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Leveling the playing field for residents and non-residents

Posted by theonlinecitizen on June 20, 2007

By Leong Sze Hian

I refer to the Ministry of Manpower’s labour market report for Q1 2007. (Link)

Minister Lim Boon Heng said on his return from Japan to study its elderly issues that “We should make employment happen. We should not leave people in the situation where they can’t get a job, and yet the (CPF) Minimum Sum draw-down age is raised (from age 62 to 65)”. (Link)

With the latest statistics of increasing unemployment despite record new jobs creation, I agree with his remarks, as it may be quite difficult to ensure that most people can get employment from age 62 to 65.

The resident jobless rate of 4%, seasonally adjusted, in March, is an increase of 14%, from March’s 3.5%.

The explanation that the higher resident (Singaporeans and PRs) unemployment rate is due to more people looking for jobs, because of a more buoyant economy, may need to be analysed further, in the context that since 49,400 new jobs were created and 17,700 more residents entered the job market, does it mean that the difference of 31,700, which is 64% of new jobs created went to non-residents?

If so, the percentage of jobs created going to residents may be at an all-time low, declining from around 90% for the period 1997-2002 to 70, 56, 51 and now 36%, in 2004, 2005, 2006 and 1Q 2007, respectively.

59% of the residents retrenched by private sector establishments with at least 25 employees in Q4 2006 were re-employed by March. If we include those from less than 25 employees private sector establishments, the public sector, and the self-employed whose businesses have failed, does it mean that more than 41% are still unable to find jobs?

If the 77,000 jobless have an average of 3 family members, about 308,000 residents, which is about 8% or 1 in 12 of the resident population, may be financially affected by unemployment.

Unless the following are addressed to level the playing field between residents and non-residents, the situation for residents may worsen:

– employers saving 13% by not having to contribute to CPF for non-residents

– lower-wage non-residents’ reduced turnover problems because they are stuck with the same employer for 3 years

– male residents’ reservist training

– maternity leave for residents whereas low-wage non-residents are not allowed to get pregnant

– residents having less disposable income because they have to contribute to CPF – it may be harder to accept lower-wage jobs to provide for their families whereas most low-wage non-residents are here alone by themselves

Like a wave of good intention,to grow the economy with liberal foreign labour policies – now that the economy and job creation are at almost all-time highs – perhaps, it may now be time for us to review the implications for Singaporeans, in light of this “wave after wave” of increasing unemployment rate, number of unemployed, declining percentage of new jobs to residents, declining productivity, and almost stagment median real income growth against average real income growth.

Finally, Mr Lim remarked that it was the “duty” of the family to look after their old – “Payment cheapens the care family members give”, when asked whether care-givers should be given financial help to keep the elderly at home rather than in institutions.

I find it rather illogical, as what care-givers need is some financial help, recognition and support.

As an analogy, it is akin to saying that civil servants should not be paid too much as it may cheapen the public service they give, as it is their “duty” to serve the country.

Read more of Sze Hian’s writings here.

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The Straits Times’ article titled “S’pore’s Dirty Secret” on the 28th of July, 2007 picks up on the points Sze Hian was making in the above article. It is reproduced below:

July 28, 2007

S’pore’s dirty secret

They keep offices, shopping centres and the roads clean. But their wages look shabby compared to the rest of boomtown Singapore.

SUE-ANN CHIA finds out why the pay of cleaners and labourers declined over the past decade.

EVERY DAY, Madam Aishah Mohamed Yunos, 30, toils at four blocks in a Bukit Panjang housing estate, wiping walls and lifts and sweeping and mopping floors.

The neighbourhood is spick and span. But the job pays crumbs.

At least that is what Madam Aishah feels when she pockets her monthly wages of $400. If that’s not lousy enough, she has not had a pay rise in two years on the job.

‘There’s nothing else I can do,’ she says with a careless shrug. She left school at Primary 6.

Her story, if she sticks to cleaning work, could soon mirror that of another cleaner’s, Madam P. Devi, 60.

Nine years ago, she earned $500 a month cleaning offices. Today, she earns $440 cleaning at a mall in Holland Village.

‘I have enough to eat,’ she says, by way of prefacing how she has no right to be unhappy because she is illiterate. She and her retiree security guard husband, 69, who gets a pension, are supporting two children still in school.

The two women, across two generations, are in the beleaguered brigade of Singapore workers whose pay packets have slackened even as other workers have marched ahead in an expanding economy.

In the last 10 years, the starting salaries of all occupational groups rose – except one.

That group: cleaners and labourers. Their median monthly starting pay fell 30 per cent between 1996 and 2006 – from $860 to $600.

The Government’s latest wage report says the group’s median pay was being dragged down by a sizeable number of this category of workers languishing in extremely low-paying jobs.

At the bottom of the heap: office cleaners and aircraft loaders. They start with a monthly pay of $500 and $550 respectively.

In 1996, newbie cleaners made $550 while newbie aircraft loaders made $650.

While aircraft loaders’ pay went up with experience, office cleaners had no such gains. Their median monthly salary fell from $708 in 1996 to $657 last year.

Twin forces thwarting rise in wages

WHAT accounts for their shrinking wages?

Labour economists blame two forces: competition from low-skilled foreign workers and the growing trend of outsourcing.

‘Salaries are unlikely to rise as long as low-skilled local workers compete with low-skilled foreign labour who are often paid less,’ says Associate Professor Hui Weng Tat, vice-dean of the Lee Kuan Yew School of Public Policy.

His view that foreign workers depress the wages of local workers has been aired before by others, including Mr Lim Swee Say when he was deputy labour chief.

In an interview last year, Mr Lim, who is now the labour chief, said he suspected the easy entry of cheap foreign workers in some sectors has reduced the incentive for employers to improve work processes and raise productivity. It is easier and cheaper to hire cheap, than to invest in better work processes.

But he made clear he was not opposed to foreign workers, saying that they contributed to the economy.

Economist Lim Chong Yah, who headed the National Wages Council for 29 years until 2001, also last year warned policymakers to be careful about allowing ‘too free a flow’ of ‘very low value-added labour, very low-wage labour’.

The other issue to contend with is outsourcing. As firms cut costs and headcount, many outsource non-core functions like cleaning.

Instead of being on the more stable payroll of these companies, cleaners are now hired at a much lower pay by cleaning agencies which then assign them to different workplaces.

Cleaning agencies, in their fierce battle to win contracts, slash the price of their bids. The losers: the cleaners who end up with even lower pay.

Prof Hui notes that outsourcing also encourages service buyers such as building owners to switch to cheaper cleaning contracts. This means some cleaners may continue in the same job under a different employer – often wearing just differently coloured uniforms – while others are forced to seek new employment.

‘This perpetuates the low pay of such workers who do not benefit from any seniority-based component in their pay but are constantly treated as new employees,’ he says.

Part-timers, retirees depress wage figures

FIGURES from five cleaning companies surveyed by Insight indicate that cleaners’ pay may be creeping up.

Five to 10 years ago, a cleaner would be offered around $580 to $600 a month. Today, he would get about $100 more, says Mr Kevin Loh, the boss of Campaign Cleaning Services.

Mr Joey Yeung, executive manager of cleaning company SQ1 Development, addsthat those who work in far-flung places like Tuas can get even more, about $900.

If so, why do the national figures show them making so little?

Labour economist Shandre Thangavelu suspects the wages are depressed by part-time workers like retirees agreeing to work for a lot less.

Madam Wang Xiu Qin, 67, is among them. She retired five years ago as a waitress but went back to work two years later to beat boredom at home.

She has since been cleaning office toilets four hours, six days a week. She is pleased with her pay of $350 a month.

But there are many others who struggle to survive.

Madam Sharon Kong, 50, earns $300 a month keeping an office clean. She works three hours a day, six days a week.

‘I earn just enough to buy food from the market to cook and feed the family,’ says the mother of two sons, aged 22 and 25.

Her factory worker husband earns about $1,000 a month and one of her sons help with other family expenses.

Can she get a better job?

Not a chance, as ‘I only have primary education,’ she says.

Tackling issue through productivity boost

THE plight of low-wage workers – with stagnant or shrinking pay packets – is an issue the Government and labour movement have been grappling with for some time.

Three years ago, the Job Recreation Programme (JRP) was set up to boost the productivity and pay of low-skilled jobs in several sectors, from cleaning to construction.

Last year, Workfare, an income supplement for low-wage workers, was introduced and is now a permanent feature for workers aged above 35 and whose income is $1,500 and below.

Labour chief Lim Swee Say tells Insight: ‘The downward pressure on the wages of low-wage workers will continue to be there for some time as there is no shortage of low-cost, low-skilled workers in the world.’

The cause may be global, but the effect is truly local. The biggest worry is the widening income gap between high- and low-end workers.

Different countries look for different solutions – from a minimum wage policy and closing the door on low-skilled foreign workers to paying foreign local workers the same wages.

But Mr Lim calls these ‘easy solutions’ that do not necessarily work.

He wants Singapore to focus on raising productivity.’When their productivity goes up, their pay will also go up without eroding business competitiveness.’

Some success has been achieved through JRP, which has boosted the salaries of security guards, landscape technicians and bus captains.

Mr Lim concedes that ‘there is still a long way to go’ in improving the pay of every low-skilled worker.

One major criticism of the programme is that it spreads itself too thin in trying to reach too many sectors.

Still, Mr Ang Hin Kee, director of NTUC’s Employability Enhancement Department, believes it has made a difference to the cleaning sector.

‘JRP pilot projects have demonstrated that workers in the cleaning industry can earn higher wages through re-skilling and job re-design,’ he says.

He notes how 75 conservancy cleaners who went for the programme found their wages going up from $750 a month to about $1,000. They got a new title to boot: building custodians.

The new perks come with added responsibilities of weeding, checking and rectifying defects in drains and replacing light bulbs in HDB blocks.

Another recent success was at three major hospitals which revised their cleaning contracts.

Previously, their housekeepers just cleaned the wards. Now, 15 of them act as team leaders to inspect ward cleanliness and prepare simple reports.

Their monthly pay rose from $800 to $1,050. Their job title was also spruced up. The housekeeper is now the facility services specialist.

But these are small-scale efforts. The JRP has yet to cover the large army of cleaners who clean commercial properties such as offices, shopping centres and condominiums. There are about 22,000 of them.

It will do so by year’s end, says Mr Ang.

The biggest hurdle in pushing the cleaners’ brigade is posed by sceptical companies. They want to see a cleaner environment first before they will pay cleaning companies more for better-trained workers.

This causes a vicious cycle as cleaning companies do not pay more and the lowly paid worker sees no incentive to do more.

There seems to be no way out.

Mr Lim advocates staying the course with JRP, as skills re-development is the only way for ‘more low-wage workers to be part of the race to the top’.

But the brigade may also have thinning ranks of Singaporeans in time, as the workforce becomes better educated and move on to better work while cleaning jobs are revamped to attract better pay.

For now, though, the problem cannot be wiped clean.

sueann@sph.com.sg

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