TAX RELIEF FOR WORKING WOMEN WHO ENGAGE FOREIGN MAIDS (Extension to single working parents)

Mr Teo Chong Tee asked the Minister for Labour whether the tax relief to be granted to working women as a result of the increased levy on foreign maids will be extended to single working parents like widowers and male divorcees who also engage foreign maids to look after their young children.

The Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, may I have your consent to answer Questions Nos. 8 and 9 together as they are related?

Mr Speaker: You have my consent.

Mr Lee Yock Suan: The Government liberalised work permit controls in 1978 to allow the import of maids from non-traditional sources like the Philippines and Sri Lanka. Before that, Singaporeans who could afford maids had to recruit them locally or from Malaysia at relatively high wages. Since 1978, the number of foreign maids has shot up from several thousand to nearly 50,000 today. Foreign maids constitute more than a quarter of the total foreign workforce in Singapore.

Foreign maids come from low-wage countries and some are prepared to work for as little as $150 per month, which is still higher than what they can earn back home. Without the levy, the number of maids could easily double or even quadruple. For example, the number of maids could mushroom to more than 200,000 if every mother who is working today decides to hire a maid. The ultimate number could be even higher considering that there are about 600,000 families in Singapore, the vast majority of whom are managing without a maid. If maids are so readily available at very low cost, the existing methods of family support and domestic help will rapidly disappear and Singaporeans will become ever more dependent on foreign maids. Alternatives such as child care centres and part-time work will not develop.

The Government has to moderate the growing demand for maids and other foreign workers to minimise their long-term social and economic costs. It does so through the levy as a pricing mechanism as well as by administrative controls. When the demand continues to grow as at present, the levy has to be raised to con- tain the demand. Conversely, if the economy slows down and the foreign workforce declines, the levy can be reduced accordingly.

A foreign maid is also a foreign worker and poses similar economic and social problems. An unskilled foreigner could be hired as a maid or as a factory worker. If the housewife who employs the maid does not go out to work, then the maid has not made a contribution to our economic growth except what she consumes here, unlike the factory worker. Such situations result in a leakage of our foreign exchange reserves. If the maid displaces the housewife into the job market, then effectively and indirectly we would have increased our workforce by importing an additional foreign worker. If maids are priced too cheaply, even housewives with low skills will be inclined to hire maids to look after their families and take up low paid jobs. The increased pool of unskilled workers will depress local wages and attract labour-intensive, low value-added industries. The number of maids therefore has to be controlled as part of the total pool of foreign workers.

Maids also pose various social problems. For example, some foreign maids want to marry Singaporeans and settle here but are not allowed to do so. We can well envisage the total impact on our society if we were to have a whole army of maids here. No developed country admits foreign maids as liberally as we do.

The Government has been relaxed towards the employment of foreign maids because it recognises that hiring them encourages our women, especially those with higher skills and qualifications, to continue working and bring up their families. With the levy adjustments, the maid levy will still be $50 less than the foreign worker levy.

Employers are allowed to deduct the cost of hiring foreign workers against their taxable income. Similarly, married women who need maids to continue working are allowed to deduct from their taxable income twice the maid levy which approximates the cost of hiring the maid. This tax concession will soften the impact of the levy increase on working wives.

The question by the Member for Changi is similar to the requests by various employers to be included in the tax concession on the foreign maid levy for working wives. The details are still being finalised for announcement in the Budget.

I would like to inform the House that the tax concession is not meant to help all employers who need foreign maids. It has been granted in recognition of the fact that hiring foreign maids encourages women, especially those with marketable skills and qualifications, to continue working and to have children. This objective has to be considered in deciding the final details of the tax concession.