Shift gears = New fears

In Money, News Reports, Politics on February 27, 2013 at 12:19 am

I reckon that the best thing about the debate on the Population White Paper is that most of us will be able to comprehend the Budget 2013 much better than in the past, when we will probably be zooming in to see what’s in it for us.
So many reactions now, so here’s a summary of some new points that have emerged following DPM Tharman’s speech yesterday culled from media reports.

– The construction sector, that really unproductive part of the economy, is going to be hit so hard that it will be a wonder if we can get our infrastructure plans in place. Construction companies which have been going around the quotas by paying a $650 monthly levy for every additional foreign worker will have to pay more, $950 next year and $1,050 in 2015. Now that’s a psychological barrier that’s being breached. Smaller companies are expected to fold or merge.

– The retail and restaurant business people are extremely angry that they have been hit so heavily with higher levies and lowered quotas on foreign workers. Some operations simply cannot be automated, they say, and no matter how much you pay, Singaporeans just won’t do certain jobs. Seems though that there is some kind of workaround: A flexible job scheme that was piloted in the hotel sector to get foreign workers to multi-task will be extended to the whole services sector. So a waiter can double as a dishwasher in this new scheme (hate the word!) that will have its own quotas? Seems we’ll hear more about this later.

– That Wage Credit Scheme in which the G foots 40 per cent of pay rises for those earning less than $4,000 a month might well prove to be a double-edged sword. Bosses may feel compelled to pay people more than they are worth; people would start expecting higher pay even though there is no increase in productivity. And what happens after Year 3, when these credits stop? Can companies afford to foot the wage bill? Would their companies have had enough time to re-structure and raise productivity by then to justify the cost of manpower? The opposition parties, the Singapore Democratic Party and Reform Party, have weighed in too, suggesting a minimum wage law would be a better instrument.

– Some real drama is playing out in car companies. First, they had to deal with last minute orders with people started shopping on Monday night to beat the clock – higher cash payments, ARF etc will kick in. Now, people who had ordered cars are calling to cancel because they don’t know how the new figures will play out. There’s a shift of gear here: the G seems to be moving from curbing car usage to restricting car population. Not fair, the car people say.

– The Workfare Income Supplement to give cash/CPF support to those with low-paying jobs should be extended to part-timers, said an economist. Calculate the income support on a per hour basis, he suggested. This might well bring in more workers into the fold and up the resident workforce numbers.

I’m looking forward to the debate. Stay tuned to this blog and

  1. 1. Labor shortage in the construction industry has been around for a long time.
    Remember the Construction Brigade that was started by the government in the 1980s?
    The players in the construction industry – being profit-driven entities – have been using cheap labor from neighboring countries (1st Malaysia, then Thailand & now from China and Bangladesh) and will continue to do so until the government plays a more proactive role in driving the shift towards more automation.

    2. For the retail & restaurant sectors, I wonder if we really need that many malls & outlets in the first place?
    I agree Singapore has greater variety of F&B outlets now but many of these are poorly patronized except on weekends. Is it a good use of labor resource?
    Interestingly, when I am overseas, I notice many wait staff are students working part-time….& I’m not referring only to the fast food chains only.
    Perhaps the high pressure education system does not allow our teenagers the chance to earn their allowance and to also experience real-working life from a young age.

    3. Instead of focusing primarily on labor, I’m disappointed the government isn’t taking a more holistic approach to solving the business cost / productivity issues.
    – The Straits Times featured several businesses offering services like centralized cleaning of utensils & food preparation. But when transportation cost, turnaround time & land costs are factored in, would such centralized services be cost-effective for all but the larger F&B firms?

    4. Some years back, when the government was more relaxed in letting in foreign labor, businesses had complained about other costs like land & transportation.
    Remember when JTC decided to sell its industrial space to commercial REITs?
    Or when the government stopped building hawker centers & even sold off existing hawker centers to commercial entities like Sheng Shiong who promptly raised the rentals?

    5. While in Hong Kong a few years ago, I expressed my surprise to a colleague that the restaurant we were having a dimsum breakfast transforms itself into a nightclub after dinner. His reply?
    “Most restaurants are open from 6:00am till 2:00am. When you’re paying this kind of rent, you will operate long hours to maximize the revenue capture opportunities. At least labor & ingredient costs are relatively cheap to offset the high rents. Besides most homes in Hong Kong are so small, we only use them for sleeping. So we’re out working more.”

    6. I sincerely hope Singapore isn’t being driven down this road.

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