Can Singapore rely less on foreign workers? It's not just about dollars and cents, say observers
SINGAPORE: Contractor PQ Builders’ Peh Ke-Pin has had little luck sourcing for Singaporean workers.
About 90 per cent of the company’s team that does ground construction work are made up of foreigners. The Singaporeans who are part of the team are in supervisory roles.
Bringing in foreign workers is not as cheap as people think, he said. A construction worker typically earns about S$800 a month in basic pay, but each worker costs at least double that, if you count the levy, accommodation and food expenses, as well as overtime pay.
“It’s not that much more expensive to hire a local,” Mr Peh said. He is willing to pay between S$2,000 to S$3,000 for a local, but there are still no takers when he puts out the job advertisements.
This may be due to the current notion of what construction work entails.
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Some Singaporeans CNA spoke to said that with higher pay and career advancement, they might consider working in the construction industry, but they admitted that most people here see the job as menial, and even dangerous.
Samuel Goh, 35, said that he once trained as a workplace safety officer but he switched to a sales job after realising that the starting salary of less than S$2,000 was insufficient to provide for his family.
“If the salary was the same, then I will join the (construction) industry,” said Mr Goh, who is now driving a taxi as he needs flexible hours to care for his children. “Driving a taxi, you are trading your time for money. If you want to earn more, you can work 16 or 18 hours a day.”
Grab driver Ian Chan, 31, said that if the pay was similar, he would still prefer to be a private-hire driver: “It’s less dirty, and you won’t get injured. Construction will be more tiring than driving.”
Similarly, the level of interest among Singaporeans to take up jobs for technicians and technologists is low due to perceptions of these jobs being meant for foreign workers and the lack of recognition and career progression, said Mr Joseph Goh, deputy chairman of the Mechanical and Electrical Engineering Technical Committee for the Institution of Engineers, Singapore (IES).
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The cost of hiring a skilled foreigner worker, including the levy as well as accommodation, laundry and insurance is comparable to hiring a local tradesman, he said. “This means that the issue for some employers might not be budget constraints, but the lack of local applicants.”
DEBATE ON FOREIGN LABOUR REVIVED
Their views come amid a debate that was recently re-ignited as COVID-19 cases in the workers’ dormitories surged.
Members of the public and political observers alike have questioned Singapore’s continued demand for lower-cost foreign workers, and whether local companies could and should reduce their reliance on them.
Singapore has recorded more than 38,000 COVID-19 cases, with the vast majority being migrant workers.
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During a panel discussion on the COVID-19 pandemic in May, former Nominated Member of Parliament Viswa Sadasivan, said that officials should rethink Singapore’s economic growth model that has long hinged on these low-wage workers, causing productivity to remain low.
Another panellist, National University of Singapore sociologist Chua Beng Huat, said that the country’s dependence on foreign workers has depressed the wages of low-income workers.
About a week and a half later, trade bodies and associations released a joint statement declaring that Singapore’s economy will suffer without foreign workers, and result in fewer jobs for Singaporeans in the long run.
Several Government ministers, from Minister for Trade and Industry Chan Chun Sing to Deputy Prime Minister Heng Swee Keat, have reiterated during recent media interviews that while Singapore should depend less on foreign workers by automating processes, the country can never eliminate its need for them.
Foreign workers fill the low-wage, manual labour jobs that Singaporeans are unwilling to do in areas like construction, security and cleaning, they said, while Singapore’s small and shrinking domestic population means it is increasingly tougher to find the people who will take up these roles.
And unlike other countries that spend a longer time to finish a project due to manpower constraints, construction companies here cannot afford to take a similar route, Mr Chan argued.
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“For a small country without natural resources, we compete on the basis that we are a good place for people to do business. If we lose out in that relative game compared to other people, then, unfortunately, I think the future of Singapore will not be what we expect it to be,” he had said.
BALANCE IS KEY
So should Singapore curb its intake of foreign workers? Or are current levels necessary to keep the economy running smoothly?
Experts say that while Singapore needs a certain proportion of foreign workers, getting the balance right is key.
Singapore’s 1.42 million foreign workforce today makes up close to a quarter of the country’s population of 5.7 million people. Aside from the close to 400,000 foreign professionals holding either an Employment Pass or S-Pass, nearly all the rest are work permit holders in low-wage, low-skilled positions.
The proportion of the foreign workforce relative to total employment varies from about 78 per cent in construction to about 56 per cent in manufacturing, and around 30 per cent in services, said Nominated Member of Parliament and economist Walter Theseira.
“There is evidence from other countries that migrant workers do have a positive effect on improving employment and income for locals, in higher skill positions,” he told CNA.
But this also comes with negative effects on local labourers who compete with foreign workers for the same types of jobs: “So the question is whether the net effect is positive - it probably is - and after that, how do you mitigate any harms on local workers who are substitutes for foreign workers?”
Associate Professor Daniel Wong Hwee Boon, Department of Building at the National University of Singapore, said that finding the right balance is critical: “The Government has incorporated many initiatives to control the number of migrant workers and this is already a fair quantum.”
“Without migrant workers, we may inadvertently hollow out skilled Singaporeans in (the construction) sector who may not return to projects and facilities management and (Singapore will) lose talent in an essential industry,” he added.
OCBC chief economist Selena Ling said that Singapore’s ageing population and low fertility rate means that it does need migrant workers.
“Foreign workers also complement Singaporeans, both in terms of skills, experience and cost differentiation at a general level. However, the question may be one of what quality of foreign workers and the appropriate numbers which are judgemental depending on who you ask,” she said.
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They agreed that the Government has to take the lead if change is required.
“As long as you have a good supply of low-cost labour, it is not really in the incentive of firms to switch away from that labour,” said Assoc Prof Theseira. “That's why I think there is a role for Government coordination, so that the industry can move together.”
Said Ms Ling: “There may be some industries and/or companies that have become accustomed to affordable foreign workers and need a nudge or more to change. That’s where policy comes in.”
“NO ONE WANTS TO GET THEIR HANDS DIRTY”
For the companies CNA spoke to in the construction, manufacturing or food & beverage industries, they have had no choice but to bring in foreigners.
All of them had shared the same sentiment: That it is almost impossible to hire Singaporeans, because most of them are unwilling to take on the long hours, low pay and weekend shifts that are required in these industries.
At precision engineering manufacturer Rexadvance Technologies, nearly all its machine operators are S-Pass or Work Permit holders, its founder Jessie Chen said.
Workers in these roles are paid S$2,500 to S$3,000, but the amount is still not enough to attract local applicants.
“No one wants to get their hands dirty,” she said. There are 10 local workers among Rexadvance’s 25 employees; all of them are either administrative and delivery driver roles.
Three years ago, Ms Chen used to have 35 employees. But without enough local applicants to replace those who resign, she could not meet the foreign worker quota. With fewer employees, she scaled her business down and dropped several clients.
Under manpower laws, manufacturing firms must hire about four locals for every six foreign workers.
Likewise, Asiawide Print’s chief executive Stephanie Fang has struggled to get new blood into her office of 50 people. For example, she said, none of her past interns applied for full-time positions. They even mentioned to her after their stints that they do not think this is the “right industry” for them.
As interns, they rotate between graphic designing and operating the printing machine. Ms Fang thinks it is the latter stage when they are on the printing floor that drives them away.
No one wants to get their bodies or their clothes stained with ink, she said. “Dealing with printing machines is just not sexy.”
So how about paying the locals more to attract them? They cannot afford to, some companies say. They are small businesses with tight cash flow.
“The consumer has to be willing to pay more (if we hired locals and increased wages),” said Ming Tan, the founder of restaurant group Jam and Toast. The F&B industry, he noted, is infamous for its razor-thin profit margins.
HOW ABOUT TECHNOLOGY?
The current crisis is a reminder that certain industries, like the construction sector, needs to evolve with technology and skills rather than manpower, said Assoc Prof Wong.
“The industry needs time to adjust to this new reality and perhaps this pandemic may also be the paradigm shift to operations and maintenance,” he said.
Mr Goh of IES said that the institution is working closely with the Government and industry stakeholders to enhance recognition of technicians and technologists in Singapore, with the aim of encouraging more locals to join the industry.
He acknowledged that if fewer foreign workers are employed, many companies will face huge challenges in finding locals to replace them, leading to reduced capacity to take on more projects in the short term.
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“In severe situations, there may be no firms to perform the required works thus causing inconveniences such as downtimes due to lack of maintenance and repair works,” he said. “However, in the long term, increased automation will help to reduce overall costs.”
But some employers said technology has its limitations.
Kenneth Loo, the executive director of Straits Construction, said that while there are building methods that are supposed to reduce construction time and the workers needed on a project, such as prefabricated prefinished volumetric construction, or using precast concrete, the way contracts are commissioned makes it difficult to maximise how technology is employed.
He explained that in the building industry, the architects and developers dictate what the design of the building should be. Since every design has a different requirement, the components contractors manufacture will differ from building to building.
“(This means) everything is tailor-made,” he said. “We can’t automate (and) cut workers.” The process would be more efficient if there were a set of common building designs so that contractors could mass produce the components, he said.
That said, Mr Loo acknowledged that with better coordination and machinery over the past 10 to 15 years, his company managed to reduce the average number of workers he needs per project by half.
Meanwhile, F&B players say space constraints and a business model that relies on the human touch make tapping on technology unrealistic.
“Rent is already so high. We cannot afford to lease more space to install machines in our small kitchen,” said Angeles Herrero, the owner of restaurant KAZBAR.
Even using more compact types of technology, like robotic cooking arms or tablets for customers to order from, differs from the dining experience a restaurant aims to offer.
“It’s not just about food - you can get that at a supermarket,” she said. “It’s about hospitality.”
“Technology cannot be able to replace the human interaction or the taste of hand-crafted food we seek by going to a restaurant,” she added.
“Restaurants create a social environment that brings families and communities together. It’s why we exist,” she added.
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Machines also do not make sense if their Singapore customer base is limited, said Pine Garden’s managing director Wei Chan.
“I can have an automated cream puff machine that produces thousands of cream puffs in an hour, but I only need 200 to 300 puffs a day,” he said. “The Singapore consumer volume is not there.”
And, he added: “We are here to offer a handmade product, not a machine-made one.”
MAKE THESE TRADES ATTRACTIVE TO LOCALS
A part of the solution, in Ms Herrero’s view, is to shift the focus away from insisting that companies reduce their need for foreign workers, but to make the jobs more enticing to locals instead.
For one, the image that a member of the waiting staff or a cook is unskilled labour has to change, she said. "People need to recognise the value of the job we do … It’s a mindset issue.”
This is a view shared by former Non-constituency Member of Parliament and Workers’ Party member Yee Jenn Jong, who wrote a lengthy blog post on this issue.
He feels that it is not just about the pay - the lack of a pathway for progression makes the construction industry unattractive for Singaporeans, he told CNA.
Drawing parallels with the nursing and pre-school education sector, he said that Singaporeans may not see construction work as a viable trade to go into.
“(We need) to show people that there is a career progression, just like they did with nurses and with pre-school teachers. People can see there’s a pathway now, I can aspire to become a manager of a chain of schools or an executive principal,” he said.
Hopefully the use of technology itself will draw people into these labour-intensive industries, Asiawide Print’s Ms Fang said.
In the fourth quarter of last year, she launched a 3D printing division with four people in the department, which she is looking to expand while she tries to work with more companies overseas.
Employees in this arm work in a sterile room environment and print the likes of medical devices, shipping components and military vehicle parts. She is optimistic this new branch of manufacturing will attract and retain younger jobseekers.
“It’s still dealing with machines, but it's a machine that could change the way things are done,” she said. “I think there are better chances getting Singaporeans on board in this field.”
GROWTH VS RESILIENCE
Relying less on foreign workers might also be a matter of survival in the long-run.
Debating the Fortitude Budget in Parliament on Thursday, Assoc Prof Theseira said that Singapore’s current economic model is “akin to running an army only with sergeants and officers”.
“We will face the question in the coming months of how to restructure our economy and society for a more sustainable and resilient future ... we must resist the temptation to use our reserves to simply preserve the economic model of the past, in the hopes that we can return to it once the COVID-19 outbreak subsides,” he said.
The pandemic has shown that a highly specialised foreign versus local workforce can be a weakness as well as a strength, he said in his response to CNA.
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“In good times, it helps us punch well above our weight, but ... if foreign workers are withdrawn or numbers reduced for any reason, we will quickly find that we don't have the local skills or capabilities to take their place - numbers notwithstanding.”
OCBC’s Ms Ling said that both economic and socio-economic considerations should be part of the calculus.
“It’s all about trade-offs – between cost and growth and maybe also our societal aspirations. The COVID-19 experience has probably revealed that it cannot be simply a calculation of dollars and cents. And what happens to the foreign workers on Singapore shores can impact the Singapore economy both positively and negatively.”