Employment service agencies providing contract staff to companies and middlemen bringing in foreign workers are the main factor contributing to the current woes of lower wages and unfair terms of employment for both local and foreign workers.
There has been many feedback regarding the plight of foreign domestic and non-domestic workers being sucked dry by middlemen who charges exorbitant agent fees. These workers have their salaries deducted for months just to pay off the agency fee. This amounts to exploitation in 'broad daylight'.
Local contract staff are not spared either. Employment agencies pay peanuts to them though companies pay market rate for the staff employment. Thus, for similar job nature, those who are employed directly by companies have a better deal than if they are contract staff under employment agencies.
Besides, the terms of contract in some employment service providers are unfavorable to employees, binding them to unfair conditions. This simply another form of 'legal' exploitation. Some examples of unreasonable terms in employment contract are :
1)An admin staff doing clerical work during the 1st year of service is required to give 2 months notice for resignation, if not a penalty of $2000 is imposed under the contract term. Such long notice period are only required of management staff under current employment practices. Under The Employment Act, employees with 26 weeks to less than 2 years service need only to serve 1 week notice! As they are savvy businessmen, they know the loopholes in the Act and use a binding contract in their favour. Such unreasonable notice period basically put the person at disadvantage in job seeking.
2) Potential employees of the company are made to attend training at their own time without compensation even before the employment contract is offered and signed. But they are made to sign an undertaking that should they pull out from the training, they have to compensate the company.
This current trend of companies using employment agencies and middlemen has resulted in many workers having raw deal while fattening the pockets of some. It is an unhealthy trend which will only lead to a widening of income gap.
As even government sectors are using contract staff from employment agencies, looks like there will not be any improvement to the wage structure of these workers. Besides, Singapore does not even have a law regarding minimum wages, though there have been countless feedback on the needs from the public.