Stagnant Wages? It’s Your Own Fault.
by singaporearmchaircritic
Or so the government and its mouthpiece want you to believe.
I am referring to the recent onslaught of insults hurled at the Singaporean PMETs (professionals, managers, executives and technicians) in a string of articles published by our national mouthpiece, insinuating or blatantly accusing us of not deserving our wages; not being “hungry” enough, and being “pampered, mediocre, expensive and timid.”
Apart from being a self-corrective measure to counter the arguments of an earlier, relatively critical (by Straits Times’ standards) commentary “When wages fail to grow along with economy,” these write-ups are yet another low blow at ordinary Singaporeans to absolve the government of any blame for the problems we face today.
Yet if we look at Straits Times reports on the job situation of our PMETs from the 1990s, it becomes very apparent that the plight of today’s PMETs is a result of myopic government policies since the 1990s, i.e. its pro-immigration policy, the constant kowtowing to businesses that fed off cheap labor, and re-training that had failed to equip workers with the necessary skills.
PMET Retrenchment in the 1990s
Amid concerns about how companies were “delayering” or removing middle level executive positions due to technological advancements[1], employment pass holders in Singapore increased from 50,000 in 1994 to 70,000 in 1997 while work permit holders surged from 300,000 to 450,000 over the same period.[2]
As the floodgates opened wide, Singapore saw 10,956 workers being retrenched in 1996 – a record since the 1985 economic recession during which 19,529 workers lost their jobs.[3]
When many began to question if foreign workers were taking away the jobs,[4] then Prime Minister Goh Chok Tong repeatedly justified the government’s decision to import foreign workers in 1997 and 1998.
In his 1998 National Day Rally speech, he said:
We must continue to bring in international talent…In today’s much harsher environment, some Singaporeans are questioning whether this is still the right policy. Workers have asked union leaders why we do not cut down the number of foreign workers here, and save jobs for Singaporeans.
I know many Singaporeans are concerned about their jobs. Architects are having a tough time and many of them cannot find employment. Likewise lawyers and doctors. I have met recent graduates who have applied for several jobs in the last two months but have not been called for a single interview…
There will be more retrenchments before we come out of the slump. But chasing away foreigners, hoping to free up more jobs for Singaporeans, will only make our problems worse…
And so in 1998, 29,000 workers lost their jobs, among whom 5,830 were PMETs. The PMET job loss was three times higher than that of 1997.[5]
Amid the soaring PMET layoffs, a concurrent report made baffling claims that there were more job openings for PMETs in September 1998, “due to an on-going restructuring towards higher value-added and knowledge based activities.”[6]
In 1999, the Manpower Ministry revealed that there were 530,000 foreigners in Singapore, among whom 80,000 were employment pass holders.[7] There were another 14,622 people laid-off in the same year, among whom 24% (3,509) were PMETs.[8]
Retrenched PMETs in the 2000s: A Permanent Fixture?
From 1990 to 2000, Singapore’s total population surged by one million. Of this, the number of citizens grew from 2.6 million to 3 million while that of permanent residents grew from 109,872 to 287,477. The non-resident population increased from 311,264 to 754,524 over the same period (source).
In the first half of 2000, 7,903 workers lost their jobs and about 24% (1,896) were PMETs.[9] This trend persisted and worsened in the first half of 2001, when 38% of those axed were PMETs.[10] Over four years, the number of unemployed degree and diploma holders aged 40 and above increased three-fold.[11]
Despite all the schemes, retraining and skills upgrading to help PMETs,[12] the jobless rate of PMETs continued to climb.[13]
By September 2002, unemployment hit a 15-year high of 4.8%. As many as 12,900 graduates could not land a job, doubling the number in 1998.[14] A resumé to a human resource company reads, “I am a system engineer and I have been job hunting for months. My last salary was $4,800 but I will work for $1,800.”[15]
A total of 40,903 jobs were axed in 2002.[16]
Curiously, a 2003 report claimed that “The share of jobs for managers, professionals and technicians, rose from 29.5 per cent in 1992 to 41.6 per cent last year.”[17]
Yet thousands of degree holders could not land a job.[18] And middle managers were also vulnerable, many mired in long-term unemployment.
So the question is: where did the increasing share of jobs for PMETs go to?
Jobs Vanished? Or…
By March 2003, 89,400 people were out of job, and more than 50% were PMETs.[19]
Reports claimed, yet again, that technological advancements were “leading to the demise of droves of middle managers.”[20]
A former bank manager with an annual pay packet of $60,000 was unable to find a job even though he was willing to go for a $1,000-a-month sales clerk position. Some of his retrenched banker friends had become taxi drivers in desperation.[21]
Another 55-year-old former bank assistant manager took a pay cut from $4,000 to $1,100 to become an assistant cleaning supervisor.[22]
In July 2003, two Nanyang Technological University (NTU) economists suggested that foreigners took three out of four jobs created in the last five years.
The government swiftly denied this and claimed that out of 10 new jobs, nine went to Singaporeans and PRs and only one to a foreigner (??!!).[23]
When some MPs demanded, rightfully, for a breakdown of the number of jobs that went to citizens and PRs, this was what Acting Manpower Minister Ng Eng Hen said:
“What difference does it make? The ratio is unimportant when jobs are created.”[24]
Effective from October 2003, the CPF rate was cut again from 36% to 33%.[25] In December 2003, it was reported that 95,500 people were jobless, with a record of almost three in 10 seeking jobs for at least six months.[26]
In the first quarter of 2004, PMETs again formed the biggest chunk (45%) of the 2,962 laid off.[27] In 2005, an estimated 30,000 PMETs were out of job.[28] According to a ST report dated 16 June 2005:
Employers have been lambasted for discriminating against them [retrenched middle managers] in favour of younger, cheaper recruits – essentially getting two, three energetic workers for the price of one … prejudice against retrenched executives aged between 40 and 50 is real…[there] is ample evidence of axed professionals who are ready to take huge pay cuts and still are jobless.[29]
In December 2006, 8,100 PMETs were still unemployed.[30] This was despite MOM figures which showed that PMET share of jobs had risen from 39% in 1996 to 47% in 2006 and that 173,300 new jobs were created.[31]
Said Mr Sim, a retrenched IT manager who used to earn $7,500, “The pool of people looking for the same job is quite big now, compared to previously. There’s also competition from IT workers from China and India willing to do it for much less.”[32]
In 2007, official figures showed that six in 10 of the new jobs went to foreigners, up from five in 10 in 2006.
The report claimed that “this has more to do with insufficient Singaporeans being available to fill the rising number of new vacancies, according to the report giving a breakdown of jobs held by citizens, permanent residents (PRs) and foreigners” (emphasis mine).[33]
So what happened to the 8,100 unemployed PMETs who needed a job?
Whose Fault?
According to employers, the Singaporean PMETs could only blame themselves, of course.
Because local PMETs lacked the “skills relevant to the industries of the day,” “Bosses in trading houses and the infocomm, hospitality and retail sectors were thus hiring foreigners for middle management positions” (emphasis mine).[34]
Hey presto! The “redundant” middle management positions that were supposedly vanishing in droves in the mid 1990s and early 2000s made a miraculous comeback.[35]
The only problem is these positions were not for Singaporeans, who, after undergoing years and a myriad of skills upgrading, still did not make the cut in the eyes of the employers.
Is it because, as former National Wage Council chairman Lim Pin said, “Worker training is like trying to hit a moving target. The technology and skills required today are likely to be different from those needed five to 10 years from now”?[36]
Or is it simply because employers prefer cheaper foreign workers?
Today, our national mouthpiece is hinting that Singaporeans do not deserve our wages. This is rubbing salt into wound because our wages had been stagnant for years.
We know that there are around 128,100 S-pass holders with a qualifying salary of $2,000 in Singapore in 2012. Their number has also grown by 14,200 from December 2011 to June 2012 (see Chart below). I have raised this question in an earlier blogpost and I will ask it here again:
Are cheaper foreign workers taking away jobs from Singaporeans?
Even Goh Chok Tong, who so strongly advocated bringing in foreign workers in the late 1990s, wasn’t sure anymore.
(Source: MOM)
References
1. All sources are from The Straits Times unless otherwise stated. Executives focus on challenging wages to develop competitive edge, 27 May 1995. Preparing older execs for rapid changes – employers group to help mature executives cope, 18 Sep 1995.
2. Foreigners can propel two S’pores, 20 May 1999.
3. More older workers seek help to find jobs, 3 Jul 1997.
4. Manpower dilemma in an economic slowdown – Are the foreign workers taking away local jobs? 6 Sep 1998.
5. 5,800 execs lost their jobs last year, 16 Apr 1999.
6. Singapore labour – more jobs for those with higher skills, 5 Feb 1999.
7. Foreigners can propel two S’pores, 20 May 1999.
8. Paying what it takes for a first-class civil service, 30 Jun 2000.
9. NTUC to help execs cope with job changes, 13 Oct 2000.
10. More help for bosses hiring retrenched, 4 Oct 2001.
11. Downturn hits mature grads, 14 Sep 2001.
12. Courses launched to help laid-off workers. 19 Dec 2001; New scheme to help white-collar workers, 24 Nov 2001; More help for bosses hiring retrenched. 4 Oct 2001; NTUC to help execs cope with job changes, 13 Oct 2000.
13. More executives facing layoffs, 4 Mar 2002; No offer for 3 in 4 of those retrenched, 12 Jul 2002.
14. What do the grim figures mean to you? 23 Nov 2002; Record number of grads cannot find jobs, 14 Dec 2002.
15. What do the grim figures mean to you? 23 Nov 2002.
16. Another bad year ahead for the jobless, 15 Mar 2003.
17. There is no magic cure as lower-end jobs vanish, 15 Feb 2003.
18. You’ve got a degree. So What? 31 Jan 2003.
19. Job scene change, 7 Jul 2003.
20. Down but not out, 29 Jun 2003.
21. A year later, still a survivor, 29 Jun 2003.
22. Job-seekers, fussy? Not when reality bites, 12 Jul 2003.
23. Let us focus on getting jobs – Minister, 15 Aug 2003.
24. Let us focus on getting jobs – Minister, 15 Aug 2003.
25. CPF- 33% from October, 29 Aug 2003.
26. Labour market on the mend, 16 Dec 2003.
27. How older workers bounce back after they’ve been laid off, 15 Aug 2004.
28. Help wanted for white collar jobless. 14 Jun 2005.
29. White collar crunch, 16 Jun 2005.
30. The middle-aged, middle management squeeze, 16 Dec 2006.
31. More grads and skilled workers in workforce, 27 Jan 2007; How will Singaporeans react to influx of foreigners? 28 Feb 2007.
32. The middle-aged, middle management squeeze, 16 Dec 2006.
33. S’poreans losing out in job boom? Not so: MOM, 1 Mar 2008.
34. How will Singaporeans react to influx of foreigners? 28 Feb 2007.
35. Down but not out, 29 Jun 2003.
36. Should low-wage workers be afraid? 11 Jun 2005.
Singapore Armchair Critic 
This blogpost, extensively based on Straits Times reports, is partly a retaliation to ST’s cheap shot at bloggers (http://www.facebook.com/photo.php?fbid=10152113624738438&set=a.7322923437.20889.839078437&type=1&theater), accusing bloggers of disseminating inaccurate information.
The data I’ve cited here are drawn from ST, which presumably gets its “facts” from “official” sources.
Any errors, therefore, are not mine but ST’s.
While I do believe that the large influx of foreign workers have resulted in depressed wages, there is also some truth in our PMETs being not good enough.
I have seen people constantly trying to come up with harebrained ideas, even though the situation is already critical and no time can afford to be wasted. I have seen people where even after laying all the scenarios out to them, you can’t leave to their own devices to figure a solution out. You literally need to hold their hand and spoon feed all the way through. I have seen people so inept at what they are doing, it really makes you wonder how have they stayed employed all these years and have they ever learned anything from experience.
Of course, there is no guarantee that the foreign workers are brilliant. They can easily be screwballs just like some of our PMETs. However, picture this. You have a position open, you desperately need it filled but you only have two screwballs to choose from. One is asking for $1800/mth, the other is asking for $2500/mth. Who would you choose?
For a problem of a macro scale like this one, its always a multitude of problems. Straits Times only highlighted one of them. The blogpost highlighted another, as a counter argument to Straits Times. But the one problem with the Straits Times article was that it was delivered in such a way that it sounded like Singaporean PMETs being inept was the true root cause.
Hi Edmund,
I think a lot has to do with the rather low level of the qualifying salary for the different grades of employment pass holders and how loosely a “foreign talent” is defined here.
Frankly it is far-fetched to define someone with a qualifying salary of SGD2,000 per month as a “talent.” The qualifying salary of a S-Pass holder, the lowest grade of the employment pass holders, should be pegged to the median wage of Singaporean PMETs. Then the scenario that you cited above will not happen. The Singaporean and the foreigner can then compete for a job based on merit in a level-playing field.
Taiwan goes as far as to make it mandatory that any foreigner hired in Taiwan must be paid more than his/her Taiwanese counterpart. That means there is no incentive for a company to hire a foreigner unless he really possesses some skill that locals lack, i.e he is really a talent.
From what I know some Singapore employers have downgraded their foreign workers from a higher grade employment pass to the lower S-Pass when the qualifying salary was raised. And there is no knowing how employers may be exploiting the loopholes in the system to keep low-cost workers. A reader posted this on the facebook page of The Online Citizen:
Alan Bennett: I work in most of the shipyards here in Singapore…I don’t know of a single “s-pass” holder who actually earns 2000 even though there pay slip says that they do….they give cash back to their employer, it happens also in the F & B industry with many Filipinos. Who here would want to earn $400 a month to grit blast and paint a ship or wait on tables 12 hrs a day 6 days a week for $1000 a month?
[…] I am referring to the recent onslaught of insults hurled at the Singaporean PMETs (professionals, managers, executives and technicians) in a string of articles published by our national mouthpiece, insinuating or blatantly accusing us of not deserving our wages; not being “hungry” enough, and being “pampered, mediocre, expensive and timid.” Yet if we look at Straits Times reports on the job situation of our PMETs from the 1990s, it becomes very apparent that the plight of today’s PMETs is a result of myopic government policies since the 1990s, i.e. its pro-immigration policy, the constant kowtowing to businesses that fed off cheap labor, and re-training that had failed to equip workers with the necessary skills. […]
lTHE PAP owes their Born and BRED citizens BIG TIME!!!if they dont do a V Turn, make them pay…
to Edmund’s comment, I have also seen many foreigners who are not that good at their work and worse, hired for jobs like secretaries and store managers which can be filled by locals. That we need a good balance of foreigners to work here is a fact. But that the government had taken the easy route out and kowtowed to businesses’ ceaseless demand for imported PMET workers is also a fact. I have also witnessed the biased hiring by some expat managers who upon settling in, start removing locals and bring in their own kind.
There is also a growing and extremely worrying trend of many expats holding a superiority complex and openly looking down on Singaporean workers. Why are more of them openly criticising our workers? Well, it doesn’t help when our own government and some Singaporean employers diss our own people frequently. If Singaporean workers were so bad, how could our nation have progressed so fast and done so well over the past century?
Sure, Singaporeans can improve in several aspects, as with workers of other nationalities. The onus is on the govt and employers to figure out how to help Singaporeans be even better workers. They can start by having confidence in locals, They can also pay fairer wages, be better managers, and really know how to motivate and train the staff. In this area, many employers are very lacking from what I have witnessed over the years. The responsiblity is also on our government to know that their duty is to us, ensure Singaporeans have priority in employment and are being well developed and prepared for a global economy.
My charts (http://sgratrace.appspot.com/macro.html) show that, income-wise, the bottom 20% received very little benefit from the open immigration policy of the past decade. From 2002 to 2012, the gross monthly income of the 20th percentile crawled from $1,192 to $1,500. On average, this means an annual increment of $30. For the 20th percentile, income actually dropped in some years.
Too bad MOM did not release data for citizens at other percentiles, especially the higher income groups and how they fare against the median and the bottom 20%.
SAC
Have you seen and read the explosion of BPO and outsourcing, the outflow of jobs and good ones to Singapore came from the first wave,but due to maturity and high cost within Singapore, there will more outflows.
Frankly, all of our jobs are at risk except for knowledge jobs and direct service jobs,
For stagnant wages, too many have the attitude that with seniority, there should be extraordinary pay, let me blunt what BT editor stated holds true, that is why even in US, there is such discrepancy.
Well you read the headlines on lawyers starting pay , well start worrying, non performers will be given the can much earlier.
You have the implicit assumption that employers can well afford to pay ever increasing increments both absolute and percentage wise, well the market says otherwise and the global market is even worse.
Please proceed to rebut me I am sure, but unless employees are of real value to employers or we come under a communist system, stagnant wages will remain except for the top 40% of employee market
Hi Onion,
I am not denying that at the global level, there is already a growing trend of outsourcing. Similarly, I agree that at the individual level, some workers may have unrealistic expectations of the pay/pay increment they deserve.
However, I am of the opinion that at the country level, our government policies have aggravated the plight of the Singaporean PMETs, be it stagnant wages or difficulties in getting employed.
When I was researching on this topic, I came across this ST report “Should low-wage workers be afraid?” (11 Jun 2005). It cited a study by the MOM and Monetary Authority of Singapore that Singapore workers “enjoy an education premium…on average, a worker’s income goes up by 13 per cent for every additional year of education he invests in.”
The report goes on to suggest that “the effectiveness of policies to help low-wage earners can be measured by how much they have helped to shrink the pool of those with little or no education.” It then claims that Singapore had progressed by reducing the pool of workers with less than secondary education from 59% in 1980 to 32% in 2004, although “Singapore still lags behind many developed countries.”
So the big problem with our economy and workforce is this: while all these years Singaporeans are getting more educated, we have not made significant progress towards a “knowledge-based” economy. We have failed to tap on our increasingly educated workforce to realize its potential. Instead our government has chosen the easy way out.
Today our economy is still thriving on labor-intensive and non knowledge-based industries/sectors (i.e. the casinos), and to feed their appetite for cheap labor our government has opened the floodgates, with the outcome of depressing our wages.
I cite Ngiam Tong Dow to support my point:
Our growth trajectory was rising smoothly from labour-intensive to skilled and knowledge-based activities, until the global financial crisis struck.
We got cold feet, backed away from manufacturing and promoted softer options such as regional headquarters, logistics hubs, casino tourism and wealth management.
At this inflection point, we reverted back to labour-intensive activities. A million foreign workers were brought in to man low-skilled and low-wage economic activities, straining our housing and transport infrastructure. Instead of punching above our weight, we performed below our knowledge potential. Today, we have thousands of young graduates becoming property agents or relationship managers selling esoteric products.
http://blogging4myself.blogspot.sg/2013/03/ngiam-tong-dow-lets-get-our-young.html
Channel News Asia’s report on the trend of hiring PMETs on contract:
SINGAPORE: Short-term contract work seems to be a growing trend among professionals in Singapore as the economy restructures.
And increasingly, this is working in the favour of employees, say HR experts.
Contract work used to be the domain of low-skilled workers.
But increasingly, professionals, managers, executives and technicians (PMETs) are being hired on contracts.
Figures from the Manpower Ministry show that some 70,000 PMETs were hired on term contracts last year, up from 67,000 in 2011.
HR firms Channel NewsAsia spoke to also noticed a similar growing trend.
Robert Walters said it saw a 43% increase in contracting vacancies in the first quarter of this year, compared with the 4th quarter in 2012.
http://www.channelnewsasia.com/news/singapore/more-pmets-hired-on/750760.html
SAC
Further, if employers cannot hire people here, they will hire people elsewhere, es example, the mega bank and even other major MNCs are placing transactional processes within India, Phillipines and even China and even knowledge levels or even consider Vietnam and Myanmar.
For lower mid level and higher, wages are ever increasing and no the employees are not cheaper.
Traders, professionals, executives are being paid higher, however, if things turn sour, out you go because margins are thin.
Singapore is in a sweet spot at present, but if it is not maintained, it can easily become a backwater, as people will consider other cities within ASIA eg Kuala Lumpur, Penang, Manila, Cebu and even Colombo or Hong Kong.
You say it is not possible,well, see China, tell me it cannot be done.
It may not be fast eg 10 years but other cities and countries are happy to eat your lunch or to move the cheese
SAC
let me ask you how many young ones in terms of percentage are willing to get their hands dirty. a minimal number ie 20% or even less, 80% wants to go to Finance, Econs, Accounts etc
At the country level, let me ask you, do you have ready pool of people able to stomach the working poor existence of the lower levels of manufacturing.
We can be an Switzerland for design and etc, but at cultural level, we are too pragmatic ie 3Ks
Frankly, I agree with Ngiam Tong Dow but you forget that the reason why Singapore at a country level is trying to develop so many sectors, is so that the economy can be well diversified.
His prescription works more for high level manufacturing but you also need the whole supply chain(inclusive of low cost workshops) so that ideas can be made to fruition easily.
Hopefully with 3D printing, yes manufacturing can be a even bigger key industry . Timing is everything.
Unfortunately, the majority of economic growth now comes from the mega cities eg Tokyo, New York , London, Paris, Berlin, etc.
You cite Ngiam Tong Dow, well his prescription was followed By Taiwan but graduates pay remain stagnant due to globalisation.
It is a multifaceted issue and you do have your points but being overly prescriptive will not help unless we ourselves are willing to take the leap to work in both 1st and 2nd and 3rd world countries and wiling to learn and absorb,
Classic case of EDB scholar to put in 1st class instituition of 3rd world emerging nation and refused.
[…] – Blogging for Myself: Shrinking Singaporean Core – Singapore Armchair Critic: Stagnant Wages? It’s Your Own Fault. – TOC: Expanding Education in Singapore: Associate […]
SAC,
The root problem of stagnant wage is due to the liberal immigration policy. How do you account for the significant wage difference of a Singapore bus driver or trash hauler compared to his counterpart from Switzerland or the USA, especially when Singapore claims a higher per capita income? I’m sure if the USA opens its border, wages for many jobs will fall too. The bus company has no reason to pay a Chinese worker 10 times more than he makes in China. These drivers are more than happy to do the same job at twice their previous income.
Ironic thing is local politicians are the most expensive in the world when bus drivers are the lowest paid in developed countries. Unfortunately the bus drivers are brainwashed to continue to vote for the politicians who continued to shortchange them. “Uniquely Singapore,” I must say.
Hi Xmen,
I agree that the root cause of stagnant wages is the huge influx of foreign workers. But we do not know how Singaporean bus drivers vote though.
SAC
The wealth gap (GINI) keeps getting larger year after year. Well, the votes for PAP have to come from people who have not benefited as much as the rich. They are your typical bus drivers and office workers.