89% of salary disputes arise from cash-payment employers, confirms MOM

Posted by on July 29, 2018 in Articles, Facts, research, analysis, News, News Flash

In a parliamentary reply to a question by MP Melvin Yong, Manpower minister Josephine Teo said in July 2018 that only 11% of work permit holders lodging salary claims were paid electronically. (Scroll down for full reply).

This factoid supports TWC2’s urging that electronic payment of salaries should be made mandatory. In our Policy Brief on Electronic Payment of Salary released recently, we said,

TWC2 understands that currently about 70% of Work Permit holders are paid salaries electronically. However, based on the cases that
come to TWC2 for assistance, nearly all salary complaints arise from companies that pay in cash. This suggests that there are at least some
irresponsible employers exploiting the option of cash payment to underpay their workers. While good employers are already paying salaries by electronic transfer, less scrupulous employers can take advantage of the fact that the law makes electronic payment optional.

The 11% figure has never been revealed before. Instead, whenever the issue was raised in the past, MOM often defended the status quo by referring to a “right to request” and an overall average percentage. For example, on 23 June 2015, Divisional Director Alvin Lim mentioned in a letter to the Straits Times (in reply to an earlier TWC2 letter) that “Our laws already require employers of work permit holders (WPHs) to pay salaries electronically if the workers make this request, and a majority of them are receiving their salaries in this manner.” (See Link).

On the first point, we wrote in rebuttal,

Mr Alvin Lim’s letter (ST 23 June 2015, Forum) says that foreign workers can ask for their salaries to be paid electronically. While this option exists on paper, in reality any worker making such a request to a boss who is not inclined to accede, will likely lose his job and be repatriated. The structural imbalance of power between employers and workers, created by MOM’s own rules, render this “right” to electronic payment meaningless.

It’s hard to believe that MOM is not aware of this reality on the ground.

On the second point, we said that even if a majority of employers were paying salaries electronically,

… it does not excuse the authorities from addressing the problem created by the relatively fewer errant employers.

Nine months later, on 14 March 2016, MP Louis Ng asked MOM in parliament to “consider requiring employers to pay work permit holders through an electronic payment system given that this is already required of employers of S Pass holders”.

MOM’s reply (by Minister of State Sam Tan) was that “Today, two-third [sic] of these workers already received [sic] their salaries electronically.” Once again, MOM deployed the majority-are-OK argument to excuse inaction for the fewer numbers who are victims.

Finally, to a well-crafted question by MP Melvin Yong put to MOM at the parliamentary sitting of 9 July 2018, we get the 11% figure which proves the point we’ve been making all these years.

Melvin Yong asked:

(a) what are the current top three sectors with the highest number of salary-related dispute cases involving work permit holders; and (b) in how many of these cases are the salaries of the work permit holders paid electronically.

Josephine Teo replied:

The Tripartite Alliance for Dispute Management (TADM) handles salary-related dispute cases, including cases lodged by work permit holders. From its inception in April 2017 to December 2017, there were 3,100 salary claims involving work permit holders. The top three sectors with the most number of claims were Construction, Manufacturing, and Wholesale and Retail Trade, which accounted for 2,600 claims, or 83% of all salary claims. Of these 2,600 claims, 280 workers or 11% had their salaries paid electronically.

Our laws already require employers of work permit holders to pay salaries electronically if their workers make the request. MOM has been facilitating the process of opening bank accounts for FWs during the Work Permit application process since 2014. In addition, MOM and our partners such as the Migrant Workers’ Centre (MWC) have been working to encourage salary payment through electronic means. A recently concluded survey conducted by MOM showed that 76% of foreign workers were paid electronically, higher than the 67% in 2014. We will continue to work with stakeholders to improve take-up rates, and also consult them on the option of mandating electronic salary payment.

The first sentence of the second paragraph deploys (again! with no embarrassment) the hollow point about the right to request. As for the last sentence, it may sound encouraging, but given the long history of deflecting good proposals, we shan’t hold our breath.

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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