Tuesday, 1 May 2012

Productivity: In the Name of Outsourcing and Out of Touch

Productivity then inflation is given as excuse for the inability to give wage increase to low income workers.  PM Lee said wage increase would lead to inflation but just a day ago, DPM Tharman said most people would not feel the inflation. 

Anyway, the government has to think of some reasons to justify no wage increase for low income workers.  Perhaps, they are running out of ideas. After productivity, inflation, they will add economic restructuring (business closures), jobs lost, and even world economic crisis.  All the fear tactics will come out but will people believe them?

When we celebrate May Day, it is really not a piece of good news to the workers.  Just like a birthday without a cake and in addition, you receive a warning of inflation, jobs lost, competitions, and even crisis. Instead of celebration, it is like mourning.

Let see how the government is raising productivity through their outsourcing activities. How do they perform more jobs through less manpower used? You can visit the website of Spring Singapore. There are various assistance schemes for companies to raise their productivity.

The basic and straight forward grant, for example the LETAS, is done by Spring Singapore and the complicated cases, companies seek help through so called EDC (Enterprise Development Centres).  This model creates more jobs for others but fewer jobs for Spring Singapore.  The end result is Spring Singapore can achieve higher productivity through outsourcing activities to third parties. But the activities of the third parties are added to the contributions of Spring Singapore and so they can claim that with fewer headcounts, they can achieve more.  Hence, their productivity increases and can justify for wage increases.     

IDA has a program called Infocomm@SME, another productivity improvement assistance scheme for companies.  The basic iSprint is done by IDA and the complicated ones (SIRC), companies have to seek help from Singapore Poly and Chinese Chamber.  Doing the easy and straight forward cases and leaving the complicated and may be no result cases to third parties, IDA can claim credit for productivity gains, again with smaller headcounts.   

Same may go for the SAF, outsourcing catering, vehicle maintenance activities to Singapore Food and ST Technology and claim the credit of productivity improvement.

The whole exercise is beneficial for all parties involved. There are also multiplier effects on our economy. The source parties (Spring, IDA and SAF) claim productivity improvements, and the third parties gains from having the contracts and businesses.

Powerless workers

Only with monopoly status or regulated protections, the outsourcing effect will make meaningful gain in productivity.  

This has nothing to do with low income workers and also will not improve their productivity.  As for the third parties, in order to make money and also to improve their productivity, they will go for cheaper sources, be it foreign labour or older workers or another third parties.

Consequently, we see the stress on low income and low educated Singaporeans.  In the whole process of outsourcing, the cost will have to go lower and lower to achieve profits. There is no bargaining power for low income Singaporean workers as they have to compete with younger and more productive foreign workers.  

When we talk about economic restructuring, especially in the name of productivity improvement, we have failed to input local human factors.  Of course in the name of greed, who cares about low income Singaporeans? Spring, IDA, the SAF and other government bodies, all can claim they have achieved productivity improvements.  But this is at the expense of whom?

The more outsourcing the more out of touch

But the single and most critical of the outsourcing activities is THE LOST OF TOUCH with the people. This is the reflection of the PAP government – by outsourcing activities to PA, then PA outsources to CCC, CDC or many other Cs.  The end result is the government is not receiving correct feedback and has no feeling on the ground. This is why the government seems to do all the wrong things, from housing, transportation to immigration.   

When the government announces they are spending more money to help companies to raise productivity, again they will use the same outsourcing tactic. Needless to say, we have already known the answer. It will help some companies but certainly not majority of the companies as well as their low income workers.

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