for foreign staff, property tax rebates and perhaps other measures. These must be factored in before allowing them to claim additional costs. When ECDA made all preschools give 50% rebate on net fees for Apr and May to Singaporean parents, the main rationale was that centres already receive JSS and foreign staff support from government and these must be used to provide the fee rebates. All preschool centres definitely had increased costs during this period due to additional cleaning, health screening, additional MCs for staff, etc, on top of loss of revenue due to withdrawals and deferred enrollments. The centres all bore these costs as part of the expectation that these are part and parcel of their business risks.
The dorm operators, especially the larger ones, seemed to have been rather profitable in the good years as the government pushed foreign workers away from HDB and other places into large dorms in a short period, plus a constant growth of low wage migrant workers coming to Singapore. Have all the operators complied with the regulations, health and safety measures required by the Foreign Employees Dormitories Act? Or were a number flouting regulations and cutting on costs needed to implement these? Surely their level of readiness must be factored into how they would qualify for additional support.
While I can understand that the situation at foreign workers dormitories is urgent due to the fight to contain massive explosion of Covid-19 infections, I do hope the authorities will be very careful in reviewing carefully all applications for additional relief. It seems to me from a cursory read of the Straits Times report on this issue that the criteria to give out additional relief is far too simple and these businesses can continue to enjoy the normal good profits they make and no mention was made on whether the regular generous business support that they already received from our Budgets would be taken into account. We must not double support them given that they already automatically receive support like all Singapore-based businesses. There should be sharing of pain, in fact more needs to be borne by the operators as they had benefited in the good years and they will want to continue to partake in this business after Covid-19.
The massive explosion of Covid-19 cases has cast the spotlight on migrant workers. Much has already been said about living conditions for these workers and whether this has contributed to the spread of Covid-19. The purpose of this article is not to add to these debates, but to examine how we ended up with such a vast number of low wage workers, living in a different world from Singaporeans even though they are very much in our midst all the time. What could have been the economic thinking behind this massive influx?
Singapore has seen migrant workers grow from 3% [see notes] of our workforce since 1970 to 38% today (presented by NMP Associate Professor Walter Theseira at a recent IPS forum). Currently, 72.4% of these migrant workers are on Work Permits (WP) and 14% are on S-Pass (SP). In absolute numbers, the migrant workforce grew from just over 60,000 fifty years ago to a staggering 1.472 million today. The vast majority of 1.234 million are WP and SP holders (Source: MOM & Migration Policy Institute).
WP and SP workers form the lower wage spectrum of our work force. Their numbers are so large now that they occupy almost every area of our social spaces. In 2008, the late Mr Lee Kuan Yew said that he was not convinced on his own party – the PAP’s plan to have 6.5 million population, to be achieved largely through immigration to drive economic growth. “There’s an optimum size for the land that we have, to preserve the open spaces and the sense of comfort,” the late Mr Lee said. Other than occupying our social spaces, the presence of so many low wage foreign workers have depressed the wages of less skilled Singaporean workers, which has in turned caused a great divide between those who have benefited from our economic progress and those whose real wages have stagnated or even regressed in the past two decades.
How did we arrive at this situation of so many migrant workers, many stuck at low wages and with low productivity compared to other developed countries?
I believe it was the obsession with economic growth when the baton was passed from the first generation of leaders. Economic growth is good, but we also need to look at how the growth is derived, whether it is sustainable quality growth and how the benefits are spread across society. Our rapid growth from independence till the 1990s has made many countries and economists praise Singapore as a role model for development. One contrarian view was that of renowned Professor of Economics, Paul Krugman. To him, Singapore’s miracle was based on perspiration rather than inspiration. The growth had come from a very successful mobilisation of the population to participate in the workforce, jumping from 27% in 1966 to 51% by 1990. Professor Krugman warned that Singapore’s workforce participation rate was by then so high that it was unlikely to be further increased significantly. Such ‘sweaty’ economic growth model has its limit. Unless productivity, efficiencies and innovation are raised in the future, economic growth has to be captured through an ever-increasing migrant workforce.
By the 1990s, the ruling party had monopolized parliament with absolute or near absolute monopoly since 1968. The leadership was transferred to our second PM, Mr Goh Chok Tong in 1990. There was an unprecedented loss of four seats to the opposition in GE 1991, a really big deal to a party that will not tolerate any loss or the rise of a serious competitor. Mr Goh had in 1984 promised that Singapore would reach the 1984’s Swiss standard of living by 1999, in per capita GDP terms. The measure of success was to boost up GDP.
The late Dr Goh Keng Swee, architect of Singapore’s economic transformation in our first 2 decades, had since the 1970s till his retirement in 1984, warned of the dangers of growing our GDP through large influx of foreign workers and foreign direct investments. In the Future of Singapore (FOSG) talk in 2017, former Chief Economist at GIC, Yeoh Lam Keong who had worked under Dr Goh, said that Dr Goh frowned upon those who dare suggest growing the economy by boosting immigration. Dr Goh had felt that getting unlimited access to cheap labour would impede the critical need for upgrading and innovation. The first-generation leaders seem well aware of the dangers of large influx of cheap foreign labour and overpopulation. The next generation of leaders however, felt that it was imperative to capture economic growth fast. I believe they must have felt the pressure to retain their super majority control of parliament through continued economic growth.
There were massive infrastructure projects in the 1990s. It opened the doors for a much looser migrant workforce policy to feed the expansion. Foreign workers grew from 311,264 in 1990 to nearly 800,000 in 2000 (a 255% increase in just 10 years). In the mid-2000s, to capture another wave of economic boom, Singapore had another massive round of migrant workforce. The 2009 Global Financial Crisis put a temporary pause but in 2010, our GDP grew a phenomenal 14.7% and the influx continued. Foreign workers numbered 1.3 million by 2010. As infrastructure had been a key part of the economic activities, the construction workforce grew very rapidly in these two decades, from 114,000 in 1996 to some 300,000 in 2019. This numbers will potentially be even higher going forward as the Singapore Business Review recently projected a 3.3% average annual growth in the construction industry from 2019 to 2028. The late Mr Lee Kuan Yew had observed in 2011: “We’ve grown in the last five years by just importing labour. Now, the people feel uncomfortable, there are too many foreigners.” He had estimated that it might take five years for the country to scale back its need for foreign workers, something which the government is still grappling with nearly a decade later and the numbers have continued to increase.
During the 2013’s debate on the government’s Population White Paper, we were reminded of this simple formula: Economic growth = Annual Productivity Growth + Growth in Workforce. Singapore’s productivity in recent years have been miserable, mostly flat for the decade of 2011-2020. It even fell by 1.5% in 2019 and is likely to be worse in 2020 due to Covid-19 disruptions and an impending recession. Today, despite recent acknowledgement of our low construction workforce productivity and some efforts to improve on this, we are still lagging very far behind our developed peers such as Australia, Japan, Taiwan, and Hong Kong. For example, Australia’s and Japan’s construction workforce are 3.9 times and 2.8 times respectively more productive that their peers in Singapore. In other sectors that depend heavily on low wage migrant workers such as F&B and retail, our productivity has lagged significantly behind that of Hong Kong, a city state economy like ours.
The trouble with looking at purely GDP numbers is that it is misleading. GDP can be divided into three components – Wage share, Profit share and Tax share. Singapore has now one of the highest GDP per capita in the world but its wage share has been hovering just above 40% for the past few decades, way below those of OECD countries which are around 50% and some even much higher.
The profit share component of GDP would go back to shareholders. In Singapore, the government owns a disproportionately large share of the economy compared to other developed countries. We encourage foreign investments and the profits would have to flow back eventually to where the investments originated from. Prior to Covid-19, the Marina Bay Sands was the most profitable casino in the world. It was generating some US$1.5 billion in earning (EBITA) a year. It is owned entirely by Las Vegas Sands Corp, listed in the USA.
For a long time and up till 2011 when astronomical ministerial salaries became an issue in GE2011, GDP was the measure for how well the civil service did. GDP growth was a key determinant of the bonuses of political office bearers. With the rapid rebound from the Global Financial Crisis, in 2010 the salary bonus for ministers went up to 8 months on a then-super high salary base. When productivity is low, growth in workforce can boost up the GDP growth; so we should also look at the quality of GDP growth, as well as how income growth had been distributed to the median and lower income groups.
I believe that the last three decades of drive to boost GDP numbers through large-scale foreign labour import had masked many brewing long-term structural problems. It has come to a stage where our Singapore Inc. economy is hooked on an ever-increasing base of low wage, low productivity workers to continue with our model for ‘prosperity’. I believe it is this obsession with GDP that impedes bold decisions such as having a national minimum wage.
It is unsustainable. In the same FOSG talk, Yeoh Lam Keong shared a 2014 forecast by IPS: A mere 1.7% annual growth in labour could see Singapore hitting 10 million population by 2050! The 2013 Population White Paper only presented a population scenario of 6.9 million by 2030. What’s beyond 2030 if we continue at this rate? This is quite a frightening thought considering that our imported labour is indeed growing at beyond 1% per annum currently. At a population of 10 million, the IPS forecast was for 3.3 million migrant workers, a 235% increase from currently. This will be on top of regular injection of new citizens and permanent residents. How do we manage the housing and social spaces by then? How do we manage the growing wealth and income inequality that will come? What will our Singapore identity be like then?
We have seen how troubles like that of the Little India riots of 2013 could happen when we overcrowd our small city state with the many people that we currently have, not to mention if we allow it to explode to another 235%! The government now collects some $3 billion per year in workers’ levies. These add significant costs to employers and force them to keep wages of workers low. There has to be big structural changes, initiated by the government to bring us away from the ‘perspiration’ driven model that Paul Krugman warned of in the 1990s. We have to also look at the ‘optimum size’ as advocated by the late Mr Lee that our island can hold and figure a more sustainable quality and innovation-led economic growth. The government has to take the leadership to effect big structural changes to sectors that persistently have this problem of huge dependency on low wage workers.
For too long, we have kicked the can down the road from one generation of leaders to another in the drive to capture GDP growth in the quickest (and lazy) way, even though we had been warned by prominent leaders and economists that such methods will lead to unsustainable population growth, depressed wages for the bottom income earners and social problems associated with vast inequality. We are all feeling the negative effects now in a very real way. Uncomfortable though the changes may be, the time to tackle this escalating problem is now.
Note: The views expressed here are the opinions of the author.
* Earlier, I had published that ‘Singapore has seen migrant workers grow from 7% of our workforce since 1970 to 38% today’. This was based on data from an earlier presentation by A/P Walter Thereisa. I later shared with A/P Thereisa another data I found for our manpower in 1970 and we agreed that the figure could be more accurate and hence it should be 3% of our workforce in 1970 were migrant workers.
* published in The Workers’ Party Hammer Newsletter, March 2019
The recent storm over high rental prices in Social Enterprise-run Hawker Centres (SEHC) cast the spotlight on what social enterprises are and how they run public goods. When the plan was presented in parliament in 2013, I expressed concerned that if we gave too much autonomy to the operators to impose rents and other charges to hawkers, when they operated a significant market share of the hawker centres, we might face monopolistic behaviours that would impose high operating cost on hawkers. Hawkers would in turn impose higher food prices on consumers. Although we term the operators as social enterprises (SEs), from the reality of how SEs had run public goods in the past, it was obvious that they did make surpluses; and when they dominated the market, monopolistic behaviours had been observed.
Hence, I sought the assurance of the ministry to monitor the way SEHC are operated. Then-Minister for The Environment and Water Resources, Dr Vivian Balakrishnan, gave his assurance in Parliament that his ministry would keep a tight watch over the way hawkers would be charged.
Fast forward five years and the issue became a national debate when food blogger K.F. Seetoh revealed details of high rental charges and ridiculous terms and working hours that hawkers had to bear with.
Much debate online ensued. Many Singaporeans were angry that commercial operators were allowed to form SEs to manage hawker centres with burdensome terms for hawkers compared to those at NEA-run hawker centres, and that hawkers seemed to be imposed with many other costs beyond the actual rental.
NEA finally acted to stop operators from imposing some onerous conditions, allowing now for early termination with smaller penalties, shortening required operating hours of hawkers, capping the fines that SEHC operators can impose on hawkers and imposing better feedback channels for hawkers.
I believe the unfortunate saga could have been prevented if NEA had indeed taken a very proactive examination of contracts by SEs for hawkers in the five years that SEHC had been operating.
The issue also called into question how government outsources the provision of public goods to third party organisations. The preference thus far has been for social enterprises to run public goods such as childcare and hawker centres. A commercial company has to incorporate a social enterprise entity to bid for such projects. I do not object to social enterprises running public goods, but we must know that they do not work magic and cannot be relied on to fulfill government objectives automatically. As can be seen from revelations of contracts and correspondences between SEHC and hawkers in the recent saga, the SEs tend to behave like typical large landlords, imposing harsh terms on hawkers and using employees who will apply rules strictly on hawkers without mercy. Without government subsidies or interventions, they also cannot work magic to bring about lower food pricing, maintain low rents to hawkers whilst having to manage own costs (including payments to NEA) and be profitable themselves.
I believe one reason this issue has generated so much sympathy for hawkers is perhaps because the situation hawkers faced mirrored the feeling of many SMEs and Singaporeans – squeezed by rent-seeking landlords in a country where costs have become very high. This has caused the ordinary person to feel the stress of making a decent living and small companies being forced out of business. It stems from a mindset of squeezing as much money as possible out of the people. Industrial land, for example, used to be managed by JTC who as a large supplier of such space, could dictate market rents. After JTC divested the industrial factories to Real Estate Investment Trusts (REITs), many of them majority-owned by the government, rents went up steeply. Public transport was outsourced to private companies with the government also benefitting initially from the privatisation. This however backfired when private companies, pressed constantly for profits, cut back drastically on maintenance.
Mr Ngiam Tong Dow, former Permanent Secretary recalled a conversation he once had with the late Mr Lee Kuan Yew over the Certificate of Entitlement (COE) scheme, which he felt was taxing transportation, and hence taxing every man, woman and child in Singapore, from the day of his birth till the day of his death. The late Mr Lee shot back, “Ngiam, are you the Permanent Secretary of the Budget and Revenue Divisions at MOF? … What’s wrong with collecting more money?” (ref: https://www.theonlinecitizen.com/2013/10/01/pap-elitist-dont-feel-for-the-people-ngiam-tong-dow/)
Hawkers today are not spared from this, being squeezed by ever higher rentals and operating costs. A different government mindset, more understanding on the plight of hawkers and a better support system will be needed if we are to help hawkers manage a decent living whilst keeping food costs manageable for all.
余振忠
Yee Jenn Jong 