A largely unregulated recruitment industry means unethical agency practices flourish and a highly competitive market continues to reinforce and reward unscrupulous behavior.
In what could be an ominous sign for the year, more than 100 China construction workers spent New Year’s Day, 1 Jan 2009, gathered outside the Ministry of Manpower (MOM) in Singapore. This was their third consecutive day at the MOM – there were 200 workers on 30 Dec 2008 – to complain about unpaid wages and unauthorized deductions. Employed by Zhonghe Huaxing Development and China Nuclear Industry Huaxing Construction, some of the construction workers were building the Marina Bay Sands integrated resort.
In the past few months, reports have surfaced that significant numbers of migrant construction workers building the Marina Bay Sands resort have been embroiled in salary disputes. In October 2008, 180 China construction workers lodged a complaint with the MOM because Ssangyong Engineering and Construction wanted to cut their monthly pay from the agreed sum of $1700 to $1200. Apparently, Ssangyong had found a sub-contractor whose workers were ‘cheaper’.
Sub-contractors – the case of Xuyi
Companies sub-contracted by Ssangyong have also proved problematic. Groups of disgruntled workers from Xuyi Building Engineering Co., listed as a foreign company registered in Singapore, have also been filing complaints with the Ministry of Manpower over unpaid salaries and unauthorized salary deductions. In the past three months, I have spoken with up to five different groups of workers from Xuyi involved in salary arrears cases – some were building Marina Bay Sands and others Resorts World Sentosa. The workers claim their salaries are often withheld for three months or longer, with arbitrary deductions made each month from their wages. They work long hours with no overtime pay (12-13 hours a day is the norm, though time cards have shown 19-hour work days; 24 hour shifts have also been noted), seven days a week. When the workers, dissatisfied with such terms, resign and wish to return to China, they are slapped with ‘breach of contract’ fees. This can result in workers being given minimal sums of several hundred dollars – despite being owed several thousands in back wages – and repatriated.
Workers’ contracts are often signed in China and under coercive conditions. As one Xuyi worker related, “We were told plainly – if you don’t sign this contract, you don’t get on the plane to Singapore”. This is after they have already paid thousands of dollars in agency fees. Typically, this contract determines that Xuyi workers are not entitled to annual leave, or paid medical leave, nor overtime pay, nor a higher rate of pay for working on public holidays. This contract gives their employer the right to withhold workers’ passports and work permits and also states that workers’ salaries will be withheld for three months and is subject to 'miscellaneous fee deductions by the employer’. Many of these terms violate those laid out in Singapore’s Employment Act.
Returning to China, workers’ problems often escalate, as they have loans, generated by hefty agency fees, to repay. One group of 12 workers who returned to Henan in early November 2008 reported that they were beaten up by thugs hired by their labour agent in China. This happened because they tried to recover their agency fees, which ranged in thousands of dollars. Other Xuyi workers have reported that family members in China received intimidating phone calls when they made official complaints about their company here in Singapore.
What does all this unrest mean for ‘big brand’ project developers? Currently, it is unclear if key developer Las Vegas Sands, with its headquarters in Las Vegas, is aware of the ground level troubles its Marina Bay Sands worksite in Singapore is facing. From a supply chain perspective, however, it is reasonable to ask if such ignorance absolves it from responsibility. In the past decade, we have seen ‘big brand’ apparel and electronic manufacturers taken to task by human rights groups for unethical labour practices down its supply chain. While the corporate response in the early days tended to be denial or finger-pointing, global pressure for companies to be socially responsible has meant they are less able to do this now without severe damage to their reputation.
Complex supply chains in the construction industry, particularly for large-scale projects, make it difficult to establish clear lines of responsibility. Often, workers are not aware of who their ‘big boss’ is and generally take orders from a workplace supervisor; workers can also be sent to different work sites on ‘loan’. Guidelines are blurry and errant employers are able to shut down and register new companies quite easily. A largely unregulated recruitment industry means unethical agency practices flourish and a highly competitive market continues to reinforce and reward unscrupulous behavior. At the moment, there appears to be little financial incentive to operate ethically. Defensiveness makes the problem-solving process challenging, particularly when issues of national sovereignty come into play. At times, receiving countries blame sending countries, bigger companies shift responsibilities to smaller sub-contractors and vice versa. Everyone embroiled in this web of unrest and dissatisfaction generally feels squeezed and exploited – developers by a worsening economic situation, sub-contractors by tenders with marginal profit margins and tight deadlines, workers by labour recruiters and employers.
Yet ignorance and finger pointing can only be tolerated for so long. With the growing numbers of disgruntled workers and media attention, answers must soon be provided as to who is responsible and what needs to be done. A ‘race to the bottom’ should not be a foregone conclusion. With the global surge of interest in corporate accountability and ‘sustainable development’, a ‘hands-off’ approach by stakeholders is unacceptable. Construction site banners that proclaim, ‘We are building in an environmentally sustainable manner’, ring hollow when it becomes apparent worksites are teeming with unhappy, exploited workers. It is time for the construction and property development industry to take pro-active measures to ensure ethical recruitment and subcontracting practices all the way down its supply chain and from the moment of a project’s conception right to its operational phase. Tourism and hospitality businesses – like gaming developers, hoteliers, and large-scale entertainment venues – are intertwined and dependent on these industries and are equally culpable.
The desire to maintain labour flexibility in order to attract foreign investment must be balanced by adequate protection for vulnerable workers. The ‘free market’ myth has been debunked by the global financial chaos experienced in 2008. We are now nine years into the new millennium. It is time to embed ethical business practices, which respect labour laws, and the principles outlined in the UN Global Compact, into mainstream business models all the way down the supply chain and for all industries.
Stephanie Chok is a PhD student at the Asia Research Centre, Murdoch University, Western Australia.
This article was first published in CSR Asia.
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