Disadvantage of foreign workers in singapore

These savings would be given to the foreign workers when they leave Singapore. In response, National University of Singapore economist Ivan Png pointed out that such a scheme, although well-intentioned, is unlikely to help foreign workers much.

Disadvantage of foreign workers in singapore

These savings would be given to the foreign workers when they leave Singapore. In response, National University of Singapore economist Ivan Png pointed out that such a scheme, although well-intentioned, is unlikely to help foreign workers much.

This price mechanism has evolved to allocate the limited number of foreign worker permits. Creating a savings fund would simply increase the demand, raising the fees that foreign workers pay to secure work in Singapore and negating the income increase that the proposed fund would give them.

The likely beneficiaries of the proposed fund would be the middlemen, agents and employers who respond by cutting wages - all of whom have more bargaining power than the workers. The economics of foreign worker policies can often be quite counter-intuitive.

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For instance, many of us assume that paying foreign workers lower wages benefits low-skilled Singaporeans. But this is flawed reasoning: If Singaporean workers are paid more than foreign workers doing the same job, why would employers want to hire them?

The foreign worker levy therefore exists to narrow the wage differential between foreign and local workers. But this assumption is also questionable. Since foreign workers have much less bargaining power than employers, the levy is passed on to them in the form of lower wages.

Can anything be done? There are at least three policy goals worth pursuing. The first is to create stronger incentives for employers to hire Singaporeans instead of foreign workers. This is what the foreign worker levy tries to do, probably not very successfully. The second is to raise labour productivity, the assumption here being that an over-reliance on cheap, low-skilled foreign labour has led to Singaporean companies investing less in automation and in raising the skills or technology content of their operations.

Economists have a strong preference for tinkering with incentives to produce the desired outcomes.

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In this instance, our instinct is to find a better way to "price" foreign workers in Singapore. If a tax on foreign workers which is what the foreign worker levy is is not working well, would a minimum wage or a cap-and-trade system work better?

But as I shall proceed to argue, neither a minimum wage nor a cap-and-trade system is able to achieve all three policy goals simultaneously. Rather than look for a more efficient way to price foreign workers in Singapore, policymakers are probably better off looking to legislative and regulatory measures to achieve the third objective of improving worker welfare.

One option is to legislate a minimum wage that is applied to all workers. It would level the playing field, negating the cost advantage that foreign workers have over locals. A minimum wage may also encourage employers to reduce their reliance on low-skilled labour and introduce labour-saving, productivity-enhancing measures.

But as with the proposal to channel the foreign worker levies into a savings fund for foreign workers, a minimum wage that is higher than current wages would increase the number of foreign workers seeking employment here and push up the fees they are willing to pay.

So the likely result is that employers pay more but foreign workers are no better off. This is not to say that a minimum wage is a non-starter. The benefits of levelling the playing field for lower-skilled Singaporean workers and of sharpening incentives for employers to increase productivity may be sufficient justification to have one.

Cap-and-trade ANOTHER option that economists would consider is to replace the foreign worker levy with a cap-and-trade system similar to the vehicle quota system for controlling the vehicle population.

Disadvantage of foreign workers in singapore

Under such a system, the Government announces a quota the cap on how many foreign workers Singapore would take in say on a monthly or quarterly basis. Employers who wish to hire more foreign workers would bid for them; the limited foreign worker permits would go to those who are willing to pay the price determined by the auction process.

Employers would also be allowed to trade these permits. Such a system would enable the market, not the Government, to set the price of hiring foreign workers.

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It removes the political considerations that the Government invariably has to take into account under the current levy system. In determining the levy, the Government has to strike a balance between keeping business costs low and providing a strong price signal for companies to reduce their reliance on low-skilled labour.means the foreign workers may change job often or leave the country quickly if there is a problem occur, such that happened in Libya.

Next, the presence of foreign worker shall lower the pay rate for 4/4(3). Does Singapore have a problem with xenophobia?

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It seems that barely a month goes by these days without news reports highlighting friction between Singaporeans and foreign workers in the tiny. In Singapore, the term immigrant workers is separated into foreign workers and foreign talents.

Foreign workers refers to semi- skilled or unskilled workers who mainly work in the manufacturing, construction, and domestic services sectors. Does Singapore have a problem with xenophobia? It seems that barely a month goes by these days without news reports highlighting friction between Singaporeans and foreign workers in the tiny.

Creating a savings fund would simply increase the demand, raising the fees that foreign workers pay to secure work in Singapore and negating the income increase that the proposed fund would give them.

means the foreign workers may change job often or leave the country quickly if there is a problem occur, such that happened in Libya.

Next, the presence of foreign worker shall lower the pay rate for certain jobs.4/4(3).

Focus on welfare, not wages, of foreign workers, Opinion News & Top Stories - The Straits Times