Supply of cheap foreign labour drying up

More demanding higher pay; companies going further afield to recruit

By Yunita Ong & Lo Yee, The Straits Times, 30 Apr 2012

FIRMS in Singapore which rely heavily on unskilled labour at rock-bottom pay rates say they are being adversely affected on two fronts.

First, the Government is making it harder and more costly for firms to hire cheap unskilled foreign labour.

The double whammy is that even when they try to hire foreign workers, many of them are giving these lowly paid jobs a miss.

These workers say they can earn almost as much back home in countries such as China, Thailand and India, where the economy is growing at a rapid pace.

Wages back home are much better than they were a few years ago, and they don't have to contend with Singapore's high cost of living.

Firms now find that they have to pay more or go further afield to hire the workers they need.

The problem is especially acute in the construction sector, which has long relied on cheap foreign labour.

Some firms say they have to pay as much as 30 per cent more to hire foreign workers on the Work Permit pass from two years ago.

Mr P. Ramar, who runs FRR Consultants, said that Chinese workers are demanding at least $50 a day, compared with $35 a day two years ago to take up a job here as a general worker.

'They say they earn at least 200 yuan (S$40) at home. And for the semi-skilled workers, like technicians, they want at least $100 a day to come,' said Mr Ramar, who specialises in recruiting and placing workers from China, India and Bangladesh in the construction sector.

He added that foreign workers complain that the cost of living in Singapore is rising and that it is 'not worth it' to take up the jobs.

Chinese worker Xu Guo Tuan, who earns $40 a day hauling sand and cement at construction sites in Singapore, is one such worker thinking about whether he should continue to stay here to work.

The Jiangsu native, who came to Singapore last year, said there is not much difference between what he can earn back home and what he is earning now.

'I earn $40 a day here, but at home, I would earn about 200 yuan and some companies are offering more. I chose to work in Singapore for personal reasons, but my friends are not interested in coming,' he said.

The difficulty in getting Chinese workers to work here is not surprising, as firms within China are also facing similar issues, said HSBC economist Donna Kwok.

She said that over the past few years, manufacturing firms were moving inland from coastal cities to hire staff they need.

'This is a trend which started since the economic recovery back in 2009,' she said. Last year, wages in China shot up 20 per cent over the previous year's, said Ms Kwok.

There were 702,000 Work Permit pass holders in Singapore last year, up from 670,000 in 2010.

The Government has been raising foreign worker levies to wean firms off cheap foreign workers, especially unskilled labour.

To cope with the situation, firms are turning to less traditional sources to recruit the people they need.

Managing director of plastics engineering firm Roechling Singapore Y.K Wong said that his firm is going to the more remote parts of China, as far in as the mountainous regions of Inner Mongolia and other remote regions.

Others are hiring more from India, Bangladesh and Myanmar, said Dr Ho Nyok Yong, president of the Singapore Contractors Association. 'Workers from Tamil Nadu, where Indian workers in Singapore are predominately from, are coming in reduced numbers to Singapore now as their economy moves up the value chain,' he said.

Mr Ramar said that Bangladeshi and Indian workers are now asking for at least $20 a day to work, higher than the $15 a day two years ago.

'They are still cheap but their demands are getting higher,' he said.

Economists said firms are better off focusing on raising productivity as a way to cope with the manpower crunch.

Given the Government's drive to reduce reliance on foreign workers, it is unsustainable to chase cheap foreign workers, said DBS economist Irvin Seah.

'The best option for firms would be to up their productivity by reducing their reliance on foreign workers, which would be the best outcome for all.

'That would reduce the need to deal with rising levies and wages,' he said.