Do foreign workers depress local pay at the lower end of the salary scale

The issue of foreign workers depressing local salaries has cropped up again in Parliament. Acting Manpower Minister Gan Kim Yong attempted to dismiss this view on Tuesday in his reply to a question from Non-Constituency MP Sylvia Lim.

Sylvia Lim had reiterated the point that wages for the lowest income earners for the last 10 years had stagnated, due to the presence of foreign workers. (ST, “Simplistic to say foreign workers depress local pay”, 27 Aug).

Given rapidly rising inflation, it is fair to say that real wages for the bottom earners have even outrightly declined.

Mr Gan attempted to discredit this idea by stating that foreign workers form a big and growing pool in the services industry, yet wages there are comparatively better.

He said, “In 2007, total wages went up by 5.9 per cent in the overall economy. Services sector wages went up by 6.5 per cent, and this is a sector with growing numbers of foreign workers in 2007.”

I think Mr Gan should pay careful attention to what Sylvia Lim was saying. She was referring to wages at the lower end of the pay scale, not to overall wages.

Mr Gan also claimed that during a recession, foreign workers would be retrenched faster than Singaporean workers, but his claim has yet to be empirically tested in a real life recession. Talk is cheap.

Why would there be an incentive for companies to retrench foreigners first during a recession, when there is no legislation governing this aspect of employment, and no monetary incentives awarded for such acts?

Foreigners, if they are without families in Singapore, would in fact be in a better position to bargain for less pay in exchange for keeping their jobs, as compared to local workers who might have mouths to feed in high-cost Singapore.

As usual, the government’s obsession with overall statistics clouds the real issue of the poor and lower-income households being the first to bear the brunt of rising inflation and an overly-liberal policy of importing large numbers of foreign workers, many of them unskilled.

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