I have friends in Perak, a father and two daughters, who used to work in Singapore as a fitter, cleaner and production operator for about S$1,500 (RM3,500) to S$1,700 (RM3,950) a month.

The father and her second daughter now work as rubber tappers, from 2am to 8am, covering about 8 hectares of a rubber plantation, for about RM40 a day. His oldest daughter sells flowers from their home.

They are supporting their mother who is a housewife, and give about RM600 a month to the youngest daughter studying in Kuala Lumpur.

As I visited their home recently, I began to think about how labour policy changes over the years in Singapore may have affected Malaysians like my friend and his family, especially in respect of the availability of jobs and the policy in regards to the granting and renewal of work permits.

Due to Singapore’s worst recession last year, the labour policy was changed to reduce the reliance on foreign workers, of whom there are about 1.1 million (excluding permanent residents (PRs), out of a total workforce of around 2.93 million.

I understand that there was a new categorisation of workers from China (PRC), that together with workers from non-traditional sources (NTS) countries like Thailand, Philippines, India, Bangladesh, Sri Lanka, Pakistan, Burma, etc, had their foreign workers quota reduced to only up to 10 percent of a service company’s total workforce.

Consequently, this may result in employers employing more Malaysians.

Foreign workers in a bind

To illustrate this, a simple combination can be 5 locals (Singaporeans and PRs including Malaysian PRs), four Malaysian work permit holders and one PRC or NTS work permit holder, excluding S-passes (monthly salary of at least S$1,800, or RM4,180) to simplify matters.

As a result of this foreign labour policy tightening, many PRC and NTS workers may not be able to renew their work permits, and will probably be replaced by Malaysians.

For example, under the previous foreign workers’ quota, a service business like a restaurant that was employing 29 staff, 18 of whom were locals (say Singaporeans and Malaysian PRs), could have 11 foreigners (six Malaysians and five PRCs).

However, under the new quota, only three PRC workers are allowed. Thus, two of the existing PRC workers’ work permits will not be renewed. Alternatively, in order to keep all the five PRC workers the company would need to have its total workforce up to 50.

In this scenario, in all probability, the employer will have to try to hire two Malaysians to replace the 2 PRC workers.

This may have caused some hardship particularly for PRC workers like Jane (not her real name).

She is a 21-year-old Chinese from Shanxi, China, who paid S$8,000 (RM18,580) to the employment agent in China in order to come to Singapore to work.

When she applied to work in Singapore, she was told that the renewal of her two-year work permit would normally not be a problem.

However, now, after working for two years, her employer tells her that due to a change in the Ministry of Manpower’s (MOM) foreign labour policy, her work permit cannot be renewed, as the number of foreign workers that they can hire has been reduced, and they may likely be replaced by Malaysians.

Bosses brace for headaches

As she has barely recouped the $8,000 agent’s fee and air ticket that she paid to come to Singapore, she is naturally disappointed with how things have worked, or rather not worked out for her in the island republic.

In this connection, I understand that Malaysians who come to Singapore to work, typically do not have to pay any agent’s fees, or only about a thousand ringgit, as one shop assistant at KLCC, who had worked as a product operator in Singapore, told me recently.

On July 14, Singapore’s prime minister, announced that at least another 100,000 foreign workers will be needed, so as not to overheat the economy, which is expected to be the fastest growing economy in the world, at 13 to 15 percent GDP growth for the year.

What all these may mean, is that there may be more jobs for Malaysians in Singapore.

But this may also be causing a lot of headaches for employers, as their foreign worker NTS quotas have been reduced.

Also, why say that there is a need to bring in at least 100,000 more foreign workers so that the economy will not overheat, and then refuse to renew the existing work permits of those who have paid a lot of money to come to Singapore?

Boon for Malaysian workers

Foreign worker levies have also been increased by as much as 100 percent from July 1. So, there is now more incentive for employers to employ Malaysian PRs. Even for foreign workers, employers may have a preference for Malaysians, because anecdoctally it appears that it may be easier for Malaysians to get PR status.

The employer’s CPF contribution rate for Malaysian PRs at 9 percent rising to 14.5 percent from the third year of attaining PR status, may also be lower than the foreign worker levy, and thus derive labour cost savings for employers.

In this connection, some of the 34 percent of Malaysian workers whose wages fall below the poverty line of RM720, according to the Human Resources Ministry’s study of 1.3 million workers, cited in the article ‘Study: 34% of workers earning below poverty line‘, may be interested in working for possibly higher wages in Singapore.

The World Bank study found that the wage trend in Malaysia had recorded only an annual 2.6 percent growth during the past 10 years, as compared to the increasing cost of living during the same period.

In contrast, for Singapore, for the last nine years, from 2001 to 2009, real wages rose by only 1.4 percent per year. In a Straits Times report, National Trades Union Congress (NTUC) deputy secretary-general Halimah Yacob said that wage increases of between three and four percent are being anticipated for this year.

With inflation running at 3.1 percent in July, Singapore may end up with a third consecutive year of decline in real wages.

As I understand it, wages do not include the employer’s CPF contribution. The employer’s CPF contribution rate was cut from 16 to 13 percent in October 2003, which was partially restored to 14.5 percent in July 2007.

After factoring this in, does it mean that in effect, the increase in real wages may even be less than the 1.4 percent per annum, from 2001 to 2009?

The human resources minister has said that Malaysia’s understanding of Singapore’s “unwritten policy” on retrenchment of foreign workers, is that Malaysians will be let off last in times of economic uncertainty. This perhaps underscores the general preference to employ Malaysians over other nationalities in Singapore.