A fair deal for low-wage
workers
Cleaners have long languished at the bottom
of the pay ladder. Are new measures by the Government, wages
council and unions likely to make a difference? Toh Yong Chuan and Janice
Heng report
FROM 7am to 4pm, five days a week, 65-year-old Madam Kamsinah
Ismail sweeps and scrubs at a Jurong secondary school, a job she
has been doing for five years.
She dislikes cleaning toilets but stays on the job
because she is unable to find another higher-paying one within
walking distance of her Housing Board flat. "Who wants to hire an
old woman like me?" she laments.
For her labour, she gets $850 a month, after a $100 rise
last year when she was made an assistant cleaning supervisor.
There are some 50,000 Singaporean cleaners like her, most
of whom earn less than $1,000.
Last week, the National Trades Union Congress (NTUC)
announced a "progressive wage" plan to gradually raise their pay to
above $1,000. There will be a job ladder which cleaners can climb
to get higher pay, so that cleaning is not a dead-end job, says
labour chief Lim Swee Say.
The immediate target: To have 10,000 cleaners who earn at
least $1,000 each. Those who do harder jobs like cleaning HDB
housing estates or operate cleaning machines can earn as much as
$1,500, according to salary benchmarks set by the labour
movement.
That is just a start, Mr Lim tells Insight: "We will
continue to identify more cleaning jobs and other sectors. Our
total target is to help 100,000 low-wage workers by 2015."
Even as the momentum to raise the wages of the 270,000
Singaporeans who earn less than $1,000 a month gathers pace, a key
question remains to be answered: What is a fair wage for workers
like them?
The meaning of fairness
THERE are two competing concepts of what a "fair wage" might be,
say economists.
One is a living wage, which is "fair" in that it allows
workers to support themselves, and perhaps also their families. It
thus depends on the cost of living.
A living wage ensures that workers "will be fairly
treated and rewarded for the work effort that they provide, in
terms of enabling them to sustain a reasonable standard of living
above the subsistence level", says National University of Singapore
economist Hui Weng Tat.
The second idea is the market wage, determined by the
economic forces of supply and demand.
It is "fair" in that a worker is paid the worth of his
job - for in economic theory, a job is worth only as much as
companies are willing to pay for it.
Both concepts are in tension. If the market settles at
too low a wage, workers may not be able to support themselves.
But free-market economists would argue that a living wage
that is higher than the market wage distorts the real worth of a
job.
For labour Member of Parliament Zainal Sapari, the
concept of a living wage is more relevant to low-income workers:
"These workers need higher wages to cope with the rising cost of
living."
How much might a living wage be? In Parliament last
month, Nominated MP Laurence Lien asked for the Government's
estimate of a Singaporean family's minimum expenditure.
A four-person household will need $1,250 for necessities
such as food, clothing and shelter, replied Trade and Industry
Minister Lim Hng Kiang. Nearly 5,000 four-person households here,
with one working adult, earn less than that. But these families get
help from the Government, added Mr Lim.
Coincidentally, $1,200 is also what union leader
Hareenderpal Singh considers - in his personal view - a "fair
starting point" for security guards' monthly pay.
The security and cleaning sectors are two in which wages
remain low. Most of the 40,000 guards here have a basic pay of less
than $1,000, but can earn as much as $1,500 a month with
overtime.
The labour movement does not support the idea of a
legislated minimum wage. But Mr Singh, an executive council member
of the 11,000-strong Union of Security Employees, believes it is
important to have a fair pay cheque so that security guards
continue to be drawn into the sector.
Both the labour movement and the Government, however,
have been reluctant to move away from the concept of a market
wage.
Their stance is that wage increases must be supported by
higher productivity. Pay goes up only if the job is worth more.
Demand and (foreign)
supply
THOUGH the Government believes that wages should be set by the
market, it nonetheless wields considerable influence over the
market and has taken steps to nudge wages upwards.
Chief among them is the tightening of foreign labour
supply through measures such as higher levies for foreign workers,
and lower caps - or dependency ratio ceilings (DRCs) - on the share
of foreigners in a firm.
A ready supply of low-skilled foreign workers in earlier
years kept wages at the bottom low, say economists. Accordingly, a
tighter foreign labour policy should give wages room to go up.
"It is forcing employers in these sectors to face up to
the reality that they will have to offer higher wages in order to
draw in Singaporeans to take on these jobs, rather than rely on
foreign workers to make up the numbers," says Singapore Management
University economist Davin Chor.
In practice, no clear trend has yet emerged. In 2009,
before government measures to tighten foreign labour began, the
average monthly wage for cleaners and labourers was $1,000. It fell
to $960 in 2010, but rose to $1,020 last year.
Officer cleaners' pay has risen from $767 in 2009 to $800
in 2010. But industrial cleaners saw their pay plummet from $850 in
2009 to $572 in 2010.
Last year, figures for both groups were merged. The
average cleaner in offices and other establishments made $815 a
month.
The wage stagnation puzzles NUS economist Basant Kapur,
who had expected that tightening foreign labour supply would be
"rather effective" in raising wages.
However, Professor Hui is sceptical about the
effectiveness of a tighter foreign worker policy. Higher levies may
not reduce numbers, he says, as employment agencies may recruit
foreigners on lower salaries than before, to compensate.
Meanwhile, DRCs have fallen only marginally. In the
cleaning sector, foreigners can make up 45 per cent of a firm's
staff, down from half. "This will have minimal impact on the use of
foreign workers and its wage depression effects," says Prof
Hui.
Persuading bosses to pay
IF MARKET measures have limited impact, what else can be done to
raise wages at the bottom?
This year, two ideas surfaced but were rejected. Former
National Wages Council (NWC) chairman Lim Chong Yah's proposed
shock therapy - raising the pay of those earning less than $1,500 a
month by 50 per cent over three years - drew rebuttals from the
Government, unions and employers.
A legislated minimum wage will not work either, said
NTUC's Mr Lim, because unions and companies can hit a gridlock over
what that wage should be.
But Mr Lien feels the idea of a minimum wage should not
be dismissed: "It can be voluntary, and it can start in some
sectors."
Some industry players think that best-sourcing efforts in
the cleaning sector - where service buyers consider factors other
than cost - may result in something like a voluntary minimum
wage.
In March, the Government announced that it would require
its agencies to lead by example, by hiring only accredited cleaning
companies. The accreditation scheme is under review, and may
eventually include guidelines on paying cleaners "appropriate
wages". But some cleaning company bosses are wary of such a change.
One says it would be "like having a minimum wage" and affect the
whole sector.
Insight understands that the review committee, led by the
Manpower Ministry and National Environment Agency, is looking at
setting cleaners' pay at between $900 and $1,200, for companies
that seek accreditation. The scheme is thus one way in which
employers might be persuaded to pay workers more, in order to be
accredited and land government contracts.
Currently, cleaning companies engaged by the Government
employ 6,000 cleaners, about one-tenth of the 69,000 cleaners in
Singapore.
But Prof Hui argues that persuasion alone may not work,
because companies will not take their eyes off the bottom line.
NTUC's best-sourcing drive, for example, which has been
around since 2006, "is dependent on the goodwill of the service
buyers and cannot be expected to have universal or widespread
adoption", Prof Hui notes.
Indeed, owners of cleaning and security companies have
long argued that cost-competitiveness is key as jobs often go to
the firms that submit the lowest bids in tender exercises.
Mr Woon Chiap Chan, country managing director of ISS
Facility Services, says he is willing to raise the pay of the 6,000
cleaners in his company. "But the question is whether buyers are
also willing to pay more, or go back to picking the cheapest
bidder."
This year's NWC guidelines are another means of
persuasion. For the first time in some three decades, the council
specified a sum by which wages at the bottom should go up. It
suggested a wage increase of at least $50 a month for workers
earning less than $1,000.
NUS economist Shandre Thangavelu sees this as a step in
the right direction, as the workers who benefit have weak
bargaining power and low skills. The NWC thus plays a very
important role to "provide more bargaining strength" for them, he
says.
Yet these guidelines, though often followed in practice,
are also strictly voluntary.
Profits and productivity
TO INCENTIVISE companies
to do the right thing, the Government is pouring millions into the
Inclusive Growth Programme (IGP).
The labour movement plans to tie IGP funds to its
progressive wage plan. This will involve subsidising employers'
operating costs on machinery and other purchases that raise
productivity.
Linked to this is a plan to systematically upgrade the
skills of cleaners and others on low wages, so their pay can be
scaled up. The ideal outcome is that firms reap savings when they
spend to raise productivity, and this sweetens the bitter pill of
higher wage costs.
Labour chief Lim Swee Say tells Insight he believes that
the Best Sourcing Initiative and IGP will eventually make an
impact.
He says: "With a tight labour market, cleaners can become
more mobile too as we spread the progressive wage model. As time
goes by, contractors who do not upgrade the skills, wages and
working conditions of their cleaners will risk losing them to those
who do.
"Hence, our aim is to make progressive wage a new mindset
for the tripartite partners and, most importantly, the service
buyers so that there are incentives for those who embrace the
progressive wage model and also disincentives for those who do
not."
But views are mixed on how far productivity can rise.
While Professor Kapur sees "significant scope" for raising
productivity through better equipment in cleaning and improved
skills for security guards, Dr Chor has reservations.
"There are aspects of the cleaning job that will
inevitably remain labour- and time-intensive," he says. "Technology
is not quite at the point yet where a machine can consistently do a
better job than a human being in mopping a floor or wiping a
window."
To such doubts, NTUC's Mr Lim says: "The bottleneck today
is not that the cleaning job has run out of room for further
improvements but rather, there is a big lag in the way our cleaning
sector makes use of the technology and innovation available out
there in the world."
Still, if higher wages are not compensated for by higher
productivity, firms could do two things. One is to swallow the
costs.
In Parliament in March, Senior Parliamentary Secretary
for Education and Manpower Hawazi Daipi noted that security and
cleaning make up less than 7 per cent of the operating costs of
offices and shopping malls.
"We must be prepared to take some cost increase in our
stride, if we want to help our low-wage workers earn more," he
said.
The other is to pass them on. Singaporeans should be
prepared to pay more for the services of workers such as cleaners,
plumbers, just like in other developed countries, says Prof
Kapur.
The alternative, he says, is for the Government to top up
wages instead. It already does so via the Workfare Income
Supplement, which tops up the wages of low-wage Singaporeans aged
35 and above.
But Prof Kapur feels that the payout - a maximum of
$2,800 a year - could be higher.
Sooner or later, the Government will have to spend money
on this group anyway, says Dr Chor.
"Ultimately, the economic burden will fall back on the
Government if we have a sizeable portion of our population that
isn't able to accumulate sufficient savings to see them through
their retirement years."
And how will the Government fund support for these aged
poor?
One route, notes Dr Chor, is higher taxes - which may
fall on the private sector. If companies do not pay now, they may
well have to do so later.
That those at the receiving end of these low wages lack
bargaining power is no reason to tarry in setting things right.
On the contrary, that is all the more reason for a
society that prides itself on being inclusive to make fair, living
wages for them a priority.
Part D,Insight, The Straits Times, Saturday June 30 2012, Pg
D2
