The Art of Numbers

I refer  to the Straits Times article dated 15th July 2010 “Singapore needs 100,000 foreign workers”

I am uncertain where Prime Minister Mr Lee Hsien Loong and  his advisers learnt their economics from, but for me,  when an economy ‘overheats’, it means productivity is unable to keep up with demand.

Normally an ‘overheated’ economy lends its characteristics to tremendous economic growth otherwise known as a ‘Boom’ period. The global economy has barely recovered from the financial/banking collapse of the past year and there are reports that Europe will face their own financial troubles soon.

China is facing mounting pressure to revalue its Yuan so that her products and good are more competitive in the global market. If Europe’s financial and banking industry collapses (which we already have seen with Greece and Iceland) and China decides to revalue its Yuan, costs of goods will increase and demand will dampen.

Already, the Monetary Authority of Singapore has increased the value of the Singapore dollar in April in anticipation of  forthcoming inflation (http://www.businessweek.com/news/2010-06-20/singapore-says-yuan-move-won-t-affect-currency-regime-update1-.html).

Moreover, we are uncertain which sectors will overheat  – manufacturing, construction, finance/banking sector, tourism/hotel/service, health, GLCs/GICs/SWF? There is no proper data on this important element.

The million-dollar question remains – if there is a ‘Boom’ period,  why are there still so many thousands of people unemployed?

So I question the ruling party’s sudden growth forecast for Singapore this year of  between  13% to 15%. Already they have given themselves a pay hike of 8.8 % based on earlier  7% to 9% growth forecast and I can’t imagine they are going to ask for more salary increase in future.

These are questions that have been bothering me until I remembered that this is the month of July.

According  to the Straits Times article 22nd Feb 2010,  our ruling party is  going to increase the foreign workers’ levies from 1st July 2010 forcing companies to reduce their dependence on Foreign Workers. But will this work? Your guess is as good as mine.

The levy rates will go up by between $10 and $30 for most work permit holders, with adjustments in 2011 and 2012. It will amount to an average increase of $100 in levies for the manufacturing and service industries over the next three years.

There will be two levy tiers for S Pass workers, up from the single rate of $50 currently. The rates for first and second tiers will be $100 and $120 respectively from July, with adjustments phased in until the rates reach $150 and $250 by 2012

Finance Minister Mr Tharman Shanmugaratnam commented that: “These changes will provide clear incentives for businesses to restructure and upgrade their operations so as to rely less on lower skilled foreign workers. Businesses will receive significant support from the government through schemes to improve productivity, innovation and training to develop skilled local workers”

Before the levy hike, an employer pays between $50 to $470 per month for a work permit pass holder. Now, it has raised to between $60 to $500.

Companies are simply going to pass the increased costs to their workers and more detrimentally to the consumers. This will definitely have an impact on inflation in the near future further worsening the livelihood woes of the general populance.

Basing on the report that most of the 100,000 would be in the hospitality sector, lets assume they would be work permit pass holders and lets take the lowest levy of $60.

If we take 100,000 foreign workers multiple by $60 by 12 months, it will net the ruling party $72 million dollars a year alone in levy monies. Moreover,  we have not included the taxes generated from these workers and  the amount companies will have to pay to take advantage of the so-called government schemes to redesign jobs to improve productivity.

It looks like our government is really in need of a lot of hard cash.

Already the total for all foreign levy collection per year is close to $1 Billion and by 2012 it is expected to be close to $3 Billion (http://migrantworkerssingapore.blogspot.com/2010/02/raising-foreign-worker-levy-will-not.html). Not inclusive, monies earned from taxes and ‘productivity’/’educational’ schemes.

In my opinion, our ruling party has taken the term ‘human trafficking’ to a whole new level sacrificing many local people in the process.

- A Singaporean Patriot

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2. Foreign workers: Figures can be so deceptive
3. Singapore may reduce foreign workers, boost social spending after opposition makes gains
4. F & B Employer: Singaporeans should embrace the need of foreign workers in Singapore
5. Top 10 reasons why Singapore is the BEST place to work in for foreign workers
6. Sign our online petition against high influx of foreign workers
7. Response to Goh Chok Tong’s Status Update on Blue Collared Workers
8. Eight Reasons Why Foreign Workers Are Preferred Over Local Ones
9. “Foreign workers help create good jobs for S’poreans: PM” – Really?
10. Local Employer’s Appeal Letter to PMO for More Workers