The Reform Party recently introduced a series of economic proposals touching on areas like minimum wage, productivity, education, foreign workers and housing.
Many Singaporeans have expressed concern about the rising deluge of foreigners coming into the nation. As such, the Reform Party has unveiled a slew of economic proposals which it hopes will “level the playing field” between locals and foreigners.
(From left -- Secretary General Kenneth Jeyaretnam, along with guest speaker Leong Sze Hian. Photo credit: Terence Lee)
A key suggestion by the party is to provide a minimum wage of $5 an hour, said Secretary General Kenneth Jeyaretnam at a Reform Party discussion session held last Saturday at the RELC International Hotel.
This was among an extensive list of suggestions offered to protect local workers amidst the current liberal foreign worker policy.
The $5 minimum wage, which is “a bare minimum for survival”, would help Singaporeans bring home at least $1,000 monthly for 200 hours of work, preventing their wages, especially for the bottom 20% of income earners, from falling to levels of countries like India and China, Mr Jeyaretnam said.
However, older workers will be exempt from the minimum wage, while younger workers below 25 years of age will have a lower minimum.
The minimum wage will also not apply to foreigners in sectors which Singaporeans are minimally involved in, such as the construction and domestic worker industries.
Strong reaction against exemptions
The exemptions, however, were met with some disapproval from the attendees. A lady questioned Mr Jeyaretnam’s point about exempting foreign domestic and construction workers.
“What’s the rationale behind their exemption given that they form a large minority of our workforce and that they contribute significantly to the economy?” she asked.
“Because they’re not Singaporean,” he replied, “and there is low substitutability – given that Singaporean workers don’t work in that sector, so it is unlikely to affect the wage rates of Singaporeans and pull them down.”
Another lady was also against this exemption, arguing that by applying the minimum wage to these industries, these jobs will be become more attractive to Singaporeans, thereby lessening the dependence on foreign labour.
In response, Mr Jeyaretnam said that he would not be so certain that Singaporeans would be interested in the construction and domestic maid sector. Furthermore, if locals were to work as maids, costs would escalate and this would hurt the pockets of many families who need domestic help.
“That would be very unpopular among Singaporeans,” he added.
Another attendee approached the topic differently, arguing that employers will still hire foreign workers as they are still cheaper. Singaporeans, at the end of the day, are still disadvantaged, he added.
Addressing his concerns was financial consultant Leong Sze Hian, who was a guest speaker. He said that even if the minimum wage were applied to foreigners, it would still not solve the problem of inequality.
“If I am a foreigner, I don’t have to pay CPF. Employers still prefer to hire foreigners. If you employ a male foreigner, he doesn’t need to do NS 14 days a year. If you employ a foreign lady with lower skill and lower pay, she won’t get pregnant – and there would be no maternity leave problem.”
Therefore, policies have to be fine-tuned to give the advantage to locals, he said.
Agreeing with him, Mr Jeyaretnam added that the Reform Party is recommending an additional set of measures to minimise existing disadvantages against Singaporeans.
One such measure is to bring foreign workers within the CPF scheme. They should also be taxed at a higher rate to compensate for the fact that they are not required to do National Service and attend subsequent In-Camp Training.
The party also suggested that Singaporean workers should receive more education and training to increase their productivity, as this would raise their living standards more effectively than increasing GDP growth merely through bringing in more foreign workers at a lower wage –rate to expand Singapore’s workforce.
Other measures include ensuring that employers fill positions with locals first, and disallowing employers from sacking Singaporean workers and replacing them with cheaper foreign workers. Exceptions will be made for failing business cases.
The party will also push to privatise CPF after part of it is used to fund a public health insurance scheme and a basic pension for all Singaporeans who have contributed to the fund after a certain number of years.
On top of these, the party is proposing a transparent, cost-benefit analysis of the foreign labour policy to study how they are affecting Singaporeans.
Addressing the point about exempting older workers, Mr Jeyaretnam admitted that nothing is set in concrete yet. However, the idea is that this would encourage employers to hire the older workers as they might have difficulty getting jobs.
He also highlighted other areas of concern such as education, housing and investment issues.
Housing, education and investment policies
For housing, the party hopes to make flats more affordable for first-time buyers and low income earners. Besides pushing for increased transparency of HDB accounts, the party will either require HDB to build more of the cheaper two and three room units, or request the URA to release more land for private developers of low-cost housing.
Instead of accumulating unproductive overseas assets, the party suggested increasing domestic investment and consumption in areas such as education and health which have a high social rate of return, while cutting taxes and fees for the less well off.
They include GST reductions or exemptions, reduction in HDB fees, or even abolition of school fees.
Mr Tony Tan, who is the party’s shadow spokesman for education and defense, said that the party hopes to increase investment in education beyond the current 2.8% of the GDP. The increased spending could be funded by saving in other areas, including defense, or by a smaller surplus and borrowing from reserves. This would improve quality of teaching and reduce class sizes.
The money would also go to expanding tertiary education and increase loan schemes for Singaporeans.
The party’s proposals on education, however, are still being studied and remain a work in progress. Mr Tan extended a call for interested Singaporeans to contribute to the study.
Besides the rising tensions between locals and foreigners, the party is also concerned about rising global temperatures. As such, the party will place greater emphasis on green and energy-saving technologies than present government efforts, and help local SMEs seize opportunities from carbon reduction efforts worldwide.
Privatisation of SWFs and GLCs
The party also called for increased disclosure and transparency of Government of Singapore Investment Corp's (GIC) and Temasek Holdings' accounts.
To enable this, the party would set up a committee to examine the possible privatisation of the two companies. Singaporeans could either be given some shares, or benefit via a direct linkage between returns on investments and CPF returns.
There is "no convincing reason for the government to continue to hold controlling stakes in most of the major companies as these are now largely mature and slow-growing," according to Mr Jeyaretnam.
Government-linked companies (GLCs) could also be sold off and privatised, reducing the state sector in favour of focusing on the private sector as a source of growth. To prevent foreign takeovers against national interest, the government can retain a "golden share" in these companies.
For a complete list of proposals offered by the Reform Party, click here.