foreign construction workers in singapore
TRANSCRIPT
SAP 2.57/WP.106
SECTORAL ACTIVITIES PROGRAMME
Working Paper
Foreign construction workers in Singapore
George Ofori School of Building & Estate Management
The National University of Singapore
Working papers are preliminary documents intended tostimulate discussion and critical comments
International Labour Office Geneva
2
Contents Page 1. Introduction ...................................................................................................................1 Terms of reference ..........................................................................................................1 The report ........................................................................................................................1 “Definitions” ...................................................................................................................1 2. Executive summary.......................................................................................................2 3. Overview of the construction industry in Singapore .................................................3 Economic structure .........................................................................................................3 Industry's features ...........................................................................................................4 Continuous development.................................................................................................4 Issues and challenges ......................................................................................................5 4. Structure of the construction workforce.....................................................................7 Nature of data..................................................................................................................7 National labour data ........................................................................................................7 Census data ............................................................................................................7 Construction workforce composition..............................................................................9 Sources of foreign workers ...........................................................................................11 5. Terms of employment .........................................................................................................13 General welfare.............................................................................................................13 Wages of construction workers.....................................................................................13 Regional comparison ...........................................................................................16 Working hours ..............................................................................................................16 Accommodation............................................................................................................17 6. Foreign worker policies ......................................................................................................19 Policy intention .............................................................................................................19 History...........................................................................................................................19 Initial developments ............................................................................................20 Attitudes and early efforts to reduce the number of foreign workers..................20 Target 1991..........................................................................................................21 Current foreign construction worker policy ........................................................21 Work permits.................................................................................................................22 Statutes and regulations .......................................................................................22 Who can apply .....................................................................................................24 Duration ...............................................................................................................24 Application ..........................................................................................................24 Information which should accompany application..............................................25
Processing and approval ......................................................................................25 Conditions attached to a work permit..................................................................25 Numbers...............................................................................................................26 Contraventions.....................................................................................................26 Dependency level ..........................................................................................................28 Foreign worker levy ......................................................................................................28 Central Provident Fund .......................................................................................28 Levy .....................................................................................................................29 7. Effects of employment of foreign workers on local industry ..................................32 General issues ...............................................................................................................32 Reaction of industry to policies ....................................................................................32 Response to foreign worker levy increases .........................................................33 Managerial problems.....................................................................................................34 Productivity .........................................................................................................34 Communication and attitudes ..............................................................................34 Labour subcontractors .........................................................................................35 8. Reducing reliance on foreign construction workers ................................................37 Training.........................................................................................................................37 Certification ..................................................................................................................38 Improving working environment ..................................................................................39 Attracting construction workers: CIDB initiatives .......................................................40 Upgrading of construction operations...........................................................................41 9. The future ....................................................................................................................42 Level of requirements ...................................................................................................42 Proposals .......................................................................................................................42 Regional developments .................................................................................................43 Future human-resource challenges: Concluding remarks .............................................43 References ................................................................................................................................44
1. Introduction Terms of reference The terms of reference for the preparation of this report were:
To obtain existing primary and secondary source data on migrant labour in the construction industry on questions such as:
− trends of annual inflow of migrant workers (by sector, by country of origin); − structure of migrant construction workers; − recruitment and labour contracts; − conditions of employment and welfare; and − effects of migration on the national construction industry. The report This report considers foreign construction workers in Singapore. It was prepared from published material available in Singapore. It concentrates on site operatives, both skilled and unskilled. To put the issue into the proper context, the report also discusses the recruitment of foreign workers in other sectors of the economy.
The report first provides an overview of the construction industry in Singapore. It then discusses the structure of the construction workforce, highlighting the place of foreign workers. The countries from which Singapore obtains such workers are indicated, and the wages of Singaporean and foreign construction workers are compared. The nation's policies on foreign construction workers are next discussed, highlighting their historical development and considering some of the main instruments including the work permit, the dependency level and the foreign worker levy.
The effects of the use of foreign workers on the local construction industry, are discussed, and efforts being made to reduce Singapore's reliance on foreign construction workers are outlined. These include training and certification, creation of a good working environment and upgrading of construction operations. Finally, the report considers briefly, likely future issues relating to the use of foreign construction workers in Singapore. “Definitions” All financial data in this report are in Singapore dollars (SGD), denoted as $. At the time of writing this report in July 1994, US$1.00 = SGD1.52. Annual data in the report relate to calendar years, except where reference is made to the fiscal year (1 April to 31 March) as in the case of figures published by the Construction Industry Development Board (CIDB).
2
2. Executive summary Owing to its small human resource base, Singapore’s economic progress has been based on systematically upgrading the level of technology in all sectors, and adopting high value-added activities, while phasing out labour-intensive ones. Whereas the employment of foreign workers is permitted in some sectors, continued reliance on such workers is not considered desirable, as it is thought that social and economic problems may result. The use of foreign workers is viewed as a necessary temporary measure to avoid shortages which could hinder the nation’s economic development. The long-term intention is to reduce the reliance on such workers. Meanwhile, effort is made to derive optimum benefit from those employed, for example, by enhancing their quality through training.
The inflow of foreign workers into Singapore is controlled, and companies are urged and assisted with technical and managerial advice and financial incentives to adopt approaches which would enable them to substitute for low-skilled labour. The Government is determined to build up a highly skilled local workforce. Employers have been continuously urged to upgrade and automate their operations “because, in the long run, Singapore will not be able to compete with other countries which have cheap and abundant labour” (Ministry of Labour, 1983: p. 1).
The construction industry of Singapore has played a key role in the country’s socio-economic development, creating the physical facilities and infrastructure which have made possible the nation’s remarkable progress. Following effort to improve upon it, the industry is relatively advanced. However, it continues to use labour-intensive techniques. Since the 1970s, the construction industry has required increasing numbers of foreign workers as Singaporeans have shunned it, preferring the more comfortable, often safer, better-paying and more prestigious opportunities in other sectors. Over 70 per cent of the construction workforce is foreign.
Singapore’s policies on foreign workers are embodied in legislation, regulations and an administrative system which ensures effective monitoring and control. The statutory provisions and administrative framework are continually fine-tuned to reflect changed circumstances. The employer of a foreign worker is directly responsible for the worker in all respects, including the provision of accommodation and eventual repatriation. The long-term policy regarding foreign construction workers is to reduce the number of unskilled workers. However, those with skills will be allowed to stay longer. Employers are being given the incentive and encouragement to adopt working procedures and practices which will help achieve these aims.
The number of Singaporeans taking up careers in construction is unlikely to increase. Conditions in the countries from which Singapore obtains its foreign construction workers are changing, as economic development is proceeding apace in most of them. These developments need to be monitored and their implications for the availability of workers for the construction industry in Singapore addressed.
3
3. Overview of the construction industry in Singapore This section gives a brief overview of the construction industry of Singapore, to provide a background to the consideration of foreign construction workers in the rest of the report. It discusses the role of the construction industry in the economy of Singapore, the structure of the industry, attempts to improve upon it, and its challenges. Economic structure The construction industry in Singapore has an annual gross output of about $10 billion, with a capacity of about $12 billion. It employed over 166,000 workers in fiscal 1993. The industry contributes around 7 per cent of gross domestic product (GDP) and accounts for about 6.5 per cent of total employment (Research and Statistics Department, 1993). Foreign workers provided 75.3 per cent of the total number of workdays in construction in 1993 (CIDB, 1994c).
The largest construction contracting enterprise in Singapore has an annual turnover of about $300 million. The average turnover of the top 20 contractors is about $150 million (CIDB, 1994a). Since the mid-1980s, construction enterprises from Singapore have won a sizeable volume of projects abroad, especially in countries within the region. A total of $1.6 billion was won in 1992. Table 1 provides a set of indicators of the performance of the construction industry in Singapore between fiscal 1990 and 1994. Table 1. Performance of the Singapore construction industry, fiscal year 1990-92
1990
1991
1992
1993
1994
Construction GDP growth rate (%)
7.2
21.0
18.0
8.0
15.0
Total progress payment ($ billion)
4.9
6.8
8.9
8.9
11.2
Value of contracts awarded ($ billion)
8.0
7.9
12.8
10.6
11.7
Construction workforce ('000s)
104
117
138
166
n.a.
Building Tender Price, Index (1990 = 100)
100
107
105
100
100
Material Cost Index, Index (1985 = 100)
128
125
115
113
114
Labour Cost Index, Index (1985 = 100)
110
119
134
138
139
Source: CIDB (1994a); Ministry of Trade and Industry (1995a).
The value of progress payments represents the sum of the value of all payment
certificates issued to construction enterprises for work completed during the period. The construction industry has been experiencing a boom since the late 1980s, as shown by the increase in construction value added of 21, 18 and 15 per cent in fiscal 1991, 1992 and 1994 respectively. The level of construction demand in 1992 ($12.8 billion) was an all-time high. This period of expansion followed a four-year recession in construction in 1985-88.
4
The prices of materials have been falling over the past few years, after gaining much ground in 1988 to 1990 (Ofori, 1993). On the other hand, labour costs have been increasing over the past few years. The downward trend in tender prices since 1991 is surprising, given the high level of activity. Industry's features Singapore’s construction industry uses some of the most advanced construction technologies available. While foreign construction enterprises have been prominent in the country during the past two decades, their dominance of large and sophisticated building projects has been eroded. However, they retain control of a large share of the market for complex civil engineering works.
The procedures and practices adopted by the construction industry in Singapore are based on those prevailing in the United Kingdom, for reasons of history. The architect leads both the design and construction teams, and the quantity surveyor plays a key role in the construction process. Projects are awarded to a main contractor, who may engage subcontractors for aspects of the work some subcontractors may be “nominated” by the client. On most projects the main contractor’s involvement in design is minimal.
However, the construction industry of Singapore absorbs progressive concepts and technologies from all over the world, especially Japan, the United States and the more advanced European countries in this regard, such as Germany and France. A manifestation of this is the widening use of novel procurement practices such as project management and design-and-build. A series of studies have shown that the industry’s overall level of management expertise and productivity are relatively low (CIDB, 1989; Task Force on Construction Productivity, 1992). Construction companies in Singapore also invest little in research and development (R & D), and their capability to offer financial packages to back up their tenders is limited.
A key distinguishing feature of the construction industry in Singapore is its reliance on labour subcontractors. Even the larger companies do not normally employ full-time site labour, skilled or unskilled. This human resource management practice has been linked to the industry’s labour-shortage problems, as well as its low productivity and quality of workmanship (The Mirror, 1984). Continuous development Effort has been made by the Government of Singapore to upgrade the country’s construction industry since it launched an industrialization and mass-housing programmes in 1960. This effort was further intensified upon the formation of an agency charged with managing the development of the construction industry.
The Construction Industry Development Board (CIDB) was established in 1984 to spearhead, promote, monitor and guide the continuous improvement of the industry. Thus, Singapore is one of very few countries with a specially dedicated agency for construction industry development. The CIDB has recorded achievements in all aspects of construction (as shown in table 1). Writers on construction industry development frequently cite it as a model for developing countries (Miles and Neale, 1992; Ofori, 1993).
5
The mission of the CIDB is: To develop a high quality construction industry which gives value-for-money products and services, and serves Singapore's economic needs (CIDB, 1994b: p. 64).
The Board’s plan for the future is to “build on what it has achieved ... to help the construction sector to attain quality and capability standards found in developed countries” (CIDB, 1994b: p. 62). It will focus on three main areas: skills development, enhancement of quality and productivity standards, and strengthening capabilities of construction firms. The CIDB’s ten-year plan for human resource development is aimed at:
∗ training and certifying a core of skilled foreign workers for structural and basic finishing trades;
∗ increasing retention of skilled foreign workers; ∗ training and certifying Singaporeans for higher value added interior and building
service trades; ∗ expanding the range of trades to include dry trades; ∗ strengthening training of supervisory, technical and managerial personnel; and ∗ increasing opportunities for career progression of construction personnel (CIDB,
1994b: p. 62). In the area of quality and productivity, the CIDB will offer firms incentives to attain
high quality of work, and to improve on their environmental (safety and housekeeping) standards. Design disciplines will be integrated, and information technology (IT) and other engineering tools used to raise efficiency. Buildable designs and prefabrication will be promoted to improve productivity.
In the third area in which improvements will be sought, construction enterprises will be encouraged to attain international competitiveness. The gradation system used to categorize contractors when registering them for public-sector projects will be strengthened. A group of top-class contractors will be identified. Conditions will be improved to encourage more local participation in large projects and develop design-and-build capability. Subcontractors will also be developed. Export of services by local construction enterprises will be assisted through the provision to contractors of information and networking support. Issues and challenges Current topical issues relevant to the Singapore construction industry and challenges it will face in the near future – most of which the CIDB is addressing, as discussed above – include: (i) quality of workmanship – most sizeable construction organizations (including large
clients) aim to attain ISO 9000 certification; for large contractors wishing to tender for major public-sector projects, it will soon be mandatory;
(ii) use of IT – construction organizations are using, and are being encouraged and assisted to use, IT to rationalize and expedite their operations and improve their efficiency;
6
(iii) buildability – designers are being encouraged to pay attention to buildability in their designs, and thereby allow for a greater proportion of standardization and prefabrication to improve construction productivity;
(iv) advanced technology – owing to the country’s physical and resource constraints, construction organizations will have to use modern technologies to obtain a more rational use of inputs, including land, and enhance their competitiveness at home and abroad;
(v) repair, maintenance and refurbishment – as the economy matures, the industry will have to build up its capability to upkeep or upgrade the large volume of existing buildings and items of infrastructure; and
(vi) regionalization – construction enterprises will have to win and undertake contracts overseas, to protect themselves from the cyclicality of construction activity, especially given the small geographical size of the country.
Summary Construction is an important sector of the Singapore economy which has an agency administering its continuous development. It is relatively advanced and forward-looking. It is aware of its possible future challenges and has started, or is preparing, to address them. However, the industry's productivity is relatively low. Lack of human resources has been one of its key problems. It is reliant on foreign workers.
7
4. Structure of the construction workforce This section is devoted to a consideration of the structure of the construction workforce in Singapore, analysing the countries of origin, as well as trade of the foreign workers. Nature of data Attempts to analyse data on the construction workforce in Singapore face several problems. The Labour Force Survey, from which the Department of Statistics derives its published information on the nation's workforce, does not include “construction workers living on worksites” (Department of Statistics, 1993: p. 7). Thus, the data do not cover much of the foreign construction workforce in Singapore who (as discussed in section 5) live on worksites. Whereas the CIDB publishes very useful information on both local and foreign construction workers, its recent data on the composition of the workforce by nationality are in percentages only (rather than absolute numbers). National labour data Table 2, which presents recent information on the numbers of workers in the economy of Singapore as a whole, and in construction and manufacturing, shows that, as in most countries, the construction workforce is predominantly male, whereas the proportion of females in the manufacturing sector is much higher. The workforce in the “Others” sector (agriculture and fishing, mining and quarrying) is also mainly male. Census data Until more accurate data became available in the late 1980s, estimates of the proportion of Singapore's construction workforce which was foreign had been put by various people at between 50 and 80 per cent (Ofori, 1993). Some conflicting estimates have been published recently. For example, The Straits Times (1992b) reported that 120,000 foreign workers were employed in the construction industry in 1991, whereas in another article in the same issue of the newspaper, the authors noted that there were 100,000 foreign construction workers in February 1992 (De Silva and Toh, 1992), when indeed, the level of construction activity was higher than it had been in 1991. The CIDB Task Force on Productivity (1992) estimated that there were over 80,000 foreign construction workers in Singapore, constituting about 25 per cent of all foreign workers in the country. Data from the CIDB indicate that the demand for construction labour increased by 21 per cent in 1993, making the total 166,000 (as noted in Section 1).
8
Table 2. Employed persons aged 15 years and over by industry and sex, 1991-94 Total Manufacturing Construction* Others
1991
Total 1 524 315 429 612 98 981 12 077
Male 917 794
240 246
90 355
10 176
Female
606 521
189 366
8 626
1 901
1992
Total
1 576 151
434 121
103 222
13 792
Male
944 336
243 595
92 256
12 030
Female
631 815
190 526
10 966
1 761
1993
Total
1 592 039
429 479
102 097
12 538
Male
952 314
247 799
91 102
10 500
Female
639 725
181 680
10 994
2 039
1994
Total
1 649 296
422 539
108 824
14 118
Male
987 137
247 766
96 490
11 684
Female
662 159
174 773
12 333
2 434
* Figures for “Construction” do not include workers living on worksites. Source: Research and Statistics Department (1993). Table 3 presents Saw’s (1985) analysis of data from Singapore’s 1980 census. It compares employment of both citizens and non-Singaporeans in construction with that in manufacturing, and considers the proportion of each in the total. Only 5.5 per cent of workers who were Singapore citizens had taken up employment in construction. Most foreign men and women worked in manufacturing, but around 28.2 per cent of foreign men worked in construction.
9
Table 3. Working persons aged 10 years and over by industry, residential status and sex, 1980
Total
Manufacturing
%
Construction
%
Permanent residents 1. Singapore citizens
Persons 957 607 273 880 28.6 52 975 5.5 Males 6 22 985
145 691
23.4
48 378
7.8
Females 3 34 622
128 189
38.3
4 597
1.4 2 . Non-citizens
Persons 40 208 13 683 34.0 3 391 8.5 Males
28 876
7 835
27.2
3 207
11.1
Females
11 332
5 848
51.6
184
1.6 Non-permanent residents Persons
79 275
36 558
46.1
15 980
20.1
Males
54 656
20 622
37.7
15 406
28.2 Females
24 619
15 936
64.7
574
2.4
Source: Saw (1985).
Construction workforce composition
Table 4 compares the breakdown of the construction workforce by residential status with construction output. It shows that the level of recruitment of foreign workers has fluctuated over time, as the workload of the industry has changed. During the recession in the late-1980s, foreign workers accounted for most of the job losses in construction, and the proportion of foreigners in the construction workforce fell below 50 per cent. Table 4. Construction workforce by nationality, and volume of work Year
Construction workforce
Volume of work
Foreign (a)
Local (b)
Total (c)
% (a:c)
GDP in construction (current prices $106)
1981
81 700
47 300
129 000 63
2 164
1982
79 800
56 100
135 900 59
3 146
1983
105 500
63 700
169 200 62
4 203
1984
95 100
68 500
163 700 58
4 974
1985
67 700
59 700
127 400 53
4 168
1986
50 100
52 900
103 100 49
3 149
1987
41 700
46 200
87 900 47
2 885
1988
38 100
45 200
83 300 46
2 812
Source: CIDB (1989); Research and Statistics Department (1993).
10
Table 5 presents data on the structure of the construction workforce in Singapore by country of origin. It indicates the extent to which the industry currently relies on foreign workers, and also shows the dynamism of the composition of the construction workforce. Table 5. Nationality of construction workers (%), 1990, 1992, 1993
1990
1992
1993
Local
32.4
19.4
24.7
Malaysian
36.7
40.2
32.1
Thai
24.4
29.6
32.2
Bangladeshi
2.8
6.6
5.2
Other NTS*
3.7
4.2
5.8
* NTS: Non-traditional sources. Source: CIDB (1991, 1993, 1994c).
By 1990, only two years into a recovery of construction activity, the proportion of
foreign workers had already risen to over 67 per cent from 46 per cent two years earlier. This proportion exceeded 80 per cent in 1992, and declined to just over 75 per cent in 1993. In 1992, Malaysians made up over 40 per cent of construction workers in Singapore. The total number of Malaysian workers was about twice that of Singaporeans. Most of the Malaysians were skilled workers. They constituted about half of the workers in the structural, finishing and building services trades. Thais formed the second largest group of foreign construction workers in Singapore, being one-third of structural tradespersons and more than half of general workers. Most of the construction workers from India and Bangladesh were unskilled. Table 6 gives a detailed breakdown of the construction workforce in 1993, indicating trade and country of origin. The structural composition is discussed below. Table 6 shows that Singaporeans are in significant numbers only in areas where high levels of skill are required. Singaporeans constitute nearly half of building services workers and over half of operators of plant and equipment, but only about a third of workers in finishing trades, and about one-fifth of structural trades. There are virtually no Singaporean general construction workers (unskilled workers). By 1993, Thais had (marginally) overtaken Malaysians as the largest single component of Singapore’s construction workforce (by nationality). Malaysians still made up the bulk of the skilled workers. Thais formed about 35 per cent of workers in the structural trades, and about 78 per cent of unskilled workers. Bangladeshis and Indians together constituted 11 per cent of the construction workforce, the bulk of them being engaged as general workers.
11
Table 6. Construction workers by trade and nationality (August 1993) Trade
Local
Malaysian
Thai
Bangladeshi
Indian % of
total Structural
Concretor
1.1
1.2
2.1
0.2
0.3
4.9
Carpenter
3.1
6.1
4.9
0.8
0.3
15.1 Metal-form erector
0.6
1.5
0.7
0.1
0.1
3.0
Scaffolder
0.6
0.5
1.1
0.0
0.0
2.2 Steelbender
2.4
4.5
3.5
0.7
1.0
12.1
Welder
0.7
0.8
0.4
0.0
0.0
1.9 Subtotal
8.3
14.6
12.7
1.9
1.7
39.2
Finishing
Bricklayer
1.5
3.0
0.7
0.1
0.2
5.3
Painter
1.4
1.1
0.2
0.0
0.0
2.6 Pavior
0.5
0.4
0.0
0.0
0.0
0.9
Plasterer
2.1
3.9
0.9
0.0
0.2
7.2 Tiler
1.8
2.6
0.0
0.1
0.1
4.6
Subtotal
7.3
11.0
1.8
0.1
0.5
20.7
Building services
Electrician
2.6
1.6
0.3
0.2
0.2
4.9
M & E worker
2.0
1.4
0.2
0.2
0.1
3.8 Plumber
1.6
1.2
0.6
0.4
0.4
4.2
Subtotal
6.1
4.1
1.2
0.8
0.7
12.9
Plant and equipment operation
Plant operator
1.2
0.6
0.3
0.1
0.0
2.0
Crane operator
1.1
0.9
0.0
0.0
0.0
2.0 Subtotal
2.2
1.5
0.3
0.1
0.0
4.0
General worker
0.8
1.0
16.3
2.3
2.9
23.2
Total
24.7
32.1
32.2
5.2
5.8
100.0
Source: CIDB (1994c).
Sources of foreign workers
The countries from which Singapore obtains its foreign workforce are categorized into “traditional” and “non-traditional” sources. Traditional sources of foreign workers are those countries whose culture and work ethos are compatible with those of Singapore. These included Hong Kong, Japan, Macau, Malaysia and the Republic of Korea. As discussed in
12
section 6, initially, all foreign workers came first from Malaysia, and then from the traditional sources. However, as these nations became successful economically, the supply of workers fell. Moreover, Singapore’s requirements for foreign workers soon surpassed what these countries could provide. Hence, other sources were required. Non-traditional sources of foreign workers for Singapore include Bangladesh, India, Indonesia, the Philippines, Sri Lanka and Thailand. Workers from these countries were recruited in the latter stages of Singapore’s development. The classification of sources of Singapore’s foreign workers has changed. The distinction is now mainly between Malaysian workers and all others. In defining “non-traditional sources”, the CIDB (1994c) stated:
Singapore traditionally obtains its supplementary foreign manpower from Malaysia. In ... recent years, Singapore is getting foreign workers from places such as Thailand, the Indian subcontinent, Hong Kong and Macau. These countries and economies are known as non-traditional sources (p. 42).
The following classification of foreign construction workers is currently adopted (as noted from the “Application Form For Work Permit”): (a) Malaysian construction workers on three-year work permits. (b) Malaysian construction workers on two-year individual work permits. (c) North Asian (Hong Kong, the Republic of Korea, Macau and Taiwan, China)
construction workers on work permits. (d) People's Republic of China construction workers on work permits. (e) Malaysian construction workers on block work permits. (f) Non-traditional source (Bangladesh, India, the Philippines, Thailand, etc.) workers on
work permits. Summary Singapore’s construction industry relies heavily on foreign workers, with Malaysians and Thais forming the bulk of them. This is due to the country’s small human-resource base and the lack of popularity of careers in construction in Singapore (as discussed in section 8). The proportion of foreign workers in the total fluctuates with levels of construction activity, and (as discussed below) is subject to government control.
13
5. Terms of employment In this section, the terms under which foreign construction workers are employed in Singapore are discussed under the headings general welfare, wages, working hours and living accommodation. General welfare The industrial environment in Singapore is very peaceful. Various issues of the annual report of the Ministry of Labour state that Singapore enjoyed a strike-free year (the previous year). The array of employment-related statutes and regulations aiming to protect the worker and ensure smooth industrial relations, and the effectiveness of the administrative framework for their enforcement is partly responsible for this.
Foreign workers enjoy protection under Singapore’s stringent labour legislation and regulations. They are given a mandatory medical check-up by their employers, and also enjoy company medical benefits and insurance protection (The Straits Times, 1990b). The Ministry of Labour observed:
Foreign construction workers here, regardless of their nationality, are given adequate protection under local laws with regard to the terms and conditions of employment, safety and health at the workplace, and compensation for work-related injuries (The Straits Times, 1990b: p. 16).
Foreign workers who are not members of a union may refer specific issues such as non-payment of wages to the Labour Standards Branch of the Ministry of Labour “which ensures that all workers receive the statutory entitlement laid down in the labour legislation” (Toh, 1993: p. 11). Foreign workers also have an opportunity to learn a trade on a part-time basis during their stay in Singapore. Those with skills may attain formal certification of their abilities. Foreign workers with special skills may also qualify for permanent resident status, and, ultimately, Singapore citizenship. Wages of construction workers Much data on workers' remuneration is published in Singapore. However, comparison of earnings among sectors and categories of workers is not easy. The Department of Statistics (1993) adopts the Singapore Standard Industrial Classification of Economic Activities. It includes “bonuses” in its data on “earnings”. But the CIDB publishes salaries of professionals and supervisors, and site operatives separately. The CIDB (1994c) defines the “basic wage” as:
... the basic pay received by construction tradesmen before ... deduction of the employee’s CPF [Central Provident Fund] contribution and personal income tax. It excludes overtime payments, commissions, levy, annual wage supplement, variable payments/bonuses,
14
employer’s CPF contributions, food/entertainment/transport/ ... allowances, other monetary payments and payments-in-kind (p. 42).
Table 7 shows data on earnings in selected sectors of the economy of Singapore. It indicates that in the period reviewed (1982-94), earnings in construction were consistently below the national average. Moreover, only in three years, 1982 to 1984, at the peak of a construction boom, did monthly remuneration in construction exceed that in manufacturing. Table 7. Average monthly earnings by sector, 1982-94
Total
Manufacturing
Construction
Commerce
1982
859
732
761
725
1 983
947
818
863
799
1 984
1 048
892
908
892
1 985
1 131
964
939
935
1 986
1 140
976
929
945
1 987
1 176
1 009
926
977
1 988
1 273
1 116
1 005
1 049
1 989
1 398
1 243
1 128
1 174
1 990
1 528
1 395
1 275
1 305
1 991
1 669
1 552
1 426
1 419
1 992
1 804
1 686
1 624
1 535
1 993
1 918
1 818
1 713
1 631
1994
2 086
1 995
1 865
1 763 Source: Research and Statistics Department (1993, 1995).
Table 8 presents data on the daily wages of Singaporean and foreign construction workers from various countries in 1990-93. It shows significant earnings differentials among persons in different trades, as well as among workers from various countries. The data show that wages of Malaysian workers differ only slightly from those of Singaporeans. Non-traditional source workers appear cheap compared to Singaporeans or Malaysians. To obtain the cost to the employer of engaging workers from various countries, the employer's additional direct costs for each group of construction workers should be considered, as these differ for the various nationalities. For Singaporean and Malaysian workers (except those on two-year work permits) these include the CPF contribution, whereas for non-traditional source workers, direct costs include the foreign worker levy. Other costs relating to the employment of foreign workers include transport, accommodation and costs of complying with statutory requirements. Some Malaysian workers require no accommodation as they can commute to work daily. These additional direct costs account for the differences in earnings of workers of different nationalities. The small proportion of the total in Singapore made up of workers from the non-traditional sources shows that such workers may not be that cheap. The productivity of workers from the various countries is related to the ease of communication with them, their work ethic and attitudes, and so on.
15
Table 8. Average daily wage of local and foreign workers in August, 1990-93 ($)
1990 1991 1992 1993 Change, '93 over '92 (%)
Bar bender Singaporean Malaysian NTS*
48.98 37.51 17.85
52.11 40.61 19.31
52.68 51.96 19.02
53.57 47.32 19.54
1.7
-8.9 2.7
Bricklayer Singaporean Malaysian NTS
48.14 45.05 18.00
55.86 49.89 18.24
55.32 54.62 18.90
55.30 51.02 19.62
0.0
-6.5 3.8
Carpenter Singaporean Malaysian NTS
47.92 45.26 18.00
53.66 42.19 18.63
53.13 53.31 19.13
56.06 46.54 20.34
5.5
-12.7 6.3
Electrician Singaporean Malaysian NTS
44.53 32.67 16.00
51.06 41.03 17.22
57.25 49.68 18.75
53.32 53.55 17.98
-6.9 7.8
-4.1 Painter Singaporean Malaysian NTS
45.98 45.00
-
52.14 46.17 15.83
54.34 48.20 19.73
52.96 49.86 20.22
-2.5 3.4 0.2
Plant operator Singaporean Malaysian NTS
45.34 46.64 27.33
56.35 48.16 20.86
55.24 47.85 19.17
55.50 52.97 22.91
0.5
10.7 19.5
Plasterer Singaporean Malaysian NTS
43.81 41.13 20.00
57.19 52.63 18.32
59.28 57.45 19.12
57.43 53.97 19.57
-3.1 -6.1 2.3
Plumber Singaporean Malaysian NTS
42.39 43.81 16.82
56.08 44.21 18.02
53.80 49.82 17.98
54.80 49.86 19.32
1.9 0.1 7.5
Scaffolder Singaporean Malaysian NTS
50.00 38.13 19.00
41.57 34.50 19.93
52.11 46.41 18.45
52.09 45.55 18.73
0.0
-1.9 1.5
Steelworker Singaporean Malaysian NTS
50.59 44.00 20.00
54.32 45.22 19.16
57.12 49.49 16.97
53.23 52.61 19.44
-6.8 6.3
14.6 Tiler Singaporean Malaysian NTS
52.78 51.40
-
60.24 54.11
-
56.19 55.83 18.32
58.84 53.56 17.01
4.7
-4.1 -7.2
General worker Singaporean Malaysian N TS
36.40 27.42 17.86
35.51 28.59 16.62
35.34 29.60 18.24
33.78 34.06 16.96
-4.4 15.1 -7.0
* NTS: Non-traditional sources. Source: CIDB (1994c).
16
Regional comparison Singapore could face competition from countries in the region for foreign construction workers, including the nations of origin of these workers. Monitoring developments in these countries is important. The CIDB’s annual survey of the human resource situation in the construction industry compares construction wages in Singapore with those in some of the other countries in the region. The average daily wages of construction workers in the South-East Asia region are indicated in table 9. The wages of workers in Singapore are the second lowest among the countries considered. Construction wages in Singapore are around one and a half times those in Malaysia, explaining perhaps why workers from that country seek opportunities in Singapore. However, wage levels in Singapore are less than half those in Hong Kong in all categories of trades considered. In the case of Taiwan, China, the wage differentials are even wider. Table 9. Average daily construction wages in South-East Asia, September 1993 Tradesperson Average daily wage (SGD)*
Singapore Taiwan, China Hong Kong Malaysia
Bar bender 59 148 161 37
Carpenter 61 146 113 37
Bricklayer 60 134 119 36
Concretor 57 138 119 36
General worker 34 96 79 18
* All currencies converted with exchange rates as at September 1993. Source: CIDB (1994c).
Working hours The CIDB (1994c) considers “the standard working week” to be 44 hours. “Working in excess of 44 hours is considered as working overtime” (CIDB, 1994c: p. 43). Working hours in sectors of the Singapore economy which have a large proportion of operatives are depicted in table 10. During the period 1982-94, construction had the highest number of working hours per week, averaging about 50 hours per week each year. In September 1992, construction had standard working hours of 48.8 per week, compared with 42.4 hours for all workers, 42.7 hours for manufacturing, and 43.8 hours for agriculture, fishing, mining and quarrying. The average weekly overtime hours in construction, at 12.7 hours, were also the highest among all the sectors of the economy in September 1992. By comparison, the average weekly overtime hours for all workers in the overall economy was 9.3 hours; for manufacturing, 9.8 hours; for commerce, 5.9 hours; and for agriculture, fishing, mining and quarrying, 7.9 hours (Research and Statistics Department, 1993).
17
Table 10. Average weekly hours worked by all workers, 1982-94 Total Manufacturing Construction Commerce Others*
1982 45.4 47.6 50.5 44.0 47.6
1983 45.6 48.1 50.5 43.9 47.6
1984 45.6 47.8 52.2 43.5 47.1
1985 44.6 46.5 51.0 43.3 46.6
1986 45.1 47.7 50.0 42.9 46.8
1987 45.5 48.4 49.5 42.8 46.3
1988 45.6 47.4 48.2 41.7 46.4
1989 46.6 48.6 50.0 42.0 47.2
1990 46.5 48.5 49.7 42.3 48.1
1991 46.7 48.7 50.0 42.7 47.5
1992 46.6 48.7 50.5 42.6 46.6
1993 46.9 49.2 50.6 42.8 45.0
1994 47.0 49.3 51.0 42.9 45.0
* Agriculture and fishing, and mining and quarrying. Source: Research and Statistics Department (1993, 1995).
Accommodation An appendix to the standard Application Form For Work Permit indicating the “terms and conditions” of the Foreign Workers’ Scheme states:
The employer sponsoring the foreign workers shall provide adequate dormitories or hostels with proper supervision of the foreign workers especially after working hours. All foreign workers should be provided with proper beds. Adequate sanitary and other facilities should be provided (Appendix to Application Form For Work Permit, p. 1).
Foreign workers are provided with accommodation on or off-site by their employers. For off-site accommodation, employers normally rent premises to house a number of workers – the workers are provided with transport to and from sites. These premises are often within residential areas. They can be overcrowded and noisy, to the annoyance of neighbours (Tan, 1993; Toh, 1993). However, complaints have been rare. Since 1979, under the Dormitory Housing Scheme, the Housing and Development Board rents out housing blocks at market rates on two-year tenancies to employers of foreign workers endorsed by the Economic Development Board, and for construction firms, the CIDB (Chung, 1995: p. 32). Although relations between the foreign workers in these blocks and Singaporean residents in neighbouring blocks in the estates are generally good, there have been some complaints of occasional unruly behaviour such as excessive noise, fights and littering. In March 1994, the
18
Government announced a new scheme to provide land for big companies to construct dormitories for their foreign workers. “The aim is to provide accommodation away from the estates, but close enough for workers to make use of estate amenities such as shops and hawker centres” (Chung, 1995: p. 32). Various studies of foreign workers’ living quarters on-site show that they are generally satisfactory, and have the necessary statutorily required basic amenities such as clean running water and electricity. However, the quality differs, depending on the employer, the site and the workers (Gwee, 1986; Leong, 1989). Leong (1989) found a variety of conditions. On one site, the 500 workers were provided with spacious, air-conditioned accommodation free of charge with tight security. On another, the conditions were unhygienic, and the buildings dilapidated. Kagda (1989) observed that some foreign workers lived in “cramped, dirty and unhygienic conditions” (p. 2). Some, including contractors, put the blame for the poor quality of living environment (where it occurs) on the foreign workers (Leong, 1990). The Contractors’ Association observed that all site facilities were in compliance with regulations, and provided all necessary basic amenities. They had to be inspected by relevant authorities before they were occupied. Subsequent housekeeping was the responsibility of the workers (The Straits Times, 1990b). In the early 1990s, the Singapore Contractors’ Association Ltd. proposed to build permanent quarters in centralized locations for foreign construction workers. This would not only improve workers' welfare, but also enhance their safety as the temporary site buildings, mostly of timber, could be a fire hazard, with many workers cooking with open fires (Tan, 1993). It would also upgrade site security, making intruders easy to spot and apprehend. Work on some permanent dormitories for foreign workers was started in early 1995. In May 1995, a temporary three-storey building housing foreign workers on a site where, ironically, permanent dormitories were being constructed for foreign workers, collapsed, killing one person and injuring 64 others (The Straits Times, 1995a: p. 1). That same month, in order to improve the conditions in such housing, the Government announced its intention to require housing for foreign workers on construction sites to be of reasonable quality, “safe and ... meet all the environmental health requirements” (The Straits Times, 1995b: p. 25). A committee comprising the CIDB, Fire Service Bureau, Housing and Development Board, Ministries of Labour and the Environment, Public Utilities Board and the Public Works Department was set up to formulate regulations to ensure that such quarters are structurally sound, comply with all fire and electrical safety rules, and are well-lit and ventilated (The Sunday Times, 1995: p. 24). Under the Building Control (Temporary Buildings) (Amendment) Regulations 1995, workers’ quarters, canteens and other temporary buildings must be designed and supervised by an engineer and meet minimum standards of storey height, ventilation, staircase width and extent of fenestration. Summary Foreign construction workers in Singapore have quite good terms of employment. They enjoy protection under the country’s labour statutes and regulations. Their wages are relatively high. They also receive medical and insurance coverage and free accommodation and transport to and from work. A period of employment in Singapore can bring such added benefits as the opportunity to acquire a skill and formal certification of competence in a trade.
19
6. Foreign worker policies Singapore has a set of policies for controlling the number of foreign workers recruited into sectors of its economy. This section considers some of these policies, paying special attention to those relating to construction workers. Policy intention The inability to recruit and maintain an adequate level of local workers has been one of the major problems of the construction industry in Singapore during the last two decades (Ofori, 1993). In its 1992 annual report, the CIDB stated:
There is a pressing need to upgrade construction personnel through training and testing. This is to address the twin problems of skilled workers’ shortage and the industry’s dependence on foreign workers which in turn give rise to low worksite productivity and poor quality of construction (CIDB, 1993: p. 27).
Thus, while foreign workers have been allowed in to meet the needs of the construction industry in Singapore, their recruitment is considered an interim measure only, and the aim is to reduce their involvement over time. This policy is in line with the national policy relating to foreign workers in all sectors of the economy:
Although foreign workers help contribute to Singapore’s economic growth, the presence of a large number of such workers can pose social and other problems to host countries as experienced by some European countries. The employment of foreign workers is therefore restricted to only those sectors or industries which are vital to the development of the economy and where there is a shortfall in local manpower (Ministry of Labour, 1987: p. 26).
The long-term policy for foreign workers is clear:
We will progressively reduce our dependence on foreign workers. To overcome temporary shortages, we will however continue to allow a revolving pool of foreign workers on short-term work permits. Only those who have critical skills of economic value to Singapore will be considered for employment on a longer basis (Ministry of Labour, 1987: p. 35).
History As mentioned above, construction is not the only sector of the Singapore economy which uses foreign workers. Other sectors include manufacturing (including shipbuilding), the domestic sector and hotels. In this section, an account of the history of the engagement of foreign workers in Singapore is provided, concentrating on construction workers.
20
Initial developments Singapore achieved much success in its early development efforts. It fulfilled its objective of creating employment opportunities through manufacturing and public construction projects, most notably housing, stated in its first national development plan (Ministry of Finance, 1961) within a decade of the implementation of the plan. Chew (1970) highlighted the prevailing labour policies and problems of Singapore and suggested that effort be made to develop a “technical” labour force. Chew (1970) observed:
Unemployment throughout the 1960s was high. Yet, in the latter 1960s, there were complaints by industrialists of skill bottlenecks adversely affecting operations. One hears too of crafts students at the Singapore Vocational School booked by firms prior to graduation. The Economic Development Board ... has also deprecated the lack of trained craftsmen (p. 12).
The rapid industrialization of the economy created jobs in manufacturing and commerce. Opportunities for further education were increasing, and Singaporeans were delaying their entry into the workforce. Moreover, jobs in construction lost their appeal owing to the poor working conditions (Ganesan, 1982). The construction industry failed to attract new entrants; it also lost some trained personnel. A shortage of construction workers was clear by 1969 as labour costs increased by over 100 per cent (The Contractor, 1984). Similar shortages were being experienced in other sectors. The Ministry of Labour (1972) observed:
The year [1971] saw the rapid transformation of the labour market in Singapore. The remarkable expansion of the economy has generated such a tremendous number of employment opportunities that there are now problems of labour shortages in certain sectors of the economy. The problem of unemployment which was ever present in past years is no longer a problem. All indications show that the Republic is fast approaching a state of full employment (p. 1). With the labour shortage, an increasing number of factories have been unable to recruit local labour for their workforce and have therefore to look to immigrant workers for their labour. In order that the economic advancement of Singapore is not hindered, the Ministry has further liberalized its policy on work permits for certain categories of workers (p. 2).
Attitudes and early efforts to reduce the number of foreign workers
Soon after independence, attitudes of the public to careers in construction began to change, for the worse. By the mid-1970s Singaporeans preferred to work for less pay in other sectors, or even to remain unemployed rather than take up the many available places in the construction industry (The Construction Times, 1976). Foreign workers from Malaysia and Indonesia became increasingly prominent in the construction industry. Initially, most of them came from the southern states of neighbouring West Malaysia. Later, workers from the more northern states of Malaysia also arrived. The unskilled workers were given two-year work permits and the skilled ones, three-year permits. These developments occurred although wages in construction had exceeded the national average for the first time in 1967. Six new technical and vocational training centres were also opened, increasing the annual intake from the 100-200 range to over 2,000. The Ministry of Labour also stepped up efforts to improve site safety and worker welfare. In 1972, in addition to liberalization of the grant of work permits to certain categories of foreign workers, the Employment Act was amended to raise the limit imposed on overtime by employees from 48 hours per month to 72 hours per month “to ensure that the Republic had sufficient personnel to sustain its industrial expansion and economic growth” (Ministry of
21
Labour, 1973: p. 2). As construction boomed in the late 1970s labour shortages became even more severe, increasing construction costs considerably (Wong and Yeh, 1985). More Malaysians were employed. The profile of the foreign construction workers in Singapore at this time was significant. Many of them were farmers with little or no skills in, or experience of, construction. They would come to Singapore to seek work during lull periods in the farming calendar, and return home not only on festive occasions (on extended holidays), but also during planting and harvesting seasons. Moreover, after acquiring some training in Singapore, many would subsequently take up work nearer their homes, in their own countries. Their places would be taken by a fresh batch of unskilled workers, often from the same countries as the previous groups of workers. This constant cycle led to problems such as poor quality of work and low productivity, as well as failure to develop a stable core of workers. With the number of available construction workers subject to sudden changes, unanticipated periods of critical shortages could occur. On such occasions, semi-skilled workers would temporarily take the place of more skilled ones, leading to poor workmanship and high wages. The shortages led to increasing labour cost, low productivity, high labour turnover, and poor work discipline. From 1980, contractors were permitted to recruit foreign workers from “non-traditional” sources. Previously, only the manufacturing sector had been allowed to use such workers. Target 1991 One of the most important statements on Singapore’s long-term policy on foreign workers was made in a New Year speech in January 1982 by the then Prime Minister. In this speech, Mr Lee Kuan Yew announced the Government’s intention to phase out all low-skilled foreign workers in the Singapore economy by 1991. Highly skilled and qualified personnel would be retained and given permanent residence with a view to granting them citizenship. All non-traditional source workers except those in construction and shipbuilding, as well as domestic maids, were to be phased out by 1986. Circumstances militated against the achievement of this aim. Toh (1993) observes:
... it was soon realized that a totally local labour force was not feasible. The booming construction sector and other sectors of the economy during the late 1980s warranted abandonment of the policy of phasing out guest workers by 1991. Economic conditions made it apparent that it was necessary to retain a controlled pool of foreign workers on short-term work permits ... to serve as a buffer against cyclical economic swings.
It is significant to note that both the dependency level and the comprehensive foreign worker levy (see below), important control instruments relating to foreign workers, were introduced in 1982. In 1984, employers were encouraged to recruit skilled workers from Hong Kong, Macau, the Republic of Korea and Taiwan, China to meet the continuing shortfalls.
Current foreign construction worker policy Programmes to develop a stable core of local construction industry workers have been in place since the 1960s. It has long been understood that, as locals were averse to careers in
22
construction, it was not sufficient to have training programmes. A more comprehensive programme of human-resource development and management as well as practical measures to reduce labour usage in the industry were required. Initiatives in this regard are considered in section 7. In 1992, a CIDB survey showed that there would be a dramatic increase in the requirement for construction workers as a result of an unprecedented rise in the level of demand for construction. The Government proposed to use this opportunity to undertake a review of its foreign-worker policy for the construction sector. It would adopt a three-pronged approach: (a) to pursue a long-term strategy to improve construction productivity and quality, making
“... jobs higher skilled, higher value added and better paying so that more Singaporeans are attracted to the industry” (The Straits Times, 1992a: p. 40);
(b) to allow the industry to recruit additional foreign workers to meet cyclical increases in construction activity, but the increase in the number of foreign workers required should be due to “increased construction output and not because of declining productivity” (The Straits Times, 1992a: p. 40); and
(c) to simplify the foreign-worker quota (dependency level) system, make it more transparent, and bring it in line with those used in the manufacturing and services sectors as the definition of the control ratio was “complicated and restricted” (The Straits Times, 1992a: p. 40).
Work permits One of the most important elements of Singapore’s foreign-worker policies is the requirement for a work permit to be obtained for each foreign worker employed, or working in the country. This facilitates the control of the number of foreign workers in each sector of the economy, and in total.
Statutes and regulations Under the Regulation of Employment Act, 1965, “non-citizens who are offered employment at a salary of $750 per month or less are required ... to possess work permits” (Ministry of Labour, 1969: p. 18). The 1965 Act has been repealed: the Employment of Foreign Workers Act 1991 is the governing statute at present (as discussed below). In November 1970, the “block permit” system was introduced, under which companies could apply for a number of foreign workers together, rather than individually. In 1982, the ceiling for work permit holders was raised to a salary of $1,000 per month (Business Times, 1990). The scope of the work permit regulations was revised in July 1984 “in view of the rising salaries of non-graduate foreigners seeking employment [in Singapore]” (Ministry of Labour, 1985: p. 3):
All foreigners and permanent residents working in Singapore at a basic salary of not more than $1,500 per month now have to apply for a work permit. Those who are earning more than $1,500 per month have to apply for an employment pass ... (Ministry of Labour, 1985: p. 3).
The Employment of Foreign Workers Act 1991 (Chapter 91A of the revised 1991 edition) is the main legal instrument governing the recruitment and deployment of foreign workers in Singapore. The Act describes a “foreign worker” as:
23
(a) any person who is not a citizen of Singapore who seeks employment with, or is offered
employment by, or is, at 1st January 1991, in the employment of, an employer at a salary of not more than $1,500 a month or such other sum as may, from time to time, be fixed by the Minister by notification in the Gazette; or
(b) such other person or class of persons as the Minister may, by notification in the Gazette, specify (sec. 2).
The Act provides for the appointment of a Controller of Work Permits and “employment inspectors”. Per section 5 of the Act,
(1) No person shall employ a foreign worker unless he has obtained in respect of the foreign worker a valid work permit which allows the foreign worker to work for him.
(2) No foreign worker shall be in the employment of an employer without a valid workpermit.
(3) No person shall employ a foreign worker otherwise than in accordance with the conditions of the work permit.
The powers of employment inspectors are also provided for under the Act. They include: entering and searching premises where they have reasonable cause to believe that a person is employed; asking relevant persons to produce documents for inspection; examining, orally, persons supposed to know relevant facts; and requiring, by order in writing, the attendance of persons with knowledge of relevant facts. The Act specifies minimum and maximum financial or custodial penalties for employer organizations (and some of the key persons directly responsible) and foreign workers contravening its provisions. The Act outlines the procedure for application for a work permit, and of appeal by those aggrieved by a decision of the Controller. Per section 8(3), the Controller may “vary or revoke any of the existing conditions of a work permit or impose new conditions; or vary, suspend or cancel a work permit” (section 7(3)). Per section 12, a work permit is valid only in respect of the trade, occupation, employer and foreign worker specified in it. It is not transferable (section 13(1)), and is also valid for a specified period, unless it is suspended or cancelled by the Controller (section 12(2)). The employer is required to keep “a register of foreign workers” (section 8(1)) which “shall at all reasonable times be open to inspection by an employment inspector” (section 8(3)). Upon terminating the employment of a foreign worker, an employer “shall return the work permit to the Controller within seven days of such termination” (section 9(2)). The Act provides for the payment of a levy in respect of the employment of foreign workers:
The Minister may, by an order published in the Gazette, provide for the imposition of a levy of such amount as may be specified in the order on employers in respect of any foreign worker or class of foreign workers or on persons who have, ... obtained a work permit to engage in any trade, calling, occupation or other activity for the purposes of gain (section 11(1)).
Employers or persons failing to pay the levy on time are liable to pay penalties on the outstanding amounts. From 1 January 1994, the monthly income ceiling for work permit holders was raised from $1,500 to $2,000, “paving the way for more skilled workers to be employed in Singapore” (Ministry of Labour, 1995: p. 39).
24
Who can apply
The employer applies for the work permit before the foreign worker arrives in the country. Companies applying for foreign workers must meet the following criteria (Liew, 1994): (a) have a registered business in Singapore; (b) employ local workers, and pay their CPF contributions regularly in the correct amounts
and without default; and (c) be actively involved in construction work, with a minimum project value of $500,000,
lasting a minimum of six months – in 1989, construction enterprises could only apply for foreign workers for projects worth over $1 million and lasting over a year (Koh, 1990).
Duration
Work permits for most foreign workers are issued for two years, and may be renewed for another two-year period. Those with special skills may be given a further two-year extension of their work permits. In 1989, Malaysian workers “with skills relevant to the economy” (Ministry of Labour, 1990: p. 12) were given three-year work permits. These persons may be: (a) those with GCE Ordinary Level certificate with at least five credits, or a full GCE
Advanced Level certificate for an examination taken at one sitting; or (b) those holding a two-year work permit and a recognized trade certificate. Foreign workers holding three-year work permits may be eligible for: (a) applying for permanent residence in Singapore if they have worked for at least one year
in a field related to their skills. After five years as a permanent resident, the worker may qualify for Singapore citizenship;
(b) renting a public-housing flat; (c) sending their children to school in Singapore on terms not unlike those relating to
Singapore citizens and permanent residents; and (d) applying for “long-term visit passes” for their spouses and children below 21 years old.
Application The work permit is issued in relation to a particular employer, which may be the main contractor, first-level subcontractor, or second-level subcontractor. That particular employer has to apply for the permit, and is responsible for the worker. For non-traditional sources, the employer should first apply for “prior approval”, indicating the number of workers required. If approved, prior approval is valid for two months. Within the two-month period, the employer should submit work permit applications in respect of the workers, and if approved, is given an In-Principle Approval letter, also valid for two months. This constitutes a temporary permit commencing on the date following the worker’s arrival in Singapore. The foreign worker levy is payable from this date. The application process for Malaysians is simpler and easier. A temporary permit may be issue within an hour, the actual work permit being ready within 14 days.
25
Information which should accompany application The contractor or subcontractor should submit the following information together with the completed application form for work permit(s): (a) information on current workforce; (b) list of applicants’ names; (c) copy of applicant(s) passport(s); (d) declaration form; (e) brief company profile; (f) CPF statement of accounts for the last three months; (g) some key contract documentation including Letter of Award (indicating commencement
and completion dates and contract sum) and Permit to Carry Out Building Works; (h) for subcontractors, endorsement of main contractor. The employer should furnish the CIDB with a security bond and a security guarantee of $5,000 for each worker before the workers are brought into the country.
Processing and approval Efforts have been made to streamline and simplify the process of applying for a work permit, and make it more convenient to applicants. These include the introduction, in 1970, of the “block permit” system, which allowed the application for a number of foreign workers to be submitted together. Moves have also been made to shorten the processing of applications for work permits. In 1990, the Work Permit and Employment Department of the Ministry of Labour “moved nearer towards a ‘one-stop/one point’ service” (Ministry of Labour, 1991: p. 5). It took over some of the functions of the Immigration Department (on visas for foreign workers) and the Stamp Office (on payment of stamp duty in respect of the application) relating to work permit applications. In October 1992, the CIDB took over the processing of applications for work permits for construction workers from the Ministry of Labour, providing a one-stop service at the Work Permits Section of the Board’s Manpower Development Division, located at the Construction Industry Training Institute. Through a computer linkage to the Ministry of Labour, the processing time for work permit applications was reduced by over 75 per cent (CIDB, 1994a).
Conditions attached to a work permit The Foreign Workers’ Scheme has the following “terms and conditions”, listed in an appendix to the Application Form for Work Permit: (a) all foreign workers (males only) are to be recruited from approved countries; (b) the employer must recruit and bring foreign workers directly from their country of origin
– no foreign worker shall be employed while on a social visit to Singapore; (c) foreign workers are to be paid the same wages and entitled to the same wages as local
employees, but the employer may deduct the cost of any food, transport and/or accommodation provided to the foreign worker;
(d) all foreign workers must be at least 16 but below 55 years of age;
26
(e) foreign workers employed by an employer must not be contracted out to other employers.
Numbers
Initially, few permits were applied for. In 1968, applications for 1,740 work permits for foreign workers were submitted to the Ministry of Labour, of which 958 were granted (Ministry of Labour, 1969). In that year, 2,420 applications were made for change of employers or occupations. Work permit renewals and endorsements for change of occupation totalled 4,522. At the end of 1968, there were 38,872 foreign workers (in all sectors of the economy) in Singapore, compared with 47,217 the previous year (Ministry of Labour, 1969). As the construction industry experienced a boom in the early 1990s (see table 1), the demand for foreign construction workers was high. In fiscal 1991, the CIDB’s Work Permit Section received applications for 93,690 foreign workers, a 13 per cent increase over the previous year’s figure (CIDB, 1993). The CIDB received some 30 per cent more applications for foreign construction workers in fiscal 1992.
Contraventions The Labour Inspectorate of the Ministry of Labour enforces the Employment of Foreign Workers Act. It carries out inspections in “all types of establishments ranging from large construction sites to factories, restaurants, hairdressing salons and small shops” (Ministry of Labour, 1992: p. 13). Initially, problems relating to the employment of foreign workers in Singapore were very modest. The number of cases of illegal employment of non-citizens was 460, 261, 197 and 348 in 1977, 1978, 1979 and 1980 respectively (Ministry of Labour, 1978, 1979, 1980, 1981). By the late 1980s the problem had become serious. The number of cases reported increased from 3,700 in 1983 to 9,500 in 1985 (Koh, 1990). Several thousand foreign workers were rounded up and repatriated in 1989, showing the extent of the problem. Over 10,000 construction workers, mainly from Thailand, left the country before a new law (the Immigration (Amendment) Act) providing for stiffer punishment of illegal foreign workers came into force. This led to major disruptions in work on several construction projects, including those involving large and reputable contractors, such as the Central Expressway and Changi Airport Terminal 2. Several of the repatriated foreign construction workers later returned to Singapore after they were given work permits. Between 15 March and 6 May, 14,783 permits were issued by the CIDB, four times the usual number (The Straits Times, 1989a). The processing time was reduced from 14 days to four days. Half of these work permits were for Thai workers, a sevenfold increase in the normal figure. The developments in 1989 culminated in a tougher version of the Immigration Act and in the Employment of Foreign Workers Act, 1991. The problem of foreigners working illegally in Singapore persists although the scale is much less now than in the 1980s. Table 11 shows information on illegal foreign workers and their employers apprehended by officers of the Labour Inspectorate in 1991, 1992 and 1994. It indicates that 2090 and 1797 illegal foreign workers were arrested in 1991 and 1992 respectively. Of these, 330 and 346 were convicted in 1991 and 1992 respectively. By mid-1993, 2,000 foreign workers had been detained and 350 convicted. A total of $5 million had been collected in fines on errant
27
employers (Miller, 1993). In 1994, some 1538 illegal foreign workers were arrested, 315 offenders were convicted, and some $5.3 million in fines were paid (see table 11). Table 11. Contraventions of Employment of Foreign Workers Act, 1991-92, 1994 1991 1992 1994
Complaints of illegal foreign workers received
2 193 2 957 4 469
Inspections conducted 695 639 279
Number of illegal foreign workers arrested
2 090 1 797 1 538
Number of illegal foreign workers convicted
380 346 315
Revenue from fines collected from employers of illegal foreign workers ($ million)
2.5 5.1 5.3
Source: Ministry of Labour (1992, 1993, 1995). In 1993, attention was focused on the employers of illegal foreign workers. The Immigration (Amendment) Act was further strengthened to require those charged with employing or harbouring illegal foreign workers to prove that they had inspected their passports and work permits, and had grounds to believe that they were valid. The problem got worse. In 1994, newspaper reports alleged that 10,000 illegal immigrants were caught, twice the 1988 number. From January to September 1995, 9,343 were arrested (The Straits Times, 1995e: p. 26). In the stiff competition and low margins prevalent in the industry, some contractors are tempted to employ illegal workers because not only do they avoid paying the government levy, but they would also pay such persons much less than the market rate relating to their skills and experience (Ibrahim, 1995: p. 34). The argument that some contractors had employed illegal workers because they could not obtain adequate numbers of workers was belied by the fact that some firms which had been found to be employing such persons had not reached their 1:5 dependency ceiling. The majority of illegal immigrants apprehended in Singapore are found on construction sites, owing to “inadequate security, poor or no access control and no system of identifying workers, making it easy for offenders to seek shelter and employment” on these sites (The Straits Times, 1996: p. 24). The “multi-level” subcontracting prevalent in the Singapore construction industry adds to the difficulty of controlling illegal immigrants on site. Moreover, a foreign worker may be deployed on more than one site from day to day. In 1995, the Immigration Act was amended to make the principal (main) contractor responsible for any immigration offender found on its site. If such a person was found, “it would be presumed that the principal contractor had control of access to the site and had knowingly allowed the immigration offender to enter or remain there” (The Straits Times, 1996: p. 24). An offender faces a fine of between $15,000 and $50,000 or a jail term of not more than one year, or both. To successfully defend itself, the contractor should be able to show that it had taken measures to tighten security at the site (such as building a fence, employing security guards at all entrances and giving identification cards to all its workers). The Employment of Foreign Workers Act was also amended to make it an offence for a principal contractor to allow illegal foreign workers to enter or remain at its site (The Straits Times, 1996: p. 24).
28
Observers believe that as a result, main contractors may employ foreign workers, and then assign them to subcontractors (Ibrahim, 1995: p. 34) Dependency level The “dependency level” is another instrument used to control the number of foreign workers in Singapore. It indicates the permitted ratio of foreign workers to Singaporeans in the workforce of each employer in the sector of the economy concerned. The quantum for each sector is changed over time as circumstances dictate. The main determinants are prevailing levels of activity and the projected future situation. Table 12 shows changes in the dependency levels for the various sectors since 1985. With the introduction of the two-tier policy for the construction industry in 1991 (see below), the previous approach of considering Malaysians on two- or three-year work permits as Singaporeans for the purpose of calculating the dependency level was discontinued, and only Singaporeans were included. Table 12. Dependency levels for various sectors of the Singapore economy 1987 Foreign workers not more than 50 per cent of firm’s total workforce
1989 For manufacturing, reduced from 50 to 40 per cent, but remains at 50 per cent for construction
1990 Companies in services may recruit foreign workers from traditional sources up to 10 per cent of their workforce. Level raised to 20 per cent in November 1990
1991 For construction, increased from 1:1 to 2:1, with introduction of two-tier levy system
1992
For construction, raised from 2:1 to 3:1 in April 1992, and then increased again to 5:1 in November 1992. HDB contractors can employ five additional foreign workers per $1 million annual turnover for upgrading projects, and three additional foreign workers per $1 million turnover for new HDB construction contracts
Source: Ministry of Labour (1986, 1988, 1990, 1991, 1992); Toh (1993). In order not to disrupt the operations of organizations or persons employing foreign workers, changes in dependency levels are announced well in advance. Moreover, employers with excess foreign workers due to the change are not compelled to reduce their workforce immediately the change takes effect. Rather, they can replace workers once their work permits expire. Foreign worker levy
Central Provident Fund
Initially, foreign workers in Singapore were covered by the Central Provident Fund (CPF). Although only a small proportion of foreign workers in Singapore are on the CPF (as discussed below), a short note on the Fund is appropriate. Both the employer and the employee pay specified proportions of the employee’s remuneration to this Fund each month. The accumulated amount may be withdrawn by the employee upon reaching 55 years of age, or just before the employee leaves Singapore for good. The Ministry of Labour (1992) observed:
29
The Central Provident Fund (CPF), to which both the employer and employee contribute, was set up in July 1955 with the basic objective of providing financial security to every wage-earner in his old age or when he is no longer able to work. ... the Board has over the years, introduced various schemes to provide for home-ownership and health care for members as well (Ministry of Labour, 1992: p. 28).
The current rate is the long-term level of CPF contribution of 40 per cent of the employee’s remuneration, with equal proportions from the employer and the employee. To encourage employers to take on older workers, the CPF contribution rates are significantly lower for persons above 55 years. By the end of 1994, the Fund had 2,251,750 members, with some $57.6 billion to their credit (Ministry of Labour, 1995).
Levy
Foreign construction workers were the first in respect of whom employers had to pay a levy. In 1980, a levy of $230 per month was payable for every non-Malaysian foreign construction worker employed. In April 1982, the Foreign Worker Levy was introduced for work permit holders in all sectors including construction, in place of the CPF Savings Scheme, as the latter was deemed unsuitable for foreign workers owing to the relatively short duration of their stay in Singapore. Employers would pay 30 per cent of the monthly wage of each foreign worker, or a minimum of $150. The levy would make employment of foreign workers expensive (Teo, 1990; Toh, 1993). This would reduce employers’ reliance on foreign workers which would otherwise impede Singapore’s efforts to improve the overall productivity of the economy. As the Ministry of Labour (1983) observed:
The Levy Scheme was introduced to discourage employers from indiscriminate recruitment of low-skilled foreign workers instead of automating and mechanising their operations. It helped raise the cost of employing foreign labour which would have been cheaper as a result of the policy to phase out CPF contributions for foreign workers (p. 17).
The Levy Scheme has been fine-tuned over time. In January 1989, the scheme was extended to cover Malaysian workers on two-year work permits as and when their permits expired and were renewed. However, “workers with skills relevant to the economy were granted three-year work permits with CPF benefits ... They would be absorbed into the local workforce eventually” (Ministry of Labour, 1990: p. 12). Different quantums of the levy may apply to various sectors of the economy. Since 1984, the levy for domestic maids has been lower than those for other foreign workers. In 1987, the levy was reduced from $200 to $140 for workers in the manufacturing sector, whereas that for other workers remained unchanged. The levy for workers in manufacturing was increased to $170, before being brought in line ($220) with the other sectors in January 1989. From table 13, it is clear that the quantum of the levy was increased progressively until 1991, when the two-tier scheme was introduced. Under this scheme, the flat $300 monthly levy for all foreign construction workers was raised to $350 per month for unskilled workers, while that for skilled workers was reduced to $250 per month. The Employment of Foreign Workers (Levy) Order defines a skilled construction worker as a construction worker who holds a trade certificate issued or recognized by the CIDB. The two-tier levy scheme
30
again underlines the intention to scale down the use of low- and unskilled foreign labour in Singapore. Table 13. Foreign worker levy for construction, 1982-95
Commencement Quantum of levy (per worker per month)
1980 $230 for non-Malaysians April 1982 30 per cent of wages (min. $150 per month) October 1984 $200 1 January 1989 $220 1 July 1989 $250 1 February 1990 $280 1 August 1990 $300 1 January 1991 Two-tier system:
Skilled worker – $250 per month Unskilled worker – $350 per month
1 July 1992 Skilled worker – $250 per month Unskilled worker – $400 per month
1 April 1995 Skilled worker – $200 per month Unskilled worker – $440 per month
Source: Ministry of Labour (1982, 1989, 1990, 1991, 1992, 1995). The new levy system was introduced together with a relaxation of the dependency level from one foreign worker to one Singaporean employed to two foreign workers to one Singaporean employed. Introducing the two-tier levy system, the CIDB observed:
The higher levy for unskilled workers will help to reduce the industry’s dependence on foreign labour... [It] will help to accelerate the number of certified skilled workers who are three times more productive than those who are unskilled. The new levy system is also intended to encourage contractors to mechanise their operations... (Construction Focus, 1990: p. 1).
With effect from 1 April 1995, the monthly foreign worker levies were as follows: skilled workers – $200; and unskilled workers – $440 (table 13). Perhaps following its success in helping to realise policy intentions in construction, the two-tier levy system was introduced for the marine industry in July 1991, and manufacturing in 1992. Under the Overseas Testing Scheme, introduced in 1995, foreign workers can be tested and certified at designated centres in their home countries before they come to Singapore (Lee, 1995: p. 3). This allows contractors to pay the lower levy for skilled, certified workers as soon as the foreign workers start working. The workers will be tested to the same standards as at the CITI, by CIDB officers. Among countries where centres will be set up are Bangladesh, China, India and Myanmar.
31
Summary Table 14 compares key aspects of Singapore’s foreign worker policy in 1984 with those prevailing currently, and shows changes in all the major respects: classification of sources, possibility of permanent residence for skilled personnel, dependency level and foreign worker levy (quantum and structure). Table 14. Singapore’s foreign construction worker policy in 1984 and 1994
1984 1994
Traditional sources: Hong Kong, Japan, Macau, Malaysia, Republic of Korea
Malaysia considered only traditional source
Non-traditional sources: Bangladesh, India, Indonesia, Philippines, Sri Lanka, Thailand
North Asia (Hong Kong, Republic of Korea, Macau and Taiwan, China), People’s Republic of China, Bangladesh, India, Philippines, Sri Lanka, Thailand
Workers from traditional sources: For skilled workers, two-year work permits renewable until 1991
Skilled Malaysian workers – three-year work permits with possibility of permanent residence
Non-traditional sources: Two-year work permits renewable for further two years
Unskilled Malaysians and NTS workers – two-year work permits renewable for another two years. For skilled workers, a further two-year renewal possible
Workers from non-traditional sources except in construction, shipbuilding and domestic services to be phased out by end 1984, unless their work permits are renewed. These renewals not to go beyond 1986
Controlled revolving pool of foreign workers permitted in critical sectors: manufacturing (including shipbuilding), hotels, construction and domestic services. Control tools: work permit, dependency level and foreign worker levy. Reliance on unskilled workers to be reduced. Skilled workers may be retained
Traditional source workers: Employer pays 20.5 per cent of workers’ wages into Central Provident Fund (CPF) monthly – employee pays 22 per cent – paid to worker later, according to CPF regulations
For Malaysian workers on three-year work permits, employer pays CPF of 20 per cent – employee pays 20 per cent
Non-traditional source workers: Employers pay levy of 30 per cent of workers’ monthly wages, minimum $150
Two-tier levy: Skilled workers – $250 per month Unskilled workers – $400 per month
32
7. Effects of employment of foreign workers on local industry Many writers have referred to the economic, social and political problems relating to the employment of foreign workers in Singapore (Koh, 1990; Liew, 1994). The small geographical size of Singapore gives the issue particular poignancy. After briefly discussing some broader issues, this section considers the implications of the employment of foreign workers in the construction industry of Singapore, with emphasis on the (direct) technical effects. General issues Toh (1993) outlines some of the possible effects of the employment of foreign workers in some sectors of the economy of Singapore: (a) delays to economic restructuring and upgrading of enterprises’ operations; (b) adverse effect on occupational safety as foreign workers are relatively inexperienced and
might lack the necessary work discipline; (c) negative impact on productivity through lowering of average skill levels, as new,
untrained foreign workers replace those departing on expiry of their work permits; (d) social problems relating to the need for additional infrastructure to ensure these workers’
welfare; and (e) political implications, for example as other governments or people take exception to
alleged harsh treatment of their citizens in the country. For construction, the free recruitment of cheap foreign workers which drives down the wages of local workers would be serious. It would further erode the attraction of careers in construction, and make it necessary for even more foreign workers to be recruited to meet the industry’s labour requirements. Another construction-related negative impact of the employment of large numbers of foreign workers is that it tends to set in motion a vicious circle. The image of the industry is already unattractive. As more foreign workers with low skills and poor educational backgrounds are engaged in it, Singaporeans might feel that such work is not for them. This would lead to locals shunning the construction industry, leading to further reliance on foreign workers. Such a chain of events would hinder and frustrate efforts to attract Singaporeans into the industry. Reaction of industry to policies
It is worth outlining reactions of construction practitioners in Singapore to the Government’s policies relating to foreign workers. This would indicate the industry’s own views on the use of foreign construction workers, and also show certain aspects of the effect of the recruitment of such workers on the industry. Table 15 presents a summary of the results of a survey by Liew (1994).
33
Table 15. Summary of results of survey by Liew (1994)
Issue Affirmative response (%)
Contractors want more foreign workers 92
Increased dependency level helped ease shortage of workers
76
Insufficient local workers to meet dependency level requirements
100
Structure of levy inappropriate because Singapore requires more unskilled workers than skilled workers
84
Levy for unskilled workers too high 100
Less turnover of foreign workers due to work permit regulations
100
Duration of stay allowed for foreign workers is insufficient
60
Illegal employment prevalent because it is cheaper, despite the higher risk
64
Source: Liew (1994).
The number of contractors responding to Liew’s (1994) questionnaire was very small (25). Thus, the data cannot be used to generalize for the entire industry. However, construction practitioners, in general, appear to view foreign workers not as a temporary resource for supplementing their needs, but as the only way by which the requirements of an inherently labour-intensive industry with an unfavourable social image locally can be met. This can be inferred from the response of contractors to: the crackdown on illegal foreign workers in 1989 – they highlighted the resulting labour shortages (Koh, 1990); reduction of the foreign-worker dependency level, or increases in the level considered by the industry to be insufficient (as in February 1992) – again stress was put on lack of local workers to enable construction enterprises to recruit enough foreign workers to meet their requirements (The Straits Times, 1992e); and increases in the foreign worker levy – contractors highlighted reduction in profit margins and the likelihood of cost inflation in construction (The Straits Times, 1992e). Reactions to increases in the foreign worker levy are considered in some detail below.
Response to foreign worker levy increases The official response to calls for the levy to be reduced has been consistent. For example, in response to such calls by businessmen, a senior Minister of State said:
34
Allowing foreign workers into Singapore by lowering levies will bring about a depressive effect on local wages at the lower end. This is unacceptable as it contradicts the Government’s policy that all Singaporeans should have a share in the country’s economic pie (Tan, 1992: p. 40).
Managerial problems Productivity It can be observed that the ability to recruit foreign construction workers has made local construction enterprises unwilling to take measures to reduce their requirement for labour, especially where these call for high amounts of investment. Many reports have referred to the relatively low level of productivity in construction. The CIDB Task Force on Productivity (1992) found that the local industry’s productivity compared unfavourably with those of its counterparts in Finland and Japan. Efforts to encourage the construction industry to adopt standardization and prefabrication have recently been intensified. The Best Buildable Design Awards have been introduced to offer practitioners an incentive in this regard. At the national level, construction is considered to be dampening down the overall productivity of the economy. Increases in other sectors are often pared down by lack of improvement or reduction in construction productivity. Thus, as shown in table 16, productivity figures for the economy are computed as a “total”, and then “excluding construction”. The data show that, since 1985, increases in construction productivity have been consistently lower than the national average, except in 1992. The impressive showing in 1992 could not be maintained, as it was followed by a negative figure in 1993. Inherent problems relating to productivity in construction caused by the uniqueness of construction projects and lack of transferability of experience are exacerbated by the use of a revolving pool of foreign workers. The relatively short duration of stay of foreign construction workers in Singapore gives employers little incentive to invest in their improvement. Contractors also spend little time and effort on the development of their foreign workers in terms of loyalty and inter-trade cohesiveness.
Communication and attitudes Given the multiplicity of operations involved in even the simplest construction
project, the number of different trades required and the intricate web of relationships among the specific tasks of workers or groups of workers, it is essential that workers on a particular project are able to communicate effectively as many groups of workers of different trades need to cooperate closely. It is also important for the contractor to maintain discipline and appropriate work procedures and practices. Issues of safety, efficiency and productivity make this imperative. The correct working attitude is important. This is not easy to attain, given the diverse background of workers on each site.
35
Table 16. Changes in productivity by sector, 1980-94 (%)
(compared with same period a year ago) Year Total Total
(excluding construction)
Manufacturing Construction Commerce
1980 5.7 5.6 4.6 6.6 4.9
1981 5.2 5.8 9.2 0.5 1.3
1982 1.6 1.9 -0.7 4.2 1.2
1983 5.3 5.1 9.1 10.1 2.1
1984 6.9 6.7 7.2 9.0 4.5
1985 3.6 2.4 -1.5 10.3 0.4
1986 6.7 7.1 13.6 0.7 4.9
1987 4.8 4.8 3.7 0.8 5.9
1988 4.5 4.4 2.0 2.2 10.8
1989 5.0 5.2 3.8 – 4.4
1990 3.9 4.0 4.6 1.2 6.3
1991 1.5 1.6 3.5 3.9 3.3
1992 2.7 2.1 3.0 12.8 1.5
1993 6.7 8.1 12.2 -5.8 5.1
1994 5.3 5.7 11.4 4.2 5.4
Source: Ministry of Trade and Industry (1987, 1993, 1995). The mixture of construction workers from different countries speaking different languages and with different cultures, traditions and work ethic poses managerial problems on-site. Communication between Singaporean supervisors and the largely semi-literate foreign workers from many communities, most of who have little command of English or local languages, is difficult. This leads to errors resulting from misunderstood instructions, which, in turn, culminate in re-works, wastage, delays and increased costs. Studies show that the main adjustment problem facing foreign workers is language (Toh, 1993). Many employers have supervisors who have learned the main languages of the countries of origin of the foreign workers. However, the use of sign language is not uncommon on construction sites. The limitations of such a form of communication are clear. There is anecdotal evidence that because of the ease of communication with them in Malay, contractors prefer to employ the more expensive Malaysians, even as general workers, rather than workers from non-traditional sources.
Labour subcontractors The construction industry in Singapore operates predominantly on the basis of a labour subcontracting system. The Kepala (or “headman”) provides services to main contractors for the various trades such as carpentry, bricklaying, plastering. The Kepala is usually a skilled tradesperson who takes up a subcontract on a lump sum or unit rate basis.
36
The Kepala recruits workers directly to undertake the work, while the main contractor provides all materials, equipment and supervisory personnel. Where the Kepala has subcontracts on a number of sites, the workers on these sites will be under a chargehand, or representative, the Kepala transferring workers between sites to ensure their optimum deployment. The Kepala system enables the contractor to avoid the large overhead expenses of permanent workers and the necessary administrative personnel. The contractor also avoids investment in training, and necessary incentive and motivational mechanisms. The system requires a large number of construction workers. As local workers have been at a premium, the availability of foreign construction workers may be considered the mainstay of the Kepala system. The drawbacks of the Kepala system are: (i) poor workmanship as the Kepala does not invest in training, and switches workers
from site to site to achieve the best return from the expenditure on them; (ii) wastage of materials as the Kepala’s workers are most concerned with the quickest,
not necessarily the most efficient, methods; (iii) improper usage of the main contractor’s equipment by the Kepala’s workers; (iv) the Kepala’s inability to retain workers, or seek their improvement and welfare,
leading to the failure to develop a core pool of construction workers; and (v) workers do not enjoy permanent employment; they also do not receive any perks and
welfare benefits normally relating to such employment. Over the years, several studies have been undertaken on the Kepala system with the view to improving upon it. The latest, and perhaps the most promising, is the Singapore List of Trade Subcontractors (SLOTS) of the Singapore Contractors’ Association Ltd. which registers subcontractors, making them visible and possible to reach with assistance and support, such as training. Summary The effect of the recruitment of foreign workers on sectors of the Singapore economy in which they are employed has been studied by many writers. In construction, practitioners have become used to foreign workers, and consider them vital: they see no alternative. This contrasts with the nation’s long-term aim to reduce reliance on such workers. The most important effect of the utilization of foreign construction workers is its possible dampening of construction productivity owing to the low skill base of the workers, and communication difficulties.
37
8. Reducing reliance on foreign construction workers To reduce reliance on foreign construction workers the Government of Singapore has been encouraging and assisting the industry to mechanize its operations, and adopt appropriate corporate policies and practices. Some of the measures taken in this direction are discussed in this section. Training Efforts are being made to develop a core of skilled local construction workers. Foreign workers are also given the opportunity to acquire construction skills during their period of employment in Singapore. Training in construction, as in other technical skills, has been given increased attention since the 1960s. The establishment of the Construction Industry Training Centre (CITC) in 1983 – whereas all other training was centrally controlled by the then Vocational and Industrial Training Board (now the Institute for Technical Education) – shows the priority given to development of construction skills in Singapore. The CITC was renamed the Construction Industry Training Institute (CITI) in 1994. The CITI trains construction workers in Singapore at both the basic level (leading to the Builder’s Certificate) and advanced level (leading to the Advanced Builder’s Certificate). The courses are offered in both full- and part-time mode, and are open to Singaporeans, permanent residents and holders of valid work permits. Table 17 provides data on the enrolment of trainees for courses at the CITI. Part-time trainees predominate. The full-time trainees are mostly members of the Construction Brigade, which young Singaporean males may join during their national service. Brigade enlistees are given training and on-the-job experience in construction. Some of them take up careers in the industry after their national service. The major decline in full-time CITI entrants in 1991-92 resulted from changes to the regulations of the Construction Brigade. However, the decline in that year was more than offset by a substantial increase in part-time entrants. Table 17. Enrolment of trainees at CITI, 1987-93
Fiscal year Full time Part time
1987-88 902 1 298
1988-89 858 2 027
1989-90 981 3 087
1990-91 971 3 326
1991-92 577 5 489
1992-93 773 4 131
Source: CIDB (1992, 1993).
The CITI aims to train new entrants as well as provide opportunities to existing workers to acquire structured training leading to certification. It offers multi-skills training to
38
make workers versatile, reducing the number a company will need to employ, and increasing their utility. Apart from imparting necessary skills in construction operations, emphasis is also put on developing appropriate worker attitudes: discipline, teamwork and good housekeeping, and so on. The CIDB has a three-pronged strategy to raise the skills of workers (CIDB, 1993). First, it would coach those who already have skills to achieve consistent quality workmanship. Second, it would train new entrants and experienced workers within a short period of time (a five-month programme for new entrants to be semi-skilled; and a three-month programme for the latter to become certified as skilled). Finally, it would equip contractors, site supervisors, engineers and site foremen to be able to train their workers. Certification The testing and certification of construction trades has been undertaken by the CIDB since 1984. It seeks to formally test and recognize the competence of trainees and existing “skilled” personnel working in the construction industry, both Singaporean and foreign. The Board aimed to increase the number of certified skilled workers in the industry from 12,200 in fiscal 1991 to 24,000 by fiscal 1995. Over time, effort has been made to increase the convenience of certification to potential trainees and their employers. Mobile certification has been introduced. The number of skilled workers tested each year has progressively increased. Compared with the eight trades which were tested in 1984, 21 are now tested. In fiscal 1991 alone, five new trades tests were introduced: concreting, drain laying, marble laying, roofing, and pavement and kerb construction. Table 18 presents data on the number of construction workers tested and the number certified. The average pass rate of about 35 per cent for the three-year period is rather low. Preparatory courses are now held for prospective candidates for trade tests which familiarize them with the structure and contents of the tests. Table 18. Number of construction workers tested and number certified, 1990-93
Year Number tested
Number certified
Cumulative total certified
1990-91 4 591 1 630 9 592
1991-92 6 899 2 727 12 318
1992-93 5 571 1 603 13 291 Source: CIDB (1993).
Table 19 shows data on workers certified by the CIDB as at March 1993, classified by
trade and origin. The data also well reflect the proportion, by nationality, of workers in the industry. Foreign workers certified in the structural and finishing trades outnumber their Singaporean counterparts by more than 2:1, whereas there have been far more locals than foreigners certified in the building services and plant operation trades, in the former by a ratio of 3:1, and in the latter, 2:1.
39
Table 19. Number of workers certified by CIDB by trade (as at 31 March 1993) Trade Local Foreign Total
Structural 1 388 2 873 4 261 Finishing 1 367 3 854 5 221 Building services 2 527 679 3 206 Plant operation 816 383 1 199 Civil engineering 18 16 34
Source: CIDB (1994c) Improving working environment The dangers posed to personal safety by construction work is one of the reasons why Singaporeans are unwilling to take up careers in it. Table 20 compares relative levels of safety in the construction, manufacturing and commerce sectors in Singapore, by considering the frequency rates of accidents. Accidents on construction sites in Singapore, where high-rise building is common, are mainly caused by falling objects or by workers falling from heights. Table 20. Industrial accidents by frequency rate* and industry, 1982-94
Total Manufacturing Construction Commerce
1982 6.1 6.2 4.9 0.7
1983 5.5 5.4 6.3 -
1984 4.6 4.5 5.1 0.4
1985 4.5 4.2 5.5 -
1986 4.0 3.7 5.0 0.8
1987 4.0 4.0 4.8 0.9
1988 4.0 4.2 3.6 -
1989 4.2 4.1 3.9 3.3
1990 4.0 4.0 3.7 4.3
1991 4.0 3.9 3.9 3.4
1992 3.6 3.5 3.0 0.9
1993 3.2 3.2 2.6 1.3
1994 2.8 2.8 2.5 0.7
* Frequency rate: Number of industrial accidents per million work-hours worked. Source: Research and Statistics Department (1993, 1995).
Since the mid-1980s, considerable effort has been made by the Singapore Contractors’ Association, the Ministry of Labour and the CIDB to improve levels of safety in the industry, mainly through education of workers, and more effective supervision on worksites. The latest initiative is the formation of a subsidiary company by the Contractors’ Association to undertake safety audits on construction projects.
40
The success of the efforts being made to improve site safety is indicated by the fact that since 1988, the frequency rate of accidents in construction has consistently been lower than the national average and the level in manufacturing (table 20). The HDB has realized remarkable achievements with respect to safety. It managed to reduce the accident frequency rate on its sites from 7.18 accidents per million hours worked in 1982 to 0.66 in 1992. With effect from April 1993, foreign construction workers are required to attend a half-day course on safety before receiving their work permits. The Construction Safety Orientation Course is conducted in the main languages of Singapore’s key sources of foreign workers (The Straits Times, 1993). Under the Factories (Building Operations and Works of Engineering Construction) Regulations, 1994 (Department of Industrial Safety, 1995): (i) for projects with a contract sum of $5 million or more, the contractor is required to
appoint a full-time supervisor “to spend at least 40 hours a week exclusively on safety supervision and promoting the safe conduct of work” (p. 12);
(ii) for projects with a contract sum of $10 million or more, the contractor must implement a safety management system covering “areas such as safety policy, safe working practices, hazard analysis, safety inspections, in-house safety rules, and maintenance of machinery and equipment” (p. 12); and
(iii) in addition to (i) and (ii) above, for projects with a contract sum of $30 million or more, the contractor must appoint an independent external auditor to audit the safety management system at least every six months.
Attracting construction workers: CIDB initiatives The construction industry in Singapore has been burdened by an unfavourable image which has worsened as the country has made greater economic progress over time, and more glamorous and obviously more challenging work opportunities have emerged. Construction work is largely viewed as: “dirty, dangerous and demanding” (The Contractor, 1992). After a comprehensive study of perceptions of careers in construction among Singaporeans from various walks of life, the CIDB launched the “Construction and You” programme in 1992, with an intensive media campaign. The campaign promotes construction as a field in which Singaporeans can find rewarding and challenging work at all levels (professional, technician, trades and unskilled). It takes the form of coverage in the press and television, as well as posters, booklets, brochures, exhibitions and talks. The campaign highlights the contribution made by construction to the development of the nation; the multiplicity of job opportunities available; the more challenging nature of construction work; the improved working conditions; and increased wages. As a result of the effort made to improve the industry’s image by the CIDB, the Singapore Contractors’ Association Ltd., the Housing Development Board and other organizations, the Minister of State for National Development urged Singaporeans to take up careers in construction. The industry was not as “difficult, risky or low-paying as commonly perceived” (The Straits Times, 1992d: p. 44). “Singaporeans must have a share in building our homes, schools, roads, offices and shopping centres” (The Straits Times, 1992d: p. 44).
41
Upgrading of construction operations As discussed above, the CIDB has made continuous efforts to reduce the number of workers engaged in the construction industry in Singapore. It offers firms advice, guidance and incentives. Standardization and prefabrication of components have been promoted as the main components of the drive in this regard. The Board introduced the Buildable Design Appraisal System and the Buildable Design Awards in 1991 to recognize and acclaim enterprises adopting labour-saving construction methods. Even before the CIDB was formed, efforts had been made to upgrade the construction industry in Singapore. A number of incentive schemes were in place to encourage contractors to mechanize their operations, hence reducing their requirement for labour. These schemes have been administered by the CIDB since its formation, and new ones have been introduced over time. The incentive schemes include: the Investment Allowance Scheme (which offers tax write-offs, of up to 50 per cent of the value of investment, to firms purchasing approved equipment); the Accelerated Depreciation Scheme (which enables companies to depreciate their equipment, for tax purposes, over a shorter period); and the Research Development Assistance Scheme and the Product Development Assistance Scheme under which grants are given in support of R & D. Among initiatives which will help construction enterprises improve their human resources is the emphasis on quality. Awards for construction excellence were introduced in 1986. The annual Zero Defects Construction campaign launched in 1989 emphasizes the importance of completing tasks right the first time every time. The Construction Quality Assessment System (CONQUAS) was instituted in 1989. CONQUAS is an objective system for assessing quality of work produced by contractors. The CONQUAS Premium Scheme, which offers up to 5 per cent tendering preference, soon followed. Jointly with the Singapore Institute of Standards and Industrial Research (SISIR), the CIDB awards the CIDB-SISIR ISO 9000 certification. The Board provides training to prepare organizations for certification. Procurement and other policies of major public-sector client agencies such as the Housing and Development Board and the Public Works Department are tailored towards assisting contractors to upgrade their operations. They generally aim to improve the operating environment of construction enterprises engaged on their projects. For example, the HDB’s Interest-Free Financing Scheme helped its contractors acquire necessary equipment, and its Core Contractor Scheme assured selected firms a minimum workload and offered them better contractual terms to enable them to plan their capital investments. Summary Singapore wishes to reduce its reliance on foreign construction workers. Measures it is taking include further training and certification, improvement of the image of the industry in order to attract more Singaporeans, and upgrading construction operations to reduce the requirement for labour as well as improve the environment on construction sites.
42
9. The future In this section, an attempt is made to consider likely future trends in Singapore’s requirements for construction workers, and the factors which might influence the availability of such workers, both locally and in the countries in the region. The role of the construction industry in meeting long-term national human-resource aims is also discussed. Level of requirements In section 3, it was mentioned that the repair, maintenance and refurbishment sector of the construction industry will become even more important in future, as the economy progresses towards maturity and the volume of buildings increases and ages. As such work is relatively more labour-intensive, the industry’s requirements for labour are likely to increase even if overall demand for construction declines. As the pool of Singaporeans wishing to work in construction shrinks with other sectors of the economy faring better in the competition for workers, even more foreign workers may be required. Again, this may be the case, even if the volume of construction activity declines. It has been observed that the construction industry can reduce the number of foreign workers it uses only if its image is further enhanced to attract local people (Goh, 1991). Whereas safety had improved, management, workers and their union needed to work hard to make the working environment more conducive. So far, the Government has played a disproportionally large role in these efforts. More multipartite concerted action will be required in future. Proposals Various proposals have been made for liberalizing the regulations relating to the employment of foreign workers in Singapore. Most have suggested that the controls on an absolute number be relaxed. Imaginative recommendations include the introduction of a two-tier levy system under which employers can recruit more foreign workers by paying a higher levy. Another suggestion is the institution of a tender system, under which companies could hire additional foreign workers above the permitted ceiling. Sng (1992) considered the feasibility of a tender system for foreign workers, similar to the Vehicle Quota System. If the national objective of progressively upgrading the level of technology and improving the level of productivity in the economy is not to be undermined, effort should be made to raise the quality of the contribution foreign workers make to output. Intensive training before these workers are engaged is essential. In construction, the foreign workers need not only trades training, but also orientation courses on the nature of work on a construction site in Singapore, and basic language courses. Regional developments Some relevant major developments are taking place, are planned or are anticipated in the countries in the region, which will have an impact on the availability of foreign workers for employment in Singapore. In general, most of the countries are making considerable progress on the economic front. The cases of two countries are now outlined.
43
Indonesia earned some US$1.2 billion from the export of 631,000 workers in its last five-year plan, and hopes to earn US$3 billion from 1.5 million of its citizens working abroad under its current five-year plan (The Straits Times, 1994b). But Indonesia has decided that it will send only skilled workers abroad. Over the next five years, it hopes to change the present proportion of 80:20 per cent unskilled to skilled which it currently exports, to the export of professionals only. It will do this through the control of permits and monitoring of labour agencies. The case of Malaysia offers another example. It is estimated that foreign workers in Malaysia send home some US$1 billion each year (The Straits Times, 1995c: p. 15). The country has an estimated (legal) foreign workforce of some 1.5 million. There are also “hundreds of thousands ... working in the country illegally” (The Straits Times, 1994a: p. 24), despite numerous raids in which several people have been rounded up by the enforcement agencies. Apart from the economic cost and the well-recognized impact of reliance on foreign workers on productivity and effective utilization of the nation’s human resource, the Government considered foreign workers as causing social problems which could harm national harmony and security. Some of these problems are: “housebreaking, smuggling, robbery, rape and murders as well as forging identification documents, spreading communicable diseases such as tuberculosis and sexually transmitted diseases” (The Straits Times, 1995d: p. 3). In early 1995, Malaysia imposed a freeze on the recruitment of unskilled foreign workers. This freeze led to severe labour shortages, with some enterprises reporting that they were operating well under their installed capacity, and that their market share might be irretrievably eroded. Developments such as these should be constantly monitored in Singapore. Their probable wider implications and possible measures to address them should also be considered. Future human-resource challenges: Concluding remarks Foreign construction workers will have to be considered in the attempt to seek solutions to Singapore’s projected future challenges relating to its labour force: the impact of new technologies, and qualitative changes in the labour market including the ageing of the workforce, growing academic standards of the population, and increases in female participation and part-time workers (Steering Committee on Labour-Management Co-operation, 1985). For construction, the above trends will have very serious implications as they are likely to lead to a contraction of the pool of the local workforce. It will be necessary to make imaginative use of foreign workers to supplement the country’s requirements of construction labour.
44
References Business Times (1990). “How the policy has evolved over the years”, 9 Mar., p. 12. —. (1993). “Ministry to proceed with higher foreign workers, levy”, 18 Jan. 1990, p. 1. Chan, H.L. (1993). “Be more flexible in foreign worker policy, employer groups, businessmen urge Govt.”, in The Straits Times, 16 Jan., p. 47. Chew, D.C.E. (1970). Labour problems in the economic and social development of Singapore, Background paper commissioned by the International Institute for Labour Studies, Geneva. Chung, T.M. (1995). Foreign workers cause problems for residents in Woodlands, 5 May, p. 32. Construction Focus (1990). “Two-tier levy for foreign workers”, Vol. 2, No. 6, p. 1. Construction Industry Development Board (1990). Construction Manpower Report, Singapore. —. (1991). Construction Manpower Update 90, Singapore. —. (1992). Construction Manpower Update 91, Singapore. —. (1993). Construction Manpower Survey 1992, Singapore. —. (1994a). Annual Report 1993, Singapore. —. (1994b). Commemorative Publication, Singapore. —. (1994c). 1993 Construction Industry Manpower Survey, Singapore. De Silva, G. and Toh, E. (1992). “Ongoing projects will be hit, say contractors”, in The Straits Times, 19 Feb., p. 1. Department of Industrial Safety (1995). Annual Report 1994, Ministry of Labour, Singapore. Ganesan, S. (1982). Management of small construction firms, Asian Productivity Organisation, Tokyo. Goh, E.Y. (1991). “New foreign worker policy likely to be announced soon”, in The Sunday Times, 4 Aug., p. 14.
45
Government of Singapore (1992). Employment of Foreign Workers Act 1991 (Ch. 91 of revised 1991 ed.), Singapore. Ibrahim, Z. (1995). “Illegal workers: Stemming the tide”, in The Straits Times, 28 Oct., p. 34. Kagda, S. (1989). “The unsavoury face of foreign worker issue”, in Business Times, 12-13 Aug., p. 2. Koh, P.C. (1990). “The alleviation of dependence on foreign workers in Singapore’s construction industry”, unpublished B.Sc. dissertation, University of Singapore. Lee, T. (1995). “Foreign workers can now be tested before they come”, in The Straits Times, 21 July, p. 3. Leong, C.T. (1989). “Worksite living quarters: Some good, some squalid”, in The Straits Times, 15 Sep., p. 26. —. (1990). “Quarters messy? Workers to blame, say supervisors”, in The Straits Times, 17 Apr., p. 21. Liew, K. (1994). “Foreign worker policies”, unpublished B.Sc. dissertation, University of Singapore. Lim, M.L. (1985). “The development of a construction workforce”, unpublished B.Sc. dissertation, University of Singapore. Miles, D. and Neale, R. (1991). Building for tomorrow: International experience in construction industry development, International Labour Office, Geneva. Miller, D. (1993). “Employers fined $5 m for hiring illegal workers”, in The Straits Times, 20 July, p. 21. Ministry of Labour (1969). Annual Report 1968, Singapore. —. (1972). Annual Report 1971, Singapore. —. (1973). Annual Report 1972, Singapore. —. (1978). Annual Report 1977, Singapore. —. (1979). Annual Report 1978, Singapore. —. (1980). Annual Report 1979, Singapore. —. (1981). Annual Report 1980, Singapore. —. (1983). Annual Report 1982, Singapore.
46
—. (1984). Annual Report 1983, Singapore. —. (1985). Annual Report 1984, Singapore. —. (1987). An Overview, Singapore. —. (1990). Annual Report 1989, Singapore. —. (1991). Annual Report 1990, Singapore. —. (1992). Annual Report 1991, Singapore. —. (1993). Annual Report 1992, Singapore. —. (1995). Annual Report 1994, Singapore. Ministry of Trade and Industry (1987). Economic Survey of Singapore, Third Quarter 1987, Singapore. —. (1993). Economic Survey of Singapore, Third Quarter 1993, SNP Publishers, Singapore. —. (1995a). Economic Survey of Singapore 1994, Singapore National Printers, Singapore. —. (1995b). Economic Survey of Singapore, Third Quarter 1995, Singapore National Printers, Singapore. Ofori, G. (1990). The construction industry: Aspects of its economics and management, Singapore University Press, Singapore. —. (1993). Managing construction industry development, Singapore University Press, Singapore. Research and Statistics Department (1992). 1991 Singapore Yearbook of Labour Statistics, Ministry of Labour, Singapore. —. (1993). 1992 Singapore Yearbook of Labour Statistics, Ministry of Labour, Singapore. —. (1995). 1994 Singapore Yearbook of Labour Statistics, Ministry of Labour, Singapore. Saw, S.H. (1984). The labour force of Singapore, Census Monograph No. 3, Department of Statistics, Singapore. Sng, J.C. (1992). The economic implication of a tendering system for a quota of foreign workers; academic exercise, Department of Economics and Statistics, National University of Singapore.
47
Steering Committee on Labour-Management Co-operation (1985). Towards better labour-management relations: An action plan, National Productivity Board, Singapore. Tan, O.B. (1993). “Foreign workers to live away from site”, in The Straits Times, 31 Oct., p. 21. Tan, S. (1992). “Govt. noting businessmen’s complaints”, in The Straits Times, 12 Aug., p. 40. Teo, A. (1990). “Balancing two conflicting goals”, in Business Times, 9 Mar., p. 12. The Contractor (1984). “Rely less on labour, says SCAL President”, Vol. 2, No. 2, p. 1. —. (1992). Annual Dinner 20 November 1991: President’s speech, Vol. 9, No. 1, pp. 8-9. The Construction Times (1976). “Safety and health on site: Everyone’s responsibility”, July/Aug., pp. 24-25. The Mirror (1984). “Board aims to develop a permanent pool of construction workers”, 1 Aug., p. 6. The Straits Times (1989a). “Issue of work permits up four-fold since mid-March”, 13 May, p. 1. —. (1989b). “Influx of 9000 workers cuts demand for Thais”, 10 June, p. 26. —. (1990a). “Quota system for foreign workers possible in future”, 7 Mar., p. 1. —. (1990b). “Living conditions of Thai workers satisfactory”, 9 Apr., p. 16. —. (1990c). “‘No link’ between Thai deaths and work terms”, 10 Apr., p. 18. —. (1992a). “Govt. to modify foreign worker policy for construction sector”, 9 Jan., p. 40. —. (1992b). “Foreign labour: Govt. sets out new measures”, 19 Feb., p. 1. —. (1992c). “Govt. to allow more foreign workers for HDB projects”, 15 Aug., p. 48. —. (1992d). “Construction jobs no longer risky or low-paying”, 23 May, p. 44. —. (1992e). “Ongoing projects will be hit, say contractors”, 19 Feb., p. 32. —. (1993). “Construction safety course before work permits”, 23 Mar., p. 21. —. (1994a). “KL urged to lift freeze on unskilled foreign workers”, 9 July, p. 24. —. (1994b). “Jakarta ‘to stop sending unskilled workers’”, 13 July, p. 17.
48
—. (1995a). “One dead, 64 hurt after workers’ quarters collapses”, 1 May, p. 1. —. (1995b). “Foreign workers’ housing: Standards soon”, 27 May, p. 25. —. (1995c). “Foreign workers send home $1.4 b a year”, 18 July, p. 15. —. (1995d). “1.2 million foreign workers in Malaysia ‘a threat to security’”, 21 July, p. 3. —. (1995e). “Two Bills passed to deter illegal workers at construction sites”, 2 Nov., p. 26. —. (1996). “Changes to 2 Acts to deal with illegal foreign workers”, 16 Feb., p. 24. The Sunday Times (1995). “Workers’ housing: Panel plans checks”, 7 May, p. 24. Toh, R. (1993). Foreign workers in Singapore, Singapore Institute of Labour Studies Information Series No. 6, Singapore. Wong, A.K. and Yeh, S.H.K. (1985). Housing a nation: 25 years of public housing in Singapore, Maruzen Asia, Singapore.