Singaporean MP criticises employers for outsourcing too much labour

Author: PM editorial | Date: 17 Feb 2016

Practice is harmful to lower-paid workers who are struggling to make a living, says Sapari

Outsourcing has caused the wages of low-paid workers to stagnate, as service providers fight for contracts by offering to charge less and less.
 
That is the criticism leveled at organisations in Singapore by Zainal Sapari, an MP for the People’s Action Party of Singapore.
 
Sapari, who is also assistant secretary general for the National Trades Union Congress (NTUC), used his blog to highlight the example of his aunt earning less in 2015 than she did in 2005 as a car park warden.
 
“Unfortunately, outsourcing has led to market failure, contributing to the depression and stagnation of wages of many low-wage workers such as cleaners and security officers to name a few,” he says.
 
The constant pressure to reduce costs trickles down from the organisation putting a contract out to tender to the service provider, argues Sapari. To get the better of competition, that service provider puts in as low a bid as possible to win the contract. If the bidding war is fierce enough they may end up offering to do the work for less than the previous contract, which means their staff are also paid less, he says.
 
“As the workers are often elderly, uneducated and with limited job options, they are vulnerable and will still take up the job to make a living,” he says. “They might work under the contract for two to three years but with little or no wage increment.”
 
The MP is not accusing the larger organisations or the service providers of being in the wrong, but says that they are involved in a price war that ultimately damages the ability of those doing the work to make an acceptable salary.
 
“Are the service providers unscrupulous? Most are not,” he says. “They want to pay better wages and give better benefits to the workers but their hands are tied because all these mean higher operating costs to them. They are afraid of losing the contract if they are not able to put in a reasonable bid.”
 
Another factor is the advice given by the Austrian author and management consultant Peter Drucker, whose recommendation to “do what you do best and outsource the rest” is credited by Sapari as encouraging the boom in outsourcing in Singapore in the late 1990s.