Earlier this year, TSL wrote a piece on minimum wage and the problems it caused. In this article, the issue of cheap sourcing will be looked at by a guest writer. This problem is best illustrated by the story of Mohd, a security officer of 9 years who had just lost his job.
Cheap sourcing victims were model workers
For 9 years, 52 year old Mohd has kept students safe as they went about their daily activities in their secondary school.
His humble monthly gross pay of $1,760 from working up to 66 hours a week still allowed him to raise a family of 3 children on a single income. That's 12 hours of work Mondays to Fridays and another 6 hours on Saturday. He does however, get an alternate Saturday off. His life goal is simple - having a healthy and happy family.
Mohd's colleague, Sankar, has been guarding at a primary school for 10 years. He married late, and at 61 years, is still supporting 2 school-going children on a single income, a monthly gross pay of $1,860 from a work week similar to Mohd's. Sankar's weekends are simple: visiting his sister and having a simple family meal at the nearby coffee shop.
Both security officers have received awards for their dedication to their job, thank you letters from students and respect from their fellow colleagues.
Asked to resign on the spot or accept a pay cut
Their lives were turned upside down when their employer, a security agency contracted by the managing agent of the school, informed them they had to resign. This was because a new security agency had won the contract on a cheaper bid.
Mohd and Sankar were apprehensive and wondered if they could keep their jobs at the same pay with the new security agency. To their shock, they were told by the new security agency that they could only keep their jobs if they accepted a pay cut.
The new security agency showed Mohd and Sankar their new contract stating a monthly gross pay of up to $1,600. Worse still, after they did more calculations, they realized that to earn the full $1,600, they would have to work an extra 2-3 overtime hours a week.
Longer serving workers faced bigger pay cuts due to “minimum wage”
They checked with their colleagues and realized that the 140 or so other security officers were proposed the same terms regardless of number of years of experience or service. Colleagues who just entered the trade and earned less than $1,600 are happy at the pay rise, whereas colleagues with a long service record were shortchanged by the pay cut.
What is clear is that a minimum wage legislation would not have helped Mohd and Sankar - a "minimum wage" of $1600 has now been set. New guards get a pay increase, whilst the more experienced ones suffer pay cuts.
The new security agency's reason for the lower pay was because the managing agent which chooses the security agency had accepted their bid which was cheaper than the current security agency's.
The managing agent had obviously placed considerations on price over other aspects like livelihood of officers, skill sets and familiarity of the nature of work and the school environment.
Cheap sourcing doesn’t care about skills or experience
It is not unheard of for managing agents to cheap source as these agents are incentivised to look for the best deals for their client's tender budgets, even if it means cutting manpower costs. Often, managing agents do not look at aspects that actually enhance the contracts that they are trying to place.
For example, if a security officer is trained in firefighting and emergency first aid, versus one who is not but is cheaper to employ, chances are the managing agent will go for the cheaper worker, since his client did not ask for someone with those training. But on the ground, we know such skills do matter, even if it is for 1 day in the entire 1 year contract.
Clients may also have more than one managing agent to ensure these agents find the best deals for various tenders or risk getting replaced by a more competitive agent.
Cheap sourcing makes it difficult to increase pay beyond $1,600
To their credit, the new security agencies which won the tender are now trying to do what they can to keep the workers’ wages at their current level. But it is a struggle, since their margins are tight.
Mohd lamented despairingly why the managing agent who chose the new security agency did not spare a thought for his 9 years of loyal service to the school, in an industry where it is common for security officers to switch jobs after less than a month for higher pay. With $160 less every month, he was afraid he could not manage household and education expenses.
Worse, he doesn't know if he should count his blessings as his colleague, Sankar, had to face a bigger pay cut of $260 if he wanted to keep his job.
Many of the guards are happy where they are or have no intentions to change to another job or to guard another premise if they could choose. They have made friends within a familiar environment and just want to serve loyally and enjoy wage increments like the rest of us.
How can they get better jobs and better pay?
After intervention from the various sources including the union and MOE, the security officers under the new contract are getting $1,650 (gross salary including OT). Whilst things are looking positive for them, the even better news is that their salaries will continue to rise because of the Progressive Wage Model introduced by NTUC.
The Progressive Wage Model recommends that salary paid must commensurate with the skills, job responsibility and productivity of the security officer and by 2016, no officer can be paid a basic pay of below $1,100 (about $1,900 to $2,200 in gross salary terms).
As security officers earn about $800 now, their salaries will increase by more than 30%! The officers will also get a 5 step career path for them to progress into, like each and every one of us.
Screenshot from TODAY's coverage of the issues security guards face.
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