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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Other than sucking more $, what else are they good at? Could they not have helped the industries automate instead of losing hundreds of billions in addictive gambling?
Published February 24, 2010
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Construction jittery as levy hike is spelt out
Contractors count costs; other sectors say they can cope with new foreign worker levies
By UMA SHANKARI
(SINGAPORE) AS the Ministry of Manpower (MOM) released more details on the planned increases in foreign worker levies, the construction industry said that it would be hit hard. Some contractors may try to pass on the costs.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>The construction sector - which has been singled out for its low productivity numbers - will bear the brunt of the changes. The least impact will be felt by firms in the marine industry, which will see only slight increases in foreign worker levies as the sector has high productivity levels.
Foreign worker levies were also raised for the manufacturing, services and process (the building and maintenance of equipment in the petroleum, petrochemicals, specialty chemicals or pharmaceutical industries) sectors. But there is also no change in the dependency ratios for all industries.
Hiring workers on S passes will also be costlier.
The first round of hikes will take place in July this year, with subsequent increases until July 2012. Generally, the changes mean that more workers in each company will now be classified under the more expensive levy categories. The rates for most levy categories have also been bumped up.
MOM's announcement comes on the heels of Monday's Budget, when Finance Minister Tharman Shanmugaratnam said that Singapore is raising its foreign worker levies in a bid to get businesses to restructure and upgrade their operations and rely less on lower skilled foreign labour.
'If we make low-cost foreign workers too readily available, employers will not have sufficient incentive to upgrade their operations and upskill their workers,' he said.
On the ground, firms in labour-intensive industries such as construction, hospitality, manufacturing and shipping voiced their apprehension at the impact on their bottom lines.
Companies in the construction sector will see a 25 per cent cut in the man-year entitlement (MYE), which refers to the total number of foreign workers a main contractor is entitled to employ based on the value of projects and contracts the company has been awarded.
MOM will also phase out unskilled work permit holders in the sector from July 2011. Existing work permit holders would only be reclassified as 'basic skilled' if they possess a Skills Evaluation Certificate. A 'higher skilled' tier for work permit holders with the relevant experience and qualifications will also be introduced.
Simon Lee, executive director of industry body Singapore Contractors Association Limited, said that the levy increases will affect contractors' cashflow.
For ongoing projects, contractors would have underestimated their costs when they tendered as they were unaware of the coming levy hikes and could now face difficulties.
Mr Lee added that the public sector should also set the example when it comes to compensation in such cases.
But for future projects, at least two contractors BT spoke to said that they would pass on the increased costs brought on by the levy hikes.
'When we tender (for projects), we will need to factor in all these extra costs,' said Ong Pang Aik, managing director of Lian Beng Group. 'The levy increases need to be put into the project costs, and so construction costs will go up.'
He also added that it would be difficult to increase the productivity of workers in his sector as the nature of the job is labour intensive, which means that firms cannot boost productivity by using more automation, for example.
'We need manual labour, we can't move to machinery,' Mr Ong said. Lian Beng employs about 800-1,000 work permit holders.
But companies in other sectors mostly said that the hikes should be manageable as they are being implemented gradually over the next three years to give businesses time to adjust.
'We do not expect the increases in foreign worker levies to have a great impact on us as only 23 per cent of our total workforce is made up of foreign workers,' said Kellvin Ong, general manager of Rendezvous Hotel Singapore. 'The increase is manageable.'
'While there will be some cost impact resulting from the increase in foreign workers' levy, we expect to be able to manage it well,' said a Keppel Corp spokesman, declining to give actual numbers involved.
Sembcorp Marine has said that the cost impact would amount to some $7 million a year. It is believed that Keppel has a similar number of foreign workers among its staff and sub-contractors.
Gary Lim, group managing director of Rokko Holdings (an automated equipment and precision engineering firm) echoed those views. His company will not be badly hit as it is largely automated. And foreigners make up only a quarter of Rokko Holdings' workforce.
'Basically, we can live with it but I think that a lot of the more labour-intensive companies may find it hard to manage,' Mr Lim said.
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</TD></TR></TBODY></TABLE>Asked if an increased foreign worker levy will spur increases in productivity, Rendezvous Hotel Singapore's Mr Ong said: 'No, it will not, as the workloads are still the same.'
</TD></TR></TBODY></TABLE>
Published February 24, 2010
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Construction jittery as levy hike is spelt out
Contractors count costs; other sectors say they can cope with new foreign worker levies
By UMA SHANKARI
(SINGAPORE) AS the Ministry of Manpower (MOM) released more details on the planned increases in foreign worker levies, the construction industry said that it would be hit hard. Some contractors may try to pass on the costs.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>The construction sector - which has been singled out for its low productivity numbers - will bear the brunt of the changes. The least impact will be felt by firms in the marine industry, which will see only slight increases in foreign worker levies as the sector has high productivity levels.Foreign worker levies were also raised for the manufacturing, services and process (the building and maintenance of equipment in the petroleum, petrochemicals, specialty chemicals or pharmaceutical industries) sectors. But there is also no change in the dependency ratios for all industries.
Hiring workers on S passes will also be costlier.
The first round of hikes will take place in July this year, with subsequent increases until July 2012. Generally, the changes mean that more workers in each company will now be classified under the more expensive levy categories. The rates for most levy categories have also been bumped up.
MOM's announcement comes on the heels of Monday's Budget, when Finance Minister Tharman Shanmugaratnam said that Singapore is raising its foreign worker levies in a bid to get businesses to restructure and upgrade their operations and rely less on lower skilled foreign labour.
'If we make low-cost foreign workers too readily available, employers will not have sufficient incentive to upgrade their operations and upskill their workers,' he said.
On the ground, firms in labour-intensive industries such as construction, hospitality, manufacturing and shipping voiced their apprehension at the impact on their bottom lines.
Companies in the construction sector will see a 25 per cent cut in the man-year entitlement (MYE), which refers to the total number of foreign workers a main contractor is entitled to employ based on the value of projects and contracts the company has been awarded.
MOM will also phase out unskilled work permit holders in the sector from July 2011. Existing work permit holders would only be reclassified as 'basic skilled' if they possess a Skills Evaluation Certificate. A 'higher skilled' tier for work permit holders with the relevant experience and qualifications will also be introduced.
Simon Lee, executive director of industry body Singapore Contractors Association Limited, said that the levy increases will affect contractors' cashflow.
For ongoing projects, contractors would have underestimated their costs when they tendered as they were unaware of the coming levy hikes and could now face difficulties.
Mr Lee added that the public sector should also set the example when it comes to compensation in such cases.
But for future projects, at least two contractors BT spoke to said that they would pass on the increased costs brought on by the levy hikes.
'When we tender (for projects), we will need to factor in all these extra costs,' said Ong Pang Aik, managing director of Lian Beng Group. 'The levy increases need to be put into the project costs, and so construction costs will go up.'
He also added that it would be difficult to increase the productivity of workers in his sector as the nature of the job is labour intensive, which means that firms cannot boost productivity by using more automation, for example.
'We need manual labour, we can't move to machinery,' Mr Ong said. Lian Beng employs about 800-1,000 work permit holders.
But companies in other sectors mostly said that the hikes should be manageable as they are being implemented gradually over the next three years to give businesses time to adjust.
'We do not expect the increases in foreign worker levies to have a great impact on us as only 23 per cent of our total workforce is made up of foreign workers,' said Kellvin Ong, general manager of Rendezvous Hotel Singapore. 'The increase is manageable.'
'While there will be some cost impact resulting from the increase in foreign workers' levy, we expect to be able to manage it well,' said a Keppel Corp spokesman, declining to give actual numbers involved.
Sembcorp Marine has said that the cost impact would amount to some $7 million a year. It is believed that Keppel has a similar number of foreign workers among its staff and sub-contractors.
Gary Lim, group managing director of Rokko Holdings (an automated equipment and precision engineering firm) echoed those views. His company will not be badly hit as it is largely automated. And foreigners make up only a quarter of Rokko Holdings' workforce.
'Basically, we can live with it but I think that a lot of the more labour-intensive companies may find it hard to manage,' Mr Lim said.
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- With additional reporting by Vincent Wee
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