Overhauling Singapore’s migrant labour system – an alternative plan

Posted by on September 15, 2014 in Articles, Facts, research, analysis, News, Our Stand

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By Alex Au

Many stories on the website of Transient Workers Count Too (TWC2) tell of the abuses inflicted on migrant workers in Singapore. TWC2 holds the view that the regulatory system governing the recruitment and control of foreign labour lies at the root of these abuses. Fortunately, many employers refrain from taking full advantage of the system to exploit their workers, but when a less scrupulous employer or middleman intends to do so, very little holds him or her back.

No systemic improvement in the conditions experienced by migrant workers can result without thorough-going reform of the system. In this article, the writer will present a possible alternative system. It is his personal view, though generally in line with TWC2’s advocacy positions.

The focus of this paper is on non-domestic (mostly male) migrant workers in the Work Permit salary bracket, coming to Singapore to work in the construction, marine, sanitation, landscaping, manufacturing and a few service industries such as catering and hospitality. The term  ‘migrant worker’ or ‘foreign worker’ in this paper will have this meaning. Though abuses may be just as common for domestic workers, recruitment processes are generally different in their case, so they are outside the scope of this paper.

This discussion excludes foreigners coming to work in Singapore on higher salary brackets, i.e. S Pass and Employment Pass, holding professional, semi-professional and highly-skilled jobs.

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The kafala system

For lower-skill labour, Singapore relies on what can be described as the kafala system — although this term is usually associated with Middle Eastern countries, which have been heavily criticised for abuses of migrant labour. Many of those abuses have parallels in Singapore. If at all conditions are better in Singapore, it is only a matter of degree since the structural defects are virtually the same.

As in Saudi Arabia, Qatar, the UAE and other countries in the Middle East, at the heart of Singapore’s kafala system is the principle that a migrant worker should be tied to an employer. The employer chooses whom to bring into the country and is vested by the State with powers to control the worker. Outside of rare exceptions granted by the government, the worker is not allowed to change employers while in the country without the employer’s consent, which is rarely given. The employer is free to terminate the employment (and with it, the work visa) at any time, and the worker loses his job and is sent back to his home country. He has little control over his own fate, his agency and autonomy eroded by the commoditisation of labour.

not_kafala_3The first major deficiency inherent in such a system is immediately obvious: The employer is given enormous powers of control over employees. Passports are routinely taken away and the State does not consider this practice objectionable. Deception, exploitation and intimidation are never far away from the employer-employee relationship, since a worker’s entire livelihood and right to stay in Singapore is contingent on obeying.

The second, equally major deficiency may be less obvious to the layman. It lies in the fact that the typical employer has no easy way to reach the labour pool of source countries, nor is there any transparent, quality-verifiable formal recruitment system.[1] In order to recruit, the employer typically relies on a chain of shadowy middlemen, every single one of them eager to extract a pound of flesh from the potential worker. The result is that the worker’s journey begins with a huge sunk cost. The terms used by TWC2 and workers themselves are various, and include ‘placement fees’, ‘recruitment fees’, ‘agency fees’ and ‘agent money’. Readers will find many stories on TWC2’s website making reference to this shackle on workers. The fees (sunk cost), which range from $3,000 to $9,000 for a one- or two-year contract, represent anything from 20 – 80 percent of the worker’s expected total income through that period. The amount is often raised by the worker borrowing from Shylocks, selling family land or pawning wives’ dowry.

This second deficiency in the system compounds the first. Having paid so much upfront to secure the job, and yet disallowed from seeking a new job should his employer prove exploitative or abusive, the worker is in an extremely vulnerable position, unable to withstand unreasonable — even criminal[2] — demands by the employer. The fear of losing his job and be sent home to face debt collectors and social shame for losing family savings strips him of any bargaining power.

Any successful overhaul of the system must address both these key deficiencies since they are interlinked.

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Generalised right to change jobs

To address the second of the major deficiencies, TWC2 has long argued for workers to have the right to change jobs in Singapore. The Ministry of Manpower has gone a little way in this direction. Cases in which case officers at MOM feel the worker has been ‘victimised’ have seen the ministry granting him a ‘Change of Employer’ (COE) opportunity. However, this concession is rarely given, and the process of determining who has been victimised is not altogether transparent.

not_kafala_4Moreover, in the majority of cases that TWC2 has come across where the worker tells us he has been given COE, the worker is still unable to land a new job within the (ridiculously) short period of 30 – 45 days he is given before he must leave the country. The hurdle most commonly reported by these COE-granted workers is that potential new employers or their unofficial agents demand payment for the job. This is illegal, but because the demands are made verbally, it is nearly impossible for workers to prove that such demands have been made. As a result this practice flourishes and the authorities are rendered impotent.

Why do employers ask to be paid — usually $1,000 to $2,000 — for hiring a COE worker? TWC2’s view is that this reflects the opportunity cost for not taking a new worker direct from the home country. The ‘agent money’ collected from new workers in home countries is shared not just among layers of middlemen, but in some cases, also with the boss.[3]

TWC2 has argued in previous proposals that giving workers already here the right to change employers must be coupled with raising barriers for the hiring of fresh workers from abroad. Otherwise COE as a generalised right is meaningless when in practice workers cannot find jobs. TWC2 has suggested that one way to incentivise employers to hire workers already in Singapore is to differentiate the monthly levy rates between experienced workers already in Singapore and fresh workers from home countries. Enacting a bias in favour of workers already here has the added benefit of retaining experience, skills and socially-adapted foreign workers.

Another factor to consider is that information asymmetry disadvantages the COE worker. Whereas employers, being corporate entities that regularly hire workers in the tens, hundreds or thousands, have well-honed networks of middlemen contacts, the lone worker does not. Moreover, the contact(s) the worker has would be in his home country, not in Singapore. Overcoming this information asymmetry is essential if COE is to have practical effect, and it is thus part of the proposal here.

 

Eliminating middlemen

Granting the right to change jobs is the easy part. But so long as getting a job involves middlemen, sunk costs and the abuses stemming from the financial disempowerment that results will remain unaddressed. All parties, not just the Ministry of Manpower, recognise that this problem is not easy to solve since much of the transactional activity takes place outside of Singapore. Nonetheless, there are solutions; this paper describes one.

not_kafala_2That solution must involve a centralised, digital job marketplace (hereafter termed “the Exchange”) which potential workers can access with relative ease, whether those workers are already here in Singapore wanting to change jobs, or still in the home countries. All employers with Work Permit jobs to offer must recruit through this Exchange and not any other channel.[4] In essence, it means cutting out middlemen.

This solution can be tied to another strategic goal of Singapore: to upgrade the skill levels and thus the productivity of foreign workers. This can be done by requiring that access to the job marketplace is contingent on first having a trade qualification recognised by Singapore.

Something similar is already in effect with respect to the construction industry. Work Permits are now only given to those who have passed skills tests conducted by the Building and Construction Authority (BCA) in India, Bangladesh and China. A weakness is that while testing is done by BCA, training is not. Training is outsourced to a variety of privately-run “training centres”, many of which are of dubious standard. The article Training centres in Bangladesh have become money-minting machines explains that with about 100 training centres in Dhaka city alone, far more hopeful trainees are induced to part with precious money as training fees than there are eventual testing slots or jobs in Singapore. The situation strongly indicates that these training centres are more interested in extracting money from young Bangladeshi men and their families, exploiting their aspirations, than serve the real needs of Singapore in a proportionate way numbers-wise. The uncontrolled nature of the this ‘training industry’ also raises questions about the quality of the training provided.

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Nationalise worker training centres

An idea the writer floated at a talk given to a roomful of officers from the Economic Development Board a couple of years ago was this: Singapore should ‘nationalise’ the vocational training industry for foreign workers, the same way that the State plays a leading role in providing vocational training for Singaporeans. If we want skill and productivity standards to rise across the board in Singapore’s economy, equal attention must be paid — and equal involvement of the State embraced — to vocational training for migrant workers who come to work in Singapore. The proposal the writer floated at that talk, and reiterate here, is for ITE (whose technical training colleges have quite a good reputation) or a similar body to establish satellite training centres (hereafter referred to as ‘State-linked training centres’) in the main countries from where we source Work Permit labour, and to stop the outsourcing of training to private entities.

This is not to suggest that the curriculum in these overseas training centres would be substantially similar to courses offered at ITE colleges in Singapore. Almost surely, the courses will need to be reduced to absolute core competencies required by the industries that hire Work Permit workers, and perhaps not take more than six to twelve months to complete.

One added advantage of having a State-linked body in charge is that English language training can be made an important part of the curriculum. The inability to communicate in Singapore’s common language or read instructions is a huge hindrance to productivity improvement and social integration of migrant workers.

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Graduates from training centres to get access to Exchange for job-matching

The proposed Exchange should grant password access to

  • freshly certified trainees from the proposed State-linked training centres abroad,
  • previously certified trainees working in Singapore but wanting to change jobs,
  • previously certified trainees who have worked in Singapore before but are currently back in the home country.

A reasonable fee, say $50 each for employer and employee, may be charged for every successful placement. Given that perhaps 200,000 Work Permit workers start new jobs a year, that’s $20 million annual income. This should more than enable the Exchange — essentially just a digital platform — to be self-financing.

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Workers, having secured their first job through the Exchange, should be granted six-year Work Permits, within which they can change employers (provided these new jobs are also obtained through the Exchange). Since the maximum period a worker can work in Singapore is currently 18 years, two renewals of the six-year working visas can be routinely offered if the worker still has a job here at the point of renewal.

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Politically-sensitive aspects

Perhaps it is worth adding that migrant workers’ options should be limited to those sectors for which they have the necessary skills training. This should alleviate concerns that migrant workers might displace Singaporeans across a broad range of jobs — a politically sensitive issue.

not_kafala_5Another politically-sensitive issue relates to the total number of the foreigners working in Singapore. The above proposal does not foreclose any options. The total number of foreign workers can be modulated, as is now, through the Dependency Ratio (colloquially known as the ‘quota’), which imposes a ceiling on how many Work Permit employees a company may have on its payroll, depending on the industry sector.

With respect to the third common grouse — that of foreign workers not being able to speak any English even when they hold frontline service sector jobs — this proposal provides the means to mitigate the problem. All trainees at the overseas State-linked training centres should be put through intensive English classes, and should be tested for basic grasp of the language before they can graduate.

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Costs to the aspiring worker

Undeniably, this proposal does not completely eliminate the sunk cost workers have to bear. It is only fair that they should pay reasonable fees for the training they receive. Depending on the length of the training course, it may not be much less than what they are currently paying ‘agents’ to get them jobs under the current ‘Wild West’ situation. However, there are three key differences, which any worker will appreciate:

  • The sunk cost (of training) does not relate only to the first job. When twinned with the right to change employer, it is an investment that allows him to obtain future jobs. This is unlike the agent fee he pays at present that is payment for only the specific job recommended, and from which he can be terminated within weeks of taking up the job.
  • The right to change jobs will completely change the tenor of the employer-employee relationship into a fairer one. Where the sunk cost (of agents’ fees) currently disempowers workers by making them extremely fearful of losing their existing jobs and not being able to find subsequent work, the new sunk cost (of training) does not create the same anxieties.
  • There is no further sunk cost with the worker’s second or subsequent jobs. This is unlike the present situation where he has to pay agents over and over again for each new job he finds.

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Interim implementation

It is evident that establishing State-linked training centres abroad will be financially significant undertakings, though the writer argues that the payback in terms of raising skills, English competency and enhancing productivity will be substantial. It will also take several years to achieve this.

Yet, an interim plan can easily be implemented, though perhaps initially restricted to the construction industry. All it takes is

  • Making COE a right for all Work Permit holders and giving Work Permits six-year validity periods, with option for renewal;
  • Setting up the digital job Exchange allowing all workers who had previously passed the BCA skills tests to register for access to the exchange;
  • Mandating that employers with Work Permit jobs in the construction industry must offer these jobs only on the Exchange, and all job acceptances must be transacted through it.

Even an interim plan restricted to construction workers will make a significant difference since about 320,000 of approximately 400,00 workers from India, China, Bangladesh, Thailand and Burma are in the construction sector. Construction workers make up 80 percent.

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Political will

The writer suspects that the lack of political will is the chief obstacle. This likely flows from insufficient priority accorded to eliminating the abuses stemming from our kafala system, even as these abuses are quite well known to policy-makers. However, just as international attention on the labour situation in the Middle East has grown over the past few years, the spotlight on Singapore will intensify too. More importantly, domestically within Singapore, the sense of moral unease at the current situation is likely to grow.

As this paper shows, the problem is not an intractable one. The abuses we see are quite easily prevented. In the process, the solution will also support other worthy goals: of productivity improvement, skills and experience retention, and social integration of our migrant workforce.

 

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[1] While Singapore may boast of laws to regulate employment agencies, it is also entirely permissible to recruit a foreign worker without using a licensed employment agency. It is hardly any wonder that most male migrant workers do not come through the licensed agency route, it being much easier to demand high fees when recruitment is done through informal channels away from official scrutiny.

[2] Many common abuses are actually outlawed in Singapore, such as non-payment of all or part of salaries, illegal deductions, kickbacks, excessive working hours, unhygienic accommodation, failure to provide adequate medical care. Yet it is common to hear of employers violating the law, yet with workers too scared, intimidated or too worried about losing their jobs, to complain.

[3] From time to time, TWC2 comes across cases in which workers find themselves terminated from the new jobs within weeks or a couple of months from starting date. Having expected to have a job for one or two years, these workers are naturally upset. When they ask the ‘agents’ who had intermediated to find them these jobs for their money back, quite often the ‘agents’ say that there is no way they can refund (at least not in full) because part of the fee had been given to the employer. Occasionally, workers have voice recordings where company owners or managers admit that they did receive a cut of the fee, which leads TWC2 to believe that when agents say they have parted with the money to the employer, it is not just a ruse to avoid reimbursement, but is likely to be grounded in fact.

[4] We can also legislate that any kickback demanded in relation to any job offered through the Singapore-hosted digital marketplace is a demand that takes place within Singapore jurisdiction, and therefore violates Singapore law.

TWC2 is an organization that is dedicated to assisting low-wage migrant workers when they are in difficulty. We are motivated by a sense of fairness and humanity, though our caseload often exceeds our
means.

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