Tiered Foreign Manpower and Levy Thresholds for Hawkers and Small F&B Operators

1 Ms Jessica Tan Soon Neo asked the Minister for Manpower whether more graduated or proportional arrangements for foreign manpower and levy thresholds can be considered for hawkers and small food and beverage operators to meet their essential kitchen and service staffing needs while still ensuring fair wages and protections for all workers.

The Senior Minister of State for Manpower (Dr Koh Poh Koon) (for the Minister for Manpower): Mr Speaker, we recognise the manpower challenges faced by small food and beverage (F&B) operators, including our hawkers, given our ageing demographic and rising local aspirations.

As a unique combination of food, space and community, hawker centres are a microcosm of Singapore’s multicultural society. To preserve the local identity of our hawker culture and heritage, the Ministry of Sustainability and the Environment (MSE) only allows Singaporean Citizens and Permanent Residents to be stallholders at our hawker centres. Stallholders can also hire eligible Long-Term Visit Pass and Long-Term Visit Pass-Plus holders, who are already in Singapore and can contribute to our economy.

Licensed food shops, such as restaurants, can hire foreign workers, subject to the services foreign worker levy rates and quota of two locals to one foreign worker. To address the manpower needs of micro enterprises, we allow those with only one local worker to hire their first Work Permit Holder.

Differentiating levies and quotas further to favour smaller operators could incentivise the larger operators to break up into smaller entities to hire more foreign workers. This could result in a large increase in the number of foreign workers, which would not be sustainable given our limited infrastructural and social carrying capacity.

I think if the Member has been reading The Straits Times, she would probably have noticed that there was an opinion piece on 24 February, Tuesday, last week, written by Assoc Prof Lee Kuan-Huei. She is the Chief Research Officer of the Singapore Productivity Centre. In that article, I think there was quite a good data-based opinion of the current state of play in the F&B sector. If I may just share some of the insights from that particular opinion piece. She said that there is a structural problem in the way F&B operators here still operate. One of the key thing is that productivity gains have lagged behind activity growth. That means that the F&B operators are putting more effort and resources into their operations without the proportionate economic gains. And her suggestion is that productivity and not headcount must be the central lens through which productivity must be assessed and for which business viability has to be looked at.

So, instead of just looking at raising headcounts, the Government has schemes to support small F&B companies. These include the FoodX programme, which supports the outsourcing of labour-intensive food preparation to central kitchens to improve operational efficiency; as well as the F&B Process Optimisation Programme, which supports technological adoption and process redesign. Companies may also tap on broader schemes such as the Productivity Solutions Grant to support transformation efforts to raise productivity.

We will continue to review the foreign manpower policies for hawkers and small F&B companies together with relevant agencies, including MSE.

Mr Speaker: Ms Tan.

Ms Jessica Tan Soon Neo (East Coast): Thank you, Mr Speaker, and I thank the Senior Minister of State for his comprehensive reply. I am also very happy to hear that the Ministry of Manpower (MOM) will continue to review that. I agree with the writer that structurally there is some challenges and productivity is important, but here we are looking at the hawkers and the single F&B operators. They do not have that advantage of scale to be able to take advantage of the dependency ratio ceiling (DRC) tier. Therefore, even if they hired just one additional worker, it brings them up to the higher DRC level, if they are even eligible to hire that.

From the way hawkers and these small single F&Bs operate, honestly, they are working 12 to 14 hours, and many of the owner operators are working those hours. My residents are some of them, that is the reason why I am asking this question. I do hope the Ministry will look at the data of companies, the single operators and hawkers that are pushed into this higher tier or end up not even deciding to carry on their business, because it is just getting too hard.

Dr Koh Poh Koon: Sir, I thank the Member for her comments and questions. I agree with her that it is a challenge for smaller scale operators. But this goes beyond just giving more headcount. It fundamentally revolves around a few key issues. One is the operating model itself, whether it is sustainable. Secondly, it is a broader conversation beyond policy, which is what Singaporeans expect of the food operators when it comes to the authenticity of the of the recipe, the way it is prepared.

It is a question that goes beyond policy, because Singaporeans have certain expectations about the quality of the food from the hawkers, the authenticity of the recipe and whether it still tastes like the good old days that they are used to.

In essence, actually, MOM is agnostic to this. If it makes sense for us to give them more headcount just to produce the food at certain a productivity and maybe even quantity and efficiency, that is something we are prepared to consider. But that will mean that the authenticity of recipe could be impacted, that hawkers selling a particular ethnic dish is now not even cooked by the actual ethnicity, for example. You see this a lot in perhaps food courts, where your typical traditional dish is cooked by a foreign worker. And if that is something that the broader Singaporean public can accept, that is conversation we should have and then decide how best to move forward on this. And in in the end, smaller operators may have to really to rethink also their business model and see how they can be more productive so that they are not going just by headcount, but how they can leverage on the rest of the resources the Government has put forth – Productivity Solutions Grant, working with central kitchen, for example – so that some of the backend operations that is very labour intensive can be outsourced, while they focus on actually preparing the meals, making sure that it is authentic.