Training centres in Bangladesh have become money-minting machines

It started as a way to ensure that migrant workers coming to Singapore had some basic skills, but the raison d’etre has since become something else: to extract as much money as possible from the poor.

“It” is the tangled business of providing training, testing and recruitment in Bangladesh. The key to its metamorphosis is the fact that supply of job opportunities is limited — even though some Singaporeans think we’ve been far too liberal in taking in migrant workers — while demand from jobless Bangladeshis seems insatiable. Add to the mix incestuous business relationships, weak enforcement of regulations and cross-jurisdictional difficulties, and a highly exploitative industry has grown up.

More crucially, the original goal of raising productivity among migrant workers is nowhere close to being realised. As demonstrated through the details presented here, public policy objectives have been hijacked for private profit.

It is a classic example of market failure. Normally, in such situations, solutions must lie in regulatory authorities stepping in, but to date, there has been no interest shown by either the Dhaka or Singapore governments in tackling widespread abuse. The penultimate section of this paper will attempt to compute how much money is extracted from poorer Bangladeshis wanting a job in Singapore. A mind-blowing $240 million is estimated to be taken out of jobless men annually to feed this monster.

This paper describes the process through which young men in Bangladesh get to their first job in Singapore, typically in the construction, process construction and marine industries. It describes how rules and regulations set by the Singapore government shape this process, but also how private parties reshape them to their own commercial benefit. It is based on a report compiled by MISAF, a non-government organisation in Bangladesh that works closely with Transient Workers Count Too. The report summarised their findings after making visits to about 70 training centres (some more than once) to speak with management and trainees. This article also draws from a detailed conversation with a MISAF representative who was in Singapore recently, and interviews with some workers in Singapore visiting TWC2’s meal programme at the Cuff Road Project.

Towards trained workers

While some workers come in as unskilled general labourers, there is a gradual push by the Singapore government towards trained workers in the interest of higher productivity.  In July 2011, work permits for unskilled labourers in the construction industry were phased out. Moreover, a two-tier levy rate has been implemented across all sectors, with a $100 differential between a skilled worker and an unskilled one (excepting the construction industry where the differential is $150 between a higher-skilled and basic-skilled one).

The table below shows the levy rates in effect from 1 July 2013 in the three sectors where Bangladeshi workers are most often found:

The first malign effect of this levy differential is that employers would want to hire only skilled workers in order to save on the levy. It does not matter whether they really need the skills or if they merely want a guy to haul screws and rivets from storage shed to site. Many workers report that their actual jobs have little to do with what they’ve been trained for.

[Addendum, 17 October 2013: The Building and Construction Authority says in a letter that based on its 2013 survey, “more than 70% of the relatively new construction workers were being deployed by employers in the in the directly relevant and related trades they were trained in.” ]

This demand for skilled workers then jacks up demand for places in training centres, testing, and certificates.

Testing and training centres

For the construction industry, which is where much of this research is focussed, the Building and Construction Authority (BCA) sets the skill standards. A “basic skilled” worker would be one who has passed a test and obtained a Skills Evaluation Certificate (Knowledge), also known as SEC(K). Courses leading to an SEC(K) can be seen here, and include such trades as:

• aluminium window and door fitting,
• plumbing and pipe-fitting,
• thermal insulation,
• bricklaying,
• cladding installation,
• tiling,
• timber formwork, and
• electrical wiring

Md Rubal Murol Rubal did his training at Chiu Teng, one of the eight authorised centres. He paid 215,000 taka (S$3,500) for the electrical wiring course, a sum which included the testing fee. Although he was ready to be tested within three months, he had to wait an extra month for a test slot. The examiner was a “Singapore Chinese man” from BCA. Then he paid a further 250,000 taka (S$4,000) to secure what he was told to be an electrician’s job with a company called Eletex Engineering. However, on arrival in Singapore, he discovered that Eletex was not an electrical engineering company, and so he had to go for a five-day scaffolding course (cost $350) for which he had to pay himself. He has never worked as an electrician despite the training in Dhaka.

The BCA website lists eight authorised test centres in Bangladesh. They are:

• Chiu Teng Test Centre
• ComfortDelgro-Setsco Test Centre
• Fonda Test Centre
• Lian Beng’s (Bangladesh) Test Centre
• Progressive Test Centre
• Santarli’s STL Test Centre
• Singapore Piling South Point Test Centre
• WellTech Construction Pte Ltd

Apparently, these test centres (which also provide training) train workers for the marine sector too, though for shipyard work, the required skill standards in pipe-fitting, steel-cutting, welding, etc, may be higher. [Addendum: The BCA says this information, which came from MISAF, is incorrect. The BCA says it “does not test workers for the marine sector”.]

The reality however is that there are around 100 training centres that train (or claim to train) to BCA course requirements, of which some are Singaporean-owned. MISAF found that these “unofficial” training centres have about 500 trainees each at any given time. It also found that a young man wanting to sign up for training at any of these centres will find that he needs to fork out 50,000 to 100,000 taka (about S$813 to S$1,626) for the course. In addition the trainee has to pay for incidentals, e.g. books and uniforms, and monthly expenses, such as accommodation (around 2,500 taka or S$41 per month) and meals.

TWC2 believes that MISAF’s estimate for training fees is on the low side. Interviews with Bangladeshi workers already in Singapore indicate that they pay around $3,000 for their courses, excluding incidentals.  Mohammed Rubal Murol, featured at right, is a typical case.

Furthermore, many centres require trainees to deposit their passports with the training centre. This may seem quite unnecessary, but the likely rationale becomes clearer when the recruitment process is discussed below. To make a passport costs a Bangladeshi anywhere from 2,500 to 10,000 taka (S$41 to S$162).

According to MISAF, there is a Bangladesh government regulation that sets a maximum fee of 30,500 taka (S$496) for training, but no training centre abides by this rule.

These costs are only the beginning. The crunch comes with the limited test slots.

Test slots

The BCA arranges for about 2,500 candidates to be tested each month at the eight authorised testing centres, according to MISAF, who obtained this figure from indirect sources. The eight centres would not speak with MISAF directly. Each official testing centre therefore would have about 300 to 400 testing slots per month. This indicates that a total of about 30,000 workers are tested each year in Bangladesh for various construction- and marine-related trades. BCA also handles the testing for marine trades [Addendum: BCA says it does not test for the marine sector.]

Each of the eight authorised test centres also have their own trainees, with the possible exception of Santarli — the place was empty with only a security guard at the gate, who told MISAF that it had no more trainees and was on the verge of closing down. The aggregate number of trainees at the seven remaining authorised centres is estimated to be between 5,000 and 10,000 (mid-estimate: 7,500).

Kalam Sazdar Rahman Kalam did his training at SSTC, one of the unofficial training centres. He needed only to pay 20,000 taka (S$325) for the door-and-window course. But he also had to pay another 5,000 taka (S$81) to make a passport and deposit that passport with SSTC. The course duration was two-and-a-half months, but “I waiting seven month for exam.” When he asked why he had to wait so long, “They say no have enough quota. ‘Out of so many people, how give you exam?’ they tell me.” When he passed the test, he, as agreed beforehand, had to pay a further 500,000 taka (S$8,130) which included the job placement fee. “Training centre also agent,” Kalam explains. So, the total he paid was about $8,500. He got a job with ACL Engineering and Construction, but “they never have any door or window job”. Instead, he was supplied/seconded to other contractors as a “supply worker”. Generally, his job was to “do hacking, carry cement, mix cement, water jetting, all kinds,” he reports. Moreover, there were issues with the promised salary. Before coming to Singapore, “SSTC say my salary will be 60 to 80,000 taka (S$975 to S$1,300), but the IPA (In-principle approval letter from the Ministry of Manpower) say only $540 (per month),” he recalls. “But when I start work, actually pay me only $16 per day (equivalent to just $416 a month). I ask my boss why like that. He say if I not happy, I go home.”

In a typical month, these authorised testing centres only use about 60 – 70 percent of the 2,500 testing slots available . Another way to put it is that each month about 1,500 to 1,750 of their trainees take tests. This is roughly consistent with reports from workers who came from these centres telling TWC2 that they spent about three to six months on average before they got to take their tests. (With about 7,500 trainees enrolled at these authorised centres, testing 1,500 per month means an average of five months is needed to put all trainees through a test.)

The balance of the test slots are given or sold to the unofficial training centres. They used to be given out freely, but owners of the unofficial training centres told MISAF that the going rate is now in the region of S$800 per test slot. Not surprisingly, the cost is passed on to the trainees, who are then told to cough up the money or they’d never get to take a test and obtain a certificate.

Some unofficial training centres send their trainees to an authorised test centre to take the tests, but other workers report that BCA testers came to their unofficial training centres to test them. This means that BCA is fully aware that although it has only authorised eight centres, the reality is that many more are operating.

[Addendum: BCA says “BCA only conducts tests at BCA-appointed OTCs”.]

What is not clear is where the $800 charge originates from. It could be a fee levied by BCA to cover the costs of maintaining their officials in Bangladesh and expenses related to testing. Or it could be an unofficial price set by the authorised testing centres in order to profit from their excess testing slots. Or some combination of the two.

[Addendum: BCA says that “BCA only charges test fees and the test fees are capped at $730”.]

Limited to about 1,000 testing slots available each month on the “open market” so to speak, the (approximately) one hundred unofficial training centres can hardly drive a bargain. With up to 500 students per unofficial training centre, there may be tens of thousands (it is hard to put a number to it) in line for monthly test slots. There are indications that the training centres in effect auction the test slots to their trainees; those who are prepared to pay more get earlier dates.  Those who can’t pay find that they are kept waiting, for as long as a year and a half, as some trainees have complained.

Recruitment

For the young men, passing the test is the starting bell for another round of payments (see Kalam’s story at right). They need to find a job in Singapore. Helpfully (or not), the same training centres, official and unofficial, also act as recruiting agents. This is typically done through an affiliated outfit fronted by a brother-in-law, friend or even an employee.

As an example, here is the home page of the website of Fonda, one of the eight authorised testing centres. It makes quite clear that they do testing, training and recruitment. The image is taken from http://fondacoretrade.com.sg/ottc.html, with annotations added in red:

 

Some of the more unscrupulous unofficial training centres not only provide job placement services, but actively require that their trainees obtain jobs via themselves or their affiliated front companies (again, see Kalam’s story). The control over the passport, mentioned above, effectively eliminates the possibility of the worker shopping around for another job placement agent. This way, the training centres can extract thousands of dollars more per worker in the name of “agent fee”. See the section below: Summarising the numbers.

Summarising the numbers

The scale of exploitation becomes clearer when one looks at the big picture and aggregate numbers. The table below provides a bird’s-eye view of the number of Bangladeshi men who sign up at training centres and, in the case of those who choose unofficial training centres, the length of time they have to wait for a testing slot:

At any given time, there are apparently some 55,000 to 60,000 men enrolled with training centres. Yet only 2,500 of them can be tested each month. The extremely long wait some of them endure to obtain a testing slot suggests that many give up despite having paid for training. However, it is hard to put a number to this.

The numbers become mind-boggling when viewed through dollar-values. First, to recapitulate the typical costs per worker:

A first-time worker in Singapore typically reports having paid S$7,000 to S$9,000 in total for training (including testing) and job placement (“agent money”). Mid-estimate: S$8,000.

A worker on his second or subsequent job typically reports having to pay “agent money” of about $4,000. He does not need to undergo training again for his second job.

By deduction, the average $8,000 paid by a first-time worker would be made up of about $4,000 for training and testing, and another $4,000 for job placement.

With 2,500 trainees completing their training each month (and assuming all of them get placed into a job), how much revenue flows into the training centre/recruitment businesses?

The above table indicates that this business rakes in about S$20 million a month. In the course of a year, that’s about S$240 million. This total excludes the revenue pocketed from training fees taken from trainees who never complete their courses for want of a testing slot.

How much of this total stays within Bangladesh and how much comes into Singapore as profit is difficult to estimate. That a good part of it comes into Singapore is unquestionable. It appears that all the authorised testing centres are Singapore companies. Many of the unofficial training centres also have Singapore owners or partners — especially if they come with names like “Nanyang Overseas Training” or “Lee Star Technical”.

Furthermore, many workers report that they have reason to believe that a portion of what they have paid as placement fees (an average of $3,900 per worker) have been remitted by their job agents to their employers here.

The overall picture is therefore one of Singapore drawing not only healthy young adults out of Bangladesh to power our domestic economy, but also millions of dollars a month are extracted out of Bangladeshi family assets and added to our commercial enterprises’ bottomlines.

Unutilised skills

Most workers report that their Singapore jobs are unrelated to the skills they trained for. The two workers featured in the sidebars above typify the cases.

Muhammad Rubal trained in electrical wiring, but ended up doing a scaffolding job. Kalam Sazdar trained in fitting doors and windows but was used as a general labourer. The workers themselves do not appear to be particularly exercised by the misfit between training and job; for them money topped all considerations.

However, the whole point of requiring skilled-certified workers is to upgrade productivity in Singapore’s construction and related industries. This is totally defeated when workers are not used for their trained skills. Employers seem to pay no regard to looking for the right-skilled worker. Taken together with the observation that training centres are multiplying and taking in more trainees than they have test slots for, it is hard to escape the conclusion that (a) employers are only interested in lowering their levy costs or (b) getting basic skilled work permit employees when “unskilled”  are no longer allowed in construction (but using them for unskilled jobs), and (c) training centres have become money-minting machines.

Private interests appear to have eclipsed public policy goals.

[Addendum: The BCA wrote to TWC2 on 9 October 2013 in response to this article. A copy of BCA’ s letter is available by clicking the icon at left.]