How About ‘Richer, Kinder, Slower’?

I have come to my tether, and therefore I must blog (or self-combust).

In a nutshell:

Cause of aggravation #1: A friend told me last night of a conversation between an undergraduate at a local university here and her colleague. Her colleague had expressed his dismay at the large numbers of elderly folk in Singapore working in menial, backbreaking jobs. The law student couldn’t understand what the fuss was – after all, ‘it’s good that they at least have a job’.

This echoes a letter in a mainstream newspaper recently, which similarly extolled the employment of elderly folk here in Singapore as some sort of blessing.

Two questions for persons who hold such views:


Is this what you wish you/your mother/father/grandparents will be doing when you/they are 65, 70, 75? To be pushing trolleys, hauling trash, clearing plates (while standing most of the day), so as to earn a part-time pay of maybe $400 a month, or full-time pay of perhaps $800?

The government will boldly splash posters of elderly working folk who beam and tell us they are grateful to be working, that working keeps them active, affords them a modest income. The mainstream media will boost their efforts by featuring more of these elderly workers who are pleased to be working.

These elderly men and women are admirable for their spirit, but such cases should not be exploited to a) exaggerate the number of such cases; b) distract from the problem that many elderly persons are forced to take on menial jobs with meager wages just to make ends meet.

After working a lifetime, instead of easing into an era of ‘Richer, Kinder, Slower’, the low-wage elderly find themselves coerced by the state into being ‘Cheaper, Better, Faster’. So much for filial piety and contributing to the spoils of this extremely prosperous nation.

Ministers who are past retirement age but still working – not just as highly paid government officials but also as consultants on boards of large companies – are far from a legitimate example for the rest of the country’s ‘average citizens’.

Their wealth and bargaining powers position them among the elite, who can easily choose not to work and still live extravagantly till their last days – they do not need to worry about escalating healthcare costs draining their dwindling retirement savings, or what record inflation will mean for their daily expenditure.

I have met foreign workers from poorer countries in the region who ask me, with great puzzlement (sometimes shock), how is it that in Singapore, one of the richest countries in the world, there are so many frail elderly women and men working alongside them, as they clean toilets and scrape leftover food off plastic plates. I am embarrassed, and unable to answer. ‘This will never happen back in our country’, some of them say, shaking their heads.

Which makes me wonder, as it increasingly does for others: what is the point of being one of the wealthiest countries in the world, when we are so callous towards the weak and marginalized?

Cause of aggravation #2: The Ministry of Manpower responded to my letter to the Straits Times forum about foreign worker levies (specifically, the foreign domestic worker – or ‘maid’ – levy). In light of the recent controversy over proposed wage hikes for domestic workers, I had proposed a reduction in the foreign maid levies. This could alleviate the financial strain of working families as well as be redirected to increasing the wages of domestic workers here in Singapore. After more than a decade, the wages of domestic workers have increased from a mere $230 to $380; in comparison domestic workers can earn up to $800 in Taiwan or $650 in Hong Kong. (Little wonder they would much rather head there!)

The response from the MOM reiterated nothing new: the levy is to moderate demand, they said, not wages. However, if the mandate of the levy is to ‘moderate’ demand, I would like to point out that there is nothing ‘moderate’ about the exponential leaps in domestic worker numbers in this country.

The Foreign Maid Scheme was introduced in 1978. By 1988, in just a decade, there were 40,000 maids in Singapore. By 1993, it was said that one in fifteen households in Singapore employed a domestic worker, one of the highest rates in the world for countries with live-in domestic help; by 2007, this figure was one in six households; in 2009, it was one in five households. In today’s letter, the MOM says there are now more than 200,000 domestic workers in Singapore. In 2009 alone, 6,000 new domestic workers were hired in that one year. The figures below chart the not-so-moderate increases (as culled from media reports and research papers):

Foreign Domestic Worker population / Year
40,000 / 1988
100,000 / 1999
160,000 / 2005
170,000 / Feb 2009
196,000 / Dec 2009
200,000 / Feb 2011

Sure, numbers could have gone even higher without the levies – but is that even the point anymore? There is clearly a deepening structural dependence on domestic workers here in this country, and if the government doesn’t take concrete steps to reduce this reliance, then what is the point of taxing employers even further?

A levy ceases to be an effective deterrent when there appear to be little other attractive options available. Moreover, the costs of previously affordable alternatives have risen beyond the costs of the levy – e.g. when childcare outside the home costs $800-$1200, a financially pragmatic working family might choose to hire a domestic worker instead, as the domestic worker’s salary + levy is still lower. This does not mean that all families who do so can easily afford to hire a domestic worker – but that it will be presented as the less financially taxing option if childcare costs continue to escalate, as has been reported in the press yesterday and today.

There is also a standard PAP-government way of rationalizing ‘cost savings’: The MOM stated in its letter that families with young children, elderly and disabled family members pay a ‘concessionary levy’ of $170, instead of the full maid levy of $265. That is indeed ingenious – slapping on a tax of $265, then reducing it slightly and, hey presto! You have ‘cost savings’!

If the levy is not quite ‘moderating’ demand, and is fast losing effectiveness as a ‘deterrant’ due to inflationary pressures on childcare and aged care options outside the home, then what is the foreign worker levy for, where does the money go, and how is the money being used?

A foreign worker levy is a tax employers of all work permit holders and S-Pass holders have to pay every month. There are over 200,000 domestic workers in Singapore, and the levy ranges from $170-$265 per domestic worker. As of December 2009, there were allegedly 856,000 work permit holders, and the levy per worker ranges from $160-$470. As per Dec 2009 figures, there were 82,000 S-Pass holders, and their monthly levy ranges from $110-$150. Anyone wishes to hazard a guess how much this means in terms of government revenue each year?

A conservative estimate, based on an assumption that 40 percent of households pay a concessionary levy of $170, and the rest of the 60 percent pay $265, means a ‘guesstimate’ of revenue earned from the maid levy alone per year would be:

80,000 x $170 (monthly levy) = $13, 600, 000
+
120,000 x $265 (monthly levy) = $31, 800, 000
=
$45, 400, 000 in revenue each month for the maid levy alone

If you multiply that by 12 (months), that makes it $544, 800, 000 earned from the maid levy each year.

What if you add the levies from the other 856,000 work permit holders (which are considerably higher), and the 82, 000 S-Pass holders?

It made my calculator go beserk and my head spin.

The state has never revealed in total how much it earns in revenue from the foreign worker levies, where this money – billions! – is channeled to, and how it is used.

There is no transparency and no accountability, and yet we have to accept their rationale, as foreign worker levies continue to rise alongside foreign worker numbers, that this is really for our own good.

Cause of aggravation #3: Record inflation rates and ‘wage increases’

The news today predicts record inflationary rates – inflation is estimated to rise to 5 or 6 percent in the coming months; averaging at 3 to 4 per cent the entire year. Apparently, the average inflation rate since the 1980s has been 1.7 per cent, so this rise is considerable and alarming.

Of course, we are also told that the economy grew at a record pace last year.

But wait, hang on, income inequality has also been growing at an alarming rate too:

• According to the United Nations, the rich-poor gap in Singapore is the second largest among the world’s developed countries. Apparently, Singapore’s richest 20 percent earn 9.7 times more than the poorest 20 percent: the median monthly income of Singapore’s richest 20 percent rose from S$5, 328 in 1996 to S$7,278 in 2009; meanwhile, the poorest 20 percent saw their wages increase by a mere $32 over the same 13 year time period (from S$711 to $749).

• Yet another article in the Huffington Post cited: ‘From 1998 to 2008, the bottom 20 percent of households saw their income drop an average of 2.7 percent while the salaries of the richest 20 percent rose by more than half’.

• Leong Sze Hian’s article, ‘Income up 0.3%: Everyone got govt benefits?’, pointed out that between 2009 to 2010, ‘the ratio of average income of top 20 percent to lowest 20 percent employed households increased from 12.7 to 12.9’.

• Currently, up to 400,000 workers – 20 percent of the resident workforce – earn a monthly wage of less than S$1200.

Yet Singapore remains one of the world’s most expensive cities in the world, the second most expensive in Asia to live in (after Tokyo) – it is estimated that housing prices have increased by 70 percent since 2006. In contrast, it ranks low on wage levels in comparison with other major cities (43rd out of the 73 surveyed).

A commentary in today’s Straits Times (‘New Era of Higher Inflation’, 18/2/2011) talked about the problem of ‘higher wages’ – both overseas and in Singapore – and how this is also a driver of inflation. A mention was made of higher foreign worker levies, which an economist equated to a ‘rise in wages’.

Once again, and I refer to my previous point: higher foreign worker levies DO NOT MEAN HIGHER WAGES. It may mean higher labour costs for employers, and it definitely means higher revenue earnings for the Singapore government, but it certainly does NOT translate to increases in salary payments for low-paid workers.

And then, there was this statement: ‘Higher labour costs, by definition, mean higher pay for Singaporeans. As long as salaries rise by more than inflation – as they did last year – then Singaporeans’ purchasing power will still increase’.

Perhaps this writer is referring to the top 20 percent of Singapore’s richest households, whose income more than doubled.

But ‘salary increases’ on par with inflationary pressures is not a reality for a significant proportion of other households. In fact, Leong Sze Hian, in the article cited earlier, suggests that lower-income households actually experienced, in real terms, a decrease in income.

The mantra to ‘solve’ our woes seems to be reduced to one word: productivity. Increase productivity, and your business will become more cost-effective/the reliance on foreign workers will be reduced/you will somehow automatically earn more money because you are more productive.

Really?

Have you ever been in an office or been part of a team where someone was laid off (to cut costs), and the workload increased – hence more labour output per worker – but your salary didn’t?

In any case, Singapore, of all places, is not one where upward pressure on wages will be tolerated for too long. The PAP’s objective has always been to ensure the labour market remains ‘flexible’ and wages ‘internationally competitive’ in order to attract businesses and foreign investors. For the ruling party has vastly different sets of rules to be applied to different segments of the community.

For PAP Ministers and others on the government’s payroll, it is imperative that they are paid ‘top dollar’ to preserve their integrity and attract ‘top talent’. Salaries are pegged to the top market performers, and are increased along with GDP growth. Nothing to do with individual productivity or performance, and salaries consistently continue to increase.

For the rest of the workforce, particularly those on the lower rungs of the labour market – including hunched-over 65 year-old aunties mopping toilets – salaries must be pegged to productivity. No matter that there are limits to how many queen-size beds you can physically make up in an hour; or plates you can clear off hawker centre tables; or trolleys you can remove (without leading to higher rates of work injury and stress).

In fact, how about a vastly different question: How about increasingly woeful salaries to increase productivity? In one episode of Undercover Boss, one employer discovered differences in the cleaning teams in two different caravan resort parks, both of which he owns. Among the better performing team, wages were notably higher – the team supervisor there had cut management staff, and used the money to boost the salaries of the cleaners. Instead of management breathing down the cleaner’s necks, they implemented random spot checks. The cleaning team responded to this greater independence and higher pay by becoming more diligent, motivated and cheerful.

Which reminds me of a quote by a low-wage worker in Australia, who appeared on a talk show discussing the rising costs of living. In exasperation, after bureaucrats kept harping about how wage increases may harm the economy, she commented (am paraphrasing): How is it that marginal wage increases for the low-paid are always ‘harmful’ for the economy, but generous pay increases for the already highly-paid are not?

It is astounding and quite sickening how pay rises for top executives and ministers in this country have been rising to obscene levels – way beyond what could reasonably be construed as ‘need’ – while a significant number of persons who do an honest day’s work are forced to scrape by on salaries ranging from $400 to $1000. Moreover, any calls to mandate salary increases for the low-paid are met with horror by policy-makers, who cite a string of ‘nasty consequences’ – namely, for the economy. How come there are no nasty consequences for the economy when millions/billions are directed each year to our inflated bureaucracy?

So stop this ‘cheaper, better, faster’ nonsense already. It’s not greater productivity that we need to ameliorate the problems of the working poor.

What I want are policy-makers with greater emotional intelligence and empathy, to shift us towards a new development model that values each worker and citizen, and upholds the principles of dignity at work – not just for people at the top echelons, but especially for those currently subsisting at the bottom.

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