ITE College West in Choa Chu Kang

Matthew Koh’s letter published in the Straits Times Forum (“Reintroduce trade schools to boost supply of local workers”, 29 May 2021) called for the return of trade schools to rebuild a corps of Singaporean workers in industries currently dominated by foreign workers. He noted news reports that warned buyers about a wait of more than five years for their public housing flats to be completed because of the current shortage of construction workers. This is an industry sector that relies almost exclusively on migrant workers.

It may be Covid-19 today, but “other calamities” may affect manpower supply in future, he wrote.

We must find ways to develop Singaporeans’ skill sets and train them to do the meaningful jobs that foreigners are now doing.

What happened to our past trade school system which equipped young people with technical skills? Perhaps one reason it was discontinued was that young Singaporeans were not keen on technical jobs and hence, over time, foreign workers became the long-term solution to the shortage of manpower in these industries.

A deeper analysis of why Singaporeans were not keen on “technical jobs” must take into account the low social status and even lower wages offered. Koh alluded to this tangentially:

Perhaps the current measures taken to improve the well-being and earnings of social enterprise workers, cleaners, security guards and transport workers can be replicated for the tradesman jobs required by industries.

It would take time for Singaporeans to accept these tradesman jobs, but workers in other developed nations such as the United States, Britain, Australia and New Zealand have accepted such jobs and have been able to support their families with pride. Of course, these countries still have foreign workers, but they have built a core group of local workers for these industries.

Koh concludes by saying,

I hope the Government will reintroduce an enhanced education system that will train a pool of Singaporeans to be tradesmen, and reduce our reliance on foreign workers in the long term.

The elephant in the room

Putting the issue of technical schools out front is not very helpful to understanding the issue. While of course people need to be trained before they can do a job effectively, it is not the crux of the matter.

Koh alluded in his letter to the problem of low wages, pointing out that in developed countries, local workers have “accepted such jobs and have been able to support their families with pride.” However, he did not develop this point further, which is a shame, because it is the elephant in the room. At current wages paid to our migrant workers doing these jobs, no one can support a family in Singapore.

The table below gives the typical earnings of a Bangladeshi construction worker at various levels of skill and experience. These numbers are drawn from TWC2’s experience, seeing thousands of cases.

Now, let’s look at two countries: Australia and South Korea.

Australia

In Australia, the minimum wage is A$19.84 per hour [footnote 1]. Currently, the Australian Dollar and Singapore Dollar are almost at parity. The “ordinary hours” in Australia is 38 hours per week, after which the overtime rate kicks in, whereas in Singapore, it is 44 hours per week.

So, if a worker works a full 38 hours a week, then he will make a basic salary (minimum wage alone) of A$3,267 a month. No doubt, a lot of workers earn more than the minimum wage — that needs to be borne in mind.

Overtime rate is 1.5 times basic rate (like in Singapore), but in Australia this is only for the first few hours of overtime, e.g. first two or three hours [footnote 2]. Beyond the first two or three hours, overtime rate is twice basic rate. The threshold between 1.5 and 2.0 times basic pay seems to vary depending on contract or union agreements.

South Korea

In South Korea, the 2021 minimum wage is 8,720 Korean won per hour, or 1,822,480 won per month [footnote 3]. This is equivalent to S$2,175 per month.

Overtime is any work beyond 8 hours a day and 40 hours a week. Any work is overtime if it exceeds 8 hours a day regardless of whether or not the weekly working hours exceed 40. Overtime pay is 1.5 times the ordinary wage [footnote 4].

A comparison

A rough comparison of an entry-level or lower-skilled worker in Singapore, Australia and South Korea is in the next table. There will no doubt be additional add-ons or deductions based on the particular practices or laws of each country but this comparison of basic wages and (36 hours of) overtime wages is enough to show how wide the gulf is between Singapore and those two countries.

Moreover, the basic wage in Singapore is tuned to 44 hours per week, whereas in Australia and South Korea, the minimum wage is for 38 and 40 hours a week respectively.

What is obvious is that re-invigorating technical education is nowhere near sufficient to develop a Singaporean core within industries currently dominated by migrant workers.

What is needed is a wholesale revaluation of the economic reward for such manual, physical and service trades, by a multiple of five times (just to reach Korean pay levels, let alone Australian levels). This cannot be done easily. It’s a such a major change that it will disrupt many costs that we are used to, and palpably reduce the purchasing power of the elite and the cushy middle class. How that will ever be politically acceptable to most Singaporeans currently enjoying the economic output of migrant tradesmen paid exploitatively low wages is difficult to contemplate.

No doubt someone somewhere will suggest that only Singaporeans need be paid wages comparable to Australia’s or South Korea’s workmen. Foreign workers can continue to be paid their peanuts. But if one wishes for enough Singaporeans to be tradesmen to make a strategic difference, higher costs will still be unavoidable, though not as high as if all workers were paid developed-country wages.

But more importantly, anyone suggesting this would be blind to the enormous risk of labour unrest among migrant workers stemming from an acute sense of injustice. How can one pay some workers five times more than other workers doing similar jobs and hope to get away with such disparity?

A necessary conversation nonetheless

The hard truth is that because we are now so addicted to cheap foreign labour, it will take an economic revolution to change the system. Wealth will have to be redistributed. It will be so painful that the most likely course of action is none, i.e. paralysis. Singapore, in all probability, will simply hope that the situation will be sustainable indefinitely.

But it won’t. Even if we don’t make changes internally, external factors change.

Singapore used to have plenty of Thai construction workers. They’ve disappeared because Thailand has developed economically and there are plenty of jobs for its own citizens at home. In fact, Thailand is now a labour-importing country.

It may not be so obvious, but we in the migration space have also noticed that Chinese workers are disappearing too — for the same reason. China is developing rapidly and offering better opportunities to its citizens.

In time, so too will India. So too will Bangladesh — a country that has seen 6 – 7 percent real GDP growth per annum for the past decade [footnote 5], and whose fertility rate has been declining; in 2016, it dipped below 2.1 — the replacement rate of a population [footnote 6]. The fertility rate has continued to fall thereafter.

Sooner or later, the current sources of cheap labour will dry up. We can either go exploit from further afield (Africa maybe?) or we can face up to our past policy mistakes and start to correct them, however painful it may be.

1. Australian Government Fairwork Ombudsman, https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/minimum-wages, accessed 11 December 2020.

2. Australian Building and Construction Commission. https://www.abcc.gov.au/your-rights-and-responsibilities/wages-and-entitlements/pay/overtime-and-hours-work, accessed 11 Dec 2020.

3. Minimum Wage System (Government of Korea site). https://www.minimumwage.go.kr/eng/sub04.html, accessed 31 May 2021.

4. Complete guide to work hours and Korean labor law, https://hangangmagazine.com/complete-guide-to-korean-labor-law/ accessed 31 May 2021.

5. Bangladesh, selected indicators – International Monetary Fund, https://www.imf.org/~/media/Files/Countries/ResRep/BGD/2019/bangladesh-economic-and-financial-indicators-february-2019.ashx, (a PDF document) accessed 31 May 2021.

6. Fertility rate, total (births per woman) – Bangladesh, World Bank, https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?locations=BD, accessed 31 May 2021.