FOREIGN WORKERS' LEVY (Request for reduction)

Dr Wong Kwei Cheong asked the Acting Minister for Labour if the government will further assist industries to reduce operational cost by reducing the Foreign Workers' Levy, since the government has already decided to reduce the employers' Central Provident Fund contributions by 15% points.

The Acting Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, the Foreign Workers' Levy is applied to non-traditional source (NTS) workers who are allowed only in the construction industry, the shipyards and as domestic servants. Few NTS workers are left in the other sectors of the economy with the near-completion of the programme to phase them out from these other sectors by the end of the year. The levy is also applied to traditional source workers in the construction industry who are here on Block Work Permits. Foreign workers in the manufacturing and other industries are almost entirely on the CPF scheme. They are not affected by the levy.

For the construction industry, the original plan was to increase the $200 levy per month to $350 by April 1986 in steps of $50 increase every six months. The objective was to narrow the substantial cost difference between hiring local and foreign construction workers. However, in view of the economic recession, the Government has frozen the levy at $200 per month until further review. Any reduction in the levy will further depress wages in the construction industry and discourage Singaporeans from seeking a career in the industry. This will make it even more difficult to build up a core of local construction workers.

Mr Chng Hee Kok: Sir, is it not true that the then prevailing CPF contribution rate was the major factor taken into account when the Foreign Workers' Levy was calculated, particularly the levy of $120 on foreign maids?

Mr Lee Yock Suan: In setting the levy, the Government considers various factors. One of these is, of course, the level of CPF contribution. The other consideration is the difference in wage cost between the foreign worker and the local worker. For example, maids from Sri Lanka can be hired for as low as $100 or $150 per month. When the levy on maids was increased in 1984, I understand that the wages of Filipina maids have, in fact, gone down.

As far as the maid situation is concerned, despite the recession, the number of foreign maids is increasing rapidly. The number increased by 7,100 in 1984. It increased further by 3,500 last year, to a total of 28,000 maids. There is, therefore, no justification for a reduction of the levy on foreign maids. At $120 per month, the levy on domestic maids is still lower than the $200 levy for other NTS workers. So if Singaporeans wish to employ more maids, they should perhaps consider employing Singaporean maids. In this way, we will give more jobs to some of the local housewives who are looking for work.