Give adequate wages to low income workers

For many years, the Government has advocated a pro-business environment in Singapore. This is aimed at attracting foreign investors to set up businesses here and create more jobs for Singaporeans.

This strategy has been successful. Singapore has received many international awards for being a competitive economy and a world class workforce.

A hard working, well educated, productive and co-operative workforce is an important contributor to this pro-business environment. This strategy has also benefited many Singaporeans. They have the opportunity to get good jobs at high wages. Many multi-national companies set up their operations in Singapore to serve the Asian region. The demand for talent and for professions in accounting, legal, marketing, business development and other services have contributed to this happy situation.

To cope with the shortage of talent, Singapore has an open door policy to attract professionals and foreign talents to work in Singapore.

Depressed Wages

The open door cannot be restricted only for the talents that are scarce in Singapore. In any case, this type of people has not been defined clearly.

In practice, the open door policy has also been applied to other sectors of the labour force. The demand for workers willing to work for competitive wages extends down the skill ladder.

Although there are controls to ensure a balance of local and foreign workers, they have been difficult to apply in practice. As a consequence, we have an abundance of low wage workers in Singapore. The actual number has not been published. If we look at the people who do not speak like Singaporeans working in the heartlands and in the factories, one can conclude that there must be a large number.

One unfortunate consequence of this influx of foreign workers is the large number of local “mature” workers above 40 years who are unemployed.

Choosy Workers

A common explanation for the large number of unemployed workers is that they are “choosy”. They are not willing to do certain types of outdoor work, especially if they are risky or dirty.

I suspect that it is a question of adequate wages. If the jobs now shunned by Singaporeans pay adequate wages, I believe that many Singaporeans will be willing to do the work.

I have spoken to many taxi drivers who are willing to work 12 hours a day just to earn $2,000 to feed a family.

There are many older Singaporeans who earn less than $800 a month as cleaners or security guards. They have no choice. They have to work or face starvation. Singapore does not provide any welfare.

I do not consider Singaporeans to be “choosy”.

Foreign workers

Employers will prefer to bring in foreign workers, as they are willing to accept any job and work for a low wage, so long as they earn enough to feed a family in their home country, where the cost of living is much lower than Singapore’s. They are usually provided with accommodation near their place of work and can save on the high accommodation and commuting cost.

In contrast, a Singaporean has to earn enough to feed a family in Singapore, with its high cost and standard of living. He has a family and social life in Singapore, he cannot live in a dormitory near his place of work. He has to incur high accommodation and travel costs.

Outsourcing

For many years, the public sector has been a source of employment for many lower educated workers in our society. They work as cleaners and provide a wide range of services in our hospitals, airports and other public services.

They earn a low wage, but it is adequate to feed a family. They are represented by the public sector’s trade unions, which look after their interests.

In recent years, many of these jobs have been outsourced to the private sector. Instead of employing the direct workers, the government agencies have reorganised the work and retrenched the direct workers. They outsource the work to private contractors, to reduce their cost of operation.

A contractor has to submit a low price to win the tender on a contract. The contractors re-employ the retrenched workers at lower wages, to do the same work that they did previously as direct workers. If the local workers are “choosy”, the contractor can find foreign workers willing to work for less.

The contract is for a term of two or three years. On the renewal of the contract, the contract price is likely to reduce further, due to competition. This means even lower wages for the local contract workers.

Adequate salaries

I believe that local workers deserve to have an adequate salary for a hard day’s work. This salary has to be commensurate with the cost of living. It should be adequate for a worker to feed a family, at least in a frugal way. The worker should not be expected to work for 12 hours a day, and still not earn enough for the family.

In some countries, this is achieved through a “minimum wage”. Even America, which is the strongest proponent of a free market economy and a flexible labour force, finds it necessary to have a minimum wage.

Business has to be competitive

It has been argued that competitive wages and a flexible labour market are necessary for business to remain competitive and to stay in Singapore. This argument has been pushed too hard by our leaders. Many Singaporeans accept this argument quite blindly.

Does it really help the country much for the public sector to save a few million dollars a year, by depressing the earnings of the contract workers who were previously the direct workers of the agencies?

If businesses have to pay a more adequate wage to the low income workers, will the businesses become non-viable? I do not think so.

These businesses can reduce the exorbitant earnings of their top directors and managers, or spend less on lavish offices or other business expenses. These businesses may earn less for shareholders, but will probably still find it quite attractive to remain in Singapore.

Pride to be a Singaporean

I believe that more people will be proud to be Singaporean, if they find that the nation looks after their interests and is willing to give them a fair standard of living for a hard day’s work. I hope that the wages of the lower income workers can be increased. This is even more pressing in 2008, due to the high inflation rate.