Foreign Labour Issue in Singapore

Friday, March 23, 2007

" Is our Government's fervent bid to attract and retain foreign talent at the expense of quality?"

A Singaporean post that question in a letter that was printed in local newspaper. The letter was a response of a Government policy that seems allowing more foreign "medium-skilled workers" to come and work in Singapore. He worried that if more the so-called medium-skilled workers coming to Singapore and work here, the chances of a domestic labour to be employed are getting less. I feel sorry for his fear or anger, so i decide to calm him down by giving some brief overview of Singapore Labour policy, especially regarding the foreign workers issue.

For a foreign people who want to work in Singapore, they must be granted a "pass". This pass entitled them to work in Singapore in a certain period of time. This pass is issued by Singapore Government on behalf the request of the respective employer. So, if a company in Singapore wants to hire a bright-cute-funny-intelligent Indonesian fresh graduated worker, they have to request a Pass for their respective employee. This medium-skilled workers falls into S Pass holders category in Singapore's Foreign Workers Classifications. Quoted from Singapore Ministry of Manpower official websites, here is some general informations about S-Pass holders:


"The S Pass is for foreigners who earn a monthly basic salary of at least $1,800. S Pass applicants will be assessed on a points system, taking into account multiple criteria including salary, education qualifications, skills, job type and work experience.", and the criteria are:

1. Salary - refers to a minimum basic salary of $1,800.

2. Qualification - generally refer to degree or diploma level educational qualifications. Technical qualifications can be considered and are, very broadly, courses that train the applicant to be a qualified technician or specialist in their chosen field. This should be obtained after at least 1 year of full-time study.

3. Job type - generally refers to professional, specialist or technician level jobs; and

4. Years of Work Experience - generally refers to the number of relevant years of work experience that the applicant has for in the job being applied for.

Work Permit holders who wish to apply for an S Pass must ensure that they meet the above requirement. In addition, the S Pass is given by Singapore government to respective employer by using a quota. A maximum amount of S Pass can be given to an employer is 10 % of total employees working in their company.

So, based on official policy stated on an official website, we can conclude that Singaporeans "medium-skilled" workers are the remaining 90 % of the total workers in a respective company. It is 9 times higher than the foreign workers. If it is the reality then what is the problem? Those Singaporean concerns about the seemingly endless influx of foreign medium-skilled workers into Singapore labour market and hence tighten the competition, regardless the imposition of 10% quota of S-Pass holders. Then one should ask, what cause that influx of this kind of labour into Singapore labour market?

Say hello to wage differences.

Based on UNCTAD database on unit labour cost and manufacturing in 1998, a monthly wage of Singapore worker is 4.5 times higher than in Malaysia, 5.7 times higher than in Philippines and 10.6 times higher than Indonesia. Recent data from Singapore Ministry on Manpower also reveals that during the year 2000 to 2005, medium house-hold class income has increased with a rate of 1.2 % - 2.4 % annually and this increase is likely to widen the disparity of income in Southeast Asia nations because Singapore is the only country with the least effect of Asian financial crisis back in 1998, while many others countries in Southeast Asia have not recovered yet from its fall.

Singapore government is a pool of very talented person. They must have already known this fact, thus they implement a strict labour market regulations in order to manage its labour market. They know that such a wide wage gap between Singapore and its neighbour countries is not likely to be closer in the following year and the only way to manage the influx of labour to Singapore is by imposing a strict labour restrictions, such as a quota for S-Pass holders and many others regulations. But even it is Singapore government, they can have a leakage in its policy also. He reported that not all companies are following the rules in restricting labour market, either they try to hire foreign labour more than 10 %, or they accept foreign labour market with a monthly wage below S$1,800 and drives down local wages as well. Well, if that is the problem then the solution does not lies in economics anymore, even if economics can explain what is the reason behind this fact. Economist, you are out of the game.

Law authority, you can play your cad right now.