Let’s think about it: If free market forces determine air-con repair charges

By Guther Wong

A man calls his air-con technician after his air-con unit breaks down. Aircon technician tells him he has no manpower, and then the Government pops in and says “LET’S THINK ABOUT IT”.

Boring show ensues – former labour minister BG (NS) Tan Chuan-Jin walks into some big meeting room where chairs and coffee tables are set up and suddenly everyone agrees that we need more foreign workers.

I don’t know how much of our public funds the Government paid to Mediacorp to put all that together, but I did the math for something else. If the free market forces determined salary levels amid the tight labour market, we had better use fans or give up our high COE cars to service our air-con units.
So here’s the math.

You can’t automate air-con servicing (according to the state media platform called Mediacorp), so you must hire locals. Locals want to work office hours with weekends off, 11 days public holidays, 14 days leave (minimum), 14 days medical leave, and 15 days for National Service In Camp Training (NS ICT) (3 weeks High Key ICT). So out of 365 days a year, they will only work 206 days per year, or 1,648 man hours per year.

And how much does it cost to hire a local? At this time, not that much – around $1,409* a month (that’s actually difficult to survive on in Singapore).

But let’s assume that the free market will drive manpower costs upwards, as employers will have to keep raising salary levels to compete with other employers, say, the Civil Service. For Diploma holders, that’s about $2,480, according to the Ministry of Education.

With that in mind, let’s do the math for our future air-con technician.

According to the Polytechnic Graduate Employment Survey by Ministry of Education in 2013, an Electronic and Electrical diploma holder’s starting monthly salary, is $2,350. Assuming the local air-con technician starts work at age 23, and he gets 5% salary increment a year until he’s 40 years old, he will be earning $5,386 a month. Add Employer CPF contribution and that goes up to $6,302. Remember that locals all expect 12 months of salary, 1 month of annual wage supplement and around 2 months of bonus. That’s 15 months’ salary per technician every year, for a grand total of $94,528.

That works out to $57.36 per man hour. If your appointment takes two hours, and the air-con repair company has to charge you 30 minutes of travel time from the office, and another 30 minutes travel time to the next appointment, that will add up to 3 man hours, or $172.08. And that’s just for labour. How about the parts, the cost of the van, training of the technician, insurance and medical expenses and all that?

Well, I don’t have a solution for this, but I’d love to hear from someone who does.

*Manpower Research and Statistical Department, Ministry of Manpower Report on Wages 2011

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