Monday 20 August 2012

Mind the gap between principle and practice

Stricter rules on hiring foreign workers must be matched by rigorous enforcement
By Radha Basu, The Straits Times, 19 Aug 2012

A Bill introduced in Parliament last week to regulate foreign employment in Singapore seeks to better protect foreign workers from unscrupulous employers.

The Employment of Foreign Manpower (Amendment) Bill also seeks to ensure that employers do not deny Singaporeans jobs by circumventing tightened foreign employment rules in order to continue hiring cheaper foreigners.

It is an important piece of legislation, and an effort to regulate unfair practices that exploit foreign workers, while denying Singaporeans jobs.

All the offences mentioned in the following hypothetical examples will face stiff new penalties if the changes are approved.
- An employer charges his foreign worker an illegal "kickback" to renew his one-year contract. Desperate to continue working here since he has yet to recover his recruitment costs, the worker pays up, adding to his already heavy debt burden. 
- An employer inflates a foreign worker's salary in his work pass application to $2,000. In reality, the worker gets half of that. The employer gets his worker cheap. He also gets a handsome cut of the foreigner's recruitment fees. A Singaporean, who would have settled for $2,000, is thus denied a job. 
- In order to circumvent a rule that he must employ at least four Singaporeans for every six foreign workers he hires, a factory boss puts his Singaporean mother and relatives on his payroll although they don't work for him.
For example, under the existing law, a person who is convicted of receiving kickbacks can be fined a maximum of $5,000, jailed for up to six months, or both. This is being upped to $30,000 or two years' jail per offence, or both.

Kickbacks are payments made to a company or its representatives as an inducement to hire fresh foreign workers - including those on S-Pass or an Employment Pass - or to renew their contracts.

The amendments will also speed up the punitive process. Infringements which do not cause direct harm to foreign workers - such as those circumventing foreign worker quotas - will be classified as administrative rather than criminal offences, allowing these cases to bypass the courts and be settled within six months, as opposed to one or two years.

Criminal offences, such as receiving kickbacks or forging a worker's educational certificates, however, will still be tried in court.

The moves will help not just local and foreign workers, but also the majority of Singapore employers who play by the book and have lost out to unscrupulous competitors who flout laws, exploit impoverished foreign workers and line their own pockets.

But allegations of migrant-worker abuse and of locals losing out to cheaper foreign hires in the race for jobs have been there for years. So why are these changes being made now?

One key reason is that recent changes to tighten the tap on foreign workers have made it costlier for employers to hire foreign workers.

Levies, for instance, are being progressively increased. In construction, the maximum levy in July last year was $380 per worker per month. By next July, it will be $750.

Ratios on how many foreigners an employer is entitled to for each Singaporean he employs have also been lowered. Under the changes announced in this year's Budget, foreign workers can now make up only 45 per cent of the workforce in the service sector, down from 50 per cent earlier.

Faced with higher costs, more employers may be tempted to break the law.

The proposals also acknowledge the existence of those who set up shell companies to recruit foreign workers, pocket their fees and then fail to provide them with jobs once they arrive here.

Bosses of these companies can be fined, jailed and may even be caned once the Bill is passed, though it remains to be seen whether a maximum fine of $6,000, up to two years' jail and possible caning will prove to be enough of a deterrent.

The Bill, which aims to replace the existing Employment of Foreign Manpower Act, will be up for debate in Parliament next month.

Passing it will be the easy part. But the gap between principle and practice is wide.

However noble the letter of the law is, the changes will matter little unless they are rigorously enforced and offenders are brought to book.

This is easier said than done. As The Sunday Times reported last week, nearly four years after receiving kickbacks was made illegal, a majority of Bangladeshi construction workers interviewed by Transient Workers Count Too, a non-profit organisation that seeks to improve conditions for low-wage migrant workers, said they had been asked to pay such illegal fees.

In one case, a worker who says he paid $7,000 in kickbacks for a two-year contract was being sent back after less than a year when he complained to the Ministry of Manpower (MOM).

Some employers acknowledge that the practice is widespread, especially among smaller firms and agents. Yet, between January and April, only four people were convicted for kickback offences. There were only 10 convictions for the whole of last year.

One reason could be that the cases are hard to prove because payments are made in cash, without receipts.

The Bill proposes to give more powers to investigative officers, making it easier to nab perpetrators. The officers will be able to forcibly enter and search a worksite or office if they suspect a breach of law and also take voice and video recordings to use as evidence in court.

Under a new "presumption" clause, any money collected from foreign workers will be considered a kickback unless the employer can prove that it was collected for a legitimate reason, such as deductions for food or accommodation.

This is good, but more could be done.

For instance, making it mandatory for all employers to issue payslips to workers detailing both pay and deductions, and ensuring that all payments are made to a bank account, rather than in cash, could make underpayment of salaries or illegal deductions easier to prove.

Migrant workers' groups say that a majority of workers with salary woes are paid in cash.

In a survey of 3,000 Work Permit holders last year by MOM and the Migrant Workers' Centre, one in five said they were paid in cash. Given that there are more than 700,000 Work Permit holders here, excluding maids, it could mean that at least 140,000 get their salaries in cash.

A second issue that needs looking into is the length of contracts. Increasingly, companies are bringing in workers on one-year contracts, down from two years previously.

Migrant workers' groups charge that this has contributed to an exceptionally high worker turnover rate, especially in industries such as construction.

Some bosses and agents may choose not to retain workers because they can charge higher recruitment fees from fresh, inexperienced workers.

This is especially true for countries such as Bangladesh, with a large pool of fresh workers eager to come to Singapore.

So a worker who paid $7,000 to come here - which could mean more than 17 months of his basic pay here - may be sent back home in severe debt, even as thousands more of his compatriots pay up to come over.

Employers who want to offset higher levies they have to pay may offer these fresh workers even lower salaries than what they paid before.

This will not only make it harder for these workers to pay off their debts, but also hinder productivity, as fresh arrivals are likely to be less productive than experienced ones.

To reduce foreign worker churn - wherein new workers are recruited every year even as existing ones are sent back - the maximum period of employment for unskilled Work Permit holders from countries such as China, Bangladesh, Myanmar and India was extended from six to 10 years last month.

There are about 300,000 such workers here. A "significant proportion" are employed in the construction and service sectors, and have worked here for more than four years, says the MOM.

But there are no publicly available figures for the number of workers sent home after completing just one year. This ought to be tracked and reported.

Even as Singapore strives to improve productivity and wean itself from an over-dependence on foreign labour, it is important to increase pay and improve work conditions in the manufacturing, service and construction sectors that heavily depend on foreign workers.

There are foreign workers here who earn basic pay of as little as $18 a day - or about $460 a month. Some do tasks that can be mechanised, except that machines do not pay recruitment fees or kickbacks.

Many work 12 hours or more to earn overtime pay to clear their debts. Some, especially Chinese workers, say they do not get a day off.

For far too long, some have argued that it is all right for foreign workers to receive rock-bottom wages because they accept such conditions willingly and spend their earnings elsewhere.

But creating a group of such poorly paid migrants is not just exploitative, but could also end up hurting Singapore.

For starters, as economies improve in their home countries, these foreigners may not want to come here. This is especially true with Chinese workers, and some employers say they are already feeling the pinch.

Second, economists such as Associate Professor Hui Weng Tat of the National University of Singapore have warned of a "compelling link" between the growth in foreign worker numbers and a decline in estimated real wages for the poorest Singaporean workers.

Indeed, MOM statistics show that there are still close to 307,000 Singaporeans and permanent residents whose gross pay is less than $1,500 a month, excluding employer's CPF contributions - despite working full-time.

Of these, roughly a third - or around 110,000 local workers - earn less than $1,000, though their numbers have been falling. Many, no doubt, work in the very same sectors as their migrant co-workers.

If migrants are paid a pittance, the Singaporeans who work in the same sectors might not get much more, despite well-meaning efforts by unions to pull up their wages.

And bosses will have no incentive to improve productivity and wean themselves off an over-dependence on lucrative foreign labour.

Wages and work conditions need to improve for both foreign and local workers. And the sooner this happens, the better.


To complement prosecution
The Employment of Foreign Manpower (Amendment) Bill creates a new category of "administrative" infringements, where employers are fined, rather than jailed. These breaches will involve cases where there is no direct harm or abuse to workers.

Administrative offences will be handled by the newly appointed Commissioner for Foreign Manpower. Employers will not be prosecuted in court, since the process is time-consuming.

However, criminal offences, such as those where employers receive kickbacks, will still go to court.

Under the existing Act, all offences are criminal offences, with penalties involving fines and jail terms and enforced through the courts.

To enhance deterrence
Several new categories of offences are being proposed to tackle common malpractices.

For example, the submission of forged certificates also becomes a new criminal offence, with a maximum fine of $20,000 and/or two years' jail.

Circumventing foreign worker quotas by using "phantom" local workers becomes an administrative infringement, with a maximum fine of $20,000.

Employers may even be debarred from hiring foreign workers. Phantom workers who are linked to "shell company syndicates" will continue to be prosecuted in court.

Employers who falsely inflate workers' salaries to make them eligible for an S-Pass or Employment Pass can be fined up to $10,000.

Employers who receive kickbacks from workers - to renew contracts, for instance - will face a maximum fine of $30,000 and/or two years' jail.

To help enforcement
Officers investigating cases will be given wider powers. For instance, they can forcibly enter a worksite or office if they suspect any activity deemed illegal by the Act. They will also be able to take voice and video recordings and use these in court.

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