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Wage challenges faced by migrant workers in Singapore

by Erin Lyon  This email address is being protected from spambots. You need JavaScript enabled to view it. | 29 March 2017

s 867655912578Many companies in Singapore are identifying migrant workers as a material sustainability issue (and many who don’t probably should be). As of June 2016, there were approximately 1.4 million foreign work pass holders in Singapore (out of a population of 5.6million), of which 772,200 were low-wage migrant workers in the construction, marine, manufacturing, process and services sectors. Beyond acknowledging that migrant workers are a material issue, there is limited articulation of what the challenges are and steps that businesses are taking to address them. 


Earlier this year Singapore based NGO, the Humanitarian Organization for Migration Economics (HOME), released a report examining the wage challenges faced by migrant workers in Singapore. Reports like these should be utilised by business to gain insight into sustainability challenges and should be reviewed and considered as part of a broader stakeholder engagement process. This report assists business by identifying where migrant workers exist in their supply chain and the challenges faced.  


The report data is based on the migrant worker cases HOME has handled, reports and articles from other NGOs, academic papers, media reports and public documents from Parliamentary speeches to press releases issued by government agencies. The focus is primarily on male Work Permit (WP) holders in industries such as construction and marine/shipping, but examples from other sectors are also provided.


As the report sets out, the employment context is important. Singapore’s immigration laws impose certain restrictions and regulations on WP holders and their employers. Under the work pass system, employees on work permits are not allowed to switch employers freely and legal status in the country is contingent on employer sponsored work permits. This results in limited job mobility and high dependency on employers which in turn makes it difficult for workers to assert employment rights or file complaints against employers as job loss is a real fear and likely outcome. Migrant workers typically pay recruitment fees that can range from S$3,000 to S$15,000 (est. USD2000 – USD12,000) for the opportunity to work in Singapore. The amount of recruitment fees paid differ, according to a worker’s nationality, occupation and whether they have previously worked in Singapore.


Once in Singapore, migrant workers can face a variety of challenges. They are isolated from family and have limited knowledge of language, culture and customs in Singapore. The report provides insight into the key wage issues migrant workers face in Singapore, a short summary of each is provided below:


Non-payment of wages:

Unpaid or late payment of wages: 51.4 percent of workers who approached HOME sought assistance for unpaid or short payment of wages. A common occurrence is withholding of salaries. Employers may do this so that if a worker resigns, his/her owed wages will either be forfeited or deductions will be made to significantly reduce the amount.


Underpayment of wages: 37 percent of workers of all nationalities reported that they were not paid the stipulated overtime rate, or were only paid overtime wages from the 10th hour onwards instead of the 8th hour on a normal weekday. 30.5 percent of workers were not paid double the basic rate even though they worked full days on their rest days at the request of their employers. The majority of workers seen at HOME — an estimated nine out of 10, are not given paid annual leave.


Unauthorised wage deductions: 26% of workers who approached HOME shared that their employers make unauthorised deductions from their wages. Typical deductions are for the foreign worker levy, work permit renewals, recruitment agent fees, insurance premiums, safety effects, breach of contract and “savings”. “Kickbacks”, which refers to money demanded by employers as a condition for hiring migrant workers or for renewing their work permits, is illegal under the Employment of Foreign Manpower Act. However, it remains a known practice and employers may demand sums of S$1,000 to S$2,000 (est. USD700 to USD1500) to renew a migrant worker’s work permit when it is about to expire.


Wage manipulation

There is a lack of transparency about payment methods. Up to 90 percent of construction workers from China who sought assistance in 2015–2016 were unsure if they were paid properly for overtime work and work done on rest days and public holidays. From HOME’s experience, they estimate that up to 90 percent of employers do not adhere to overtime payment methods stipulated by the Employment Act for construction work remunerated by the piece rate-method. When challenged for an explanation on how wages are calculated, employers often resort to convoluted arguments or refer to contracts that stipulate multiple pay rates involving obtuse formulas and subjective criteria such as a worker’s attitude and the quality of work done.


Deceptive recruitment and contract substitution

Up to 20 percent of workers reported being deceived either by employers or agents about the salaries they would receive in Singapore. These were often in the form of verbal promises of higher salaries and better working conditions than what they experienced in Singapore. Some were asked to sign contracts which were not in their native language under duress, for salaries which were lower than what was declared in their IPAs (An in-principle approval (IPA) is one of the requirements for getting foreign workers to Singapore).

11% of migrant workers also reported being deceived into irregular working arrangements in Singapore. They are illegally deployed to work in different companies within the same industries or have to work for companies in other industries. This leaves the men vulnerable to being further cheated, as they will be unable to seek remedial justice if they are not paid for their work; they are also susceptible to being arrested and charged for performing “illegal work”.


Wage depression

Bangladeshi construction workers were earning S$17–S$19 (est. USD12 – USD14) a day in the early 1990s. More than 25 years later, in 2017, Bangladeshi construction workers are still receiving similar starting salaries.


Wage discrimination

Chinese construction workers’ hourly wages are double that of Bangladeshi construction workers, though they are engaged in similar types of work in the same industry. Bangladeshi conservancy workers, meanwhile, are paid half of what resident cleaners are paid, despite working longer hours and being assigned the more strenuous cleaning tasks. These forms of wage discrimination, in which workers of different nationalities and ethnic groups are paid less for equivalent (sometimes more) work appears to be entrenched across industries.


The wage problems faced by low-wage migrant workers in Singapore are wide-ranging and persistent. While the problems have been sorted into categories for this report, in reality many workers who come to HOME for assistance, experience multiple forms of wage theft and wage exploitation at any one time: unpaid wages for some months, short payment at other times, and unauthorised deductions throughout their employment. They may also be asked for kickbacks and are often not provided itemised pay slips, a copy of their employment contract (if there is one) or a full set of time cards. When migrant workers finally decide to file a formal claim, they may have to contend with the surfacing of different forms of documentation that may be incomplete, fraudulent, or contradict each other. Mediation processes, meanwhile, suffer from a lack of consistency and transparency, in which a swift settlement is prioritised. Claims that proceed to Labour Court, meanwhile, present another set of problems, including the inability for workers to enforce judgment orders, even if they win their case.


This list is not dissimilar to those faced by migrant workers the world over. It also worth reiterating that this list only related to wage challenges, many other challenges exist. As with many sustainability matters, transparency is the underlying issue related to all the items on the list. Workers are often in the dark about the terms and conditions upon which they are hired and compensated. The report includes a set of recommendations which are all directed towards the Singapore authorities. Another recent HOME report gives a set of recommendations to the Bangladeshi Government with respect to the role of home countries to provide protection.


There are several take-aways for business. The report identifies the primary industries in which these migrant worker wage challenges are found. Identifying the industries that need to ensure this issue is addressed has already been set out by the authorities. Since 2012 the government has been running a WorkRight campaign in the food and beverage, retail, security and cleaning and services sector, where they are focussing attention to get business to address these issues. The HOME report suggests that this should go further to include (at least) the construction and marine industries. For business in those industries and others with migrant workers in the supply chain, this is a material sustainability issue they need to understand and address.  


The challenges faced by migrant workers is not isolated to Singapore, this topic is one most large companies with global workforces are grappling with – especially as companies come to understand the corporate duty to respect human rights. Businesses are advised to:


  • educate staff about the low wage foreign migrant worker process, potential abuses and inherent risks to business of poor recruitment and employment practices
  • conduct a supply chain assessment to understand where low wage migrant workers are in the business and supply chain, specifically understand the role of labour brokers/recruitment agents in the process
  • create a code of practice for the treatment of low wage migrant workers which should include equal rights for all workers and ensure that all labour agencies meet certification standards or the specific minimum requirements of your code of practice
  • review and assess compliance with the code
  • engage in collaborative efforts to tackle this challenge for example the International Recruitment Integrity Systemclearview and the Fair Hiring Initiative


The full HOME report can be downloaded here. The Singapore Government WorkRight campaign can be downloaded here. Contact us to find out more This email address is being protected from spambots. You need JavaScript enabled to view it..