Good questions deserve good answers

Year: 2020

Question 1

I was asked by a bright law student, Ms Su Jia Moh (she has permitted me to name her), the following: “Do you think a solidarity payout (even if it is less than $600) for migrant workers is viable/ a good idea?”

My answer to her may disappoint and surprise many, but hear me out.

 

Not only is the Solidarity Payout not a good idea where it concerns foreign workers, it is not even a good idea for Singaporeans.  It is a political gesture in an election year and primarily serves only that purpose.

As a former fiscal planner, I can tell you that it is not needs-geared, it is not targeted nor means-tested, and it is very expensive on the fiscal purse. It has only a limited secondary policy objective of a short-term boost through the consumption multiplier. Even then, this would not have full effect as many anxious Singaporeans are likely to save rather than spend.

As for foreign workers — first, it is an impractical matter financially to include them as it would cost a further billion from the reserves (take the number of foreign workers and multiply by $600).

Second, on a proportionate basis to their incomes, it would be a bonanza for them.

Third, they would likely repatriate the money, not spend it here; there would be no consumption multiplier but rather capital leakage of scarce monies, being drawn from past reserves.

Fourth, as a matter of principle, on the basis on taxpayers relative to tax benefits, they have no legitimate claim to tax monies.

Fifth, as mentioned, the primary objective is political, and the foreign workers are not part of the electorate. This is not to say that they should not receive their pay despite the work closure or not have their health care covered. The government, represented by no less than Prime Minister Lee Hsien Loong, has committed to ensuring that their wages and health will be protected by the State. Potentially, the government may have to backstop their wages if their employers declare bankruptcy.

 

Question 2

Ms Su then asked, “What could we do for migrant workers, though? Many of them have paid significant agent fees to get jobs here. While quarantined, they are receiving their wages — but this is their base salary and from what I’ve heard they earn quite a bit from OT (overtime), so it’s still a loss from their already meagre earnings. It must be a very stressful time?”

I agree with her sentiment and concerns and applaud her taking an interest in this issue.

 

First, there is a distinction to be made between the responsibility of the State and the voluntary contributions of the community.

Second, there are retrospective contracts which even the government cannot override, but it can introduce legislation which reshapes the wage market for foreign workers in the future. But that does not address the present concerns unless the situation becomes very protracted and there is time for legislative intervention that can provide more equity in the wage market and conditions of foreign workers. The government has shown it can move fast — 3 Budgets in 7 weeks — so there is no reason to doubt that if there was sufficient public pressure, they would respond and do so rapidly.

I refer to my paper, “Defeating Covid-19 in Singapore: A Time to Change and A Time to Become”. The paper calls to move beyond only government and government-centric solutions to the myriad challenges thrown up directly and indirectly by Covid-19; instead, embrace a Whole of Nation approach which incorporates civic and industry participation in solution and implementation, in an integrated fashion, with the government.

 

Question 3

Ms Su further asked, “What sort of legislation would you say is acceptable in terms of reshaping the wage market for foreign workers in the future?”

This is another excellent question. In my personal view, this is a question for the Minister of Manpower. But if asked for my personal view, these are as follows.

 

First, their wage contracts need to be revised, by law, to conform to the effective minimum wage for Singaporeans. There is no official minimum wage, but there is a proxy, which is the level of Public Assistance (PA) that the State provides to the most financially needy of Singaporeans. That is currently $1,000 per two-person household. Using the PA as a proxy, but doing away with the two-person requirement would raise wages of foreign workers substantially in relative terms.  This is primarily a matter of principle and not to suggest that the PA level is a necessity for their living needs in Singapore.

Second, their accommodation, health and working conditions need to have their minimum standards lifted, required by law and backed up by effective enforcement.

Third, their rights as workers must be safeguarded by the law and the State should do so on their behalf. This should not be left to pro-bono lawyers.

Fourth, the recruitment process, involving exorbitant fees, is a practice that should be outlawed and replaced by either a central hiring agent process managed by the State or, if continued, to be legislatively constrained in terms of the size of fees relative to the income of wages.

 

Now, all of the above sounds very attractive and progressive. The impact on the costs of construction most immediately will be profound in cost terms and the ripple effects will flow through the entire economy. So, the question is, are Singaporeans prepared to pay the price for their consciences?

 

My objective, in consultation with Ms Su, is to open up her questions to my LinkedIn community to crowdsource good, and perhaps better, answers to her excellent questions. Better still, to prompt further questions and best of all, to catalyse action.

 

I congratulate Ms Su on her interests, initiative and her humanity. She is an example of future Singapore taking form in the shape of the young people like her and that is cause for hope and optimism for our future.

 

 

Devadas Krishnadas served two and a half years in the Singapore Infantry and ten years as a Senior Police Officer, including as a Commanding Officer and a Head of Operations. He served for three years as Honourary Aide-de-Camp to the President of Singapore (the then President S.R. Nathan). He also served five years in public policy in multiple Ministries including the Ministry of Finance. In 2012, he founded and has since led, a boutique consultancy, the FutureMoves Group( www.futuremoves.com) focused on public policy and corporate strategy.