This is a text version based on the presentation that Alex Au gave at a webinar organised by human rights NGO Maruah on 1 May 2020 on the Covid-19 impact on migrant workers, and what Singapore needs to do going forward. 

Due to the pressure of time, Alex skipped some nuances and details in his verbal presentation, but these are included here for completeness’ sake.

I chose to title this talk “The dorms are not the problem” in order to provoke thought. In the last month, as Covid-19 cases rose to over 16,000 in Singapore, with the overwhelming majority of the April increases being found among migrant workers living in worker dormitories, much of the discourse has been on why the conditions of dormitories made the situation so bad.

It is a little ironic that it was TWC2 that kick-started this by pointing out the crowding in our dormitories made infection spread a very real prospect. Our fears have come to pass, and now everybody is talking about it. And now in this talk, I seem to be dialling back.

Indeed, the situation is bad; there’s no denying it. Look at the table below. It is of the top ten countries (less those with fewer than a million population) ranked by the number of Covid-19 cases per million. Singapore is right up there ranked as number eight, among Italy, the USA, etc.

It’s also interesting to see Qatar up there in the top ten. Indeed, from what I’ve read in the press, the majority of Qatar’s Covid-19 cases are also from worker dormitories though I have yet to obtain precise numbers.

There’s no denying now that density and poor ventilation in our dorms are key factors enabling pathogen transmission. But why did Singapore choose to go this route to such high density accommodation for workers, packing 12, 16 or 20 men into a room with double-decker bunks spaced no more than a metre apart?

This question leads us to the suspicion that the dorm conditions are really just a symptom of an underlying problem. Dorms themselves are not the root problem.

Zero-sum thinking

I would point out that Singapore has an addiction to cheap labour. We have an economic model that is reliant on them for our prosperity — low-wage migrant workers (more specifically, Work Permit holders) make up 26% of our workforce — and we seem to fear that if we didn’t keep them cheap, then we Singaporeans would lose out.

Keeping them cheap has two sides to it: Paying them low salaries and keeping other costs down.

Cramming them into dormitories is one way to keep costs down. That said, it’s probably a lot more complicated than that, but this is not the place to go into an in-depth discussion of the private sector economics of dorm building and operations. For now it is enough to just say that for any given cost of space, the more workers we cram into it, the lower the per-worker cost.

The Manpower Minister has promised that as soon as the crisis eases, we will begin to look at how we can improve conditions in the dorms and raise standards. That’s well and good, but if we are not prepared to interrogate the notion that Singapore’s economy is fragile and highly dependent on cheap inputs including cheap labour, then we have little room for manoeuvre. We won’t be able to tolerate any substantial improvement when we so quickly blanche at the cost.

Workers hardly ever complain about dorms

The dorms are not the problem — another way to look at this is to ask what issues workers bring up when they talk to TWC2. The graphic below maps the main complaints and problems they came to us about in pre-covid days.

One thing readers will notice is that “dorms” isn’t there as a significant topic. “Housing” is there, but it’s a problem typically brought up by Special Pass holders, not Work Permit holders. Special Pass holders are those whose Work Permits have been cancelled by their employers, so they’re out of a job. The reason they’re allowed to stay on in Singapore (with a Special Pass) is because they’ve launched a salary or injury claim against their employers and they’re here till the case is over.

Obviously, their relationship with their employer is one of conflict. Yet the law requires employers to provide housing. The State doesn’t see it as its responsibility to do so. But one can surmise that if the relationship is one of conflict, or if the company is close to bankrupt — one reason why it hasn’t paid wages in a while, thus triggering a salary claim from employees — the company would be extremely reluctant or unable to provide. Thus the housing problems that Special Pass holders face.

Anyway, to come back to the point, in pre-Covid times, workers rarely complain about their dorm arrangements, at least not until TWC2 opens a conversation about the matter with them.

This should not be taken to mean that they are happy with the dorms. When we start to ask what they think of their dorm accommodation, it’s a mix of answers, some quite positive, others very negative.

But mostly, there’s an air of resignation. They are acutely aware that if they raised it as an issue with their employers, it would displease the boss, and they might lose their jobs. In short, the men would put up with the situation in the larger interest of providing for their families.

The next graphic is about the issues our social workers and volunteers have been hearing from the men in the last four weeks, i.e. April 2020. This is the period of escalating worker infections and the resulting cascade of dorm lock-downs.

The interesting thing is that in the same period when all of Singapore was talking about dorms and dorms, the workers were not bringing the topic up in conversation with us. They were the people experiencing the lock-down inside dorms, confined to their rooms for 20 – 22 hours a day, in stifling crowded conditions, but it doesn’t really come up when they call or message us.

Instead, they are anxious about salary and related issues.

Other issues, such as exorbitant agents’ fees have not gone away, but in the present situation, they are not as urgent as getting paid for March and April.

There is one huge new topic and it centres around the $750 levy rebate that the government promised their employers. The Ministry of Manpower (MOM) has advised employers that the money should go towards “upkeep and maintenance” of employees, but somehow there is the idea spreading among migrant workers in the dorms that the $750 should go directly to them in cash. I won’t go further into this since it is outside the scope of this talk.

The one topic that workers raise and which also appears in the general Singaporean discourse is that of food. Under lock-downs, dorms now serve catered food (there may be a few exceptions I don’t know of). There have been a lot of complaints from workers about quality, cultural suitability and portion size. However, we also have a sense that the situation varies widely from dorm to dorm, and even from week to week. The complaints may be coming from only some dorms, or some company employees, probably related to management issues of the meals supply chain in those particular dorms or companies.

Structural disempowerment and vulnerabilities

I will now come back to the graphic illustrating the top issues in pre-Covid times. But here, I’d highlight three issues that are germane to the point about cheap labour.

Of course, the best way to keep payroll cost down is to not pay salaries at all, or to undercalculate them and short-pay. That’s why these are the top two issues. But in these areas, there is at least a mechanism for claiming and settlement. The mechanism doesn’t always work —  in fact TWC2’s observation is that the success rate is poor — but having a system is better than having no proper system or no sustained effort at all for tackling the three highlighted issues.

The three issues are

  • Exorbitant recruitment fees that often flow back into the boss’ pocket;
  • Demands for payment before employers would renew their Work Permits on expiry after one or two years;
  • All sorts of unreasonable salary deductions under the guise of “company policy” existing in grey areas of the law.

What these three measures do is to claw back into the employer’s pocket what he has or will have paid out to workers in salaries. What a wonderful method for reducing payroll cost. Besides blatantly low basic salaries in the first place, this is how we keep imported labour even cheaper.

On TWC2’s website there are innumerable stories about recruitment costs or agents’ fees. For first-time workers, they could be $8,000 or $10,000 in order to obtain a job paying a basic salary of just $400 a month. In other words, the prospective worker sinks in 20 – 25 months’ worth of salary in order to “buy” the job. If the employer has pocketed all of that — not always because the agent also takes a cut — the employer would in effect get free labour for 20 – 25 months.

After 24 months, the Work Permit is up for renewal, and another opportunity comes up to ask for another payment.

How does this make any sense to workers, then? Well, to be clear we’re talking about unethical employers, not all employers. So the situation varies considerably from one company to another.

Some workers report a good working experience in Singapore, working for good employers who aren’t rapacious. When these lucky guys return home and show others the lovely new houses they build for their families from their Singapore earnings, other men will want to come to Singapore too. They come in hope.

Workers cannot know in advance whether it’s a good company or bad boss. All they know is that if they want a job in Singapore, the going rate is X thousands of dollars. Take it or leave it. No cost-benefit analysis can be performed.

Consequently, workers always hope for lots of overtime work, so that they can at least live on that, and recover their sunk cost as soon as possible.

TWC2 has long been concerned about the horrendous working hours migrant workers put in, from sales assistants to construction workers. Often, workers tell us that they usually have to put in 3, 4 or 5 hours of overtime every day  — told to us typically in the context of not being paid their rightful overtime wages in the end.

Singapore had 14 workplace fatalities between 1 Jan 2020 and 17 April 2020, compared to nine in the same period last year. Fatigue from excessive work is a factor in loss of concentration and safety lapses.

Competitive advantage for unethical employers

But the larger point is this: For unethical employers, these practices ensure

  • lower payroll cost
  • subservient workforce
  • the ability to bid low in order to win contracts

Once again, I must stress, we’re talking about unethical employers. TWC2 believes that in fact most employers try to look after their employees within their means, but the trouble with allowing unethical employers to get away with it is that ethical companies then have to compete against them to win contracts.

How to compete against a business competitor who has drastically reduced his payroll cost?  Therefore how much room does an ethical employer have to pay better, or to provide better accommodation?

That’s how the rot percolates through the system. The rot begins when we let cowboy agents run rampant in hiring, and when we don’t police unethical practices by employers.

Regulatory neglect and abetment

This leads me to the next point: readers shouldn’t simply take the view that the problem is all situated in employers. Quite the contrary: government policies and actions set the scene and enable certain practices to flourish.

There is regulatory neglect. We do a poor job of enforcement of laws against exorbitant recruitment costs, renewal money and unreasonable deductions; or our laws are ambiguous or silent.

For example, in a survey a few years ago, we asked workers on their second or third job who and where was the agent who facilitated their current job. A majority of them said they were recruited via an unlicensed recruiter living and working in Singapore — they’re the red figures in the graphic below.

A minority said they found the job through a recruiter in the source country (grey figures), who would typically be working hand in glove with a licensed recruiter in Singapore (blue figures).  But where was the large payment made?  In the source country, so that the licensed agency in Singapore could continue to claim clean hands.

We can have fine laws that call for caps on agency fees, but if unlicensed cowboy agents are nonetheless free to operate they will grab more and more market share — as seems to have happened. Why? Because the cowboys can offer bosses a cut of the high fees charged to workers, when the law-abiding employment agents who do not work with source-country cowboys cannot. It takes a boss with very high principles to turn down such offers of kickbacks when he knows that his competitors will use them to lower their payroll cost. So, gradually, the landscape is widely debased.

There is regulatory abetment. When we enact rules that forbid foreign workers from changing jobs (with narrow exceptions such as seeking the current employer’s approval), we make the worker beholden to the employer. With no option to quit and find a new job (without having to pay huge sums all over again) employees find themselves having to put up with salary under-payment (e.g. under calculation of overtime), unreasonable deductions or demands for renewal money.

Another aspect of regulatory abetment is the fact that Singapore has no minimum wage. This allows employers to offer extremely low salaries and then, sometime after workers have started on the job, to cut them further! The employer can take advantage of the fact that having sunk his family’s savings into buying the job, it’s a rare worker who can reject the employer’s request to reduce his salary, because what’s the alternative? Quit and go home, only to have to pay another $8,000 to buy another job?

From recruitment cost to infection

Readers may be wondering by now why I have gone so far off-topic.

But I have not. What I am saying is that there is an entire eco-system that so disadvantages and disempowers migrant workers, and in ways that we don’t expect, it can even promote disease.

The above graphic shows how recruitment cost leads almost inexorably to transmission at worksites. The worker is the hapless guy in the face of greedy agents, unethical and unreasonable employers (but why not, since they can get away with it?) and even regulatory policies such as that which says foreigners do not enjoy subsidised healthcare.

It should come as no surprise that dorms aren’t the only tranmission sites for Covid-19. Repeatedly, we hear of workplace clusters. Workers must be going to work while infectious.

Did we benefit from cheap labour after all?

We think we benefit from cheap labour. Our prosperity is built on that, whatever names others may throw at us (“exploitative capitalism” anyone?). But Covid-19 may be showing us the true cost. In the final analysis, we may not be benefitting at all.

We were hoping for a contained situation with relatively few cases. While there might have been some economic damage — our economy is linked to global supply chains — we should soon recover and resume growth within a matter of months.

What we ended up having is entirely different. A massive rise in cases, and a deep (and now extended) lockdown. The economic damage will be huge.

Nor should we think that we can open up the “community” part of the economy  because “community” cases have been much reduced, and go our merry way again. We cannot because many industry sectors are heavily dependent on migrant workers, and various sectors are interlinked. So long as infection rates are high among foreign-workers, we cannot truly revive our economy. We will be in economic pain until their infection rates come down.

So, the cheap labour model is now exacting a huge cost. The wealth we thought we extracted from them for Singaporeans’ own pockets is now lost.

What lessons to learn from Covid-19?

Here, I begin my summing up. To benefit from the lessons of Covid-19, we need to address root causes.We shouldn’t think that we need only rectify the defects of dorm accommodation. There are plenty of time-bombs all over our foreign worker eco-system, and they need to be addressed.

In any case, the next crisis is unlikely to be another pandemic; chances are that it will be something else, springing from some other aspect of our cheap foreign labour model.

It’s hard to predict where the next crisis might come from.

For example, a few years ago, the world suddenly took notice of the terrible labour and human rights abuses in the Thai seafood industry, from fishing boats to fish farms and processing factories. The European Union threatened a boycott unless improvements were made.

“Won’t happen to us,” we might be tempted to say. Let’s not be complacent. Already big international shipping and petroleum companies with their reputations to protect, are looking at their supply chains, within which are our shipyards. There, all the abuses I mention above — recruitment money, renewal money, salaries below living wage, unreasonable deductions — are easily uncovered.

Singapore needs to reexamine our economic model and our need to keep imported labour cheap. We shouldn’t believe that we cannot be prosperous otherwise.

We should ask: Why is our “first-world” status so differently grounded from the first-world status of Western European countries, Japan or South Korea? There, they have minimum wages that apply to migrant workers too.

How is it they can afford that and we cannot?

But foreign labour isn’t cheap!

Employers may be quick to counter that the cost of a foreign employee is not far off from those minimum wages in Korea or Japan. And they have a point. The big cost is the foreign worker levy.

The levy system is a very complex system, so the discussion below risks some degree of oversimplification, but let’s take a typical worker’s example, illustrated in the graphic below. In the example, the worker has a basic salary of $600, from which there is a deduction of $130 being his co-pay share of the dorm accommodation. The employer chips in another $200 for that. Then there is the levy, and a typical example would be $700 a month.

To avoid making the example too complex, I have assumed that the worker has no significant overtime; on the other hand, he doesn’t suffer any other deduction.

This is what the total cost to the employer looks like — about $1,500 a month.

We can say, “Well, that’s not very different from what a low-wage local employee would earn.”

Alright then, let’s see it another way. Let’s say the $1,500 is equivalent to the grand total salary for the worker — since that’s what the employer has to pay out. But if that were the case, how do we classify the $700 levy that the worker never sees in his pocket? It would be analogous to income tax — an amount of money that ultimately goes to the government.

In effect, therefore, the foreign worker pays an effective income tax rate of 47%.  Do top earners in Singapore pay a rate like this?

These are issues we need to talk about, and not just restrict our conversation to dorms.

Dorms are not the problem, they’re only a manifestation of a much deeper, structural problem. And the next crisis is likely to come from some other aspect of it. Better fix the whole thing now before we suffer another deep recession.