This is the talk TWC2 vice-president Alex Au gave at the National University of Singapore to a large class (about 300 – 400) of students from various faculties on 15 October 2014. The text here is a somewhat fuller version of the talk itself, which wasn’t entirely read from script, and which was constrained by time.
Each year, Transient Workers Count Too helps over 2,000 foreign workers when they face difficulties, commonly the aftermath of work injury, or unfair treatment over salaries. Based on what we have learnt from our experience, in today’s talk, I’d like to take you through
- A macro view of the foreign worker populations and the situation they find themselves in
- The regulatory system that Singapore has in place for bringing in foreign workers
- How the system has major flaws, creating opportunities for abuse by employers and agents
- The major issues workers have to contend with
- And the key solutions that TWC2 believes are necessary to correct what we consider a disgraceful side of Singapore.
I will make a particular argument in this talk, so that you will have something to chew on: That the unacceptable situation foreign workers find themselves in can be said, in many ways, to be the inevitable result of the regulatory framework we have set up in Singapore with respect to work migration. It is very easy to blame employers for being greedy, short-sighted, heartless and so on, especially when there is a direct relationship between workers and employers. But I want to show you that this may be too superficial an analysis. I want you to consider the possibility that in the main employers are acting rationally when they do what they do given the governing circumstances, and if these actions produce results that disturb our conscience, it is essential to then ask: What is there in the governing conditions that propel such rational action that in turn creates these outcomes?
And that is why this talk is going to take the form it does. Enquiry that goes no further than ascribe effects to ‘bad people’ or ‘bad bosses’ is not illuminating. It is not even intelligent. It’s like ascribing a collapse of a shoddily constructed building, killing several people, to bad karma and not seeking other answers.
Migrant worker populations
First, I need to set some context and background.
Out of Singapore’s total population of 5.47 million as of 2014, about 61 percent are citizens and a further ten percent are permanent residents.
Foreigners make up 29 percent, of which the biggest group are Work Permit holders, i.e. those who earn below $2,200 a month — they are the blue figures on the slide. Higher income foreigners hold S Passes or Employment Passes.
However, since many citizens and permanent residents are children, adolescents or elderly, they aren’t in the labour force. If we take only the working population, we’ll find that foreigners make up nearly forty percent of our workforce. The lower-income Work Permit holders alone make up nearly thirty percent. This shows the crucial role foreigners play in our economy. Without them, almost everything will come to a standstill.
In today’s talk, I will focus on the 980,000 Work Permit holders which can be subdivided into three main subgroups:
- About 370,000 Malaysians who blend in quite well and are found in all sorts of trades from catering to renovation to transport to retail; they’re a mix of male and female.
- 218,000 domestic workers as at midyear 2014, nearly 100% female, from Indonesia and Philippines mainly, but also from Myanmar, India and Cambodia.
- Nearly 400,000 others: what I call the ‘classic’ foreign worker – the type we see in our minds whenever we use the term ‘foreign worker’ – who mainly come from India, China and Bangladesh, but also from Myanmar, Philippines and Thailand. The majority of them are in construction, but they are also in cleaning, landscaping, manufacturing, shipyards, restaurants, hotels, hospitals and nursing homes. They are mostly male with a minority female.
In this talk, we will be focussing on the classic foreign workers and domestic workers. Malaysian workers blend in well, are less restricted and have fewer problems.
Typical conditions experienced
Let’s take a look at typical conditions faced by foreign workers. Almost none of them work a five-day week. Some work all seven days a week. An eight-hour day is virtually unheard of. We’ve had cases coming to us telling us that they work shifts lasting 24 hours, then get maybe six hours’ sleep and have to go to work again.
As for domestic workers, some of you may know that there is in fact a law that says they should get a rest day once a week, but TWC2 still hears of cases where they do not get that rest day. How does this come about?
By and large, it is because the law allows employers to buy back that rest day. The law says that it should be on a willing buyer willing seller basis, but it is extremely difficult to establish how much freedom a domestic worker really has to refuse if the employer asks her to work on a rest day. After all, the domestic worker has to continue living in the same household.
Moreover, domestic workers burdened by debt — and I will speak about agents’ fees a little further on — are not in a strong position to resist. During the first eight months or so, well over 95% of a typical new worker’s salary goes towards repaying her debt to the placement agent. The extra money she earns by selling her rest day either helps pay off that debt a little more quickly, or else provides her with a bit more disposable income.
But is working seven days a week for months on end good for her health, both mental and physical? Employment laws are intended to protect the health of workers, especially those known to have weaker bargaining power (that’s why employment laws developed in the first place). Is creating an option for the employer to buy off a rest day in keeping with the purpose of good law? At the very least, why doesn’t our law require compensation in the form of a substitute rest day?
As you can sense, this foreshadows the point I want to make: how things are regulated makes a big difference to how people behave. And while we are on this point, I should point out that it took ten years of advocacy by TWC2 and other organisations to even get this far. The Ministry of Manpower (MOM) mandated a weekly day off for domestic workers only recently, taking effect in early 2013. Without law, a weekly day off just could not, would not come about as customary employment practice by itself. Enlightened employment practice does not evolve in the absence of regulatory push. It needed an amendment to the regulatory framework to bring it about. Even then, with the option to buy back a rest day — and in some cases, the government even gives a subsidy for “families who hire FDWs to care for family members who require constant attention” (see this booklet issued by the ministry) — it should surprise no one that some domestic workers still work seven days a week even if the government brandishes this new law to fend off criticism.
Next, have you any idea what foreign Work Permit holders’ typical basic salary is?
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At this point, the students were asked to raise their hands to indicate if they agreed with A, B, C or D. About ten percent chose to indicate A, another 25% raised their hands for B, very few did so for C or D.
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It looks like about ten percent of you are right.
Basic salaries are typically just about $400 to $700 per month — think construction, shipyard and cleaning crew. I should add however that some smaller groups do tend to earn more, for example, skilled construction workers from China and those working in hospitality, retail, F&B or healthcare sectors.
Moreover, non-domestic workers earn more when they put in overtime hours which are payable. Domestic workers don’t even enjoy that.
How many of you think $400 – $700 is fair?
- That for an economy like Singapore’s this is what low-skill labour ought to be paid?
- That to pay more than that is economically unsustainable?
(Less than five percent of the students raised their hands)
Perhaps we can look at it another way. Let’s compare this wage range with the minimum hourly wage in New York, Britain and Australia. But before doing so, I need to explain that $400 to $700 a month is equivalent to $2.10 to $3.67 per hour, as represented in the bar at the left of the next slide:
This slide is quite a stunner, isn’t it? The wages we pay are less than a quarter of the legally mandated minimum wage in these countries. Bear in mind, our cost of living is in the same ballpark as these three places. And professionals in Singapore expect to earn what similar professionals earn over there. Why shouldn’t non-professionals too? Also, minimum wage would be for burger flippers or amusement park ticket collectors. Construction workers in these places earn several times minimum wage.
If you think low wages are bad enough, there’s more. In order to get a job here, workers have to pay agents crazy sums of money. At TWC2, we see workers who tell us they’ve had to pay agents $9,000 or $10,000 for their first jobs with one-year Work Permits.
Let me say something about job agents. There are licensed and unlicensed agents. There are Singapore agents and home-country agents.
As you can see from the slide the placement fee situation is particularly bad for male, or non-domestic workers. Why? Because they mostly come through unlicensed agents and home country agents. These are unregulated and engage in all sorts of terrible practices with impunity.
By contrast, domestic workers, who come mainly from Philippines and Indonesia, almost always come through licensed agents. Because the typical employer is your average Singaporean acting in his private capacity and trying to hire just one domestic worker, it does not make any sense to try to circumvent the legitimate recruitment system.
Furthermore, the governments of Philippines and Indonesia take a real interest in the welfare of their citizens going to work abroad. They have tightened rules about who can recruit within their own countries and the terms under which recruitment can be made.
The governments of China, India, Bangladesh and Burma have not shown the same degree of interest. They have not instituted much official oversight over the recruitment process.
Here again, I signal my main point: how governments behave and how they shape the system can have quite dramatic results, though in this instance, I am referring to the actions and attitudes of the governments of sending countries. Nonetheless, the principle is still the same.
Unlike the circumstances surrounding domestic workers’ recruitment, those surrounding non-domestic workers are entirely different. Rarely is an employer looking for a lone worker. Some employers have in hand a Manpower ministry ‘quota’ for ten workers, others have hundreds. Enjoying economies of scale, it is feasible to avoid the locally-licensed agents and try to use the cowboy agents riding loose and wild over the small towns of India, Bangladesh and China. Consequently, because the recruitment process occurs outside regulatory oversight, the fees and terms of recruitment are not limited by law; only by market forces, which as I will later show are also shaped by the regulatory environment and perversely too. This explains how agent fees of $9,000 or $10,000 have come to be the norm for new workers.
But then, it begs the question: why doesn’t the Singapore government think more creatively to find ways to rein them in? Why do we just shrug and say it’s all outside our jurisdiction?
How is it that Manila can strive and find success in improving the conditions for Filipinos working abroad when it too faced the same transnational nature of a problem?
(That said, I do not mean to imply that all problems have been solved. We at TWC2 still see Filipinos who report unfair practices by their employers. But I think observers will agree that generally speaking, there has been improvement in conditions for Filipinos over the years.)
At this point I need to shake up some complacency I have often observed in Singaporean modes of thinking. We seem to automatically see ‘law’ and ‘regulation’ as good things. If something is lawful or regulated, it must necessarily be good. It isn’t so simple. Things can be badly regulated. Poorly-designed regulations can produce unforeseen effects. Worse, laws can be wielded to achieve unbalanced aims, or can have an unintended effect of benefitting one side over another. Thus, the question before us is not only whether the migrant worker situation is regulated or not regulated, but how it is regulated.
Regulatory system
Hence, we should not assume that the shameful situation exists because government action is insufficient or that they exist despite State efforts to control it. Instead, my argument that in several ways, State policy created the situation — perhaps not deliberately, but inadvertently — through bad policy design. More importantly, although these ills are known to policy-makers, little urgency is displayed in correcting the situation. Why, of course is the sixty-four thousand dollar question.
Next, I want to take you through a few features of State policy. In the interest of time, I won’t cover everything, just the most important ones.
We see workers from so many countries today that we may have forgotten this is not normative. Having such a wide-open door is not a ‘natural’ state of things. Older Singaporeans will remember a time when only Malaysians were permitted to find work in Singapore for low-skill jobs. And then a time when only Malaysians and Thais. It is through government policy that we have the situation we have today with large numbers coming from quite a long list of countries.
These are shown on the slide; the sizes of the discs are proportionate to their populations. We may think that with our open-door policy, we have loads and loads of job vacancies for foreign workers in Singapore, but actually, compared to the millions and millions of people looking for work in these countries, we’re a tiny drop in the ocean. Supply completely outstrips demand!
The fundamental rules of economics naturally applies. Given the relative scarcity, wages here are depressed. Moreover, a price mechanism kicks in. Instead of employers paying to get workers, workers pay to get jobs.
The question worth asking is this: Why have we chosen these countries to open up to? In making this choice, do we have some responsibility for the present state of affairs?
Before I move to my next point, let me say this: In many other advanced countries it is the government which applies a skills test (and a quota cap) and then decides who gets in and who does not. Employers then have to hire from within the pool that has been allowed into the country. I am oversimplifying and it’s usually more complicated or flexible than that, but simplification is intended to highlight the general principle. This conceptual design is represented by the blue illustration in the slide at left.
Our system (represented by the red and rust-coloured diagram) allows employers to choose who they want to bring in. This is not unlimited, but subject to a certain ratio of foreign workers to local workers on a particular employer’s payroll. This notwithstanding, what may appear to be a relatively minor difference — letting employers choose from among the millions in India, China, Indonesia or Bangladesh (rather than having to hire from those already admitted into Singapore by the government through skills and qualification evaluation) has consequences which I will explain later on.
Let me pause here to outline the key features of our regulatory system:
- I have already mentioned that under our system, it is employers who can choose from the millions in India, China and other populous countries who they wish to bring in; the Manpower ministry’s approval process can be described as rubber-stamping.
- Employers in Singapore have to pay a monthly levy, ranging from a few hundred dollars to nearly a thousand dollars. It’s a form of tax. The government collects about $5 billion a year through the levy.
- Employers are responsible for medical care and insurance against workplace injuries. Despite collecting $5 billion a year, the State provides no subsidies when foreign workers need medical treatment.
The three worst rules – worst because they lie at the root of a lot of problems – are
- The worker’s right to stay in Singapore is tied to the job. Once he loses the job, even though it is not his fault, he must leave. He is generally not allowed to look for another job.
- The employer is free to terminate a worker at any time, without giving any reason.
- The worker however is not free to change jobs.
Already, you can see a power imbalance created by law: the employer has freedom of action, the worker does not. This power imbalance then translates into a severe reduction in bargaining power of workers, which is already undercut by the supply-demand equation that works against them.
Given their law-enshrined power to fire workers at any time without having to provide a reason, employers can become intolerant of the slightest whiff of dissent. Workers who grumble about salary abuses — more about these later — or who point out shortcuts that undermine work safety are quickly penalised by being terminated and repatriated. This leads to constant manpower churn: experienced workers are sent home, fresh inexperienced ones are recruited, and because the latter are new to Singapore, productivity suffers. Furthermore, they (generally speaking, compared to those they replace) have a poorer grasp of English and no awareness of our social and cultural norms.
Fuelling the churn is the fact that many employers take a cut of the agents’ fees. It is actually more profitable to churn the workforce than retain experienced workers! Here private interest trumps Singapore’s overall economic interest.
The regulatory system attempts to provide an avenue for workers’ complaints. When a worker feels that his employer has not lived up to his responsibilities, e.g. paying salaries on time, or providing medical care, he can lodge complaints at the Ministry of Manpower. But in real life, he is required to pay a high price for the ‘privilege’ of complaining:
- He generally is not allowed to work – so no income while his case is dealt with.
- He must provide proof, which can be very difficult.
- And we have seen cases where because the worker could not present proof, he was charged and jailed for lying to MOM.
So I reiterate my first main point: The regulatory system itself creates a bias against the worker.
Examples of mistreatment
Let me switch the focus to the micro for a while. let me go into another level of detail.
I said earlier that under our system, it is employers who choose who they want to bring in. But most employers have no way to reach into the labour pool of foreign countries. So they depend on agents — and here I use the term to mean any kind of recruiter, licensed or not. There may be more than one agent involved, each of whom wants to take a commission. Some employers themselves want to be paid for extending an available job.
This explains why workers end up paying so much for a job.
But after they have paid so much, they cannot afford to lose the job. It’ll be a financial disaster for them or their families. They may have borrowed money from usurious money lenders, or mortgaged the family farm.
You will also recall that employers can terminate a worker any time. A worker may have a two-year Work Permit in hand, but if he is terminated in his third month, he still has to go home unless his employer agrees to him getting a transfer (rarely given) or the Ministry of Manpower does so. Even getting the ‘right’ to a job transfer means less than it sounds. One may have the opportunity to look for a new job, but actually finding one is in real life quite difficult. Employers have openly declared to TWC2 that they flatly do not want to hire workers already here. They can do this again because the regulatory system allows them to hire directly from abroad, and the system ignores the fact that it is generally more profitable to do so.
Given such daunting odds against the worker and given the uncertainty whether or not the already-unhappy employer or the cold bureaucrats in the ministry will grant an opportunity to transfer, no worker can rely on this when weighing his decision whether to file a case with the authorities.
So, how many workers dare lodge complaints? This explains how employers can get away with so many abuses. You can imagine there is a widespread sense of impunity. It also cautions us not to read too much into the official statistics compiled by the ministry as to how many (or few) complaints they receive.
Here are some examples of the cases we see regularly:
A worker comes to Singapore after being promised a good job. He pays his agent.  Within days of arriving in Singapore, the boss reneges on those promises and slashes the salary down. Can the worker just go home? |
 A worker is injured and the boss refuses to send him to hospital. The worker makes his own way to a doctor and pays himself. The law says the worker should be reimbursed. But if he asks for reimbursement, he may get fired. |
   Many workers are paid in cash with no supporting documentation. Some employers routinely pay less than the correct amount. What would you do if you were him? |
Failure of employers to pay levy; workers bear the brunt
Remember I said earlier that employers have to pay a monthly levy? What if they don’t pay on time? The Ministry of Manpower will revoke the workers’ permits. The workers will lose their jobs and the repatriation process is normally activated as soon as the last month’s salary is paid up.
The ministry may allow some workers to stay on and look for new jobs, but as I have mentioned above, jobs are hard to find in Singapore when employers and agents have a strong preference for hiring fresh workers from abroad. TWC2 regularly sees cases where workers lose their jobs and are sent home prematurely after their permits are revoked. They are the innocent victims of their employers’ failure to pay the levy.
Our worker management policies allow this hardship to be inflicted. It might not have been intended, but after years and years of such implementation, has no one noticed? Has no one been moved to fix it properly?
Enforcement
In other areas, the laws we have are quite progressive. It is an offence, for example, not to pay workers on time. And the requirement that employers purchase medical and injury insurance is a good one. But laws are only good if they are enforced. MOM, in our view, is not very proactive about it. There have been many occasions when we at TWC2 are mystified why no prosecution results.
It should not be any surprise that human nature being such, a low chance of being caught and prosecuted leads to rampant flouting of the law.
A recent survey conducted by TWC2 found that over 30% of male workers are not paid their correct salaries. Salary fraud is shockingly common. See the survey report here and a follow-up survey here
Much of our work involves trying to get employers to live up to their responsibility to provide medical treatment. When we highlight a case of denied treatment to MOM, we get action, but still some employers continue to drag their feet. Scheduled operations are delayed (just think of the inefficiencies such messy scheduling then imposes on Singapore’s healthcare system). Broken bones end up fusing at wrong angles, and they have to be re-broken by the surgeon again in order to fix them!
All this is without even considering the prolonged pain and suffering injured workers face.
Yet, I don’t recall, nor have I heard any of my TWC2 colleagues mention, a single case of prosecution for denying medical treatment.
Is it any wonder that the less scrupulous employers would try their best to duck and deflect responsibility?
Solutions
There are a lot of areas that need improvement. I will just deal with the three most important ones.
- Obviously laws that exist must be enforced.
But some laws and State policies first need to be changed. We need to redress the power imbalance between employers and workers if we are to make any real progress.
- We need to find a way to cut out the middlemen so that workers do not get trapped by paying so much upfront for their jobs.
- And we need to unshackle workers from their employers so that workers are free to quit bad employers.
How to cut out the middlemen?
The current system is based on quite a simple criterion: Which potential worker, while still in the home country, offers to pays the most (in terms of agent fees)? That’s the criterion agents use to select the workers to bring in. And since some employers have been reported to take a cut, why would employers countermand what agents do? Yet, so long as private profit is the primary consideration and not skills or the retention of experience, this is not in Singapore’s long-term interest. There is much lament that productivity, particularly in sectors characterised by foreign workers, is low. Now that I have explained the worker churn and the profit motives that drives it, it is a no-brainer what needs to be done.
We need to overhaul the recruitment system. Cut out the middlemen. Their interests are inimical to our overall interests.
For a start, TWC2 has proposed that we should make it much harder to recruit fresh faces from abroad and incentivise employers to hire from within the pool of workers locally. One way, we said in a submission last year to MOM, would be to raise the levies for new hires from abroad and impose a time delay. On the other hand, any employer who hires from the pool of already-here workers should enjoy faster approval and a lower levy rate. Middlemen have fewer opportunities to exploit information asymmetry when dealing with workers who have worked here for a while and are already in Singapore. They can be interviewed directly by bosses for suitability, and they are likely to be savvier.
A more radical idea, but one with greater benefits to Singapore, is for the State to take back the initiative as to whom to admit into our workforce. We can disallow private employers and their agents from choosing from the 3-billion-strong labour pool abroad. It should be the State determining through skills qualifications whom it will admit into our workforce by granting these eligible persons work visas for, say, six years at a stretch. Then tell employers they can only hire from this localised pool.
Naturally, it is also for the State to determine the total number admitted into our workforce through this qualification system in order to maintain a healthy balance.
Once admitted into our workforce with a work visa in hand, all it takes is a digital platform where
- employers can advertise jobs, and
- those prequalified workers with work visas can find jobs.
No agent need be involved.
Workers already in Singapore should be free to change jobs. That way, bad employers will very quickly lose their employees. It is insufficient that workers should not be trapped with high agents fees (which the preceding discussion about cutting out middlemen addresses). So long as their stay in Singapore is tied to the job they will remain subject to intimidation by unscrupulous employers and are easily silenced when subjected to abuse.
The bottom line is that we need to move towards a system where workers are treated better, where we choose them by their skills and pay them better – and this improved productivity will naturally mean fewer of them needed on this island. They get to stay longer and be more experienced, and become socially adapted to our society.
So, if I may reiterate my chief point: hand-wringing about bad employers misses the point. The exploitative situation that exists came about because the policy we designed gave scope for exploitation. The solution therefore lies in overhauling the regulatory system.
Q&A and feedback forms
There were several questions from the floor, mostly along these lines: What are the reasons why MOM appears so slow in acting?
Alex explained that, in his view, it is largely ideological. The Singapore government as a whole, not just MOM, holds dearly to the idea that fast economic growth is an important objective and that not overly restraining employers is a key enabler. A few years ago, a senior ministry official openly said, with evident pride, that MOM policies are meant to be “employer-friendly”. What can go wrong of course is how friendly is friendly: where the bar is set and what such an attitude entails. The ministry seems less disturbed that injustices and abusive behaviour flourish, and more fearful that restraint may hurt GDP growth.
A follow-up question contested the idea that the government favours employers. The student said there are examples in other policy areas, e.g. raising wages of cleaners (he might not have realised though that the scope of that directive only included Singaporean cleaners, not foreign worker cleaners) where they took action that employers might not have welcomed. Alex agreed he had a valid point, but added that Singapore cleaners had votes whereas foreign workers do not. There is a political aspect to it, in addition to the ideological. This may account for a striking lack of political will rethink the present system to make it fairer to foreign workers.
About 100 feedback forms were distributed (to the class of 300 – 400). Of these, 73 forms came back. The numbers above the bars (in the bar chart below) indicate the number of students who checked the respective statement (represented by colour).
A few students checked more than one box per statement (even though they were asked to check only one), and where that happened their response was averaged between the boxes they checked.
Ten students added comments. They were:
1. Higher pay => higher tax
2. I feel the agony and conflict within myself. Foreign workers deserve to earn more but why should they when we, Singaporeans work so hard but still do not get much more than them? I agree with you that implementing the solutions will take time. It’s not only about the people involved, but the entire society as well. It’s not going to be easy, but good luck.
3. I’m an exchange student from Japan.
4. Very refreshing talk, interesting and relevant points.
5. I have enjoyed the talk as it is informative. However, it would be better if more specific examples of what the workers face are introduced, i.e. case studies to illustrate some points. Overall, it is still a very good talk.
Alex: Plenty of cases are available on our website (twc2.sg) illustrating actual situations faced by workers.
6. The countries showed (US, UK, Aus) are western countries that pride on civilise society. Perhaps we can compare with civilised Asian societies (e.g. Taiwan) can help make a stronger impact.
Alex: What is meant by “civilised”? Why would reference to Asian societies be more convincing?
7. Solutions are not realistic. Digital platform for recruitment when the workers can’t afford to pay for internet? Impossible to cut out middlemen because govt to undertake the responsibility to take care of them and use taxpayers money to pay for their welfare? Will Singaporeans agree? Would you agree? If they stay longer, we will need more spaceto accommodate them. How can we if we are struggling to provide a space called home for ourselves. Where will they stay?
Alex: Look at some of the internet cafes in Geylang and Chinatown and you’d see that they primarily serve foreign workers. Some workers have mobile data plans; more would if their salaries were a bit higher. They certainly have enough education to use the internet; almost all of them would have completed high school.
Nowhere in the talk was it suggested that “govt to undertake the responsibility to take care of them and use taxpayers money to pay for their welfare”; perhaps the student was projecting certain preconceived notions onto the speaker. That said, the idea that out of the $5 billion a year collected in levies, we might think it only fair to spend some of it on providing a social safety net for injured or trafficked workers, is not in itself a bad idea.
Neither did the talk make the equation that allowing workers to stay longer must mean the total number of foreign workers in Singapore must balloon increasing competition for living space. Quite the opposite. TWC2 believes that by shutting off the freedom of employers to hire easily from abroad, increases the scarcity of workers. Allowing those already here to change jobs and stay longer increases their skills, experience and productivity, and reduces the need to have so many of them.
8. Keep it up! Stay awesome!
9. Insightful talk on the situation migrant workers face in Singapore 🙂 Thanks for doing what you do TWC2!
10. Insightful presentation on the foreign workers’ problems which is little known to the public. Interesting! Good job 🙂