Committee of Supply Speech (Part 1) by Dr Ng Eng Hen, Minister for Manpower, 08 March 2007, 2:35 PM,
Dr Ng Eng Hen, Minister for Manpower
Singapore and Singaporeans, Winners of Globalisation; Maximising Opportunities.
(I) BETTER JOBS FOR SINGAPOREANS
1. Job creation over the past year have been quite dramatic and gratifying:
- 173,300 jobs added, of which 88,200 went to locals.
- A total workforce of 2.49 million, the largest-ever.
- A record 76% of working-age1 Singaporeans in employment.
- Average overall unemployment down to 2.7%, with almost 24,000 fewer unemployed compared to 2003.
- Average monthly real earnings up by 2.2% to $3,505 in 2006 from the year before.
2. What do these numbers tell us? Simply, that Singapore and Singaporeans are among the winners in this age of globalisation. We have succeeded because we opened ourselves to world trade and trends. Instead of resisting change, we have re-shaped our economic landscape quickly and put ourselves in positions of advantage to better capture opportunities. We have been rewarded for having a harmonious industrial climate and a flexible labour market, able to respond quickly to the fast changing demands of a dynamic economy. We have put Singapore on the map to attract global talent. We have created jobs for Singaporeans. Our workers are productive and adaptable, earning good wages that are justified by their skills and productivity, rather than through self-defeating and unsustainable protectionism. We must continue in these right policies that have brought us growth and jobs.
Singaporeans benefited the most
3. Above all, it is Singaporeans who have benefited from these policies, as it should be – with more jobs with higher pay. The demand for manpower is now well above what can be supplied locally. For example, last year, 9 out of 10 (91.3%) fresh polytechnic graduates found jobs within six months after graduation. Some have jobs waiting for them even before they have graduated. Average monthly gross salaries of these fresh polytechnic graduates have also risen 3.1% compared to the preceding cohort to about $1,710 in 2006.
4. Hudson, a HR consultancy, has reported that employment expectations are rising, particularly in Healthcare, Life Sciences, Banking & Professional Services, and Infocomm. To better attract talent, companies are having to increase remuneration packages of new hires at the managerial level, with a majority (58%) increasing salaries by more than 10%.
5. Kelly Services, another HR consultant, reports current salaries of accountants at $4,000 - $6,500. A Distribution Manager in Logistics could draw $4,500 - $6,000. Sales Managers can get a salary of $5,000 - $7,000. A Regional Business Development Director in Pharmaceuticals could earn $13,000 - $15,000 a month.
A Time of Opportunity
6. Many other sectors also need more workers. 15,000 new jobs in the marine sector are expected in 2007, of which 3,000 are higher-skilled roles for engineers, technicians and foremen – jobs well suited for Singaporeans. The process technology sector, which supports our chemical, petrochemical and pharmaceutical sectors, will require 10,000 additional supervisory jobs over the next three years. Likewise, between now and 2010, the infocomm industry expects 10,000 new jobs in IT, telecommunications, networks and digital media. In the tourism industry, the two integrated resorts will each create about 30,000 jobs economy-wide when fully operational.
7. From software engineers to process engineers, retail supervisors to manufacturing supervisors, systems analysts to financial analysts, more job opportunities will be available. All in all, we can expect more than 450,000 jobs to be created over the next 5 years, if the economy grows 4.5% to 6.5% each year. How do we ensure that Singaporeans benefit from this growth?
(II) MAXIMISING OPPORTUNITIES
8. MOM will work with our tripartite partners, to ensure that Singaporeans can make full use of these opportunities.
9. First, we will spend more on training, to equip workers to make the most of the future.
10. Secondly, we will strengthen initiatives to help specific groups of workers who face structural challenges in the labour market.
11. Thirdly, we will ensure that the opportunities that present themselves before us today do not slip out of our grasp. To do this, we have to ensure that businesses' need for manpower is met. Otherwise, businesses will go elsewhere.
12. Let me elaborate.
(III) INVESTING IN TRAINING
13. The Lifelong Learning Endowment Fund (LLEF) will be topped up by $100 million this year to $2.2 billion. Together with the Skills Development Fund, WDA will have at its disposal more resources with which to help workers re-skill. In the medium-term, the Government will triple annual expenditure on lifelong learning to $500 million.
14. With more resources, WDA will be able to help more people like Mr Mohamed Yunos S/O Fakir Mohamed. Yunos used to work as a cleaner. Drawn to the exciting nature and better prospects of the Retail sector, 38-year-old Yunos joined the new Ikea store in Tampines as a Junior Sales Assistant. Before starting in this new job, Yunos attended the Retail WSQ training which helped him better understand customer needs and brushed up his communication skills. Yunos has been in the new job for 6 months now and everyday on the job has been a new learning experience for him.
15. We will step up our efforts to establish a national qualification system based on the WSQ frameworks and Employability Skills System (ESS). We will build more quality institutions to deliver high quality adult training. This will allow all Singaporeans to have portable qualifications which take into account their previous work experience and pursue further training with the assurance that the skills obtained will be recognised by employers in recruitment and remuneration. It will progressively cover more sectors. In 2006, 32,000 workers received WSQ and ESS Statements of Attainment. While the numbers are encouraging, we still have much to do.
(IV) HELPING SPECIFIC GROUPS OVERCOME STRUCTURAL CHALLENGES
16. I will next touch on specific initiatives for groups of workers who face specific challenges.
17. One group is the structurally unemployed. The situation has improved for them as it has been easier to find jobs in a tight labour market. Only 0.8% of the resident labour force (15,100 residents) has been unemployed for 25 weeks or more. This is much improved from the 1.2% to 1.5% between 2001 and 20042, and is much lower than in many developed countries, including the US which also has a tight labour market.
18. WDA and the self-help groups developed a new CareerLink Plus (CLP) Programme in August last year, specially for the long-term unemployed. The programme offers counselling services to job seekers to better prepare them for the changing demands of the job market. From August 2006 to January 2007, the CLP Centre managed 540 cases and placed more than 200 individuals.
19. Another way we can help this group is through the Job Recreation Programme (JRP). The JRP identifies jobs in growing sectors for re-creation based on their suitability for Singaporeans as well as the potential to enhance the value of the job through job-redesign. Last year, JRP re-created more than 12,000 jobs and placed over 7,000 workers. 50% of them were mature workers, and 54% were lower-skilled3. To tap on the good opportunities in the labour market for Singaporeans, the JRP is being expanded from 23 to 27 sectors to include the Banking & Finance, Call centre, Manufacturing, as well as Electronics and Spa industries, on top of existing ones such as Retail, Tourism and F&B.
20. Let me now turn to Professionals, Managers, Executives and Technicians (PMETs).
21. As our economy restructures, there will be more rather than fewer PMET openings in the job market. PMET jobs made up 37% of job openings in 2006, continuing an upward trend in recent years4. Some 50% to 60% of 450,000 jobs that could be created over the next 5 years will be at the PMET level. Consistent with these statistics, many industry sectors have indicated that they will need more PMETs in jobs such as software engineers, electronics engineers, budgeting and financial accounting managers, as well as nurses. Many of these will be filled by PMETs who successfully transit from one industry to another. WDA also helped match 3,800 PMETs to available jobs.
22. There are jobs in the Integrated Resorts for PMETs. Indeed, each IR is expected to hire over 1,000 PMETs in jobs such as customer service executives, management executives, retail and sales managers and restaurant services managers. Recruitment for the IRs will be in phases, and the bulk of the jobs are expected to be filled in 2009 when the IRs open. WDA is already working with the two IRs to identify the skills and training programmes needed, in order to upskill locals, as well as for opportunities in the larger Tourism sector.
23. Some examples of WDA's programmes are our collaborations with At-sunrice and SHATEC to train chefs, and with UNLV to train MICE executives. Other local institutions are also involved in this effort. Temasek Polytechnic is offering new diplomas in culinary and catering management, and leisure and resort management. Singapore Polytechnic has a new tourism and resort management diploma. The University of Nevada, Las Vegas has set up an overseas campus here, offering a Bachelor of Science degree in Hotel Administration as well as the Executive Masters' in Hospitality Administration.
24. Some have asked if many of the retrenched PMETs who found a job within 9 months ended up with lower-paying jobs. In our system, the market determines the value of the job. Individuals, especially PMETs, would have to prove their own worth and increase their value. What is more critical is to help displaced PMETs upgrade and refresh their skills, so that they can expand their choices and opportunities in the job market, and further their careers in new growth sectors. Over time, as their value contribution increases, they can look forward to higher salaries.
25. To help PMETs, I am happy to announce that WDA will launch a new programme, called the Professionals Conversion Programme (PCP). PCP will cost the Government $20m over 2 years to enable 1,000 PMETs start new careers in growth sectors. It is modelled on the successful Strategic Manpower Conversion Programme in Healthcare, which trained more than 400 PMETs to start new career paths in nursing or radiography. PCP will cover new and growing sectors such as Finance, Marine, Aerospace and Tourism.
(V) MEETING DEMAND FOR MANPOWER
26. I mentioned earlier that the projected manpower demand over the next 5 years is over 450,000 new jobs. The already tight labour market will get even tighter. Up to a point, this is good for workers because salaries will rise. But if costs go up too fast, ahead of productivity or if businesses cannot meet their manpower demand, then we become less competitive and could lose opportunities for future growth.
27. Every year, about 33,000 locals5 enter the work force. Our declining birth rates will reduce this figure in the years to come. The growth of our resident workforce is expected to slow from around 3.5% p.a. currently to 1.7% p.a. beyond 2010. The employment rate for working-age males is already as high as that in other developed countries. As the chart shows, almost 9 of every 10 men aged 25-64 are working. This is one of the highest rates in the world – comparable to that for Japan (please refer to chart on Employment Rates of Working Age Males at Annex A). Employment rates are also quite high for younger better educated cohorts of women.
28. We are literally running out of physical local bodies to fill up new jobs that are coming on-stream. We will have to persuade existing workers to work longer. Fewer older women are working, so we may also have to expend efforts there to encourage them to return to the workforce. These efforts will take time, and depending on the local labour force alone, will constrain our growth potential. Therefore, we will have to judiciously use foreign manpower to supplement our local workforce to meet demand.
Foreign Workforce Policy Adjustments
29. To maintain our economic momentum, MOM will be making certain adjustments to help businesses meet their increasing needs for manpower. In doing so, I also want to address concerns of members of this house and the public that there must be a balance in allowing foreign workers here, so that Singaporeans will ultimately benefit as the economic pie grows. I will therefore not increase foreign worker quotas. The only exceptions to this are for the construction and process sectors which have a large demand for manpower due to many big projects coming on stream simultaneously. For the other industries, the existing cap remains but within the cap, certain rules will be relaxed to help businesses source for and retain experienced foreign workers.
30. To help meet industry demand for skilled foreign workers, we will allow companies greater access to S Pass holders. The S Pass quota will be increased to 15% from the present 10%. But the additional 5% will come from companies' existing Work Permit quota. In other words, they can recruit more S Passes, but the total proportion of Work Permit and S Pass remains the same. This will take effect from 1 Jun 2007.
31. Currently, skilled and unskilled Work Permit holders can be employed for a maximum of 15 years and 4 years respectively. To help employers retain their Work Permit holders longer in this tight labour market, MOM will extend the maximum employment period for skilled and unskilled WP holders to 18 and 6 years respectively. This will take effect from 1 April 2007.
32. The Building and Construction Authority (BCA) has projected that the Construction sector's annual output will rise to between $14 and $17 billion for the next few years, up from the average of about $12 billion in the past three years. Naturally this will increase the demand for construction manpower. BCA estimates that an additional 40,000 to 50,000 foreign workers will be needed in the next 2 to 3 years. To ease the manpower pressure in this sector, MOM will therefore adopt the following measures from 1 Apr 2007:
a. The sectoral Dependency Ratio (DR) will be increased from 1:4 to 1:5;
b. We will hold back the 5% reduction in the Man Year Entitlement (MYE) formula for Construction that was previously announced; and
c. Currently, the MYE is waived for construction workers who have worked for any employer for at least six years. We will relax this to four years. With this, there will be about 73,000 workers who will not require an MYE.
33. The Process industry is poised for a major boom up to 2010 due to robust growth in Asia's energy markets and China's increasing demand for petrochemicals. To harness this strong growth, from 1 April 2007, MOM will increase the Dependency Ratio to 1:5 from the current 1:4, in the same vein as the Construction sector. We will also allow contractors to cross-deploy their workers, to optimise manpower utilisation.
34. MOM will monitor closely the effectiveness of these changes, and make further adjustments as warranted by employment conditions.
35. I want to assure members that we have noted the potential concerns. For instance, during the Budget Debate, Dr Ahmad Magad had suggested training locals for mid-skilled jobs before letting in S Pass holders. For Construction, I understand that MND and BCA are looking into measures to build a core of localised skilled workers in key construction trades to improve quality and safety, and to provide supervisory leadership to the other foreign workers. BCA has also been working with the industry to enhance construction productivity through the adoption of more buildable designs and innovative construction methods. These measures will go towards reducing the industry's reliance on foreign workers in the long-term and also make construction jobs more attractive to our locals.
36. Indeed, the calibration of foreign manpower controls has to be carefully done. But we need to be mindful that globalization is a two way street. Just as we have taken business opportunities from others because we were more competitive and responsive, others can steal the march from us too. From 2001 to 2006, about 240,000 jobs created were taken up by locals, and 85,000 jobs went to foreigners. Put it in another way, with every 1 foreign worker we allowed in, nearly 3 jobs were created for locals. If controls are too tight, we may choke growth and employment creation and drive investments to competing locations. Ultimately Singapore companies face global competition in selling their products and services and in recruiting their workers. Ensuring that companies meet their manpower needs, both foreign and local, will translate into greater opportunities and benefits for Singapore and Singaporeans.
37. More should also be done to make it easier for foreign free-lance artistes to contribute to the performing arts industry. If we don't attract them here, they will go elsewhere to compete against us.
38. To achieve this, MOM has a few schemes – the EntrePass and the Personalised Employment Pass – to attract such diverse talents.
Ensuring Well-Being of Foreign Workers
39. At the same time, MOM will also strengthen the framework governing the well-being of foreign workers and to guard against potential abuse by errant employers.
40. The Employment of Foreign Workers Act (EFWA) will be amended to stiffen penalties for selected offences and introduce new offences. The powers of MOM's Employment Inspectors will also be strengthened so that they can effectively enforce the law.
41. Moving forward, MOM will require employers, at the point of application of work permits, to provide information on where they intend to house their foreign workers. MOM will not approve the applications if the accommodations do not meet specified conditions. Implementation details will be announced at a later date.
42. We had earlier announced our plans to require employers to purchase medical insurance for S Pass and WP holders including foreign domestic workers (FDWs) in October 2007, when hospital subsidies for all foreigners will be removed. Many employers already purchase medical insurance for their workers. For those that do not and need to, MOM is working with insurers on a collective medical insurance plan that employers can subscribe, to fulfil the requirement for medical insurance. MOM will release the details of the Scheme after evaluating insurers' proposals.
43. MOM is also reviewing the Workmen's Compensation Act to ensure that it continues to safeguard the interests of injured workers, both local and foreign, while at the same time deter and hold accountable irresponsible and errant employers or workers. MOM will examine the Act's coverage, the compensation formula and the compensation levels. We also plan to enhance MOM's enforcement powers to ensure that workers receive their due compensation promptly while at the same time protect the interests of employers from fraudulent claims.
(VI) CONCLUSION
44. The various policies and initiatives that I have covered will support growth and enhance opportunities for all. A strong and dynamic economy requires an equally resilient and dynamic workforce – one that embraces opportunities, adapts quickly to changing realities; one that is open and welcoming to talent from abroad, drawing strengths from within and outside Singapore. We are poised to move up the ranks of developed nations if we hold steadfast together to these policies that have allowed us to sail ahead on the crest of globalisation. Singaporeans can face the future with confidence and optimism, with an abundance of job opportunities ahead. But they must skill up to make the most of these opportunities because new jobs will be higher value-add and in new sectors.
1 75.5% of Singaporeans aged between 25-64 were in employment as at Jun 2006.
2 December periods
3 Lower skilled refers to secondary and below.
4 36.7% in 2006, 37.2% in 2005, 32.9% in 2004 and 20.4% in 1996 for September periods. Data pertain to private sector establishments each employing at least 25 workers.
5 Refers to normal annual increase in local labour supply which averaged 33,000 a year from 2000 to 2004. This increased to 51,200 in 2005 and 93,600 in 2006, boosted by more people entering the labour force, amid increased job opportunities.