A look back at job mobility policies 2011 – 2017

Posted by on February 25, 2018 in Articles, Facts, research, analysis, News, Our Stand

There has been a gradual liberalisation over the last few years allowing construction workers to transfer to new jobs. This paper takes stock of evolving government policy in this area.

Transient Workers Count Too has argued for a long time that retaining workers with experience in Singapore will be good for our much-hoped-for improvement in productivity. This is especially important in the construction industry where by the government’s own admission, productivity is disgracefully low.

Seven years ago, on 25 July 2011, we wrote about the high churn rate. This was the first time we used the word “churn” on our website, referring to the practice of employers sending their workers home after a short stint and replacing them with new employees, who are often inexperienced and unaccustomed to life in Singapore.

Nine months after that, on 28 March 2012, we recommended that:

Employers wanting workers should be incentivized to hire from those who have been laid off by other Singapore employers, rather than bring in fresh batches from abroad. This ensures that the training and experience these workers have gained are retained here.

At the time, the Ministry of Manpower’s (MOM’s) policy was very inflexible over repatriation. Singapore was strongly attached to its kafala system where foreign workers are tied to a sponsoring employer. When the job ended, the worker must be sent home — at the employer’s cost. This rule applied not only for workers who had completed the full duration of the work permit (but their employer did not want to renew the permit for them), but also workers whose jobs ended prematurely, e.g. because the company had to downsize or because they were not paid.

The only exception was when the worker had not even completed six months in the job. Perhaps MOM tried to be compassionate in view of the fact that almost all migrant workers pay huge sums of money to buy their jobs. The ministry might have been seized by their plight: these workers would not have earned enough in the few months of work to recover their sunk cost. For this category of workers, MOM allowed then to take up a six-month job under the ministry’s Temporary Job Scheme (TJS).

In actual fact, even if they had worked six months in the original job, and were lucky enough to find a TJS job for another six months — not all did, some just couldn’t even find a TJS job — the total of twelve working months would still leave them heavily in debt. TWC2’s  research report Worse off for working? found that:

Typically, they need to be employed in Singapore for at least 17½ months if they are to earn enough to pay off their placement costs.

To top it all, sometimes even a TJS job runs into trouble. This 2012 story Workers on temporary jobs face salary problems too, says it all.

Churn

Many workers, after being sent home, managed to find their way back to a new job in Singapore after a few months or a year. This didn’t mean that Singapore benefitted much from their accumulated experience. Commonly, they came back to do a kind of job they had never done before, e.g. plumbers coming back as concrete hackers, ceiling panel installers starting work as plasterers, and so on. From the man’s point of view, it didn’t really much matter so long as he was earning money to support his family, but from Singapore’s macro perspective, this would be of no help in raising productivity. Of course, coming back even for a different type of job was only achieved by paying huge sums to illegal job brokers all over again. There were regular reports that portions of the money paid would end up in bosses’ pockets.

We could immediately see how private interests — making money from the revolving-door hiring process — contradicted the national interest in retaining skills and experience and improving productivity. It was quite alarming to TWC2 to see from our casework that the typical worker would spend only 1 – 2 years with an employer before being sent home.

Employers did not need to give any reason for terminating a job. And still do not. It was entirely within their rights to engage in churn.

Two years after we pointed out the problem, the then-Minister for Manpower Tan Chuan-jin adopted the word “churn” when he told parliament on 14 March 2013 that

We all are aware of how certain sectors do practice churning and I will be looking at clamping down on that…

His solution then, as told to parliament, was one where

Work Permit holders who have worked in Singapore for four years or more, and who earn at least $1,600 a month, can qualify to become skilled Work Permit holders.

Companies would enjoy a lower levy rate if a worker was classed as a skilled Work Permit holder.

This ‘solution’ would turn out to be worse than ineffective. It would later give rise to all sorts of false declarations on work permit application forms, as employers tried to take advantage of the lower levy, while still resisting paying workers the $1,600 monthly salary. This was achieved by falsely declaring to MOM that $1,600 would be the salary when they had no intention to paying this rate. See our June 2017 story on the Everglory scam.

That story evinced no reaction at all; and we wondered if the authorities didn’t know how to make a case against such dishonest employers. Pushing the button again, we pointed out in September 2017 that the evidence was right there in at least two employers’ written statements. The employers submitted these statements to fight off salary claims by underpaid workers.

But we’re getting ahead of the chronology.

Seven months after Tan Chuan-jin anounced his solution to Parliament, on 17 October 2013, we highlighted the churning problem again. TWC2 wrote that employee churn

tends to undercut efforts to improve productivity as experience and experientially-acquired skills (including social and communication skills interacting with workers from other communities and Singaporeans) are lost.

We reiterated that the better solution lies in letting workers look for new jobs locally when one job ends, without first having to go home. In other words: job mobility. Beyond the question of improving productivity, we were also hopeful that since hunting for a job locally would mean that the entire hiring process would take place within Singapore jurisdiction, then demands for excessive payments by agents and employers would stop. Singapore’s Employment Agencies Act sets a cap on the fees that placement agents can charge: the equivalent of one month’s salary for each year of contract, subject to a maximum of two months’ salary. Subsidiary legislation under the Employment of Foreign Manpower Act makes it illegal for employers to profit too:

The employer shall not demand or receive any sum or other benefit from an employment agency or any other person in connection with the employment or change in employment of a foreign employee.

— Employment of Foreign Manpower (Work Passes) Regulations, Fourth Schedule, Part III, section 10.

‘Change of Employer’ appears on the horizon

Sometime around 2014, we noticed that when we were helping a worker with his salary claims, it could be productive to send an email to MOM to ask the ministry to grant the worker the opportunity to look for a new job locally without first going home. This is called the Change of Employer option or “COE”.

Workers didn’t know to ask themselves, and MOM officers did not proactively offer COE to them. TWC2 caseworkers had to make a specific request.

To put things in better context, COE was not entirely new. But previous to this, it was almost always practised in a very limited way, when the existing employer gave his blessing to an employee to transfer to another employer. For non-domestic workers, this was rare. Few employers were inclined to be nice to their workers even when their own business did not need the workers anymore. In a sense it was the kafala system at its worst. MOM largely left the decision about the fate of the worker to the employer; MOM itself rarely granted COE against the employer’s wishes.

The small change we observed around 2014 was a tentative step by MOM, representing a move in the right direction. Still, it remained unsatisfactory because it was so opaquely discretionary. Not all requests were granted; some were not and we would not be told why not. Moreover, a worker would only be given two weeks (usually extendable by another two weeks on request) to find a new job. It was ridiculously short. Needless to say, the success rate was very low.

Another step forward in 2015

In the middle of 2015, a new blanket policy was introduced. As described in this article, construction workers whose work permits were expiring and whose employers had decided not to renew them would have 20 days to look for new jobs. If they were able to find one, then they’d be able to transfer to it without first going home.

Two years on, this has so far not proven to be much of a success either, as discussed in this October 2017 article, Only 400 survived the fight for new jobs. Out of 100,000?

This rule change did not apply to workers whose jobs ended because of employment problems, e.g. not paid their salaries, so COE for them remained a matter of discretion. Nonetheless, from 2016 onwards, TWC2 noticed that MOM officers were beginning to inform such workers that they’d be given the COE option without our having to ask.

In a quiet way, MOM shifted its stance.

That this was a new blanket rule was finally confirmed by current Minister for Manpower Lim Swee Say when he told Parliament on 6 November 2017 that Work Permit holders (“WPH”)

who have valid claims against their employers have been allowed to find another employer.

More interestingly, in the same speech, he used language that TWC2 had been using for some years, about productivity:

The transfer policy improves productivity as employers benefit from hiring WPHs with work experience in Singapore. Employers also save on repatriation, search and hiring costs, as the WPHs do not have to leave Singapore.

But what’s the success rate?

Freely permitting workers to look for new jobs is one thing, even if this option is only for those whose employers would not renew their work permits, or didn’t pay them their salaries. Whether they are successful in getting transfer jobs is quite another. Until the latter goal is reached, the benefits of skill- and experience-retention will not materialise.

The latter sections of this 2017 article pointed out how abysmally bad the numbers appear to be, even using the minister’s own figures. Only 400 of possibly 100,000 construction workers whose Work Permits were expiring managed to land transfer jobs. That’s less than one percent.

As for workers with salary claims, and who should be benefitting from the new blanket rule that they are eligible for COE, TWC2’s recent study (Victims of unpaid salaries have hard time getting transfer jobs) found that the numbers aren’t bright either. Worse yet, the qualitative study came across several reports of agents and employers (all located in Singapore) openly asking for payment, in total disregard of the law.

TWC2 said, way back in October 2013, that merely permitting transfer would not be good enough. There is a need to restrict the hiring of fresh new workers. We predicted:

Even when workers are allowed to seek new jobs locally without first being repatriated, take-up by employers may be too low, thus defeating the aim of retaining skills and experience. From TWC2’s viewpoint, two stumbling blocks are likely to be:

2.01   Employers may believe the workers already here and looking for jobs are more “difficult” workers;

2.02   Employers often ask workers to pay for their jobs.

Both can be traced ultimately to employers being confident that little, save the foreign-to-local manpower ratio, stands in the way of bringing in fresh workers, who may be more compliant, and possibly pay more per head for their jobs. It is for this reason that, to promote the retention of experienced workers already here, something must be done to restrict the intake of fresh, inexperienced workers.

The problem therefore is far from solved. No effective solution can be designed without taking into account employers’ logic: If employers wish to profit from the hiring process, it is safer for them to hire from abroad so that the kickback takes place outside Singapore jurisdiction — this notwithstanding our finding that blatant demands for money still takes place within Singapore. One cannot escape the obvious: it is necessary to make it harder to hire directly from abroad.

There is hope, at least, that MOM is capable of seeing the light, going by the creeping changes we have seen to date. But a lot more creep is needed.

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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