In its recommendations for the upcoming Budget, the Singapore Business Federation’s SME Committee called for the Government to defer further planned increases in foreign worker levies and to remove the foreign worker levy for S-Pass holders (“Small companies’ Budget wishlist”; Jan 8).
While I appreciate the need for businesses to minimise operating costs, doing so through reducing costs in hiring foreign labour is fraught with long-term undesirable consequences.
Singapore’s economy is developed enough to completely wean itself off the low-wage development model.
Also, our productivity has remained stagnant for a while. To make labour cheaper would remove a powerful incentive for companies to improve productivity. If cheap labour is readily available, companies will delay investing in production capital, training, and research and development.
Finally, I wonder why some companies can afford to employ S-Pass holders as retail assistants in convenience stores and waiters in restaurants despite the levies and minimum salary requirements. Yet similar jobs are offered to Singaporeans at much lower salaries.
Are Singaporean staff comparatively less productive? Or are some businesses unscrupulously making illegal salary deductions from their foreign workers, or denying them rest days and overtime pay?
Overall, the best way to determine the health of the economy is to look at whether the incomes of average Singaporeans are increasing.
For that to happen, productivity needs to increase and the income generated needs to be returned to workers in the form of higher wages.
A healthy economy can support both higher corporate profits and higher wages.
I am not advocating a total ban on foreign labour. The Singapore Business Federation should instead work with the Government to promote a high-skilled, high-wage economy, and reduce companies’ reliance on foreign labour, which undermines wages and undervalues training.
Edmund Lam (Dr)
*Letter first appeared in ST Forum, 17 Jan.