Presentation on theme: "Foreign Labour in Singapore –Trends, Policies, Impacts and Challenges"— Presentation transcript:
1 Foreign Labour in Singapore –Trends, Policies, Impacts and Challenges Chia Siow YueSingapore Institute of International AffairsPIDS WorkshopManila, January 2011
2 Data Sources and Methodology There is very limited data on foreign labour in the public domain as the government regard such data as “sensitive”.Population censuses contain the main source of data on the foreign population census no longer shows population characteristics by residential status. Preliminary results of 2010 census shows only residents and exclude the large numbers of temporary contract workers who are unskilled/semi-skilled.Ministry of Manpower published labour force statistics cover only trend in aggregate foreign labour since 1991; sectoral distribution of foreign labour. No breakdowns by source country, occupation or gender. The MOM website has information on employment passes, work permits, dependency ceilings and other regulations on foreign labour.References to foreign labour, including statistics, from occasional Ministerial statements and media reportsGiven the severe data limitations, the study is mainly descriptive
3 Rationale of Policy Towards Foreign Labour Singapore has a well articulated policy towards foreign labour. The objectives and factors are:Trend of declining fertility rate resulting in rapid population ageing and slowdown in the growth of domestic labour supply. Need to boost the size of population and labor forceEconomic restructuring to upgrade economy requires skilled labour force ---efforts at education and training have to be supplemented by inflows of foreign skills, professionals and entrepreneursLabor market structural imbalances and business cycles – lead to considerable demand for foreign unskilled/semi-skilled workersQuantitative limit on foreign inflow necessitated by space constraints and need to maintain social cohesion
4 Demographic Change and Labour Supply-Demand Balance Singapore’s macro need for foreign labour due to robust economic growth on the demand side and declining fertility rate on the supply sideMeasures to reduce demand for labourUpgrading economic structure away from labour intensive activities.Pressure businesses to adopt labour-saving methods and improve productivity performanceMeasures to increase supply of labour and skillsIncrease labour force participation of females and the oldExpansion of formal education, particularly at tertiary levelsExpansion of training facilities and programmes to upgrade those already in the labour marketInflow of foreign labour
5 Population and Labour Force Projections Population (mill.)Labour Force (mill.)1999 base3.221.64Projection 20093.691.99Projection 20194.122.28Projection 20294.462.37Projection 20394.672.46
8 Characteristics of Foreign Labour …1 Country sources: No data available.Policy objective --- permanent inflows should not upset the existing ethnic balance; temporary contract labour inflows should not upset social cohesionProfessionals and skilled labour from broad spectrum of countries including Europe, North America, Australia-New Zealand, Malaysia ---many linked to employment in MNCsPolicy prescribed unskilled/semi-skilled workers from Malaysia, non-traditional sources (Indonesia, Philippines, Thailand, Myanmar), North Asia (China, Hong Kong, Taiwan, Korea), South Asia (Bangladesh, Sri Lanka, India)Skills distribution: No data available. But bulk of foreign labour are unskilled/ semi-skilled workers on work permits. Work permit holders are further subdivided into unskilled and semi-skilled. Differentiated worker levies encourage inflow of more skilled labourGender and age characteristics: No data available. Construction workers are males, FDWs are females, healthcare workers are primarily females. Upper age limit of 58 years imposed on work permit holders. Lower age limit of 23 years imposed on FDWs.
9 Sectoral Distribution of Foreign Labour, 2008 No. in thousands% distribu- tion% of total labor in sectorManufacturing274.424.946.8Construction254.523.170.7Community & personal services198.318.033.6Trade131.812.032.8Hotels & restaurants59.05.433.0Professional services35.0Administrative & support services50.24.637.2Financial services37.03.423.0Real estate & leasing services25.42.337.1Transport & storage188.8.131.52OthersTotal1100.4100.037.3
10 Foreign Labour Management Policies Policies divided into 3 periodsFrom 1970s – severe labour shortage, large inflows from Malaysia and extended to non-traditional sources, work permits and worker levies introduced, inflows of FDWs allowedFrom early 1980s attempt to limit inflows failed. Comprehensive levy system and dependency ceilings implementedFrom 1990s booms and recessions saw policy relaxation and tightening respectivelyPolicies divided into 3 categories of foreign labour ---professionals and skilled workers; unskilled and semi-skilled workers; illegal and irregular workersQuantitative, price and education/skill control instruments –work permits and employment passes; dependency ceilings; worker levies; skills and educational requirementsPolicies divided into 3 categories of foreign labor ---professionals and skilled workers; unskilled and semi-skilled workers; illegal and irregular workers
11 Management of Foreign Skilled/Professionals Open door policy because of shortage of skills in relation to requirements of MNCs and building a knowledge-based economyActive recruitment of “foreign talent” through overseas missions, websites and specialised agencies, fellowships and scholarshipsTypes of employment passes catering to different skill types –P1 and P2, Q1, PEP, S passesCover mainly PMETs (professional, managerial, executive, technical)Acceptable educational and training qualifications and work experienceNo quantitative limits imposed except for S PassSalary differentiation for different types of passes, ranging from more than S$7000 to not less than S$1800 pmContracts of 1-5 years, renewableAllowed to bring in family and dependentsOffer of permanent residence (PR status) and citizenship --citizenship eligibility after 2-6 as PRs; No dual citizenship allowed
12 Management of Unskilled/Semi-Skilled Strict controls over inflows of unskilled/semi-skilled labour exercised through use of work permits, worker levies, dependency ceilings and skills qualifications and age restrictionsEmployment of Foreign Workers Act specifies responsibilities and obligations of employersWork permit ---to control the numbers of unskilled/semi-skilled in SingaporeFor those earning not more than $1800 pm; R1 pass for semi-skilled, R2 pass for unskilledTied to specific employer, renewable 2-year permitsNot allowed to bring familyWorker levy --- to narrow the gap between reservation wage of local workers and wage demands of foreign workers. Amount of levy has been fine-tuned over time to meet change market demand conditions. Can range between S$ pm depending on sector, skills and dependency ratios
13 Management of Irregular/Illegal Foreign Labour Strict controls and relatively successful implementation due toConcerns over national security and public safety, human trafficking, and social disorders. Information and education of the Singapore public of the risks of employing and harbouring irregular and illegal migrants.Well patrolled borders, small land area and relative absence of rural informal sectors in which irregular/illegal migrants can seek refugeTransparent and efficient implementation of immigration laws and regulations and work permit requirements and processes. Strict and efficient law enforce and relatively lack of corruption in enforcement agencies and judiciarySevere penalties for law breakers (fines and imprisonment, not only for the errant foreign workers but also errant employers, errant landlords and all those who harbour the illegular/illegal workers.Singapore’s strict enforcement sometimes lead to tensions and conflicts with neighbouring countries. Need more bilateral cooperation to handle problem.
14 Economic and Non-Economic Impacts…1 Different effects of skilled/professionals, unskilled/semi-skilled and irregulars/illegalsEconomic effectsMacro-effects on economy and micro-effects on employers, local labour and householdsPositive effects of relaxing the labor and skills constraints on economic growth; largely complementary role of foreign and local labourReady supply of unskilled/semi-skilled have negative effects on macro economic restructuring and micro effects on businesses adopting labour saving options. Negative impact on productivity growthPositive effect of cyclical bufferDepressed wage levels of the unskilled/semi-skilled local workersAvailability of FDWs enable more women with children and elderly to enter the labour force
15 Economic and Non-Economic Impacts …2 Broader impacts of a sizeable foreign worker presence, including illegalsThreat to national security and increased incidence of crime and diseaseNegative impact on social cohesion and positive impact of social-cultural diversity and dynamismGrowing space constraints, with crowding-out effects on public spaces, recreational facilities, public housing, public transportation, subsidised education and subsidised healthcare servicesThe sharp increase in the foreign population and workforce in , coupled with the severe recession and rising unemployment in 2009 heightened public concerns over economic and social costs. The growing social discontent led the government to announce policies to tighten inflows and widen the perceived benefits between citizens and non-citizens
16 Welfare and Protection of Foreign Workers…1 All workers (except household maids) are covered by the Employment Act which specifies working hours, rest days and paid holiday leave, and the Workmen ‘s Compensation Act which provides compensation for workplace injuries and occupational illnesses. There is no minimum wage legislation in Singapore as the government believes wages should be market-determined.The Employment of Foreign Workers Act covers the terms and conditions of issue of work permits, the responsibilities of employers and work permit holders, and the penalties of infringement. The Employment Agencies Act spells out the registration requirements for bona-fide recruitment and placement agencies for FDWs and the fees and costs they can charge employers and FDWs. This is to obviate exploitation of FDWs while in Singapore.
17 Welfare and Protection of Foreign Workers…2 Critics of Singapore foreign worker policies point to:Recruiting of foreign talents lead to brain drain in other countries: However, source countries can undertake measures to retain their own brains such as improving their employment conditions, taxing those brains that emigrated, and using the remittances for HRD. Singapore can also offer financial and technical assistance for HRD in source countries.Using foreign labour as cyclical buffer places the burden of adjustment in recessions to the source countries: However, in the 2009 recession, Singapore government and trade union leaders exhorted employers to minimise retrenchment, and use alternatives of lower wages and sending workers for government-subsidised training during this slack period. Bilateral cooperation between receiving and source countries can help minimise the cyclical effects.Exploitation of foreign workers by recruiting and placement agencies: Singapore has enacted the Employment Agencies Act but bilateral cooperation is needed to ensure that such exploitation is minimised at source.
18 Welfare and Protection of Foreign Workers…3 Exclusion of FDWs from the hours of work, rest days and compensation for work-related injuries and illnesses in he Employment of Foreign Workers Act and the Workmen’s Compensation Act and to their physical abuse at the workplace:The government argued that it is unable to legislate hours of work and rest days for FDWs because of the nature of their work and workplace.Employers of FDWs have to undergo “orientation programmes” on their responsibilities and obligations. Errant employers are severely punished by the courts to shame them and act as a deterrent to others.New FDWs, who are mainly from rural backgrounds, have to undergo training on safe work practices in high rise apartments and some basic skill training on working for urban households to minimise work conflicts with their employersPsychological problems have sometimes led to suicides and violence against employers’ household members. The government has raised the working age of FDWs to 23 years and require 8 years of education and some English speaking proficiency to minimise communication and psychological problems. NGOs and church groups organise social activities for FDWs and provide support in times of need.
20 ConclusionSingapore is trying to reduce its longer-term dependence on foreign labour through:Accelerated economic restructuring to raise productivity performance and reduce the dependence on unskilled/semi-skilled labourAccelerated education and training to increase the local pool of skilled and professionalsRe-designed low-paying manual jobs to improve their productivity, ability to pay higher wages, and make them less “3D” to local workers. Low wage earners also receive income supplements under the Work Improvement SchemeBusinesses and households are incentivised to be law-abiding and better employers through greater enforcement of penalties under existing legislations and through public education.Regional cooperation (under ASEAN) and bilateral cooperation between source and receiving countries will ensure that labour migration is a win-win solution