The following article was published in the Business Times on 31 August 1998.
Manpower ministry stands by S$2,000 security bond to curb abuse
By Carol Eng
Business Times Singapore, 31 August 1998
THE Manpower Ministry is standing by its rules for a S$2,000 security bond for foreign worker levy payments as this is effective in curbing what it sees as industry malpractices that have led to abandoned foreign workers.
MOM said 726 workers on average were abandoned each month by employers who defaulted on levy payments. More than 5,000 workers were thus abandoned by this employer group from January to July, or two-thirds of the total abandoned by contractors, said MOM in response to queries from BT.
Recently, contractors and MOM have exchanged a flurry of letters in The Straits Times' Forum Page on the S$2,000 levy bond.
The "industry malpractices" MOM refers to originate from a kickback system where foreign workers pay their home agents to come to Singapore. This commission is shared with the Singapore agent, who in turn splits it with the Singapore employer or contractor. Estimates of the contractors' cut amount to S$1,000 to $3,000 per worker. MOM's contention is that contractors then deliberately default on foreign worker levies and subsequently abandon the workers.
In April, it introduced a bond of S$2,000 per worker on employers who default on levies or who are habitually late in their payments. Employers are considered to be in default if they miss payments for two months - each month's levy is due on the 14th of the following month. Construction firms pay a monthly levy of $470 for an unskilled worker, and S$100 for a skilled worker.
But writers to ST said they are late in paying levies not because of "malpractices", but because of genuine cash flow problems. In particular, some questioned the need to forfeit the bond when it should be there to cover shortfalls in payments, with the balance returned to employers. "It is even more unjust to forfeit bonds when no actual default has occurred," according to the latest writer.
The ministry's view is that most employers asked to post the bond are "likely to be non-bona fide contractors unable to provide any basis for appeal". Of the 950 employers asked to post the bond since April, only 15 per cent appealed against it, MOM noted. Of these, four-fifths were successful as they showed proof they had on-going and viable projects and were facing cash flow crunches.
Employers who are successful in their appeals will have their bonds deferred for an initial period of three months. There is no waiver.
Noting that 500-600 workers filed claims every month against employers for non-payment of salaries, MOM said: "The facts show that the perpetuators of the malpractices in the construction sector are the unscrupulous employers who bring in large groups of foreign workers only to deliberately default on their levy payments and abandon these workers. Such abuses cannot be allowed to continue unchecked."
Singapore Contractors Association Ltd executive director Simon Lee agreed that abuses existed in the system.
The managing director of a listed construction firm said it was mainly subcontractors who were giving problems, as main contractors were unlikely to let their names be dragged down.
Mr Lee said: "There tends to be 'other employers' using the guise of a sub-contractor to flout the law." It was likely that the balance of the 950 companies did not appeal because they were unaware that they could do so, he said.
"In good times, the bond may be a good deterrent. But in bad times, it may aggravate contractors' cash flow difficulties and accentuate the abandonment of workers." He added that the operations of small sub-contractors were often not well organised, and they were hard put to come up with substantiating documents, especially when they were far down the supply chain. As the line could consist of five or even more sub-contractors, he said that when a developer is late in payments, the main contractor delays paying his first sub-contractor, which then starts a domino effect.
"By the time the last few sub-contractors know there'll be a delay in payments for the works done, they would already have financed the project for several months already," Mr Lee said. "If there is no bond, there is a higher chance that the employer can stretch his dollar a bit longer and keep the worker."
Monday, August 31, 1998
Manpower ministry stands by $2,000 security bond to curb abuse
The following article was published in The Business Times on 31 August 1998.
Manpower ministry stands by $2,000 security bond to curb abuse
By CAROL ENG
The Business Times 31/08/1998
Bond effective in deterring abandonment of foreign workers
THE Manpower Ministry is standing by its rules for a $2,000 security bond for foreign worker levy payments as this is effective in curbing what it sees as industry malpractices that have led to abandoned foreign workers.
MOM said 726 workers on average were abandoned each month by employers who defaulted on levy payments. More than 5,000 workers were thus abandoned by this employer group from January to July, or two-thirds of the total abandoned by contractors, said MOM in response to queries from BT.
Recently, contractors and MOM have exchanged a flurry of letters in The Straits Times' Forum Page on the $2,000 levy bond.
The "industry malpractices" MOM refers to originate from a kickback system where foreign workers pay their home agents to come to Singapore. This commission is shared with the Singapore agent, who in turn splits it with the Singapore employer or contractor. Estimates of the contractors' cut amount to $1,000 to $3,000 per worker. MOM's contention is that contractors then deliberately default on foreign worker levies and subsequently abandon the workers.
In April, it introduced a bond of $2,000 per worker on employers who default on levies or who are habitually late in their payments. Employers are considered to be in default if they miss payments for two months - each month's levy is due on the 14th of the following month. Construction firms pay a monthly levy of $470 for an unskilled worker, and $100 for a skilled worker.
But writers to ST said they are late in paying levies not because of "malpractices", but because of genuine cash flow problems. In particular, some questioned the need to forfeit the bond when it should be there to cover shortfalls in payments, with the balance returned to employers. "It is even more unjust to forfeit bonds when no actual default has occurred," according to the latest writer.
The ministry's view is that most employers asked to post the bond are "likely to be non-bona fide contractors unable to provide any basis for appeal". Of the 950 employers asked to post the bond since April, only 15 per cent appealed against it, MOM noted. Of these, four-fifths were successful as they showed proof they had on-going and viable projects and were facing cash flow crunches.
Employers who are successful in their appeals will have their bonds deferred for an initial period of three months. There is no waiver.
Noting that 500-600 workers filed claims every month against employers for non-payment of salaries, MOM said: "The facts show that the perpetuators of the malpractices in the construction sector are the unscrupulous employers who bring in large groups of foreign workers only to deliberately default on their levy payments and abandon these workers. Such abuses cannot be allowed to continue unchecked."
Singapore Contractors Association Ltd executive director Simon Lee agreed that abuses existed in the system.
The managing director of a listed construction firm said it was mainly subcontractors who were giving problems, as main contractors were unlikely to let their names be dragged down.
Mr Lee said: "There tends to be 'other employers' using the guise of a sub-contractor to flout the law." It was likely that the balance of the 950 companies did not appeal because they were unaware that they could do so, he said.
"In good times, the bond may be a good deterrent. But in bad times, it may aggravate contractors' cash flow difficulties and accentuate the abandonment of workers." He added that the operations of small sub-contractors were often not well organised, and they were hard put to come up with substantiating documents, especially when they were far down the supply chain. As the line could consist of five or even more sub-contractors, he said that when a developer is late in payments, the main contractor delays paying his first sub-contractor, which then starts a domino effect.
"By the time the last few sub-contractors know there'll be a delay in payments for the works done, they would already have financed the project for several months already," Mr Lee said. "If there is no bond, there is a higher chance that the employer can stretch his dollar a bit longer and keep the worker."
Manpower ministry stands by $2,000 security bond to curb abuse
By CAROL ENG
The Business Times 31/08/1998
Bond effective in deterring abandonment of foreign workers
THE Manpower Ministry is standing by its rules for a $2,000 security bond for foreign worker levy payments as this is effective in curbing what it sees as industry malpractices that have led to abandoned foreign workers.
MOM said 726 workers on average were abandoned each month by employers who defaulted on levy payments. More than 5,000 workers were thus abandoned by this employer group from January to July, or two-thirds of the total abandoned by contractors, said MOM in response to queries from BT.
Recently, contractors and MOM have exchanged a flurry of letters in The Straits Times' Forum Page on the $2,000 levy bond.
The "industry malpractices" MOM refers to originate from a kickback system where foreign workers pay their home agents to come to Singapore. This commission is shared with the Singapore agent, who in turn splits it with the Singapore employer or contractor. Estimates of the contractors' cut amount to $1,000 to $3,000 per worker. MOM's contention is that contractors then deliberately default on foreign worker levies and subsequently abandon the workers.
In April, it introduced a bond of $2,000 per worker on employers who default on levies or who are habitually late in their payments. Employers are considered to be in default if they miss payments for two months - each month's levy is due on the 14th of the following month. Construction firms pay a monthly levy of $470 for an unskilled worker, and $100 for a skilled worker.
But writers to ST said they are late in paying levies not because of "malpractices", but because of genuine cash flow problems. In particular, some questioned the need to forfeit the bond when it should be there to cover shortfalls in payments, with the balance returned to employers. "It is even more unjust to forfeit bonds when no actual default has occurred," according to the latest writer.
The ministry's view is that most employers asked to post the bond are "likely to be non-bona fide contractors unable to provide any basis for appeal". Of the 950 employers asked to post the bond since April, only 15 per cent appealed against it, MOM noted. Of these, four-fifths were successful as they showed proof they had on-going and viable projects and were facing cash flow crunches.
Employers who are successful in their appeals will have their bonds deferred for an initial period of three months. There is no waiver.
Noting that 500-600 workers filed claims every month against employers for non-payment of salaries, MOM said: "The facts show that the perpetuators of the malpractices in the construction sector are the unscrupulous employers who bring in large groups of foreign workers only to deliberately default on their levy payments and abandon these workers. Such abuses cannot be allowed to continue unchecked."
Singapore Contractors Association Ltd executive director Simon Lee agreed that abuses existed in the system.
The managing director of a listed construction firm said it was mainly subcontractors who were giving problems, as main contractors were unlikely to let their names be dragged down.
Mr Lee said: "There tends to be 'other employers' using the guise of a sub-contractor to flout the law." It was likely that the balance of the 950 companies did not appeal because they were unaware that they could do so, he said.
"In good times, the bond may be a good deterrent. But in bad times, it may aggravate contractors' cash flow difficulties and accentuate the abandonment of workers." He added that the operations of small sub-contractors were often not well organised, and they were hard put to come up with substantiating documents, especially when they were far down the supply chain. As the line could consist of five or even more sub-contractors, he said that when a developer is late in payments, the main contractor delays paying his first sub-contractor, which then starts a domino effect.
"By the time the last few sub-contractors know there'll be a delay in payments for the works done, they would already have financed the project for several months already," Mr Lee said. "If there is no bond, there is a higher chance that the employer can stretch his dollar a bit longer and keep the worker."
Monday, August 3, 1998
"$1 for a maid" offer criticised.
The following article was published in the Straits Times on 3 Aug 1998.
"$1 for a maid" offer criticised
By Chin Soo Fang.
Straits Times, 3 August 1998
SOME maid agencies here are offering to find domestic help for as little as S$1, or even for free; but two trade associations have spoken out against them.
The "low-cost" agencies have been advertising since May, and most of them bring in Indonesian maids.
But the Association of Recruitment and Employment Agents (Area) and the Foreign Maids Employment Agencies Association (FMEAA) have spoken out against the agencies.
At a joint press conference last Thursday, Dr Chua Kim Seng, Area's president, said they had seen more complaints about maids running away or about their poor performance. He attributed this to the burden placed on the maids by agencies charging low fees.
He explained: "The cost of deployment of a maid, which is usually about S$1,200, should be paid by the employer.
"But these agencies deflect the cost to the maid to make their services cheaper."
So these maids are made to work without pay for the first few months to pay the S$1,200, which covers their medical check-up, training, insurance and other expenses incurred in their countries of origin, he said.
This, he added, is on top of the S$650 or so that the women have to pay the Singapore agencies in transportation and airport charges, and administrative fees.
He said: "Their work performance will inevitably be affected. Some even choose to run away."
Area and FMEAA took out an advertisement in The Straits Times last Friday urging employers to choose their members, whose fees start at $1,200.
Between them, Area and FMEAA have close to 100 members. There are about 1,800 agencies here, Dr Chua said.
When contacted by The Straits Times, Mr Thomas Khoo, manager of Delijoy Employment Agency, which places "$1 only" advertisements, said that what it is doing is not illegal.
He added: "In fact, we bear a greater responsibility for charging the employers so little because if our maids do run away, we cannot collect any money from the maids."
He said his company came up with the S$1 offer because of the economic crisis.
"We have so many maids waiting for jobs at our training quarters back in Jakarta," he said.
"At the same time, demand for maids had dropped."
His maids come here, he said, knowing that they will not be paid for the first four months.
"It is fine for them because their needs such as accommodation and food are taken care of by their employers."
Some of the other agencies said they could offer employers lower agency fees because the foreign maids were willing to bear the cost as there was an over-supply in their services, and because of the low value of the rupiah.
Several other agencies here have also lowered their prices, though not as drastically.
Maid-Power, for example, used to charge about S$1,000. Now, it is down to S$588.
But its director, Ms Ivy Lee, said this was not at the expense of the maids' wages.
She said: "We bargained for a lower price with our supplier in Indonesia. In exchange, we promised to market their applicants exclusively."
She added: "Every agency has its own way of doing business and its own bargaining power with its suppliers. Nobody should dictate a fixed price."
But she agreed that the maids' services could be affected if too heavy a burden was placed on them.
"If a person has to go without pay, she will have very low morale and little motivation."
"$1 for a maid" offer criticised
By Chin Soo Fang.
Straits Times, 3 August 1998
SOME maid agencies here are offering to find domestic help for as little as S$1, or even for free; but two trade associations have spoken out against them.
The "low-cost" agencies have been advertising since May, and most of them bring in Indonesian maids.
But the Association of Recruitment and Employment Agents (Area) and the Foreign Maids Employment Agencies Association (FMEAA) have spoken out against the agencies.
At a joint press conference last Thursday, Dr Chua Kim Seng, Area's president, said they had seen more complaints about maids running away or about their poor performance. He attributed this to the burden placed on the maids by agencies charging low fees.
He explained: "The cost of deployment of a maid, which is usually about S$1,200, should be paid by the employer.
"But these agencies deflect the cost to the maid to make their services cheaper."
So these maids are made to work without pay for the first few months to pay the S$1,200, which covers their medical check-up, training, insurance and other expenses incurred in their countries of origin, he said.
This, he added, is on top of the S$650 or so that the women have to pay the Singapore agencies in transportation and airport charges, and administrative fees.
He said: "Their work performance will inevitably be affected. Some even choose to run away."
Area and FMEAA took out an advertisement in The Straits Times last Friday urging employers to choose their members, whose fees start at $1,200.
Between them, Area and FMEAA have close to 100 members. There are about 1,800 agencies here, Dr Chua said.
When contacted by The Straits Times, Mr Thomas Khoo, manager of Delijoy Employment Agency, which places "$1 only" advertisements, said that what it is doing is not illegal.
He added: "In fact, we bear a greater responsibility for charging the employers so little because if our maids do run away, we cannot collect any money from the maids."
He said his company came up with the S$1 offer because of the economic crisis.
"We have so many maids waiting for jobs at our training quarters back in Jakarta," he said.
"At the same time, demand for maids had dropped."
His maids come here, he said, knowing that they will not be paid for the first four months.
"It is fine for them because their needs such as accommodation and food are taken care of by their employers."
Some of the other agencies said they could offer employers lower agency fees because the foreign maids were willing to bear the cost as there was an over-supply in their services, and because of the low value of the rupiah.
Several other agencies here have also lowered their prices, though not as drastically.
Maid-Power, for example, used to charge about S$1,000. Now, it is down to S$588.
But its director, Ms Ivy Lee, said this was not at the expense of the maids' wages.
She said: "We bargained for a lower price with our supplier in Indonesia. In exchange, we promised to market their applicants exclusively."
She added: "Every agency has its own way of doing business and its own bargaining power with its suppliers. Nobody should dictate a fixed price."
But she agreed that the maids' services could be affected if too heavy a burden was placed on them.
"If a person has to go without pay, she will have very low morale and little motivation."
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