In a side panel to an article in the Straits Times story on Wednesday, March 21, 2012 (Retire on CPF savings? Think again, by Radha Basu), associate professor Hui Weng Tat cautioned about the possibility of employers attempting to recover higher levy rates by lowering foreign worker wages, and urged greater attention to raising productivity.

Straits Times: The foreign worker levy has been raised yet again. Is that working?

Hui Weng Tat: Not really. Raising the productivity of the 900,000 foreign workers here on work permits is the elephant in the room which deserves greater attention.

A higher wage levy may not drive productivity increases, if the higher wage cost is passed on by employers to the workers in the form of lower wages.

This could deter qualified and experienced foreign workers from coming. Instead, less productive foreign workers will be recruited here, resulting in lower labour productivity.

Prof Hui, 55, teaches labour economics and public policy at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He has researched and written extensively on globalisation, migration and labour market issues in Singapore.