Work permit holders should be able to look for new jobs locally, after losing or resigning from their jobs. They should not be immediately sent back to their home countries, says Transient Workers Count Too (TWC2) in a submission to the Ministry of Manpower (MOM). The present practice of tying an employee to a particular employer, such that the worker cannot stay on, is damaging to Singapore’s hope for productivity improvement. At the same time, the currently wide-open gates to inflow of fresh workers should be partially closed.
Full disclosure: As a member of TWC2’s council, I was involved in preparing the submission.
The ministry had asked in July 2013 for public comments towards the next phase of amendments to the Employment Act and the Employment of Foreign Manpower Act (EFMA). TWC2 sent in a document (39 pages, excluding annexures) containing a long list of suggestions. You can read about it here. There are too many proposals to discuss in this article. I will only focus on this particular point: allowing work permit holders to change employers. Doing so is right by the worker, and good for Singapore.
We all realise by now that Singapore’s labour productivity is poor by the standards of high-income countries we ought to belong to. Improving productivity is crucial since our domestic population isn’t growing anymore coupled with political resistance to increasing the foreign population. With foreigners already making up 37% of our labour force (based on MOM’s mid-2012 data, see table at right. Source, page xiii) improving productivity must encompass them too.
More importantly, it must encompass the low-wage work permit holders, who make up three-quarters of the migrant workforce. As at June 2013, there were nearly a million of them. The numbers in the following table are also from MOM.
Yet, as is pointed out in TWC2’s submission, several features of MOM’s regulatory system actually work against productivity improvement. These need to be changed. Among them is allowing work permit holders to stay on after exiting one job.
Present system defective
MOM’s present work permit system has mostly been drawn up with migration policing as its chief objective. The state delegates the responsibility for control and repatriation of the worker to private employers. The (perhaps unintended) consequence of this is the tendency of employers to use these levers of control to exploit foreign labour. After all, if the state gives you power on a plate, why not use it?
Another unintended consequence is the high rate of churn, especially in the case of non-domestic workers. Experienced workers are sent home, and fresh inexperienced workers are brought over. Reasons why are discussed further down. Until recently, MOM has not considered this a worrying pattern, again because their focus wasn’t on productivity but on policing.
Getting down to the specifics, under the present system, the rules make an employer responsible for repatriating a work permit holder when the work permit is cancelled or expired. The employer in fact has to put up a bond to ensure this. To protect the employer’s financial interest, the system gives him considerable control over the worker’s movement — such control is sometimes couched in paternalistic language — for example, the employer must either house the worker, or be informed where the worker is staying. More crucially, the worker cannot change jobs and work for another employer without a formal “release” from the first employer, which in the case of non-domestic workers, is rarely given.
A worker who is unhappy with his present job then faces a difficult choice. He can resign, but he will almost surely be sent home since getting a “release” is unlikely. Or he can continue to work grumpily.
Suffer abuse or go home in debt
For the vast majority of work permit holders, resigning is not a realistic option. Many would have paid $3,000 to $10,000 to training centres and agents to secure their present jobs. Families would have sold land or borrowed at high interest rates to finance their sons. A study by TWC2 in 2011/2012 entitled Worse off for working? found that Bangladeshi construction workers typically had to work 17 months before they earned enough to repay the initial investment.
But more often than not, their work permits are only of 12 months’ duration. If they are lucky and their employer renews their work permit, then more likely than not, they’d have to pay the employer a kickback to get the renewal. The same study found that 65% of 100 survey respondents reported having to pay their employers for work permit renewal — at an average rate of $1,081 per renewal. The workers’ debt gets extended.
Technically, such kickbacks are illegal, but enforcement has been almost totally absent.
The knowledge, on the part of employers, that it is financially ruinous for a worker to quit creates a tempting opportunity to mistreat workers. Under-calculated overtime, forced lowering of basic salary, arbitrary deductions from the month’s salary, e.g. $400 for a misplaced hammer, are all common abuses. As is denial of medical treatment when a worker is injured (see inset at right). The common thread through all this? Cutting the cost of the worker to the employer.
It should hardly be a surprise that when employers succeed by these (often illegal) ways to keep the cost of labour down, there is no incentive at all to invest in mechanisation and productivity improvements.
Keeping workers unhappy
The government has tried to increase the labour cost, but the lever they have used is to increase the monthly levy. In response, employers simply try harder, and more ingeniously, to cut their workers’ salaries. Here’s an example I personally came across:
A worker tells me that when he came for his present job, it was on the basis of $19 per eight-hour day. Overtime would be calculated as per the formula provided by law (at one-and-a-half times hourly rate). A few months into his job, the company announced that basic salaries would henceforth be $16 per day, but each worker would get $3 daily allowance.
At first sight, nothing has changed; $16 + $3 = $19. But look closer and you’ll see that his overtime rate has been lowered. Instead of being based on $19 per day ($2.375 per hour x 1.5), it has been re-based on $16 per day ($2.00 per hour x 1.5).
The result of such shenanigans is widespread unhappiness among migrant workers, for one reason or another. And it’s not just over salaries. An injured worker denied treatment means lowered morale among his co-worker friends. How does one get the best out of this workforce if so many of them feel victimised? But how many employers care? From their point of view, the workers have no choice but to stay on the job. That’s all that matters. As I said above, if the state gives you power on a plate, why not use it? If workers slacken out of unhappiness, then bark louder at them, and threaten them with work pass cancellation and instant repatriation.
That, in a nutshell, is the state of labour relations in Singapore in companies with large percentages of foreigners on their payroll or through subcontractors.
Churn is good for employers’ pockets
My observation is that staff turnover, in construction companies particularly, is very high. With bad labour relations come a higher incidence of disputes, which leads to a greater tendency of employers to terminate staff and send them home. Carrying out a threat of early repatriation now and then with workers who speak up is actually something the boss needs to do, in order to keep the rest of his workforce in fear.
Workers are easily replaced by fresh “imports”. There is the added advantage of another round of inducements. Fresh workers pay thousands of dollars for a job, as mentioned above, and it is an open secret that employment agents often share their profits with bosses. Also, new workers start at the bottom of the pay scale, which saves cost again.
This is what I mean by ‘churn’. The system encourages employers to send experienced workers back and bring in inexperienced ones.
Two essential paths to productivity improvement
An understanding of the above dynamics leads to two easy conclusions if the aim is to improve productivity — these apply largely to non-domestic workers:
1. Create a slight shortage of foreign workers;
2. Retain experienced workers for as long as possible and partially close the door to fresh workers.
There is no greater incentive for employers to find ways of improve productivity than to realise that manpower is short and will remain short for the foreseeable future. MOM is already doing this through a gradual tightening of quotas. The employer simply has to make do with fewer people, relying instead on mechanisation, skill, experience, and a motivated workforce.
But reducing quotas is only half the answer. Retaining experienced workers (especially if they’ve been taught to handle equipment) is needed too. Retention doesn’t have to mean working for the same employer. In many industries, especially in construction, business goes up and down. Singapore’s interest is served by keeping the worker within our economy, not necessarily in any particular company.
This means that the present practice of tying a worker to a company, but chucking him out of Singapore as soon as the company no longer wants him, is a wrongheaded way of doing things.
It is thus important to allow existing workers to find new jobs locally if they are no longer needed by their current employers, or if they are unhappy with their present bosses. The need to obtain a formal “release” is anachronistic; bosses use such control to intimidate their employees and defeat the national interest.
However, retention will be compromised if bosses have access to an unlimited pool of fresh workers from abroad, despite lower quotas. Why should they hire an experienced guy who is already in Singapore (and because of experience, cost more) when they can get a cheaper, new worker from abroad who will even pay a handsome inducement to obtain a job?
It will be quite likely, as quotas are tightened, that inducement will go up — it’s a simple supply-and-demand thing — making it yet more attractive for a boss to hire a fresh worker from abroad.
The solution must involve partially closing the door to bringing in new workers. The state needs to create a bias in favour of experienced workers who are already here. TWC2 proposes that work permit applications for fresh workers from abroad should suffer a delay of about two months in processing time to make it more attractive to hire the more experienced localised worker. If employers still keep hiring from abroad, MOM can lengthen the delay until there is sufficient disincentive to bring in fresh inexperienced workers.
Workers get 60 days to look for new jobs
TWC2 proposes that a worker who is already here, after being terminated or resigning from one job, gets up to 60 days to look for a new job. If he manages to find a new job, his previous employer will not need to fly him home and will have the bond discharged. The new employer will execute a new bond when taking up a work permit for him, and undertake the responsibility of flying the employee home in future.
Some Singaporeans may wonder about job competition if foreign workers are allowed to look for new jobs, though TWC2 doesn’t discuss this question in its proposals. Such worry would be misplaced, firstly because foreign workers are subject to industry classification, so they are easily restricted to say, construction, landscaping or shipyards/marine — industries that few Singaporeans want to work in. Secondly, employers will still be governed by foreign worker quotas, so it’s not as if employers can replace a Singaporean worker with a foreign work permit holder.
Making hiring a purely local affair has the added advantage of locating within Singapore jurisdiction any demand by employers for payment in exchange for getting a job. Currently, these inducements (which are illegal and a form of corruption) are negotiated in the home countries before the fresh worker comes here. Payment is also bundled with placement agency fees, and transacted abroad, making it difficult to prosecute under Singapore law. But as more and more job negotiations are localised — and a whistle-blowing hotline is set up — such attempts by employers to get workers to pay for their jobs can be caught and prosecuted. Of course, there must be political will to prosecute, which so far, we haven’t seen. After all, as mentioned above, many workers are asked to pay their bosses an average of a thousand dollars for the chance of work permit renewal. It’s an illegal transaction that is entirely local, yet I can’t immediately recall any case of MOM prosecuting an employer for making such demands.
An extra benefit of foreign workers staying on longer in Singapore is that they acquire language skills and adjust to our social and cultural expectations. Just through a short conversation with a foreign worker from India or Bangladesh, I can make a pretty good guess how long he has been in Singapore. Someone who has stayed five or six years is far more likely to be able to understand me if I speak normally. He is also able to give me a reply without struggling to find the right words, often responding with a hint of Singlish too. It goes without saying that better communication skills allow a worker to work more efficiently alongside Singaporeans and people of other nationalities.
As much as we have discussed this proposal (allowing foreign workers to change jobs locally) from the perspective of productivity, it is as important, if not more so, to see the issue through the lens of human rights. It is plain wrong to create a regulatory system that ties a worker so closely to the employer, such that the worker becomes subject to intimidation and exploitation. Some egregious cases that I have seen display several markers of human trafficking, e.g. misrepresentation of the terms of a job to induce workers to come to Singapore (only to dramatically change the salary and deductions after arrival) , and debt bondage.
It is a happy coincidence that we can address both the rights issue as well as the productivity issue through the same set of measures — freeing up the work permit holder to look for another job locally. So why not do so?