First the F&B industry got hit by the labour crunch.
Then the retail sector started to shake.
All over Singapore, sector by sector, businesses are strangled by rising labour costs. Companies that are ill equipped to deal with the labour crunch find it increasingly difficult to carry on their businesses. The examples above demonstrate that the problem is serious and very real.
Yes. Salaries are rising. Talent is becoming more and more picky. There are more and more jobs that Singaporeans do not want to do.
It has become what we know as “an employee’s market”.
From since 2011, the government had tightened the clamps slowly. Each turn bringing excruciating financial pain to the company’s bottom line.
There are two things to clarify at this point:
a.) “Cheap labour” is a dirty word. I am of the belief that we have value and pride in our work and should be compensated fairly.
b.) The country never started off on the footing of wanting to flood the market with cheap foreign workers.
The time period of the influx coincided with the periods of serious global recession. To keep the country buoyant, businesses must keep going to generate the kind of low unemployment we’ve enjoyed since always.
But post recession, it seems we over did it.
In 2010 the economy expanded by 14.5 percent. The manufacturing sector rebounded by 29.7 percent. Almost every other sector followed the upward trend.
Not only was labour cheap and abundant, rentals and operating costs were low. Pair this with the government injection of $20.5 billion dollars (to fight the recession) and what you got was an amazingly lucrative environment.
The result? Companies reported roaring profit and that resulted in exploding GDP. On a micro level, almost anyone who bought property in those periods became instant millionaires.
As national wealth elevated, income inequality also widened.
When the number of Ferraris and condos increased, the common worker took a peek into his wallet and realised that his pay didn’t change much.
When seeking new job, he finds his resume competing with 10 other foreign applicants who are willing to work for a quarter of what he’s asking for.
The solutions that solved our recessionary headaches are now starting to fester into a painful problem: stagnating wages for the common man.
This resulted in a 2011 elections that bludgeoned the PAP to the ground. Since then, tripartite partners (MOM, NTUC and SNEF) have put into place a series of manpower policies that set out to raise the wages and make hiring fair for Singaporeans.
You’ve probably heard of these policies:
- the Fair Considerations Framework
- the Progressive Wage model
- Tightened dependency ratios for foreign staff
- Revised requirements for foreign staff
- Revision of the Manpower Act to increase protection/coverage of more workers
And as if that didn’t hurt enough, the Manpower Minister reminded employers in June that they can perish all thoughts of an easier labour market.
Be that as it may, we cannot look at the businessman with doubt, contempt and suspicion. We’ve already passed the bourgeois vs proletariat era.
The businessman and us, the employees have a symbiotic relationship. If they grow, we get better pay. If they suffer losses, they retrench and we lose our jobs. Or they can earnestly pass the business costs back down to us.
To ease their pain, there is a buffet of funds, incentives and grants provided by agencies such as SPRING and e2i. But to many businesses, these are sad palliatives that doesn’t solve their labour problems.
We need to go beyond mere funding. Perhaps something alone the line of tripartite committees that study sectors with specific needs: could be manpower, could be international branding, could be strategic direction, could even be expanded business incubation…and then target the resources that way.
In this changed environment, businesses need to grasp the concept that Singapore is a socialist country in capitalist’s drapery. It’s not just about minimising costs and maximising profit.
I thought this quote by the Judge in the arbitration case of China Airlines v SMMWU was rather interesting. The judge told the respondent company: if you want to cut costs, then you should cut it where the meat is. A couple of thousand dollars saved from labour pales in comparison where you can save chunks more in the high expenditure zone.