Cheapness
Its rising costs
The current era of cheap foreign labour may end faster than most Singaporeans think possible. By Seah Chiang Nee
Dec 23, 2012

(Synopsis: Reasons: The wages of foreigners - be it maids or construction workers – are rising faster back home; secondly, sensitive Asian governments readier to protect their citizens working here.)

WHAT can an illegal strike by 171 Chinese workers do to change things in law-and-order Singapore? Surprisingly quite a bit, it seems.

For starters, it may lead to better living conditions for 100,000 foreign workers living in dormitories, and that is a no mean achievement given the city’s space scarcity.

The state-owned TV early this week announced that an institution had been set up to ensure standards and living conditions in these crammed residences are raised.

A newly-formed Dormitory Association of Singapore, representing 11 owners and operators of all dormitories, would set benchmarks for the industry in the next three to six months.

Accreditation will be given according to standards achieved.

The transport company, SMRT, where the strike took place also set up a 24-hour hotline with a team of liaison officers that the drivers can call upon for help in work or living conditions.

These are praiseworthy efforts that require higher costs, and the transport ministry has quickly warned that fares might have to go up.

In the wake of frequent complaints against poor living conditions, the authorities have moved to take corrective measures.

In the short term, within the next six months, there could be an improvement in living conditions for 100,000 foreign workers living in cramped dormitories.

Since the big strike, a series of worker walk-outs and sit-ins have taken place involving discontented foreigners, mainly Chinese and Indians.

But over the longer term, it may result in a greater wariness about the mass hiring of workers from China and employers turning to less strike-prone foreigners.

The recent strike had caused about 10% disruption in bus services.

Broadly, it has angered Singaporeans, but the more liberal-minded are more sympathetic towards the strikers’ plight.

However, the significant longer term impact, together with several fundamental over-riding factors, is that it may hasten an end to the era of cheap imported labour that has fuelled modern Singapore’s prosperity.

It was also significant because it resulted in Beijing’s intervention in a local matter.

Other governments, Indonesia and the Philippines, have also intervened in deciding minimum salaries and working conditions of their citizens working as maids in Singapore.

Domestic workers are unprotected by labour laws and some are overworked and sometimes abused.

The Indonesian government is particularly sensitive about any exploitation and ill-treatment of their citizens in Singapore.

It is their respective governments that fixed the minimum starting pay of Filipino maids at US$400 and Indonesians at S$400.

A Singaporean businessman who often travels to China and Indonesia said he noticed that Asia is becoming more sensitive about “protecting their citizens” than ever before.

Indonesia, for example, has termed their women who work as maids abroad as “national heroines” because of the personal sacrifices they undergo in making a living.

In recent weeks, a series of public protests by foreign workers have broken out, serving notice that with them making up one-third of the total work-force, conflicts are likely to rise.

The acting Manpower Minister Tan Chuan-Jin has acknowledged that Singapore “can and will do more” for these workers.

There are, however, other fundamental reasons why Singapore would soon have to abandon its “cheap-foreigner” growth strategy.

All these strikes and improvement measures for their welfare will eventually produce one result – a higher cost of hiring foreigners.

Adding to this, of course, is the rising prosperity in Asia, especially China and other labour-supplying nations.

Wages in Singapore are at least three times higher than in China, but the latter is fast catching up.

For years, it has been near or over double digits.

In the first half of 2010, the wages of migrant workers in China rose by 20%.

If the trend persists in China, it may not be too long before the wage gap with Singapore narrows to an extent that coming to work on this island is no more attractive.

Economists say it may be wise for employers in Singapore to factor in a higher rate of labour cost for unskilled labourers from China.

For the hundreds of thousands who are already here on fixed contracts, it may spark more pay demands.

“Globally and regionally, there is greater labour activism taking place,” Kit Wei Zheng, an economist at Citigroup, was quoted as saying.

“In China, you have seen more assertive industrial action so, in hindsight, it was not surprising that some of these pressures have reached Singapore’s shores.”

The rising aggressiveness of workers also coincides with a China that has grown more protective of its citizens abroad.

When Singapore arrested five Chinese strikers and charged them in court, China issued a statement saying it was “highly concerned” about the arrest.

It is not only China but other neighbouring countries which supply manpower to Singapore as well that are going through wage spirals.

The Indonesian government says it may raise the lowest required monthly salary to two million rupiah (S$208) a month.

Malaysia, this year, joined Thailand and Vietnam in implementing a minimum pay.

High inflation Singapore doesn’t have one, but because its trade and manpower policies are linked to these countries, a neighbouring minimum sum pay policy will serve to push up wages of foreign workers here.

If they get out of hand, this city could become unbearably expensive except for the very rich.

It looks like our individual prosperity will be partially decided in future by how much countries like China, India, Malaysia and the Philippines pay their own workers at home.

This was first published in The Star).

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