Cheap sourcing services have been a perennial concern for the in Singapore, affecting the welfare and job security of workers in the region. Even with labour movement’s progressive wage model, that requires some sectors to pay higher basic salaries, outsourced services such as security guards and cleaners often experience stagnated pay during their contractual service, which can last for more than two years.
NTUC calls for proposed enhancements to the Government procurement act, such as to improve procurement practices for outsourced talent. This is initiated to create better relationships between the service provider and service buyer to ultimately benefit workers.
NTUC Assistant Secretary-General (ASG) and U Care Centre Director, Zainal Sapari said, “Collectively, we can create an environment that will benefit everyone, including workers who can enjoy better employment terms and conditions.”
NTUC explained that outsourced sectors have long been plagued by low productivity and stagnating wages due to irresponsible outsourcing by businesses. The practice of cheap sourcing followed by businesses has resulted in the industry being caught in a vicious cycle with service providers quoting the lowest bid and facing challenges to accelerate the productivity efforts.
While the Progressive Wage Model (PMW) mooted by the labour movement is an important step that would result in wage boost for low-wage workers, more efforts need to be done to ensure that workers with lower pay can benefit from sustainable real wage increases.
NTUC calls upon the Act to be guided by the Principle of Proportionality whereby the requirements and conditions of the contract must be in reasonable proportion to the procured services. Sapari added, “In current practice, service buyers often dictate liquidated damages for service lapses, and this is often blown out of proportion or used as a ‘cost-saving’ measure. A principle of proportionality will therefore ensure that liquidated damages clauses are used as a professional tool to reasonably compensate service buyers for non-compliance of service standards.”
The act could further serve to enforce positive industry practices to benefit both workers and the companies to include – procurement contracts contain a termination clause that allows for reasonable engagement by both parties to address any issues, ensure that the workers’ sense of job security is not compromised and any upfront quotes for piecemeal services should be provided.
NTUC noted that the Ministry of Finance has in place a set of internal guidelines for the procurement of outsourced services but more can be done to set an example for the private sector to follow.
Urging the government to amend the act, NTUC hopes inclusion of the principle of proportionality would ensure that contracts are fair to all parties. This will have a cascading impact on the private sector. NTUC added that a tripartite mediation framework can also be set up to resolve issues between service buyers and service providers.
He hopes these changes would take effect in two years’ time, after they are raised in the Parliament following this year’s Budget debate.
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