Letter to the Straits Times Forum
A letter sent to the Straits Times forum commenting on the foreign worker levy.
an edited version was published by ST Forum on February 5th 2010.
Dear ST,
The Economic Strategies Committee's proposal to increase the level of foreign worker levies in order to manage a perceived over-dependence on foreign labour does not seem like one of its better ideas. It is likely to increase burdens on employers and workers without achieving its stated goal.
Most migrant workers are in very low paid jobs. One obstacle to improvement is that the cost of their hire to employers is significantly more than the workers' salaries. Law-abiding employers provide accommodation, insure workers and see that they receive medical attention if they fall ill, pay for a policy that will cover the bond and pay a levy that ranges from $265 a month for a domestic worker to $470 a month for a construction worker. The lowest paid domestic workers may actually receive salaries smaller than their employers' levy payments. Many employers argue against paying their workers more by pointing to these other expenses, particularly the levy, as the cost of the workers to them, regardless of how much the workers themselves see of the money employers pay out.
An increase in the levy will very likely lead to a rise in cases of employers attempting to deduct money from workers' salaries on dubious pretexts and certainly increase resistance to improving pay rates for workers.
Unless it was a massive increase, a rise in the levy would be unlikely to discourage employment of foreign workers, but would just be an increased tax on foreign labour employment - which is what the levy has become, in reality, since it was first introduced. Even then, it has to be asked how many Singaporeans would feel incentivised to accept the hours and conditions that prevail in sectors of high migrant labour employment at the salaries likely to be on offer.
A better route would be to work towards the abolition of the levy and to substitute pay increases to workers that would narrow the gap between local and foreign workers. This would mean setting minimum pay conditions, which Singapore has thus far resisted, but would be a way by which foreign workers could be given significant pay increases at a bearable cost to employers. The workers would feel more fairly rewarded and salary levels in some sectors might start to look a little more appealing to locals.
Most migrant workers are in very low paid jobs. One obstacle to improvement is that the cost of their hire to employers is significantly more than the workers' salaries. Law-abiding employers provide accommodation, insure workers and see that they receive medical attention if they fall ill, pay for a policy that will cover the bond and pay a levy that ranges from $265 a month for a domestic worker to $470 a month for a construction worker. The lowest paid domestic workers may actually receive salaries smaller than their employers' levy payments. Many employers argue against paying their workers more by pointing to these other expenses, particularly the levy, as the cost of the workers to them, regardless of how much the workers themselves see of the money employers pay out.
An increase in the levy will very likely lead to a rise in cases of employers attempting to deduct money from workers' salaries on dubious pretexts and certainly increase resistance to improving pay rates for workers.
Unless it was a massive increase, a rise in the levy would be unlikely to discourage employment of foreign workers, but would just be an increased tax on foreign labour employment - which is what the levy has become, in reality, since it was first introduced. Even then, it has to be asked how many Singaporeans would feel incentivised to accept the hours and conditions that prevail in sectors of high migrant labour employment at the salaries likely to be on offer.
A better route would be to work towards the abolition of the levy and to substitute pay increases to workers that would narrow the gap between local and foreign workers. This would mean setting minimum pay conditions, which Singapore has thus far resisted, but would be a way by which foreign workers could be given significant pay increases at a bearable cost to employers. The workers would feel more fairly rewarded and salary levels in some sectors might start to look a little more appealing to locals.
Yours sincerely,
John Gee
President
Transient Workers Count Too