Rising levies fuel foreign worker debate

From July this year, employers of work permit holders will be charged an extra $10 to $30 per month for each. Similar increases are planned for the same time in 2011 and 2012. The exact increase will vary between different industries, with those in the construction industry shouldering the biggest rises. Employers of S-Pass holders will also be subject to an increase in levies.

The Government says this will help to manage the country’s dependence on foreign workers, while also providing appropriate incentives for employers to invest in both worker training and technological advantages. Finance Minister Tharman Shanmugaratnam said the increase was a measured one. “If we make foreign workers too readily available, employers will not have sufficient incentive to upgrade their operations,” he told Parliament. “But if we cut back too sharply, then despite companies’ best efforts to raise productivity, they may not be able to compete with other Asian players.”

But a number of parliamentarians (MPs) and business leaders warn the levy raise could be too much, too soon. Nominated MP and President of the Singapore Chinese Chamber of Commerce and Industry Teo Siong Seng, says the push to more local workforces will harm competitiveness of some Singapore industries. “If we don't have enough manpower and other resources to take added new orders in world markets, we may lose all our customers very quickly,” he said.

Renny Yeo, President of the Singapore Manufacturers Federation says the timing is also an issue. “Some manufacturers are still in the red while others have just gone back into the black,” he told Singapore media. He urged the Government to delay the increase until the end of the year to give companies more time to prepare.

The workers themselves are also concerned; one group saying the increased levy would do little to promote local employment. John Gee, President of the Transit Workers Count Too Association, says few local workers are likely to take on the many jobs in Singapore’s construction and maritime industries, yet these have earned some of the bigger levy increases. “It’s taxation pure and simple,” he told HRM. “It’s not going to have an impact (in those industries).”

Instead, he argues for more integration of the foreign and local workforces, and a minimum wage for both. This could well achieve the aim of reducing foreign worker numbers in total. Gee says an integrated foreign workforce with access to a minimum wage and opportunities to upgrade skills and advance careers would work more efficiently and stay for longer assignments.

Importantly, the floor minimum wage would not need to be set unnaturally high. He notes that the Philippines Government is currently lobbying for an international minimum wage for domestic workers. It is seeking a floor of just US$400 a month, for everywhere from Dubai to Hong Kong. Gee notes that many countries boast both minimum wages and higher productivity.