A few decades ago Prime Minister Lee Kwan Yew realized that Singapore could never win the worldwide competition to offer cheap labor. He decided instead, that this one equatorial Island among hundreds, was to become a high value-added producer. To Lee that meant wages had to be high enough to encourage Singapore`s businessmen to invest in labor saving technology. To raise Singapore salaries he had to make sure that local wages wouldn`t be under-cut by migrants. So Lee set a high levy on each migrant`s salary. Yes, you could pay an unskilled Bangladeshi $400 dollars a month. But in that case you had to pay the state another $400 a month.
Coming from the U.S. I simply couldn`t believe that a government, however indifferent to the welfare of foreigners, was honestly trying to keep its own people`s wages up. But I interviewed a labor contractor who brought Indians, Filipinos and some of the first Mainland Chinese migrants into Singapore. He told me that he would have to pay a Singaporean welder $2,500 a month. "And the foreigners?" I asked.
He took out a pencil to calculate his cost.
"Salary $900, levy $200 [it was lower on skilled workers], meal allowance $250, accommodation,insurance,interest on the bond,: His final figure was "The same! $2,500 a month."