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Why the hike in Foreign Worker Levy will benefit the govt more than ordinary workers
February 24, 2010 by admin
The recent move by the ruling party to increase the Foreign Worker Levy will only go to increase the coffers of the government without benefiting the ordinary workers, both Singaporeans and foreigners alike.
Under the new scheme, most Work Permit holders will have their rates raised by between $10 and $30 this year while those in manufacturing and services will see their levies rise by an average of $100 at the end of the three years.
Levies for S-Pass workers will increase from the current $50 monthly to a maximum of $250 by July 2012.
The ruling party claimed that the move will deter employers from hiring foreigners and encourage them to provide more employment opportunities to locals.
If this is really its intention, then it should follow the example of Australia and make it more difficult for companies to recruit foreigners by raising the quota for Singapore workers and pegging the levy to the difference in wages between locals and foreigners.
In all likelihood, the inadequate measures taken were no more than a “wayang” to placate angry Singaporeans that it is doing something to protect their interests.
Take for example an IT enginner – a local will command a monthly pay of between $2,500 – $3,000. A company can offer a foreigner $1,500 – $1,800 and he/she will still take up the job. The maximum $250 levy for S Passes will do nothing to encourage the employer to hire a local as it will still “save” much more by employing foreigners.
Furthermore, there is no way to stop unscrupulous employers for passing the higher cost of employing foreigners to the workers themselves thereby putting them in a vulnerable position of being exploited.
For foreigners who are desperate to land a job here in Singapore, they will not protest against having their basic salaries cut just to “make up” for the hike in Foreign Worker Levy.
At the end of the day, the employers will not be affected by the hike in the levy as their profit margin will remain the same.
The same numbers of foreign workers will still be employed at a lower cost while Singapore workers continue to face discrimination in their own country.
Ultimately, it is the government which will be the greatest beneficiary as it is expected to rake in more levies from the employers.
If the government is serious about reducing Singapore’s dependence on foreign workers and to boost productivity, it should stop the issuing of S passes completely.
Foreigners on these passes usually compete directly with Singaporeans for jobs which can otherwise be taken up by them and they do not add value to Singapore except decreasing labor costs and increasing the profits reaped by their employers.
Strict restrictions should be imposed on work permit holders – only industries and sectors which are unable to employ Singaporeans are allowed to employ foreigners and for each foreigner employed, a levy amounting to the difference in pay between a foreign and local worker should be paid.
At the same time, a minimum residency period of 2 year should be mandated before foreign workers can apply for Singapore PR.
The “low” employment rate of 3 per cent for Singapore is highly misleading as both Singapore citizens and PRs are lumped together under the same category “resident”.
For purposes of clarity, the Manpower Ministry should put PRs in the “foreigner” category in all its guidelines and regulations.
Under the current rule, a company needs to fulfill a quota in the number of “local” workers (including PRs) before they can hire foreigners which is easily circumvented by companies getting earlier arrivals of foreign workers to take up Singapore PR.
As Singapore PRs are easily granted within a few months, this enables them to artificially increase the quota thereby freeing more slots to employ foreign workers.
For example, a company with a staff comprising of 20 per cent citizens, 50 per cent PRs and 30 per cent foreigners is able to meet the quota with ease though Singaporeans remain in the minority.
Some of these PRs will go on to compete with Singaporeans in other jobs after they leave their parent companies who apply the Singapore PRs on their behalfs.
An electronic firm in Singapore was known to have applied Singapore PRs for its PRC workers who are unable to speak a single word of English. Surprisingly, most of their applications are approved within a year. The marketability of these PRC workers are therefore enhanced and they have few problems finding another job in Singapore after they left the company.
The most incredible part of it all – these PRs are sent for “retraining” too under the Job Credits Scheme last year sponsored by Singapore taxpayers!
Unless wholesale changes are made to Singapore’s employment and immigration policies, the hike in Foreign Workers levy will not moderate or slow down the inflow of foreign workers into Singapore.
Perhaps that’s the real aim of the ruling party after all – to keep the foreign workers coming without jeopardizing its chances at the next general election.
http://www.temasekreview.com/2010/0...-benefit-the-govt-more-than-ordinary-workers/
http://www.temasekreview.com/2010/0...-benefit-the-govt-more-than-ordinary-workers/
February 24, 2010 by admin
The recent move by the ruling party to increase the Foreign Worker Levy will only go to increase the coffers of the government without benefiting the ordinary workers, both Singaporeans and foreigners alike.
Under the new scheme, most Work Permit holders will have their rates raised by between $10 and $30 this year while those in manufacturing and services will see their levies rise by an average of $100 at the end of the three years.
Levies for S-Pass workers will increase from the current $50 monthly to a maximum of $250 by July 2012.
The ruling party claimed that the move will deter employers from hiring foreigners and encourage them to provide more employment opportunities to locals.
If this is really its intention, then it should follow the example of Australia and make it more difficult for companies to recruit foreigners by raising the quota for Singapore workers and pegging the levy to the difference in wages between locals and foreigners.
In all likelihood, the inadequate measures taken were no more than a “wayang” to placate angry Singaporeans that it is doing something to protect their interests.
Take for example an IT enginner – a local will command a monthly pay of between $2,500 – $3,000. A company can offer a foreigner $1,500 – $1,800 and he/she will still take up the job. The maximum $250 levy for S Passes will do nothing to encourage the employer to hire a local as it will still “save” much more by employing foreigners.
Furthermore, there is no way to stop unscrupulous employers for passing the higher cost of employing foreigners to the workers themselves thereby putting them in a vulnerable position of being exploited.
For foreigners who are desperate to land a job here in Singapore, they will not protest against having their basic salaries cut just to “make up” for the hike in Foreign Worker Levy.
At the end of the day, the employers will not be affected by the hike in the levy as their profit margin will remain the same.
The same numbers of foreign workers will still be employed at a lower cost while Singapore workers continue to face discrimination in their own country.
Ultimately, it is the government which will be the greatest beneficiary as it is expected to rake in more levies from the employers.
If the government is serious about reducing Singapore’s dependence on foreign workers and to boost productivity, it should stop the issuing of S passes completely.
Foreigners on these passes usually compete directly with Singaporeans for jobs which can otherwise be taken up by them and they do not add value to Singapore except decreasing labor costs and increasing the profits reaped by their employers.
Strict restrictions should be imposed on work permit holders – only industries and sectors which are unable to employ Singaporeans are allowed to employ foreigners and for each foreigner employed, a levy amounting to the difference in pay between a foreign and local worker should be paid.
At the same time, a minimum residency period of 2 year should be mandated before foreign workers can apply for Singapore PR.
The “low” employment rate of 3 per cent for Singapore is highly misleading as both Singapore citizens and PRs are lumped together under the same category “resident”.
For purposes of clarity, the Manpower Ministry should put PRs in the “foreigner” category in all its guidelines and regulations.
Under the current rule, a company needs to fulfill a quota in the number of “local” workers (including PRs) before they can hire foreigners which is easily circumvented by companies getting earlier arrivals of foreign workers to take up Singapore PR.
As Singapore PRs are easily granted within a few months, this enables them to artificially increase the quota thereby freeing more slots to employ foreign workers.
For example, a company with a staff comprising of 20 per cent citizens, 50 per cent PRs and 30 per cent foreigners is able to meet the quota with ease though Singaporeans remain in the minority.
Some of these PRs will go on to compete with Singaporeans in other jobs after they leave their parent companies who apply the Singapore PRs on their behalfs.
An electronic firm in Singapore was known to have applied Singapore PRs for its PRC workers who are unable to speak a single word of English. Surprisingly, most of their applications are approved within a year. The marketability of these PRC workers are therefore enhanced and they have few problems finding another job in Singapore after they left the company.
The most incredible part of it all – these PRs are sent for “retraining” too under the Job Credits Scheme last year sponsored by Singapore taxpayers!
Unless wholesale changes are made to Singapore’s employment and immigration policies, the hike in Foreign Workers levy will not moderate or slow down the inflow of foreign workers into Singapore.
Perhaps that’s the real aim of the ruling party after all – to keep the foreign workers coming without jeopardizing its chances at the next general election.
http://www.temasekreview.com/2010/0...-benefit-the-govt-more-than-ordinary-workers/
http://www.temasekreview.com/2010/0...-benefit-the-govt-more-than-ordinary-workers/
