Developing a Globally Competitive Workforce

In the face of globalisation, intensifying regional competition and more volatile economic cycles, Ministry of Manpower (MOM) seeks to develop a globally competitive workforce. This is a workforce that is flexible and responsive, with the right number of workers to meet industry needs; with the right attitude and the right skills, and at the right price. 

Singapore's workforce came in amongst the top in various research and ranking reports by the International Institute for Management Development (IMD), Business Environment Risk Intelligence (BERI) and Political & Economic Risk Consultancy (PERC) and World Economic Forum (WEF), reaffirming the strength of our labour market.

Labour Market	Singapore's Ranking
Labour Market, WCY 2007	1
Labour Force, BERI 2007	1
Human Resources, PERC 2007	1
Labour Market Efficiency, GCR 07-08	2

Skilled and Productive Labour
According to PERC, Singapore's workforce is highly skilled and productive and our managerial talent is strong. Although our nominal wages are relatively high, BERI rated our relative productivity (as measured by output relative to wages) top and in a Competitive Alternatives study by KPMG, Singapore was also ranked 1^st against 128 cities in 9 industrialised countries in overall cost and labour cost competitiveness.

Strong Management Skills 
Singaporean managers are internationally sought after to fill middle and senior positions because of our reputation for competency, integrity, diverse cross-cultural work experience and strong language skills.

Sources:

International Institute for Management Development (IMD), World Competitiveness Yearbook 2007 (WCY)

Business Environment Risk Intelligences (BERI), Labour Force Evaluation Measure April 2007

Political & Economic Risk Consultancy Ltd (PERC), Comparative Country Risk Report 2007

World Economic Forum (WEF), Global Competitiveness Report 07-08 (GCR)

As the Singapore economy restructures, some jobs will be phased out while new jobs will be created, especially in new growth areas. We need to help shape workforce skills profile and have sufficient workers to meet industry needs. Workers must also have the right skills to take up the jobs that our economy generates.

To ensure a co-ordinated and responsive approach to balancing Singapore's overall manpower demand and supply, MOM works closely with other government agencies and the industries to understand the manpower needs and identify critical skills. We also examine the availability and development of manpower from both local and foreign workforce perspectives. MOM's manpower strategies include:

1. Preparing a pipeline of skilled local workers to meet industry demands through working with the Ministry of Education (MOE) and post-secondary educational institutions.
   
   
2. Upgrading the workforce to ensure that workers' skills remain relevant in the new economy. The Singapore Workforce Development Agency, a statutory board under MOM, plays a pivotal role in creating opportunities for workers to enhance their employability through skills upgrading and for businesses to maintain their competitive advantage with a skilled workforce. It also looks into building an adult continuing education and training infrastructure through the development and implementation of the Employability Skills System and the Workforce Skills Qualifications System.
   
   Under the Skills Development Levy Act, every employer is required to pay a monthly Skills Development Levy (SDL) for each of his local and foreign employees, whose remuneration in any month is less than or equal to the SDL salary ceiling.  The current SDL salary ceiling is $2,000, and levy rate is 1% of the remuneration or $2 whichever is higher.
   
   From 1 October 2008, the SDL Act will be revised to make it compulsory for employers to contribute SDL for all employees up to the first $4,500 of gross monthly remuneration at a levy rate of 0.25%, subject to a minimum of $2, whichever is higher.
   
   
3. Developing foreign work pass policies for foreign manpower to complement and augment the local workforce. Our current work pass framework facilitates the inflow of foreign workers at different levels: Employment Pass for foreign professionals, S Pass for mid-level skilled workers and Work Permits for semi-skilled or unskilled foreign workers.

To address the challenge of a volatile business climate, MOM's strategy is to facilitate a flexible and responsive labour market.

Working within a tripartite framework, MOM encourages companies to adopt flexible and performance-based wage systems so as to help companies better ride the volatile business cycles, thereby enhancing competitiveness. In particular, companies are encouraged to implement the following 3 key recommendations of a flexible wage system, as recommended by the Tripartite Taskforce on Wage Restructuring:

1. Enlarge the Annual Variable Component (AVC) and formulate key performance indicators to link the AVC payment closely to company's and/or individual's performance;
   
   
2. Build up the Monthly Variable Component (MVC) to form 10% of monthly basic salary; and
   
   
3. Move away from the seniority–based wage system by narrowing the salary maximum-minimum ratio to 1.5 times or less.

For more details on wage restructuring, interested companies can refer to the Report of the Tripartite Taskforce on Wage Restructuring and the guide on implementing the Monthly Variable Component (MVC) for Small and Medium Enterprises (SMEs) .

MOM also regularly reviews the foreign work pass framework to improve its effectiveness and responsiveness. This includes assessing the efficacy of the work pass conditions and restrictions including the foreign worker levy, quotas and worker skills requirements.

As the Singapore economy restructures, there is a need to help workers upgrade their skills so that they can stay employable and not be left behind as the economy restructures. Some workers, especially those who are lower-skilled, risk becoming structurally unemployed as low value-added activities shift out of Singapore. Their employability challenges are also often compounded by age.

MOM works with various government agencies and the tripartite partners to develop and implement measures to help these more vulnerable workers. These efforts include work by the:

1. Ministerial Committee on Low Wage Workers. The Committee has proposed the Workfare approach where individuals are encouraged to work and achieve self-sufficiency for themselves and their families. Its recommendations included creating more employment job opportunities for lower-skilled workers through skills upgrading and job re-creation and re-design to raise the productivity and job worth.
   
   
2. Tripartite Committee on Employability of Older Workers. The Committee has formulated recommendations to help raise the employability of older workers. These included the ADVANTAGE! scheme which is a package of incentives to motivate and enable employers to hire older workers and re-employ them beyond age 62 and the set up of the Tripartite Alliance for Fair Employment Practices to ensure older workers are not discriminated against.