Cheap sourcing services have been a perennial concern for the Labour Movement, especially when they affect the welfare and job security of workers.
To address this, the Labour Movement is making a call to enhance the Government Procurement Act to improve procurement practices for outsourced services.
The reason behind this is to set the stage for a better relationship between the service provider and service buyer, which will ultimately benefit workers.
NTUC Assistant Secretary-General (ASG) and U Care Centre Director Zainal Sapari said he intended to raise this subject during the upcoming Budget debate in Parliament.
He explained: “Collectively, we can create an environment that will benefit everyone, including workers who can enjoy better employment terms and conditions.”
The Concerns
NTUC explained that outsourced sectors have long been plagued by low productivity and stagnating wages due to irresponsible outsourcing by businesses.
A common practice is cheap sourcing, which has resulted in the industry being caught in a vicious cycle with service providers quoting the lowest bid and finding it challenging to embark on productivity efforts.
The Progressive Wage Model (PWM) mooted by the Labour Movement is an important first step that has resulted in a wage boost for our low-wage workers.
However, more needs to be done to ensure our low-wage workers continue to benefit from sustainable real wage increases.
Enhancements Being Proposed
Thus, NTUC has called for the proposed enhancements to the Government Procurement Act.
They called 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.
ASG Zainal explained: “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.”
He said the Act can also serve to enforce positive industry practices which will benefit both workers and companies.
This can include ensuring that procurement contracts contain a termination clause that allows for reasonable engagement by both parties to address any issues. This will help ensure that the workers’ sense of job security is not compromised. Additionally, upfront quotes for piecemeal services should also be given.
Calls To The Government
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.
“We acknowledge that many private companies take reference from Government procurement practices to influence their own procurement policies.
If we can urge the Government to amend the Act to include the Principle of Proportionality to ensure that at the end of the day the contracts are fair to all parties, it will have a cascading impact on the private sector,” said ASG Zainal.
NTUC added that a tripartite mediation framework can also be set up to resolve issues between service buyers and service providers.
