Improving The Welfare Of Low-Wage Workers In Singapore

Crafting labor policies for low-skilled foreign workers is challenging. Moral and economic imperatives don’t necessarily coincide. These workers, who are neither enfranchised citizens nor fully participating members of society, further raise the complicated question of how far their rights have to be respected if they are at the expense of citizens.

In Singapore, the question of how these workers have to be treated has become increasingly pressing following two major foreign worker-related incidents. In December 2012, about 100 Chinese workers protested in response to their unfair wages. It was the first labor-relatedstrike in 26 years.

Nearly a year later, there was a large-scale riot by South Asian workers, following the death of a Indian construction worker due to a traffic accident. The situation escalated soon turned into a violent protest. Work-related grievances have been flagged as a possible reason for the escalation, though the government has persistently denied this.

Foreigners constitute nearly 15 percent of the population of Singapore, most of whom are low-skilled workers from countries such as China, India and Bangladesh. These workers aren’t allowed to switch jobs; their work is laborious and compensation is modest.

It is economic factors which drove these workers to Singapore, hence work-related policies would be the most effective lever in improving their welfare. Ideally, these policies should minimise cost on consumers and employers. This would also engender greater political will. In this spirit, allow me to make three policy proposals.

While these suggestions have been made in the Singaporean context, they are very much applicable to nations in the Gulf that are also heavily dependent on low-skilled foreign labor.

Regulate the Middleman’s Role

For most workers, their jobs are secured in their respective countries by employment agencies which often present a distorted image of work conditions and charge exorbitant fees for their services. Some workers have been known to work for a few years just to pay off the agency fees. Because of the high fees, many workers are beholden to their employers, even if they are unsatisfied with their work.

For example, in the Philippines, which is a huge source of foreign labor for Singapore, overseas employers are legally only allowed to recruit workers through agencies registered and licensed by POEA (Philippine Overseas Employment Administration). Employers have to be jointly responsible alongside the POEA under Philippine law with regard to any claims and liabilities raised concerning the implementation of the employment contract.

It is unlikely that developing countries such as India and Bangladesh would come up with such comprehensive legislation to protect their citizens. The want to find meaningful employment for the burgeoning working population is likely to be a greater priority than ensuring their labor rights.

However, Singapore could still take the lead and only accredit foreign employment agencies which have a track record of providing accurate representation of opportunities and charging reasonable fees. Currently, accreditation is limited to local agencies and their fees are not factored.

Ensure Proper Compensation for Labor

Most of the complaints coming from unskilled workers have been with regard to them not receiving their salaries were as a result of the non-payment of wages. Because companies weren’t required to pay their workers through their bank accounts, many workers found it difficult to prove their case with no evidence. It is laudable that the Singaporean government is actively exploring the possibility of electronic payments, following the suggestion of MP and head of the Migrant Workers Centre Yeo Guat Kwang.

With electronic payments, steps can be taken to allow workers to immediately remit a share of their income to their loved ones. This would encourage greater fiscal discipline, limiting the possibility of workers spending large amounts of money on gambling and excessive alcohol consumption.

Use Broader Criteria To Assess Employers

Economic incentives need to be properly structured to ensure that employers behave responsibly. Currently, employers are required to submit a 5,000 SGD bond to the government for every foreign worker they employ. This sum is only returned if the employee does not overstay. This has created a perverse incentive for employers to hire repatriation companies to send their employees back. Some of these companies have been reported to resort to violence.

The government could perhaps use a broader set of criteria to assess these companies. In addition to successful repatriation, other criteria, such as the number of workplace safety breaches, condition of the dormitories and promptness of salary payments, could be collated and a rating could be created. This rating then could determine the fraction of the initial bond they get back.

This track record could be used as a deciding factor in the offering of government tenders. This way, employers would have greater incentive to ensure the welfare of their workers.

Conclusion

The International Labor Organization’s Declaration of Philadelphia pronounced emphatically that “labor is not a commodity.” Low-skilled workers can’t be treated as just cogs in the economic machinery. They are individuals whose rights to a fair-paying and dignified job must be respected.

The conflicting interests of consumers, employers and workers do present a serious challenge. Recognizing this, the declaration also affirmed that “the war against want requires to be carried on with unrelenting vigour within each nation, and by continuous and concerted international effort in which the representatives of workers and employers, enjoying equal status with those of governments, join with them in free discussion and democratic decision with a view to the promotion of the common welfare.”

Palaniyapan

*The writer blogs at http://singaporematters.blogspot.sg/