Jamus Lim proposes CPF-equivalent scheme for foreign workers to level workforce playing field for Singaporeans
SINGAPORE: Workers’ Party Member of Parliament Jamus Lim (Sengkang GRC) recently tackled the issue of Singapore’s foreign workers, proposing a scheme equivalent to the Central Provident Fund (CPF) that could be advantageous to all. He explained this further in a Facebook post on Friday (Mar 21).
Assoc Prof Lim wrote that he believes “Singaporeans are not inherently averse to foreigners,” given that one out of every three residents is from other shores.
“At the low end, where they clean our streets, build our skyscrapers, cook our meals, and tend to our homes. At the high end, they invest and instruct and innovate,” he wrote.
While foreigners abound in the city-state, their presence has been a bone of contention for some time now, especially when it comes to the job market, with foreigners able to accept jobs with a lower salary than locals. He added that this is in part due to foreign workers’ ability to have lower salary expectations due to Singapore’s CPF system.
“To be clear, when locals receive gross salaries and a chunk of that goes into CPF (Central Provident Fund), they’re not being shortchanged in any way, but they may be outcompeted if they cannot accept a low take-home pay, while a comparable foreign competitor with no CPF can make do with a lower gross (but higher net) salary,” he explained.
Assoc Prof Lim proposed a “parallel, simpler” CPF system that would involve setting up escrow accounts for each foreign worker, which would hold the employer’s CPF-equivalent contributions. These, he added, “would garner modest interest via super-safe, liquid assets, such as government bonds.”
When the foreign worker leaves, this amount will be given back to them. According to Assoc Prof Lim, such a system would maintain CPF’s integrity and promote fair workplace competition between foreigners and locals. Other countries with sizable transient workforces have something comparable, he added.
In answer, Manpower Minister Tan See Leng suggested that the qualifying salary for S-Passes and Employment Passes (EPs) already fulfil a similar function of levelling the wage incentives.
Assoc Prof Lim wrote that while the salary cap for S-Passes or EPs should force companies to choose foreign workers carefully, “this only applies to a special case: when wages for a position are lower than the cap, but so long as the market wage exceeds this floor… the hiring incentives remain distorted. In contrast, this escrow approach would apply in all instances, including when the market wage exceeds the qualifying salary, and since it isn’t a tax on foreign hires—they’ll get their money back when they leave—it also doesn’t discriminate against them.”
Assoc Prof Lim added that Minister Tan had also called the problem he highlighted “theoretical and academic,” as unemployment rates are extremely low, and businesses face labour shortages.
The Sengkang MP, however, said, “I find it hard to explain to the many Singaporeans—who express their frustration that the playing field isn’t even between them and foreigners—that their well-founded concerns are ‘theoretical.’
I also find it difficult to argue that the fears surrounding prospects for our new graduates in the job market—where 1 in 5 university grads couldn’t secure a full-time position last year—are merely academic,” he wrote. /TISG
