Sunday, April 24, 2016

Why IT engineers are similar to cleaners in Singapore ?

Do not let the title distract you from the central message which I will bring to you today - There is no better time for a A level graduate to go for an engineering degree with the recent reforms announced by the government.

Before I get to that, I will first answer the question as to why IT engineers and cleaners have quite a bit in common. If you read the article in Labourbeat by MP Zainal Sapari, one of the key reasons cleaners did not enjoy an increment for a decade was due to outsourcing. Outsourcing was then led by the government which made the decision to hire cleaning services from private sector providers. This cut-throat competition forced these private sector providers to make "suicide bids", bids which forced unskilled and uneducated workers to take on work at a lower price. This was the primary reason why cleaners enjoyed a lower standard of living over the years.

At least IT Engineers were in a similar situation for the past decade. Outsourcing and a liberal foreign talent policy basically meant that engineering work could be done at lower and lower prices. Outsourcing MNCs eventually tried to sell their services also at cut-throat prices but if you really examine the kind of labour they deploy in IT departments of most of their customers, it was mainly staffed by engineers with the barest qualifications. An NCC diploma can be assigned a senior systems engineering role and then deployed to support a statutory board. If you fire him a decade ago for his attitude problem, he resurfaces under another statutory board with another MNC because no one wants to do tech support. The net effect is that engineers don't get no respect because we are support staff and people who meet us just spit on us when systems are down.

But engineers are not unskilled labor. We can fight back. We just reinvent ourselves as bankers and investors. During the boom town years in banking, a Masters in Engineering can easily stop doing engineering work and get a starting pay at $5,000 in a bank.

Singapore is now facing the consequences of this mistreatment of technical talent. Trains are breaking down and startups cannot find the skilled programming workforce to create the apps which can change the world. Worse, the oil and finance sectors are not doing too well these days.

Which brings us to the new policy of paying engineering talent $4,000 a month for fresh graduates.

I think this is a powerful game changer for the whole industry. Given that our GDP growth is struggling to reach 2% a year going forward, a 20% increase in engineering salaries can be seen as 10 years of progress. Kudos to the government for doing something significant for a change to preserve technical talent in Singapore !

A  promising engineering student now has a $4,000 baseline to look forward to upon graduation. SMEs who cannot pay top dollar for engineers now has to work with the polytechnics to provide apprenticeships to build a talent pool for themselves. The Silicon Valley startups are unaffected because engineers cost about $120,000/yr in the US and Singapore remains fairly competitive in this arena.

Now is the perfect time to do engineering and computer science.

But here's some more advice :

a) Time to beat the Budget Babe ! Better save at least $30,000 a year from your excess income.

My friend Budget Babe became viral because she claims to save $20,000 a year. A fresh engineering graduate with a $3,600 take home pay with a 1-2 month bonus should target a $30,000 savings in his first year of work. The great thing about engineering as a career is that its unpretentious and your career progress will not be impeded if you do not dress well or spend lavishly. Just carry on living like a final year university student.

b) Your second degree can be something that does not depreciate so quickly.

Moving forward, I actually think that engineers have a bright future for at least a decade. But with $30,000 savings a year, it only takes 2-3 years to save enough to consider an advanced degree like the MBA, MPA or JD which provide alternative career paths. But that's only if engineering stops being fun by then.

Even better, you can continue with the CPA or CFA without really quitting your day job.

Domain skills can be used to complement your technical skills. The difference is that now you can actually afford it at a younger age.

c) In the worse case, you can just treat your engineering career as bonded slavery for 10 years by learning how to invest well.

I won't go as far to say that engineering work is slavery but some of you might be unfortunate enough to be doing government procurement. In that case, saving $30,000 for ten years can still net you a portfolio of at least $300,000. This will produce $2,000 a month at 8%.

You can then look at different options later. If you remain single at age 35, there are many career options available to you in the private sector or other countries. Good news is that under this government guarantee, you can limit your bondage to 10 years which is great compared to engineers in my generation !

But I think a true technical professional should just say no to a career in government procurement. Trust me on this one !!!

d) You are still likely to be "betrayed" within 15 years.

Betrayal is a very strong word but when that happens, I doubt Singaporeans will become angry with the government for systematically eliminating your technical jobs when you reach your 40s. Both oil and gas, law and finance had its heyday with smart guys getting high salaries by joining these sectors. If anything our government is likely to be overly compassionate compared to the private sector.

No career path will survive prosperity for too long.

Establishing Singapore as a Smart City will take about 10-15 years of effort and engineers will experience rising standards of living compared to other professions. As in the past, the cost structure to sustain this hierarchy of technical talent will become too high and when you reach 40-something years old, the young 20-somethings then will want to know why you are so special and why are you put in this pedestal. You will become a burden to the tax-payer who will consider you a "jiak liao bee".

This is the ultimate advice, if you want to see how society will treat you when you hit your 40s. Just look at how society treats the 40 year olds now. But hopefully, you would have done something to reinvent yourself before the government reinvents Singapore decades down the road.

In summary, while my generation of engineers would probably not be able to benefit from this development, Millenials now have a pretty solid reason to study engineering or computer science. Imagine a career where you get to play with all sorts of toys, hang out with other geeks, dress badly, and still take home $3,600 a month on your first year. If the work does not suit you, the higher starting salaries effective nets you an option for a career change within 3 years.

I can see definitely see the smart geeks moving back from Law and Medicine now.

See, this is an optimistic post !

1 comment:

  1. In general, (i think) society today does not adequately value science/math/engineering skills. Most (if not all) first classes from my batch (science) went to better paying jobs. None went on to do Phd. As I tell many, science doesn't pay as many view us as overpaid technicians. The country will come to regret this (and is already experiencing this in some form) in the future when the workforce lacks people strong in logical and analytical thinking. The country will be in trouble if all top posts go to people who are just paper warriors but lack actual implementation skills/teams. Selling a sugar coated goal is all good and nice when one isn't tasked to actually implement it in a practical manner.