I suppose we should be happy with the half-year manpower report that was published in MSM today. Wages are going up – because employers can’t hire as many foreigners as before. Real median wage went up 4.6 per cent last year, and is likely to go up further. (Nope, got no updated half-year figures on income.)
I guess employers have no choice but to raise wages to attract locals to work. There are 63,900 jobs going a-begging as of June. So more jobs, higher pay for locals, as ST trumpeted today. But there’s a cautionary note that ST sounded as well, backed up by experts and economists.
What if employers just passed on the increased manpower cost to consumers? So, everything cancels out and real income growth, said one economist, will be “muted’’. And it looks like this might well happen given how productivity is going down. It’s gone into “negative territory’’ or to put it simply, people are actually doing/producing less than before in the second quarter. It’s -1.3.
You can blame the construction sector. It’s the biggest drag on productivity. (I sort of wonder if this is because the construction sector is skimping on employment of foreign workers because of higher levies they have to pay. And if lack of labour is also a reason for more people dying on worksites.)
But hey, most of us are NOT in construction so wages shouldn’t be affected, right? Except that the services sector isn’t doing too well on the productivity front as well – and this is the sector that is facing a foreign labour squeeze in numbers. You wonder where the hotels and malls that will be opening will get their workers…They just have to pay more to get the fussy locals to work then? Higher and higher wages, and higher and higher cost of living. What’s the point of holding more money if it buys you the same amount of stuff as before?
What if employers simply cannot find workers despite offering higher pay? They can do a few things – re-locate, bug the G for more foreign workers or fold.
MOM said in its statement: “The manpower-lean environment will continue to be a feature of the Singapore economy. As the economy restructures, some consolidation and exit of less productive businesses is expected.”
We’ve been hearing so much about wages that I wish we had a handle on how our employers are holding up, like how many had to “exit’’ less productive businesses. It will be good to look at bankruptcy figures to find out how SMEs are faring. Is this rate increasing? It should be, given that economic restructuring does mean that companies would have to “consolidate’’ or “exit’’. If so, retrenchment figures should go up too. But a total of 2,410 workers were laid off in the second quarter of this year, lower than the 3,110 workers who were retrenched in the previous quarter. What does this mean? Are we over the worst?
Experts interviewed by ST don’t seem to think so.
They noted that the authorities tightened foreign worker hiring policies with the aim of forcing firms to work more efficiently. But the reverse has happened in some companies. It quoted Singapore Business Federation’s chief operating officer Victor Tay as saying that a lack of workers has pushed some firms to focus on day-to-day operations instead of planning ahead to raise productivity.
In other words, some companies are too busy trying to keep head above water to think long-term.
ST also quoted Mr Victor Mills, chief executive of the Singapore International Chamber of Commerce, as saying that curbs on employment pass renewals have led to the rejection of “talented, committed and productive’’ foreign employees who could have helped raised productivity levels.
Hmm…they weren’t replaced by locals? Or the locals not as good?
Only 11,000 or so foreigners were hired in the first this year, mainly for construction. And this is half the number the year before. The labour market report, however, didn’t break down the figure into employment or S pass or work permit holders.
I think the people who wanted fewer foreigners here have got their wish. Except that now, we’ve got to persuade Singaporeans to do the jobs that foreigners used to do – for the pay that they did. Or if we want to make even more money, we simply have got to be better (read: productive) than the foreign workers were.
It’s time to make productivity sexy.