Outsourcing has led to depressed pay for many low-wage workers: NTUC’s Zainal Sapari
NTUC Assistant Secretary-General and MP for Pasir Ris-Punggol GRC Zainal Sapari
The outsourcing trend has created market failure, contributing to stagnant and depressed wages for many low-wage workers, said National Trades Union Congress (NTUC) Assistant Secretary-General Zainal Sapari.
The MP for Pasir Ris-Punggol GRC made this observation on the labour movement’s blog by referencing management guru Peter Drucker, who famously advises businesses to “do what you do best and outsource the rest!”
Outsourcing may make good business sense, but Zainal said it has also led to a situation whereby a winning service provider in a tender typically tries to keep its operating costs down – with labour constituting a major cost component - to service the contract.
“Hence, market failure then takes root where service buyers benefit with the lowest possible operational costs (that is, when they ‘cheap source’ of course by looking at only short-term profit margins), at the expense of the outsourced workers,” he added.
He recalls how an auntie of his, who was working as a carpark warden at a statutory board from 1977 to 2005, saw her wage increase over the period from $235 to $1,459, or about $1,877 adjusted for today. According to an outsourced service provider, a carpark warden earns between $1,000 and $1,200 today. “Can they earn $1,877? (Good luck with that!),” he noted.
Adapting Drucker’s advice, Zainal added that the consultant should have instead said, “Do what you do best, outsource the rest but don’t outsource your responsibility!”
Zainal also reiterated his call for annual wage increments and 13th month bonus for low-wage workers be made compulsory.
The Progressive Wage Model (PWM) introduced in outsourcing industries for low-wage workers such as in cleaning, security and landscape is not a “magic wand” and forms “part of the solution”, he said.
The PWM has been introduced for workers in the three industries with the aim of boosting their wages through higher productivity and training.
“The PWM cannot guarantee that the workers will get their annual increment or 13th month bonus. PWM cannot guarantee that their salaries (if they do receive increment over the contract duration) will not be reset at the renewal of the contract,” Zainal said.
On a related issue, he also called for the Public Private Partnership (PPP) Model to be stepped up. For such long-term partnerships between the public and private sectors to work, the Government should play a bigger role to ensure that private enterprises are committed to responsible and sustainable HR practices.
“With the PPP model in the outsourced sectors, these workers will have better wages, and more benefits that will keep them happier on their jobs. And isn’t this something they truly deserve?” he said.
