Each week, TODAY’s long-running Big Read series delves into trends and issues that matter. This week, we look at how Singapore can increase the wages of under-valued essential workers. This is a shortened version of the full feature, which can be found here.

SINGAPORE — Mr Ong Swee Teck’s work as a garbage truck driver is dirty and demanding. And after 17 years on the job, the 51-year-old typically takes home about S$3,500 a month.

Before Covid-19 hit, there would be a handful of months a year where his take-home pay reached S$5,500 to S$6,000 a month due to additional projects which required him to work longer hours. 

But overall, in the last five to six years, his typical take-home monthly salary has increased by an average of about S$100 a year, from S$3,000 to its current level, he told TODAY.

Apart from his modest pay, Mr Ong also has to contend with people shunning him whenever he makes his rounds around Jurong Island collecting food waste — something which still exasperates him even after all these years. 

“People will think that the work I do is dirty because I handle food waste. Sometimes when we drive by, people will pinch their noses and walk away… It makes me mad. After all, someone has to do this job,” said Mr Ong, who works eight hours a day, six days a week. 

Mr Peter Yeo, a cleaner for the past four years, said he started with a monthly pay of S$1,200. He is currently earning about S$1,300.

“If the pay is higher, I don’t mind working more,” said the 60-year-old who has been out of work since Singapore introduced the nearly two-month-long circuit breaker on April 7 in an attempt to curb the community spread of the coronavirus. 

Essential services workers like Mr Ong and Mr Yeo are found in a wide range of jobs. One thing they have in common is being long taken for granted, with some earning below the median wage including those in the bottom 20th percentile.

They are now perhaps viewed in a more appreciative light by the general public amid the disruptions caused by the Covid-19 pandemic, and health risks that such workers subject themselves to as they continue in their jobs to keep basic services going.

Based on the latest available statistics, the nominal median income of Singapore residents on full-time employment stood at S$4,563 last year, including employers’ Central Provident Fund contributions. 

During last week’s parliamentary debate on the Fortitude Budget, the fourth budget for the year to cushion the impact of the Covid-19 crisis, two Members of Parliament — Nominated MP Walter Theseira and Pasir Ris-Punggol GRC MP Zainal Sapari — had called on the Government to restructure the economy in ways that could address the plight of these workers, which include lower wage earners such as cleaners and security officers.

Speaking to TODAY, Mr Zainal, who is also the assistant secretary-general of the National Trades Union Congress, said the wages of workers in the cleaning, security and landscaping sectors had increased substantially between 2013 and 2018 — by around 30 per cent — with the help of the Progressive Wage Model which pegs workers’ wages to their skill and experience levels.

Nevertheless, he pointed out that the increases were from a very low base. Cleaners’ wages are still at the bottom 5th percentile of gross monthly wages among the resident workforce here, he said.  

“If we really think that they are essential workers, why are they at the 5th percentile? Shouldn’t it be higher? Let’s say we peg (their wages) at the 20th percentile, it might take them 17 years (based on their current wage levels) to hit the 20th percentile,” he added. 

THE NEED FOR CHANGE

How Singapore’s reliance on cheap labour came about:

• Since the 1970s, importing foreign labour has been part of a deliberate policy by the Government. 

• Constant access to low-skilled foreign labour prevented wages from rising according to market forces, preventing Singaporeans in these jobs from earning more. 

Singapore was able to achieve high economic growth rates by adding capital and labour, instead of raising productivity, said Professor Emerita Linda Lim at the University of Michigan and Professor Emeritus Pang Eng Fong at the Singapore Management University. 

The foreign worker issue was among the hot button issues during the General Election in 2011. Thereafter, the Government has tightened its foreign worker policy via levies and quotas despite the protestations by businesses. 

Based on the Ministry of Manpower’s 2019 statistics, foreigners — including foreign domestic workers (FDWs) — make up 37.7 per cent Singapore’s total workforce, numbering over 1.4 million.  

The proportion has not changed much in the past decade, due in part to the significant increase in the number of FDWs. In less than a decade, the number of FDWs here has spiked about 30 per cent — from about 201,000 in 2010 to about 261,900 as at the end of last year. 

This reliance is a “weakness” in Singapore’s economic structure, which has now been highlighted by the high rate of Covid-19 infections among the migrant worker community, said DBS bank senior economist Irvin Seah. 

Dr Ong Qiyan, deputy director of research at the National University of Singapore Social Service Research Centre, said that one major lesson to draw from the crisis is that the migrant worker community is very much interconnected with the larger population, both in terms of the importance of the service they provide and the similar challenges they face with other local low-wage essential workers. 

Conversations on how Singapore can reduce its reliance on cheap foreign labour has emerged. People on both sides of the argument have debated on whether it is possible to cut down their numbers, and how the wages and status of their jobs could be improved to attract more Singaporeans to take them up. 

Amid the public discussion, the Government has noted that there is a limit to how far the country can go in reducing its reliance on foreign workers, with Deputy Prime Minister Heng Swee Keat noting that a significant proportion of the country’s foreign workers are required to “do very difficult jobs which many Singaporeans will not want to do”. 

Several trade and industry associations have also spoken out, saying that cutting the number of imported labour would have a negative impact on the economy.

Analysts listed the following reasons why this “sacred cow” has to be slaughtered:

• It would not be sustainable for Singaporeans to keep searching for the next source country of cheap labour.

• Singapore needs to position itself where its competitive advantage is not dependent on being able to import large numbers of cheap labour.

• A society where there is a good core of locals in every job would be more resilient.

• Singapore should start valuing vocational skills as much as academic intelligence and start shifting away from this long-held perception that manual labour is of a lower value.

PERENNIAL DEBATE ON MINIMUM WAGE

The implementation of a nation-wide minimum wage has often been cited as one way for Singapore to increase the pay of workers in the lowest rung of the labour market.

Proponents argue:

• It would help narrow the inequality gap

• Force companies to innovate to increase their productivity 

However, there has been pushback from the Government every time, saying that:

• Singapore may lose its competitiveness as business costs go up

• It may cause a rise in unemployment rates among low-wage workers

• Its Progressive Wage Model is a more sustainable alternative to a minimum wage policy

Mr Zainal described the model as a “powerful” policy lever but he pointed out that there are still gaps that need to be filled:

• The mandated annual wage increment of 3 per cent for workers in these sectors would not be enough to bridge the inequality gap

• Some workers, especially the older ones, may find it difficult to fulfill the training requirements under the model

THE NEED TO INCREASE PRODUCTIVITY 

To make essential services jobs more attractive to Singaporeans, there is a need for companies to increase their productivity through job redesign and more widespread use of technology, said several analysts. 

However, the liberal foreign manpower policy of the past decades has made companies here complacent, with some having the tendency to take the easy way out by hiring foreigners instead of investing in technology, said Mr Seah.

Hence, the only way companies would be forced to do so is for the Government to restrict the importation of cheap labour, said Prof Lim and Prof Pang.

While the Government has been trying to accomplish this by gradually lowering the proportion of foreigners companies can employ over the last few years, it often faces huge resistance from the business community.

But companies told TODAY that they have genuine challenges in going high-tech, mainly due to the way tender contracts are being awarded in Singapore.

Problems highlighted by observers and businesses are:

• Tenders are usually awarded to companies with the lowest bid, even for some Government projects

• Several business owners feel the pressure to put in low bids, and in the process shortchange their workers

• Service buyers' tendency to pay based on the number of workers committed to the project also impedes these companies from investing in automation

• The barriers to entry in these sectors are so low that there will always be companies with questionable practices that can come in and undercut their competitors

• The nature of tender contracts is also one-sided, where service providers are disproportionately burdened to maintain their end of the bargain

WHAT NEEDS TO BE DONE 

As the debate on minimum wage and the long-term challenges to increasing productivity through digitalisation continues, some analysts suggested that Singapore could aim for more reachable targets in its bid to reduce the reliance on cheap foreign workers and increase the wages for the positions they often fill. 

Some suggestions are:

• Government taking the lead to change the way tender processes are carried out, by giving a higher weightage to factors such as local manpower share and technology and productivity parameters, said Mr Seah. On its part, the Government has pledged to move away from "cheap sourcing" to "best sourcing" — after calls by several MPs over the years for it to do so. 

• Raising foreign worker levy rates for S Pass and Work Permit holders in stages once the economy is in a better state as companies have a window now to reorganise and train their workers, said Prof Lim and Prof Lim. 

• Consumers adjusting their expectations on how frequent and efficient certain essential services are provided, said Dr Ong and Assoc Prof Walter Theseira, an economist at the Singapore University of Social Sciences. 

"For Singaporeans who have travelled to many other developed countries, the standard of cleaning and maintenance we have here is very good. But sometimes you wonder whether it’s more than what you are willing to pay for. Because you can afford to have a bit of slack here and there in some areas and life still goes on,” said Assoc Prof Theseira, who is also a nominated MP.

WILL CONSUMERS HAVE TO PAY MORE?

As the nation ponders over how to reshape the contract with its low-wage workers, one question inevitably arises: Will this translate to higher costs for Singaporeans?

Prof Lim and Prof Pang pointed out that there are other types of costs that are less visible, which could be avoided if Singapore pays and treats its low-wage workers better.

For example, it could translate to fewer government handouts meant for subsidising low-income Singaporeans, and paid from tax coffers. This, in turn, could lead to lower taxes and the average consumer may end up actually paying less overall. 

Economics theories aside, Mr Zainal argued that a higher cost of living would be a moral necessity if Singapore were to move forward to become a more equitable society. 

“If you want everything to be cheap, what you are practically doing is asking (these low-wage essential workers) to shoulder the burden. If you want good service, you pay for it,” he said