Foreign worker levies hurting productivity

I REFER to the report "Ser Luck: Govt to look into foreign worker levy" (BT, Oct 6). Apart from the financial burden imposed by foreign worker levies on businesses, it is imperative that the government consider the negative impact of these levies on productivity.

Each year, the government collects billions of dollars from foreign worker levies. The original and stated intent of the levies is to regulate the number of foreign workers in Singapore. However, today one is left to wonder if it has morphed into a revenue generating tool. There are many other ways through which the number of foreign workers can be regulated. An employer can pay up to S$950 a month or S$11,400 per year for employing a foreign worker. Some of the highest levies are for foreign construction workers. Perhaps it is no accident that the Singapore construction industry has often been cited for its low productivity.

Every dollar of foreign worker levy deprives an employer of a dollar to employ a better qualified worker. Thus, the levy is likely to have a negative effect on productivity as it deprives employers from recruiting better qualified workers. In a sense, the government has creamed off productivity gains, which business would have achieved if their wage budget were not reduced by the need to pay foreign worker levies.