Sunday, April 29, 2012

A successful surgery but the patient died—our immigration policy

When challenged on the uncontrolled influx of foreign nationals into our workforce, the then SM Goh Chok Tong counter-argued with the logic of "who is going to build your HDB flats?", habitually ducking our genuine concerns by using the lowest paid foreign workers to represent the entire foreign workforce, which in fact involves a range of skills and price levels. But he specifically picked the lowest paid group and finger pointed at Singaporeans’ shunning of these jobs that resulted in the vacuum of certain job industries.

He conveniently overlooked at the existing group of foreign workers, labelled ambiguously as “foreign talents”. While justifiable to recruit foreign talents with exclusive expertise to supplement our economy in areas which local labour market is lacking and thus the expat remuneration, there is also a huge import of foreigners with “expertise” commonly found in our labour markets. They are being recruited into our service industries or taking up PMET jobs at a cheaper rate. These are not the jobs which locals shun.

The recent release of population paper [here]  is another blame cast on Singaporeans for having low fertility, and therefore strangling our economy with an aged population. Excuses after excuses used to silence people on the issue of influx of foreigners. Singaporeans get blamed for being choosey with work and pay and not procreating sufficiently for the economy.

In short, policy makers are bent on bringing in more immigrants.

But who gets the actual benefits?

We have been hammered until concussed of the notion that foreign workers/talents benefit us. So let us start by discussing those unskilled and low-pay workers who GCT mentioned.  However, we should ask: who benefits most from these lowly/obscenely-paid workers? Or rephrasing the same question in another way: who suffers most in the absence of these workers?

On our foreign construction workers, GCT was right in saying that they build hostels, HDB flats and private properties for us. But he did not mention that these workers received pittance, some as little as $450 or $600 [here]here ] for the physically demanding and high risks nature of the job that they take up. It will not be unreasonable for Singaporeans to “shun” such pay-rate that could not cover the basic living needs, and forget about raising a family with that amount by today’s cost of living. However, such obscenely low pay helps to keep the building cost very, very low.

This cost-saving amount, when truly reflected in the selling price of our HDB flats and private properties, does benefit locals directly.

Nevertheless, as the spiralling price of our HDB flats (Fig. 1) demonstrates, very little of that amount exploited from foreign workers is passed on to the buyers. The price of HDB flats defied the true forces of a free market and stubbornly refused to come down even during times of over-supply.      

Average Price (New flats)
5 room
$30 000
5 room
$110 000
5 room
$230 000
5 room
$290 000
In 2010
5 room
$448 700
Fig. 1 (Source: Asia-Pacific Housing Journal, Pg 70 - 71)

In the last 4 decades, the average price for a 5 room flat jumped almost 14 times. Between 1990s and 2010, the price doubled--a shocking difference of hundreds of thousands of dollars in absolute amount. Are the wages of construction workers been increased proportionately to the rising price of our HDB flats in the last few decades?

In reality, like any low paid jobs across Singapore, wages for construction workers have been stagnant or have fallen in real terms.

Of course, manpower is only one of the construction costs. Building materials are needed too. Again, are material costs growing at the same rate as the housing price? I remain unconvinced by the extent of rising building costs when the increasing number of small developers joining the fray of developing private properties in recent years resembles a mad gold rush. It goes to show that the yields from property markets are very substantial despite rising building costs.

HDB itself is already gaining in two means, first through sale of land lease; then the stamp duty for the flats. Both are increasing in absolute amount when housing price rises. And both are borne by local buyers.  

Low pay foreign workers and Singaporeans who absorbed the purchase price of new HDB flats are merely the two-part mechanism in generating profits for HDB, private developers and property owners. These workers do not benefit the general public.

Decades of wild public housing prices demonstrate a seemingly lack of will in our policy makers in curbing housing prices. Afterall, our policy makers are supposedly the crème of the batch and they could easily turn things round. But they did not. Unless they have their interests at stake if housing prices are low. Singapore is now ranked the 4th hottest real estate [Here] globally. Tokyo and London could not even make it to the top 10. Implying the lucrative gains for those who could have a share in our local property market will stand to gain. Those whose “livelihoods” are linked directly or indirectly to the property market. Not forgetting the property owners. And the only way to prolong such gains in the property market is to create excessive demand, for instance, inflating the population.

With or without foreign workers, Singaporeans will have to pay an increasing price for HDB flats in the future anyway. Prices simply will not come down.

Think again, who are the ultimate winners at the expense of this group of foreign workers? And who will stand to lose more (millions) without them? As we know, no amount of money will suffice for profit-driven organizations and the greedy rich. A million dollar profit less could bring drastic change to some people’s lifestyle.

Ambiguous group of talents

Moving on from low pay foreign workers to the ambiguous group of “foreign talents”. This is the group which is infiltrating into industries which are not shunned by locals, posing direct competition to our workers with their cheaper price.

Policy makers have turned the floodgate from low pay workers to this group of “talents”, with the hidden agenda of trimming operation costs while boosting net profits for businesses. Local wages will be shredded by these foreign “talents” eventually. It will not be long before these jobs, previously held by local workers, will also be “shunned” by choosey Singaporeans and we will be made the scapegoat again for the justification to invite another wave of “foreign talents”.

These “talents” detrimental to local workers, however, are beneficial to small-medium enterprises (SMEs) and multi-national companies (MNCs).

MNCs’ addiction on foreign labour

When these foreign “talents” begin seeping into the MNCs arena, the purpose of MNCs’ presence comes into question. MNCs are wooed to Singapore with the intention of creating job opportunities and skills transfers to local labour.

Between 1994 and 2010, Singapore offered a total slash of 10% corporate tax rate (Fig. 2). In 1994, a GST of 3% was introduced when corporate tax rate was reduced by the same percentage. Through the years, while corporate tax rate dives, our GST rate hikes. Loss of revenue from corporate tax needs to be compensated. And the compensation comes from the people.

MNCs tap on our political stability and strategic position to the region, and are enjoying growing tax relief since the 90s. In other words, people are subsidizing the presence of MNCs in Singapore.  

Corporate tax rate
                       Fig. 2 (Source:

To rub salt into the wounds, when MNCs begins its addiction on cheaper foreign “talents” who are imported in abundance by our policy makers, and start shunning local workers, skills transfers come to a halt. The sole function of MNCs is only to boost the economy, ie. the GDP figures. For that purpose only. Does that benefit local workers?

And our policy makers allow that to take place. By feeding MNCs and SMEs with cheap foreign labour instead of reducing the rental charge to help trimming operation costs. Rental charge forms a substantial portion of the operation costs. Government could choose to earn less in its coffers in exchange of protecting the wages of our citizens to meeting rising living costs. This is just not the case. Policy makers choose instead, the mechanism to depress our local wages to support businesses.

Cheapening local labour price remains the only brilliant solution available, in the name of growing our economy, preventing an aged population, improving our global competitiveness.

It points to one fact. The interests/benefits of our citizens are not at the core of immigration policy. Welfare of the people is mindlessly battered for the attainment of GDP and profits confined to a specific group of people.

An uncompassionate surgeon

Growing our economy but not growing our people.

Likened to a surgery whereby the patient died in the process. Surgery is deemed successful. Surgeon was applauded and rewarded handsomely for his work done. The death of his patient is no bother to the surgeon at all. The surgery is all that the surgeon cares.

The broken record of how foreign workers/talents will benefit us is played incessantly.

But we are left to see the benefits of foreign workers/talents restrict to only a specific group of people. The only group of Singaporeans who will hardly stand to gain is the average Joe with no access to exclusive transport and facilities, and to endure sharing infrastructure, housing, education, medical and public facilities with more foreign nationals at a higher cost. As proven, higher ridership of MRT trains did not bring about cheaper fares but higher fares instead.

The majority of the locals are made to pay a higher price for the large influx of people where the bulk of the benefits go into someone else’s pockets.