14 Jan 2006

Singapore govt considers bonus for low-wage workers

Singapore govt considers bonus for low-wage workers - I guess this means that the elections are only a few months away. March 2006 seems to be the month doing the rounds at the minute. First spotted on Sg-Review.

SINGAPORE, Jan 12 (Reuters) - Singapore said on Thursday it would consider giving low-wage workers a one-off bonus as part of a S$1 billion ($612 million) programme to help the city-state's poorest.

Coming ahead of parliamentary elections widely expected in the first half of this year, the measures were proposed by a government committee set up to help low-skilled workers cope with economic restructuring in the city-state.

Chaired by Manpower Minister Ng Eng Hen, the committee suggested paying the lowest 10 percent of Singapore income earners -- who take home S$900 or less a month -- a bonus capped at the equivalent of one month's salary. Those earning earnings between S$900 and S$1,200 a month would get a payment capped at half a month's salary.

About 300,000 people could be given the bonus.

The committee also recommended state grants to help low-income families buy their first government-built homes.

Singapore is Asia's second-wealthiest country in terms of gross national product per capita.

But its unemployment rate has hovered at about 3 percent since 2002 as manufacturers shifted thousands of jobs to low-cost countries such as China, Malaysia and India.

The government is due to give its response to the recommendations in its budget statement due in February.

Economists expect government spending to boost growth in the first half this year, ahead of general elections that Singapore's media said could be held as early as March 18 this year. The government has already earmarked more than S$2 billion to upgrade public housing, and has also said it will share a likely budget surplus with the elderly and soldiers.

And below I have added what the Peoples Action Party does during the years between 'elections'.

An Honest Day's Pay for an Honest Day's Work?
By Sylvia Lim

Sylvia, Chairman of the Workers' Party, is a Law Lecturer and a former police inspector

Singaporeans cannot afford to be arrogant these days. From being one of the 4 Asian tigers of the 1990s, Singapore's economic growth has been falling behind the rest of the developing Asian economies since the Asian financial crisis in 1997 (M Bhaskaran, 2004). Competition from low-cost countries who have built up capabilities has forced painful restructuring of businesses in Singapore in order to attract job-creating investments and to reduce off-shoring of existing Singapore jobs.

Faced with pressures to reduce costs, businesses invariably look at manpower costs. At the national level, policies have been changed to reduce wage bills e.g. reversal of the decision to restore the employers' Central Provident Fund contributions back to 20%, discouraging seniority-based wages and promoting flexi-wages.

To what extent will pro-employer policies be pursued at the expense of workers? Changes to the Employment Act passed by Parliament on Sep 21, 2004, should raise alarm bells for Singapore workers.

What happened in Parliament

By the amendments, the Commissioner for Labour was given the power to allow certain employers not to pay for extra work done by non-executive workers earning not more than $1,600 per month. Such extra work would include working overtime and working on rest days and holidays. Prior to the changes, such employees were statutorily protected under the Employment Act when they did extra work, being entitled to be paid not just their basic hourly pay but also 1.5 to 2 times their basic pay. The recent amendments are so wide that it is likely that, with the Commissioner's approval, the worker may receive no pay at all for the extra work done.

In moving the amendments, Acting Minister for Manpower told MPs that employers needed flexibility to deploy their work force. According to him, business cycles would mean there would be busy periods and lull periods. Therefore, employers should be allowed to give workers time-off during lull periods and, correspondingly, extra work done during busy periods would not be paid but would be compensated by time off during lull periods. The purpose of this restructure, as is the often-cited purpose in Singapore for any wage restructure, is to save jobs.

In exercising his power under the amended Section 41A of the Employment Act, the Commissioner for Labour will exempt employers from paying workers for extra work after considering "the operational needs of the employer and the interests of workers".

In opposing the amendments, Workers' Party Secretary-General and MP for Hougang Low Thia Khiang highlighted that the change would have the effect of removing protections for the low wage earners who had the weakest bargaining power with their employers, particularly in this lacklustre job market. Instead of having the law to safeguard them, the amendment would expose them to exploitation.

Impossible task for Commissioner for Labour

As businesses are generally run to derive maximum returns for shareholders, many employers would guarantee their employees only the minimum required under the law. Now that the law has allowed the Commissioner to grant exemptions, it is certain that employers would want to put up cases for exemption.

How will the Commissioner perform this virtually impossible task of excusing employers from paying employees, and say that it is for the employees' own good? The justification will probably come down to one of employers' costs. If the wage bill eats into the employer's profits, such that retrenchments are an option the employer is considering, then the Commissioner may exempt the employer from paying employees for extra work in order to forestall the retrenchments.

What severity of employer's "operational needs" would justify the Commissioner's exemption of employers? Would it be just to ensure the company breaks even, or to ensure that profitable companies keep up their profit margins to maximise shareholder's returns? Singapore has already seen pre-emptive retrenchments in profitable government-linked companies such as the PSA (Port of Singapore Authority), which were supported by the government as necessary moves. There is hence no assurance that, after all the pain of working extra for free, the worker's job is secure.

How the worker will be affected

Arguments that the worker will be compensated with time-off in lieu of pay are little comfort to him due to the heavy price he will have to pay.

First, he may be required to work longer hours within a working day or week, for no extra pay. For instance, he may be required to work for longer than 8 or 9 hours per day, or longer than 44 hours per week. Secondly, he may be required to work on rest days or on holidays, for no pay.

Prior to the changes, workers working extra hours sacrificed rest, and family and social life, because they were assured of supplementary income. Now, they may be required to do extra work for no pay, to be compensated by time-off, which will probably be given at a time of the employer's choosing. The time-off could be given even several months down the road.

On the other hand, there may also be workers who hold a second job due to the low wages they earn in the first job. By impinging on their time after work and on rest days / holidays, their ability to earn extra income will be curtailed. This could be dire for some families.

It is interesting to note here that, according to the Labour Force Survey Report 2003 (Ministry of Manpower), the average working hours for the poorly educated was higher (51 hours per week) than the national average (49 hours). The Report attributed this to the fact that more hours had to be put in to earn a living for the less educated (and presumably, poorer paid). Cleaners, labourers and related workers worked an average of 58 hours per week, with the average for female workers in this category being 62.3 hours per week.

Some might argue that the worker could always leave for a more scrupulous employer if things got too bad. If jobs were in abundance, probably so, but a lot would depend on prevailing market conditions and the mobility of the particular worker.

In the current employers' labour market where good jobs are not easy to come by, many workers may not be able to be choosers. Two days after the changes were passed in Parliament, the local media highlighted the outsourcing of jobs by SATS (Singapore Airport Terminal Services, a subsidiary of Singapore Airlines). A cleaner earning $1,400 per month whose job was outsourced told the media that she had been offered the same job by the new contractor for less than $1,000 per month and had to take it because she needed the job to support a child.

Having a balanced labour policy in Singapore

Attempting to allay employees' worries about outsourcing, Minister without Portfolio (the Head of the Labour Movement) told the press in September that outsourcing would create new jobs, though these opportunities may not be what the retrenched workers are looking for.

It will be critical in the coming months and years to track not just the number of jobs and employment/unemployment figures. Since international definitions used in Singapore define a person as employed so long as he has worked at least one hour for profit in the week preceding the employment survey, it will be equally important to ascertain the quality of the employment available. Another key indicator is how long an unemployed person takes to find re-employment, a longer period having great impact on worker skills and employability, and serious consequences on families.

According to the Labour Market 2nd Quarter 2004 Report (MOM), the long-term unemployment rate (those unemployed for 25 weeks or more) among Singapore residents was 1.7%, higher than 1.5% a year ago. Close to three in every ten unemployed residents (29% or 30,000) have been looking for work for at least 25 weeks, as compared to 25% (or 26,000) a year ago. Long term unemployment affected mainly the less educated (those with secondary and below secondary qualifications) or the matured (aged 40 & above). Respectively, they formed 66% and 60% of the long term unemployed. This presents unique problems in Singapore due to the fact that persons aged 40 and above in Singapore tend to have heavy financial commitments.

What about the recent scintillating GDP (gross domestic product) growth figures? A leading economist has noted that the income generated in Singapore (in growth industries such as chemicals, pharmaceuticals and semi-conductors), showed a higher profit component (40 to 45%) relative to the wage component, when compared to other economies such as Malaysia, USA and Korea (less than 40%). In other words, the income earned was being recorded as profits for businesses rather than as salaries earned by employees. Further, he noted that foreign-owned companies generated a disproportionately large share of profits in Singapore and few Singaporeans hold shares in these companies. While the generation of economic growth has been the government's priority, it has been suggested that more attention should be paid to ensure a reasonably fair and equitable distribution of the gains of economic development, particularly how to increase indigenous Singaporeans' share of economic growth (M Bhaskaran, 2004).

A Future of Fending For Yourself?

Globalisation has brought realities to relatively high-cost Singapore. Job losses to lower cost neighbours are ievitable. The Workers' Party accepts that dogged, old-fashioned protectionism may not be a practical solution. Everyone, including workers, has to bit the bullet and become more cost-efficient.

While businesses are expected to always have the bottom-line in mind and to try to keep costs low, what should the role of government be in all this? Can it just let market forces push workers into a corner? The Workers' Party believes that, at the minimum, the government should ensure that its citizens are paid fairly and treated with dignity, and have protection against oppressive employers. To this end, removing the right to be paid for extra work probably went too far. Further, it may be timely that a new labour watchdog to ensure fair labour practices and seen by workers as impartial should be set up. This could come by way of an independent official (Labour Ombudsman) reporting to Parliament.

As increasingly pro-business policies are pursued in Singapore, workers will be forced to take much more initiative to eke out a living by any means available. Some will be better able to cope than others.

In good times, both employers and workers are happy to work towards increased profits and income for all. In tough times calling for restructuring, employer and / or employee will have to lower their expectations. In Singapore, prevailing pro-business policies and limited industrial activism will mean that the trend of worker sacrifices will continue. How much more will Singaporean workers stomach?


Anonymous said...

Vote buying in Singapore - so what else is new?

I set my price at $500. If I get more than that, the PAP can have my vote. Heck with democracy who needs it!

sglaksa said...

No one needs your insignificant vote except the SDP.

Anonymous said...

what is insignificant? sometimes, just by one vote means alot, either to win or to lose, ok......