<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"></TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>kojakbt_89 <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>Jun-5 11:02 pm </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>34170.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>Jun 5, 2010
FOREIGN WORKERS
Balancing social discontent and the bottom line
Insight continues its behind-the-scenes series on the public consultation exercise which culminated in the landmark Economic Strategies Committee report putting Singapore on a new economic track. In Part 1 last week, the focus was on productivity. Part 2 today finds out why the foreign worker levy drew the most 'contention' among the ESC members and how they sought to reconcile competing interests.
<!-- by line -->By Rachel Chang
http://www.straitstimes.com/Insight/Story/STIStory_535919.html?sunwMethod=GET
THE rain pounds down incessantly on the corrugated zinc roof.
At the foreign workers' dormitory on Soon Lee Road in Jurong, a group of people wait for a meeting to start.
It is a far cry from the plush boardrooms that the group, which includes Members of Parliament and chief executives, is used to. Indeed, it is chilly in the simple, unballasted structure.
Half an hour past the starting time, Mrs Josephine Teo, co-chairman of a working group of Sub-committee Six tasked to ponder a 'sustainable and optimised foreign workforce', hurries in. Her trousers are wet up to the ankle.
The labour leader and Bishan-Toa Payoh GRC MP had lost her way looking for the facility, which houses more than 4,000 foreign workers.
For the next five hours, the rain does not let up. Voices are raised - not just in heated debate but also to be heard above the din. In the end, the setting may have proved counter-productive - the meeting goes on for so long, the group does not have much time to tour the facilities, which is the primary reason they chose to meet there.
But it is indeed a fitting backdrop as the topics of discussion are all about tiered levies and dependency ratios - the nuts and bolts of Singapore's foreign worker policy.
The meeting at the workers' dormitory on Nov 2 last year would be the final one for the working group convened under the Economic Strategies Committee (ESC) to brainstorm ways to moderate the flow of foreign workers into Singapore.
A few months later, its recommendations would be realised in Government changes to the foreign worker levy system in the Budget 2010 statement.
The levies would rise in phases, becoming more expensive to bring in unskilled foreign workers compared with their skilled counterparts.
It would not be an overhaul of the system - the working group, which includes members representing industries heavily reliant on foreign workers, is not interested in revolution. But what they recommend could be seen as groundbreaking.
After a decade which saw the foreign workforce ballooning by 70 per cent to a third of the labour force, official policy would now be to slow its influx.
The group has to balance the competing interests during a contentious, drawn-out final meeting. As Mrs Teo recalls: 'So, back and forth, to and fro, against this rain.'
Simmering public discontent
IN THE thick of the 2009 recession, passions and prejudices ran high. People complained that the influx of foreigners had transformed Singapore society. Unfamiliar accents, sights and smells are filling MRT trains and HDB void decks.
As Singaporeans experienced the uncertainty of an economic downturn, foreigners became the bogeymen. They were resented for all kinds of trespasses, real or imagined - from being willing to work for less to having little command of English and exhibiting undesirable social habits.
This was the backdrop against which the ESC working group was formed. The simmering social discontent did not escape the notice of the Government.
In September last year, Prime Minister Lee Hsien Loong told an audience of undergraduates that he could not imagine the foreign workforce 'expanding year after year'.
For Finance Minister Tharman Shanmugaratnam, however, foreigners were a problem for the head, not the heart.
'The start and end points did not have to do with general discomfort about foreigners per se,' he says. 'This was a fundamental economic strategy issue.'
The issue was that employers were opting for cheap foreign labour as an easy way to control bottom lines, instead of hard-won productivity improvements.
Productivity in some foreign labour-reliant industries, like construction, had become a joke. 'Four construction workers looking at one guy manning the pole in the ground,' is how Ministry of Manpower foreign workforce policy department director Wendy Ang describes it.
The private sector representatives in the working group, who come from sectors like construction and marine, are not oblivious of the ground sentiment. But they are more preoccupied with how their businesses would be affected by any new regulations.
'I don't think it's a matter of aware or not aware,' says Singapore National Employers Federation (SNEF) vice-president Bob Tan, the other co-chair of the working group. 'When you run a business, you just run with what you've got. This is the way you work.
'I suppose from the Government's point of view, social discomfort must feature very high in its thought process. But if you go to the employers and use that as the main reason, they'll say 'Well, I can't get workers, I'll just pack up and go. I'll go to where I can get workers'.'
Limits to foreign labour growth
THIS hypothetical 'if I can't get workers' argument became the first line in the sand for the employers in the working group.
Industry leaders such as Tiong Seng Contractors' Pek Lian Guan and Sembcorp Marine's Wong Weng Sun had accepted without hesitation that there were self-evident limits to the growth of the foreign workforce population.
'There was some discussion, but not much,' recalls Mr Pek, 'because the evidence is so clear. The evidence is too clear. In our business, we already knew that we relied too much on foreign labour. Nobody is denying that there's room for us to improve.'
But he and his business colleagues were against imposing a tight quota on foreign workers, which would be the easiest way to achieve the goal of stemming their growth.
There is technically a cap on foreign workers, known as the dependency ratio. It is the maximum proportion of foreign workers to local workers that each company can hire. In construction, for example, the ratio is one local worker to seven foreign workers.
'You lower the cap, that means limiting potential growth already,' argues Mr Pek. As Manpower Minister Gan Kim Yong notes, the worry was that the Government would 'artificially or arbitrarily reduce the quota', which would affect companies which were growing rapidly.
Leaving the existing dependency ratios intact would preserve the flexibility in the labour market, he says.
It also put the industry representatives more at ease. Once the decision is made to maintain the dependency ratios, the apprehension on their part dissipates. As long as they can get the workers they need, they were willing to pay a higher price for them.
There must be pain
EACH additional foreign worker should be more expensive than the previous one. This is a general rule of thumb to properly reflect the social cost of bringing in foreign workers.
Three tiers are already in the services and manufacturing industries. The first tier of foreign workers, up to 30 per cent of the total workforce, for example, could be brought in at a certain low levy amount.
The second tier of foreign workers would be subject to a higher levy, and the third tier even higher.
'The concept is really that at the highest levels of utilisation, it must begin to feel painful, otherwise there is no strong messaging,' says Mrs Teo, whose friendly manner does not obscure her force of personality.
In fact, her working group thought that the tiered approach could be extended to all sectors. It even considered calling the third and final tier of highest levies, the 'punitive tier' - 'As in, hey, it must really be painful to use it,' she recalls. In a sense, only the fastest-growing and cash-rich companies should be able to afford that third tier.
When the Ministry of Manpower (MOM) released details of the foreign worker levy changes in February, however, it did not extend the tiered system to other sectors.
Instead, the tiers were shifted down in the existing sectors of services and manufacturing - so that the tier with the highest levy kicked in at a lower number of foreign hires.
It is not known if the Government intends to introduce tiers for work permits to sectors like marine and construction.
But the need to send a strong signal to these sectors, in which Singaporeans are rarely found, is perhaps not as pressing.
After all, 70 per cent of Singaporeans work in services. This politically salient fact also explains why the services sector was not open to foreigners, besides Malaysians, until the 1990s.
As MOM's divisional director of workplace policy and strategy Jacqueline Poh explains, a sustainable foreign workforce is one that, first and foremost, 'does not strain the social compact'.
A minor triumph
THE discussion on worker training was similarly hampered by the chasm between an ideal reality and what is politically possible.
The quality of foreign workers can be controlled only up to a point by discerning recruitment and training in source countries. But if there were to be a nationwide push to train and upgrade the labour force, did it make sense to leave out one-third of them: the foreign workers?
National resources for the training of workers, like the compulsory Skills Development Fund (SDF), are not open to the foreign workforce.
All employers contribute to the SDF based on the number of workers they have. This includes the foreign workers, although the funds cannot then be used for training them.
Companies have raised concerns over this tension before, notes Mrs Teo. 'The response is that, well, you're supposed to bring them trained into Singapore.'
At the heart of the matter would be the political fallout of allowing foreign workers to tap on the billions of national grants available for worker upgrading.
'It will not go down well,' cautions Mrs Teo. 'So that's a reality we have to deal with. In fact, there was some discussion to say that why don't (we) encourage those who have been here for many years to become PRs and so on. I think we have to manage this carefully. You don't want to solve one problem and create a whole new set of others.'
Ms Melissa Kwee, a director of Pontiac Land Group that owns Conrad Centennial and other luxury hotels, was the freshest face in the working group.
The lesson she took away was what's 'saleable' in the first instance. 'If you can help low-wage workers upgrade their skills, that's a priority. If you can upgrade foreign workers' skills, that's great too. But what's the priority?'
Still, the working group persisted in conveying its concerns on the issue to the ESC main committee.
Ultimately, one major policy to emerge from the Budget response was an unprecedented 250 per cent tax credit for companies which invest in any six areas of productivity improvement. One of these is worker training, and the credit does not differentiate between local and foreign workers.
It was a minor triumph.
Levy is highly sensitive
MEMBERS of the working group say they are acutely aware of the political hot potato in their midst.
'We weren't told not to consider all options,' says SNEF's Bob Tan. 'They didn't say this is a sacred cow, don't touch it. But we knew the levy is sensitive. It's been sensitive for years, and continues to be highly sensitive.'
In fact, Finance Minister and ESC chairman Tharman Shanmugaratnam singles out the foreign worker levy as the one recommendation that drew the most 'contention' among members of the ESC main committee.
Discussions revolved around abstract, broader issues of messaging and policy direction. One big question was whether a macro-quota, such as the total number of desired foreigners in Singapore, should be specified.
'This is a long-term target,' recalls Mr Gan. 'We're not talking about inter-year fluctuation.
' In some years when the economy is expanding, we will need to have some flexibility. And in a recession like last year, the total number of foreign workers will come down. So they will go up and down but, over the long term, we need to have some kind of a benchmark.'
Some academics have pushed for a utopian free market, allowing labour to move in and out according to economic forces.
But as chairman of the sub-committee - and as a politician - the Manpower Minister took a nuanced view: 'Over the long term, it is not sustainable to have a significantly higher proportion than what we have today. But it's also not practical for us to suppress it and reduce it significantly.'
The ultimate decision was to walk the middle line, like everything else in the fraught, delicate policy. 'So we felt that at this moment it's about one-third, it's probably about the right level, to keep it that way,' concludes Mr Gan.
The final recommendations were no one's best-case scenario but, as in every policy of compromise, it had something for everyone.
Employers managed to avoid a scaling back of quotas, and won a long built-in reaction time before the raised levies are to take full effect.
'The time line is much better than before,' says Mr Pek. 'Last time, it was always 'from tomorrow onwards, the levy will be...'.'
For the unions, there was a bigger emphasis on skills certification and the funding to match.
And the country, perhaps, received the clearest indication of what exactly the Government's policy on foreign workers is.
Senior Government leaders have made it clear that the foreign workforce will be maintained at its current level of one-third for the indefinite future.
'Yes, there is a cap,' sums up Mr Tan. 'It will change people's mindsets. Now, they know they have to live within these parameters.'
</TD></TR></TBODY></TABLE>
FOREIGN WORKERS
Balancing social discontent and the bottom line
Insight continues its behind-the-scenes series on the public consultation exercise which culminated in the landmark Economic Strategies Committee report putting Singapore on a new economic track. In Part 1 last week, the focus was on productivity. Part 2 today finds out why the foreign worker levy drew the most 'contention' among the ESC members and how they sought to reconcile competing interests.
<!-- by line -->By Rachel Chang
http://www.straitstimes.com/Insight/Story/STIStory_535919.html?sunwMethod=GET
THE rain pounds down incessantly on the corrugated zinc roof.
At the foreign workers' dormitory on Soon Lee Road in Jurong, a group of people wait for a meeting to start.
It is a far cry from the plush boardrooms that the group, which includes Members of Parliament and chief executives, is used to. Indeed, it is chilly in the simple, unballasted structure.
Half an hour past the starting time, Mrs Josephine Teo, co-chairman of a working group of Sub-committee Six tasked to ponder a 'sustainable and optimised foreign workforce', hurries in. Her trousers are wet up to the ankle.
The labour leader and Bishan-Toa Payoh GRC MP had lost her way looking for the facility, which houses more than 4,000 foreign workers.
For the next five hours, the rain does not let up. Voices are raised - not just in heated debate but also to be heard above the din. In the end, the setting may have proved counter-productive - the meeting goes on for so long, the group does not have much time to tour the facilities, which is the primary reason they chose to meet there.
But it is indeed a fitting backdrop as the topics of discussion are all about tiered levies and dependency ratios - the nuts and bolts of Singapore's foreign worker policy.
The meeting at the workers' dormitory on Nov 2 last year would be the final one for the working group convened under the Economic Strategies Committee (ESC) to brainstorm ways to moderate the flow of foreign workers into Singapore.
A few months later, its recommendations would be realised in Government changes to the foreign worker levy system in the Budget 2010 statement.
The levies would rise in phases, becoming more expensive to bring in unskilled foreign workers compared with their skilled counterparts.
It would not be an overhaul of the system - the working group, which includes members representing industries heavily reliant on foreign workers, is not interested in revolution. But what they recommend could be seen as groundbreaking.
After a decade which saw the foreign workforce ballooning by 70 per cent to a third of the labour force, official policy would now be to slow its influx.
The group has to balance the competing interests during a contentious, drawn-out final meeting. As Mrs Teo recalls: 'So, back and forth, to and fro, against this rain.'
Simmering public discontent
IN THE thick of the 2009 recession, passions and prejudices ran high. People complained that the influx of foreigners had transformed Singapore society. Unfamiliar accents, sights and smells are filling MRT trains and HDB void decks.
As Singaporeans experienced the uncertainty of an economic downturn, foreigners became the bogeymen. They were resented for all kinds of trespasses, real or imagined - from being willing to work for less to having little command of English and exhibiting undesirable social habits.
This was the backdrop against which the ESC working group was formed. The simmering social discontent did not escape the notice of the Government.
In September last year, Prime Minister Lee Hsien Loong told an audience of undergraduates that he could not imagine the foreign workforce 'expanding year after year'.
For Finance Minister Tharman Shanmugaratnam, however, foreigners were a problem for the head, not the heart.
'The start and end points did not have to do with general discomfort about foreigners per se,' he says. 'This was a fundamental economic strategy issue.'
The issue was that employers were opting for cheap foreign labour as an easy way to control bottom lines, instead of hard-won productivity improvements.
Productivity in some foreign labour-reliant industries, like construction, had become a joke. 'Four construction workers looking at one guy manning the pole in the ground,' is how Ministry of Manpower foreign workforce policy department director Wendy Ang describes it.
The private sector representatives in the working group, who come from sectors like construction and marine, are not oblivious of the ground sentiment. But they are more preoccupied with how their businesses would be affected by any new regulations.
'I don't think it's a matter of aware or not aware,' says Singapore National Employers Federation (SNEF) vice-president Bob Tan, the other co-chair of the working group. 'When you run a business, you just run with what you've got. This is the way you work.
'I suppose from the Government's point of view, social discomfort must feature very high in its thought process. But if you go to the employers and use that as the main reason, they'll say 'Well, I can't get workers, I'll just pack up and go. I'll go to where I can get workers'.'
Limits to foreign labour growth
THIS hypothetical 'if I can't get workers' argument became the first line in the sand for the employers in the working group.
Industry leaders such as Tiong Seng Contractors' Pek Lian Guan and Sembcorp Marine's Wong Weng Sun had accepted without hesitation that there were self-evident limits to the growth of the foreign workforce population.
'There was some discussion, but not much,' recalls Mr Pek, 'because the evidence is so clear. The evidence is too clear. In our business, we already knew that we relied too much on foreign labour. Nobody is denying that there's room for us to improve.'
But he and his business colleagues were against imposing a tight quota on foreign workers, which would be the easiest way to achieve the goal of stemming their growth.
There is technically a cap on foreign workers, known as the dependency ratio. It is the maximum proportion of foreign workers to local workers that each company can hire. In construction, for example, the ratio is one local worker to seven foreign workers.
'You lower the cap, that means limiting potential growth already,' argues Mr Pek. As Manpower Minister Gan Kim Yong notes, the worry was that the Government would 'artificially or arbitrarily reduce the quota', which would affect companies which were growing rapidly.
Leaving the existing dependency ratios intact would preserve the flexibility in the labour market, he says.
It also put the industry representatives more at ease. Once the decision is made to maintain the dependency ratios, the apprehension on their part dissipates. As long as they can get the workers they need, they were willing to pay a higher price for them.
There must be pain
EACH additional foreign worker should be more expensive than the previous one. This is a general rule of thumb to properly reflect the social cost of bringing in foreign workers.
Three tiers are already in the services and manufacturing industries. The first tier of foreign workers, up to 30 per cent of the total workforce, for example, could be brought in at a certain low levy amount.
The second tier of foreign workers would be subject to a higher levy, and the third tier even higher.
'The concept is really that at the highest levels of utilisation, it must begin to feel painful, otherwise there is no strong messaging,' says Mrs Teo, whose friendly manner does not obscure her force of personality.
In fact, her working group thought that the tiered approach could be extended to all sectors. It even considered calling the third and final tier of highest levies, the 'punitive tier' - 'As in, hey, it must really be painful to use it,' she recalls. In a sense, only the fastest-growing and cash-rich companies should be able to afford that third tier.
When the Ministry of Manpower (MOM) released details of the foreign worker levy changes in February, however, it did not extend the tiered system to other sectors.
Instead, the tiers were shifted down in the existing sectors of services and manufacturing - so that the tier with the highest levy kicked in at a lower number of foreign hires.
It is not known if the Government intends to introduce tiers for work permits to sectors like marine and construction.
But the need to send a strong signal to these sectors, in which Singaporeans are rarely found, is perhaps not as pressing.
After all, 70 per cent of Singaporeans work in services. This politically salient fact also explains why the services sector was not open to foreigners, besides Malaysians, until the 1990s.
As MOM's divisional director of workplace policy and strategy Jacqueline Poh explains, a sustainable foreign workforce is one that, first and foremost, 'does not strain the social compact'.
A minor triumph
THE discussion on worker training was similarly hampered by the chasm between an ideal reality and what is politically possible.
The quality of foreign workers can be controlled only up to a point by discerning recruitment and training in source countries. But if there were to be a nationwide push to train and upgrade the labour force, did it make sense to leave out one-third of them: the foreign workers?
National resources for the training of workers, like the compulsory Skills Development Fund (SDF), are not open to the foreign workforce.
All employers contribute to the SDF based on the number of workers they have. This includes the foreign workers, although the funds cannot then be used for training them.
Companies have raised concerns over this tension before, notes Mrs Teo. 'The response is that, well, you're supposed to bring them trained into Singapore.'
At the heart of the matter would be the political fallout of allowing foreign workers to tap on the billions of national grants available for worker upgrading.
'It will not go down well,' cautions Mrs Teo. 'So that's a reality we have to deal with. In fact, there was some discussion to say that why don't (we) encourage those who have been here for many years to become PRs and so on. I think we have to manage this carefully. You don't want to solve one problem and create a whole new set of others.'
Ms Melissa Kwee, a director of Pontiac Land Group that owns Conrad Centennial and other luxury hotels, was the freshest face in the working group.
The lesson she took away was what's 'saleable' in the first instance. 'If you can help low-wage workers upgrade their skills, that's a priority. If you can upgrade foreign workers' skills, that's great too. But what's the priority?'
Still, the working group persisted in conveying its concerns on the issue to the ESC main committee.
Ultimately, one major policy to emerge from the Budget response was an unprecedented 250 per cent tax credit for companies which invest in any six areas of productivity improvement. One of these is worker training, and the credit does not differentiate between local and foreign workers.
It was a minor triumph.
Levy is highly sensitive
MEMBERS of the working group say they are acutely aware of the political hot potato in their midst.
'We weren't told not to consider all options,' says SNEF's Bob Tan. 'They didn't say this is a sacred cow, don't touch it. But we knew the levy is sensitive. It's been sensitive for years, and continues to be highly sensitive.'
In fact, Finance Minister and ESC chairman Tharman Shanmugaratnam singles out the foreign worker levy as the one recommendation that drew the most 'contention' among members of the ESC main committee.
Discussions revolved around abstract, broader issues of messaging and policy direction. One big question was whether a macro-quota, such as the total number of desired foreigners in Singapore, should be specified.
'This is a long-term target,' recalls Mr Gan. 'We're not talking about inter-year fluctuation.
' In some years when the economy is expanding, we will need to have some flexibility. And in a recession like last year, the total number of foreign workers will come down. So they will go up and down but, over the long term, we need to have some kind of a benchmark.'
Some academics have pushed for a utopian free market, allowing labour to move in and out according to economic forces.
But as chairman of the sub-committee - and as a politician - the Manpower Minister took a nuanced view: 'Over the long term, it is not sustainable to have a significantly higher proportion than what we have today. But it's also not practical for us to suppress it and reduce it significantly.'
The ultimate decision was to walk the middle line, like everything else in the fraught, delicate policy. 'So we felt that at this moment it's about one-third, it's probably about the right level, to keep it that way,' concludes Mr Gan.
The final recommendations were no one's best-case scenario but, as in every policy of compromise, it had something for everyone.
Employers managed to avoid a scaling back of quotas, and won a long built-in reaction time before the raised levies are to take full effect.
'The time line is much better than before,' says Mr Pek. 'Last time, it was always 'from tomorrow onwards, the levy will be...'.'
For the unions, there was a bigger emphasis on skills certification and the funding to match.
And the country, perhaps, received the clearest indication of what exactly the Government's policy on foreign workers is.
Senior Government leaders have made it clear that the foreign workforce will be maintained at its current level of one-third for the indefinite future.
'Yes, there is a cap,' sums up Mr Tan. 'It will change people's mindsets. Now, they know they have to live within these parameters.'
</TD></TR></TBODY></TABLE>
