Thursday 26 April 2012

Beefing up the Employment Act

Law must keep up with changes such as rising pay and PME numbers
By Toh Yong Chuan, The Straits Times, 25 Apr 2012

JUST four years after its last update, the Employment Act is up for another revamp. The Manpower Ministry (MOM) has pledged to consult unions and employers in its review of the law this year.

The Employment Act protects workers by setting out minimum employment terms and benefits. It also provides redress for workers to recover salaries and to resolve disputes with employers.

The last update in 2008 took place after 13 years. It brought 200,000 more workers under its ambit, covering 1.6 million workers. This time round, a mere four years has seen sweeping workplace changes, making a review timely.

Changes in four areas in the workforce underpin the need for an updated law.

First, fast-rising wages.

In 2008, the Act was amended to cover workers earning up to $2,000 each month, up from $1,600 previously. There were calls for the ceiling to go up to $2,300, which was then the median wage.

In the last three years, the bar has been raised further. Median gross monthly income from work for the resident workforce rose from $2,588 in 2008 to $2,925 in 2011.

This puts pressure on the salary ceiling to go up. If it does not, more workers will find themselves falling out of the protection of the Act.

Second, there are more professionals, managers and executives (PMEs) in the workforce. The number of resident PMEs in the labour force grew from 573,000 in 2008 to 629,400 last year.

PMEs are given some protection under the current Employment Act. Those earning below $4,500 can turn to the MOM and Labour Court for help in salary disputes.

The amount of $4,500 is thus the threshold where the law now says: 'You are on your own' in pay disputes.

But is the threshold realistic today?

According to the latest available Report on Wages in Singapore, the median wage for professionals in 2010 was $4,300. The median wage for managers was $6,300, with the bottom quarter earning below $4,399. This means that only about one in four managers earn below $4,500 and are covered by the Act.

The limit was first set at $2,500 in 2008, and subsequently raised to $4,500.

To cover PMEs, the $4,500 ceiling has to go up. If not, the majority of professionals and managers will fall out of the protection of the law.

Third, the need to boost medical benefits of low-wage workers.

In 2008, the Act was updated so that workers can get paid medical leave after three months of work, instead of six previously. While it was meant to help low-wage workers, it can go further.

Employers are now required by law to bear the doctor's consultation fee of their workers. But they are not obliged to pay for medication, treatment or hospitalisation, unless it is in the contract made with the worker or the collective agreement signed with the union.

This means that employers can dodge paying the medical fees for workers who are not unionised, and they can thrust a lopsided contract to workers and say: 'Take it or leave it.'

Two labour MPs interviewed pointed out that foreign workers get better medical benefits than some low-wage workers.

Employers of foreign workers are compelled by law to provide medical insurance for hospitalisation and surgery set at a minimum of $15,000 a year.

It is time to extend this to cover local workers. This won't be financially ruinous to companies, since a basic health plan - pegged to the nation's MediShield Basic plan - has monthly premiums of less than $30 for a worker below 65 years old.

Fourth, with a much bigger proportion of foreigners in the workforce and some evidence of rising tension between locals and foreigners, it is time to deal with the issue of discrimination head-on.

Excluding domestic maids, the number of foreigners in the workforce grew from 866,300 in 2008 to 991,600 last year. Foreigners took up 32.8 per cent of jobs last year, up from 31.4 per cent in 2008.

Whereas most foreigners used to fill jobs unpopular with Singaporeans - such as in the construction or cleaning sectors - more foreigners in Singapore these days are PMEs in service jobs. Examples include infocomm, retail and customer service jobs.

Foreign PMEs in Singapore grew from 63,000 in 2006 to 112,000 in 2010. In the services sector, the numbers soared from 51,000 to 90,000.

Back in 2008, some people had suggested that the Act be expanded to include an anti-discrimination law. The suggestion was not taken up but deserves another look.

The top complaint received by the fair employment watchdog Tafep (Tripartite Alliance for Fair Employment Practices) was on bosses preferring foreigners over Singaporeans. This included discriminatory job advertisements. Tafep received 277 complaints last year, up from 115 a year ago. But Tafep as an alliance lacks legislative force and enforcement clout.

To be sure, introducing an anti-discrimination law is a major exercise that should not be undertaken lightly. Many different interests have to be balanced in drafting such a law.

For example, while Singaporeans may press for an anti-discrimination law to protect citizens, foreigners in the workforce may demand that the law protects them from discrimination on the basis of their nationality.

There would also be calls for an anti- discrimination law to be worded to prevent any form of discrimination in the workplace - on nationality, race, gender or religion, for example.

While difficult to resolve with a law, the thorny issue of discrimination deserves more discussion. A human resource manager I spoke to flagged this as one issue that should be dealt with in the review of the Act. A frank debate on this would be a good first step towards the stamping-out of discriminatory workplace practices.
Many more suggestions to review the Act will be raised in the coming months. Not all will be accepted. But the overall thrust of the changes must keep the law in sync with the fast-changing workplace.

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