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Parliamentary statement by Acting Minister of Manpower and Minister of State for Education, Dr Ng Eng Hen on 'CPF retuning' debate in Parliament
1. I thank the Members for supporting these changes. In crafting these new policies, many civil servants who helped formulate these changes not only used common sense, but more importantly compassion. They were mindful of the pervasive and painful effects that would result. Various scenarios and computations were examined. Staff poured through reams of printed data and tables. They tried their best to minimise the pain and recommended spacing out or phasing in changes while still achieving our economic and social objectives. Common sense indeed was used in plentiful dollops. The reactions from members and Singaporeans have reassured me that they have succeeded in some measure.
2. But as many Members in this house who rose to speak on these CPF changes have realized and expressed, larger and more fundamental issues underlie the CPF changes. For while the reasons for and pace of CPF changes have been accepted by the majority, this moment at the crossroads has occasioned all Singaporeans to wonder about our future and our fates. There is even fear among some Singaporeans. They are asking if these changes signal an end to the Singaporean dream; a relegation from our first world status; an end to some aspirations and hopes.
3. I would like to address these concerns as well as specific queries from MPs. To me there is the greater significance of character and nation building in this exercise. Our responses to these changes should be seen in this context as it signals a people's - a nation's - resolve, to want to chart and better their destiny.
4. There are some who believe these measures won't work. They say cutting CPF will dampen the recovery as consumer expenditure falls and the property market softens due to reduced purchasing power. A deflationary cycle will follow. Other similar pessimists say it is too little - it won't make a difference. We are so uncompetitive that whatever we do, companies will continue to pull out or bypass Singapore. The avalanche of cheaper manpower has overtaken us. Singaporeans can be confident
5. Singaporeans need not be despondent or insecure and believe these futilitarians.
6. I agree that the future is uncertain and success is never guaranteed. But that is quite different from saying that we are beaten as a nation, and we had best just lie back and play the vanquished.
7. Singaporeans must have greater mettle and be fully confident. To me, accepting these difficult CPF changes is a decisive response that shows the resolve to do what is needed; to be nimble to adjust. It signals a nation on the move, willing to make sacrifices to survive. It is not only about what needs to be done, but that we can do it at all. The key significance is that we can execute, as some MPs rightly pointed out.
8. Even if some other calamity befalls us tomorrow and set these efforts back, this nation will bounce back and do more, if that is what it takes to improve our lot in life.
9. We have succeeded in the past because we have never believed that the heavens predestined us to prosper indefinitely or at all. We all know that 'Nobody owes us a living' and that no one will lift a finger to help us if we choose to wallow in our difficulties. Closed Minds, Closed Futures - The rise and fall on nations 10. History is replete with examples of countries that were content to lie in the present, resisting change and landed on the slippery slope because they chose not to confront their problems and new realities head-on.
CHINA
11. China has a particularly venerable history. It boasted inventions such as printing and paper (9C), gunpowder (11C), the compass, porcelain. Chinese invented machines to spin hemp in the 12C, some 500 years before the Industrial Revolution began in England. China had the knowledge capital and advantage over many countries. With its inventions it could have been the first to print books for the masses to accelerate learning. It could have experienced its own industrial revolution. With gunpowder, it could have revolutionised the science of propulsion for industry or military gains.
12. It could have but then China - the self-absorbed Celestial empire - closed it's mind to progress and became insular. From the 15th Century, other nations pulled ahead. So for the last five hundred years, China lumbered along, living on past glory. But the dragon has stirred and all in its wake felt the pounding of its steps when it threw open its doors and chose to engage the modern world. JAPAN
13. Japan's income rose from 20% of the United States in 1950 to 75% by 1998. This phoenix rose miraculously from its atomic ashes and dazzled the world with its manufacturing prowess. But in the last two decades, when faced with lesser challenges, it lacked that same resolve to pull itself out of the quagmire.
ISLAMIC NATIONS
14. From 750 to 1100, Islamic science and technology far surpassed that of Europe. In their golden years, the world's greatest scientists wrote in Arabic. Indeed during that period, many Muslims taught science to Europeans, especially at the frontiers like Spain where intermixing occurred. Then something went wrong. Religious zealots denounced Islamic science as heresy. These nations regressed as they chose a parochial emphasis on religious conformity.
15. Any group or nation - no matter how mighty - that discards knowledge, prefers form over substance, sacrifices future needs for present comforts, resists change, erects barriers to progress is doomed to fail. Ultimately, these barriers are self-destructive.
16. Economic historians such as Stephen L. Parente and Edward C. Prescott in their book "Barriers to Riches" tell us that differences in living standards have little to do with natural resources - or levels of investment.
17. Rather, they see these differences in the intensity that various countries make of the world's existing stock of know-how. Countries that are open to the flow of ideas - and whose laws, customs and institutions encourage wealth creation - can catch up with the old-established "industrial" economies. Japan and Korea and recently China are outstanding examples of catch-up.
18. While all countries will walk through hills and valleys, some walk right into ravines or get mired in swamps. Others stay still and get hemmed in and suffocated by the overgrowth. Those that erect barriers, both physical or mental, will be overtaken. Only those who choose to engage progress wholeheartedly, expand their minds and economic space, survive and thrive.
Will these changes be enough? Whom fortune favors 19. While history teaches us that nations that do not change are often overtaken, it also shows that "fortune favors the well prepared". Tenacity, diligence, boldness and a cohesive spirit have helped nations in more dire circumstances than Singapore pull themselves out of the rut. I will give two examples and use city-states for comparability.
IRELAND
20. Take Ireland for example. In 1840, the Irish population was 9 million, a decade later it was halved: over a million died of starvation, most emigrated; a quarter of those who boarded the ill-fated coffin ships to America died on transit. After emerging as the Irish Free State, it promptly plunged into a civil war that lasted until 1923. At that time, the population included fewer than three million people and was still dwindling.
21. To demonstrate economic "self sufficiency" as well as political independence, Ireland adopted inward-looking, protectionist policies: high tariffs, bans on majority foreign ownership in industry, the establishment of state-owned enterprises in areas such as power generation, shipping, banking, and insurance. These policies were pursued well into the 1950s, with increasingly perverse results. The economy stagnated, emigration soared as more than four hundred thousand people left Ireland between 1951 and 1961. In the mid-1980s, the unemployment rate reached 17%, the government's finances were a shambles, and submission to a draconian International Monetary Fund (IMF) program was considered as a means of getting the economy back on track.
22. But at the end of the year 2000, Ireland could look back on fourteen years of uninterrupted economic growth, which had accelerated to nearly 10% annually. With this growth came markedly lower inflation, one of the lowest unemployment rates in the European Union (EU), and a growing government-budget surplus. Most dramatic, however, was the return to Ireland of young workers in increasing numbers to fill new jobs awaiting them at home.
23. How did they reverse their terrible plight? It was not just due to the luck of the Irish. In the 1960's that tenacious Irish spirit rallied. The government and people decided to adopt low corporate tax rates to encourage foreign investment. At a time when they could least afford, they spent more on educating their people better and establish high-tech industries especially IT and telecommunications. Ireland joined the EU. In the 1990s, true to the aphorism that "fortune favors the well prepared", a technological discontinuity, which brought about plummeting costs in telecommunication services, was the chance element that help start a economic boom in Ireland.
FINLAND
24. Finland is another example of a tenacious people that refused to be beaten down. Tucked away in the northernmost corner of Europe, five million dedicated Finns continue to demonstrate the fierce nationalism that has enabled them to survive an unforgiving climate as well as a turbulent history, in a land repeatedly fought over through the centuries. Finland underwent a transition from frozen isolation along the Arctic Circle into a center of high technology, with a population both technologically literate and politically sophisticated.
25. Twice in the 20th Century Finland had been written off as lost: first in the "Winter War" in 1939 when the Finns were left alone to face invasion by a Russian army 50 times it size, and again at the end of World War II when Finland was given over to the Soviet sphere of influence. In the early 1990s. the Soviet empire fragmented and the rouble collapsed. Finland's economy, which was closely tied to that of the Soviet Union, also shrunk sharply and unemployment rose. Yet, it has managed to come out of their troubles.
26. How? Government and industry made dramatic efforts to surge into the world's new information technology, supported by one of the most highly skilled labor forces in the world. Finland today is rightly called the telecommunications laboratory of the European Union, with an exceptional hi-tech infrastructure. Many of us know as we use their Nokia phones. This, in addition to industrial production ranging from complex instrumentation for meteorological and environmental sciences, to medical diagnostic equipment, to automated wood-harvesting machinery, to innovative icebreakers and luxurious cruise ships. In the late 1990s, Finland's economic growth rate was one of the highest of industrialized countries, hitting growth rates as high as 5% and 4.9% in 1997 and 1998 respectively.
27. Will Ireland and Finland expect to prosper indefinitely? No one knows and no guarantees exist for any state. All economies are subject to the vicissitudes of cycles and providence. Ireland and Finland face similar problems like Singapore - as a result of slowdown in global economic demand. As do many other countries. Who will emerge to prosper depends on how each nation's people respond. Charting a better future 28. Singaporeans' response to these CPF changes has renewed my confidence. Members of this house should not underestimate the disasters that await us if we had chosen to stay on our previous course. These CPF changes herald a critical turning point for the better.
29. Retirement adequacy will wreak economic and social havoc on those that will not, cannot or have not provided enough.
30. The IHT on August 22 this year carried this article under the subheading - The looming clash of generations. I quote,
31. "Four issues are coming together to create a "perfect storm": birth rates below replacement level, longer life spans, holes in private pension funds and massive government fiscal deficits. The aging generation has been promised much more than can delivered without dramatically damaging the prospects of future generations. This will be a political battle, a new form of class warfare over scarce resources. Demographic decline is especially apparent in Europe. In most countries fertility is far below replacement levels.
32. Neither the state nor the private sector is in a position to meet the promises made to the aging generation. Tax and deficit levels are already high and would have to rise by huge amounts to fund pension promises. Tough political decisions will have to be taken to change expectations.
33. Yet such measures are essential to avoid crippling taxes on the declining percentage of people in work. Ideally the state should be reducing tax burdens on young families and taxing pensions for the able-bodied. Whether the long-spoiled baby boomers are willing to concede that such measures are necessary is another matter. They have the votes to defeat any government that would introduce them.
34. Unrealistic expectations, longer life expectancies, medical advances, demographic trends have set up a perfect storm that threaten to disrupt the social fabric as one generation is pit against another.
35. In August this year, a furore erupted when a young 23 year old German politician, Philipp Missfelder, head of the Conservative opposition youth outfit, criticized politicians from all parties for "betrayal," saying Germany's social system favored the elderly at the expense of the younger generation. He suggested, among other solutions, that those above 85 years should not expect the national system to pay for their hip implants.
36. Older Germans, even those within his own party, threatened to 'spank the youngster'. The humorous response did not mask the resolve of the older population to protect their perceived rights, despite this being a untenable situation.
37. This road has lead Germany to the 'gloomy valley'. They are stuck! It explains why Chancellor Schroeder chose to wade into the political minefield of pension reform and proposed the biggest shakeup since the current system was set up in 1957.
38. The CPF changes we are making now will ensure that this Singaporean generation and future generations will remain nimble, still able to respond quickly to fast changing circumstances. We would have averted the perilous situation where one's generations needs can only be met with another's unwilling sacrifice. We would have behaved responsibly by not expecting the next generation to shoulder our burdens by providing for our needs now. Answers to MP's queries by Ag. Min of Manpower
39. Allow me now to address specific queries from Members during this debate.
Fixed or variable rate of contribution?
40. Some members have asked why not fix the rate at a lower level instead of a range. I acknowledge that a variable rate creates uncertainty (Cheong WC, Iswaran, Irene, Tan Soo Khoon) and disrupts long term planning. But global economic shifts have accelerated and impact Singapore almost instantaneously. In this fluid environment we need flexibility, even for the statutory component. It will come under pressure the moment you fix it. And when you are compelled to lower it, the psychological effect is greater. Remember also that even when we had fixed it at 40%, it also caused uncertainty. While we were at 36%, investors and employers calculated decisions based on that higher target rate. Workers based aspirations and lifestyles also on that number assuming it would be restored.
41. What we have now done is to reset, retune, refocus mindsets to the floor rate. We have shifted focus from ceiling rate to the floor rate: 30%. So now investors and employers know that there is potentially some refuge in reduction. We read over the weekend how Singaporeans now plan their home and spending patterns on 30%. Anything above that is an added bonus. The message has been received correctly and has sunk home.
42. I reiterate that we will give as long a lead time as possible if further CPF rate changes are required. It is not envisaged that rates will be changed from year to year. There is a range but the CPF rate is a blunt tool and will be reset when a systemic adjustment is required. It does not have the sensitivity to calibrate according to performances of different companies.
43. Indeed, many MPs have called on companies doing well to pass on profits to workers in the form of bonuses or other variable components of wages, and help avoid retrenchments (Leong Horn Kee, Ong Seh Hong, Heng Chee How, Nithiah Nandan, Andy Gan, Ong Chit Chung, Ng Ser Miang). I endorse this sentiment, although I would not push for rigid formulas.
44. But I want to emphasize the point made by Ong SH, Gan SK, Irene Ng, Arthur Fong that our overall wage structure needs to be more flexible, allowing individual companies to vary their wages according to business circumstances. Companies' wage structures should differentiate performance and reward individuals accordingly, and address the structural rigidities created by seniority-based systems. The Government has initiated a Tripartite Task Force on wage reform chaired by my PS to assist companies in implementing flexible wage structures. I will ask the taskforce to study suggestions by members (Mdm Yu-Foo, Chew HC, Ng Ser Miang, Inderjit Singh) for using tax-incentives to encourage companies to reform. The TTF will be presenting its recommendations at the end of the year. Minimum Sum and Retirement Provision and Preparation
45. I now turn to adequacy for retirement and the minimum sum. (Chew HC, Lim HH, Andy Gan, A Magad). Having adjusted expectations to 30%, can we still meet aspirations of Singaporeans? Can Singaporeans still own homes, take care of their medical and retirement expenses? Why not give flexibility in how much we force Singaporeans to save. In other words, tailor savings according to income level. Ong SH and Irene says we should calibrate savings based on pre-retirement income and income groups. Chew HC says the increases are too fast and should instead be pegged to Consumer Price Index inflation. Gan SK and Jennifer though says it is not enough as costs are rising.
46. The implication in all of these points is that perhaps we should give up some dreams, even home ownership, for some Singaporeans. We need not. The vast majority of Singaporeans can and should still hold on to their dreams and homes.
47. I will now ask the Clerk of Parliament to distribute a table (please refer to Annex). This is a useful table giving a 'helicopter view' of how our current CPF system helps meet various social needs. Pay attention also to the quantities in various OA, SA and MA accounts. I shall use the 25th percentile worker to illustrate. As this table shows, even the 25th percentile wage earner can own a 4-room flat if he chooses. He would have accrued enough in his lifetime and set aside adequately for his basic medical and retirement expenses.
48. I agree with MPs that we should set our CPF scheme to cater to basic needs, not frills. The minimum sum must be linked to anticipated consumption and life expectancy. So even at the new minimum sum at $60,000 cash component, the annuity payout per month to last for 18 years is $433. It is not a princely sum and we are not over-providing.
49. Note that if consumption for medical expenses from the MA is reduced or if a member chooses to live in a smaller flat even if he can afford to buy a bigger one, substantial spillover can result into the SA. You would have enhanced your SA so more can be withdrawn at 55 years if the minimum sum and Medisave MS are met. This is a sensible system which caters to the majority of Singaporeans with varying consumption patterns. There is rigidity for the base requirements but there is flexibility for those who choose to be prudent in housing and medical expenditure.
50. How can we help Singaporeans meet these minimum sums, MPs like Heng Chee How asked. Structurally, the reductions in OA and corresponding increase in SA facilitate this. If members are sensible in their housing commitments, it is likely that some 80% of future CPF members can meet the S$120,000 MS requirement at a contribution rate of 30%.
51. It follows that when we re-tune the use of the CPF towards the three objectives of retirement, healthcare and housing, we should not further expand the role of the CPF to be used for unemployment as suggested by Dr Wang Kai Yuen or other purposes such as starting a business as suggested by Chiam See Tong. Nevertheless, we can explore the idea of voluntary unemployment savings scheme as suggested by Mohamad Maliki. Providing better for retirement
52. Several MPs have asked for greater returns from accumulated sums or to obtain different income streams (Chew HC, Lim HH, Low TK, Ong SH, Ng SM). I agree. Housing is the biggest asset for most Singaporeans and the MND relaxations on rental rules should help. We have explored reverse mortgages before, but the major roadblock has been that insurers are only prepared to offer "fixed term" reverse mortgage. This runs the risk of the elderly lessees being evicted from their flats should they outlive the tenure of their reverse mortgages. Nevertheless, we can always revisit this issue.
53. The other option is for Singaporeans to sell their properties. It's an option that is available to them now and will be made easier with alternative housing available in the increase in rental flats. But do we want to actively push this? We should be cautious as it may result in some being homeless as they sell their homes. We know the individual stories we hear at MPS of some parents being abandoned by their children by whom they have been persuaded to part with their money.
54. Can CPF increase interest rates? The OA rate is currently determined quarterly based on the weighted average of the 1 year Fixed Deposit rate (80%) and the Savings Account rate (20%) of the three major local banks. But we have protected members under the CPF Act, by subject this to a floor of 2.5%. Presently, DBS Bank pays only 0.8125% for a 1 year FD of more than S$50,000 and 0.25% for savings account deposits. Hence the OA rate of 2.5% gives a better return to CPF members at present.
55. What about the SA rate? In this regard, CPF members are getting more than a fair deal because SA guarantees risk free 4%. 1- year Singapore Government Treasury Bills are yielding 0.9% whereas 15-year Government Bonds have been yielding less than 4% for the last 12 months and only began to yield more than 4% last week. For a person who makes SA contributions over a 30 year period, the 15-year Government bond is a good benchmark as 15 years would represent the average tenure of his savings.
56. Going forward, the CPF is studying two initiatives. Firstly, the Government has already said that in the long term, the interest rates on CPF savings will have to be pegged to market rates. We need to study carefully what benchmarks to adopt, as these will also have implications for HDB housing loans which are currently pegged at 0.1% above OA rates. Whatever benchmark that is adopted, it has to lead to a sustainable interest rate paid on CPF savings.
57. I agree though that new models will have to be adopted to maximise retirement returns for Singaporeans so that we can better provide for retirement needs (Chew HC, Andy Gan, Ahmad Magad) In line with ERC recommendations, CPFB has begun to explore the role of private fund managers to get better efficiencies (Lim HH, Irene Ng, Ng SM). The intention is to pool savings to achieve economies of scale so as to lower cost of investment for members, achieve higher returns and achieve greater certainty of income. CPFB is currently working to implement low-cost privately-managed pension plans (PPPs) as an additional option under the CPF Investment Scheme. This would give members a better chance of higher long-term returns by investing in a well-diversified portfolio. The PPPs should not require members to make complicated decisions. This is to cater to the majority of CPF members who are not investment-savvy.
58. I also agree with Cheong WC, Ahmad Magad, Indranee that CPFB must educate Singaporeans as part of its mandate. CPFB intends to start a process of investor education for its members, structured according to a member's life events, e.g. starting work or buying a property. These modules will be made available to members through the Web.
59. While CPF is the main source of financial support in retirement for most Singaporeans, some may have other sources of savings, assets as well as non-financial needs in retirement. Our surveys have shown that while the awareness for the need for financial planning is there, the majority of CPF members are still not taking concrete steps to plan for retirement. With the aging population, longer lifespan and the retuning of the CPF, it is now even more important for Singaporeans to take retirement planning seriously. In this regard, the CPF Board will also work with other government organisations including the Monetary Authority of Singapore, and industry bodies to help Singaporeans take an active role in planning for their old age. This includes promotion of the use of SRS, as suggested by Ahmad Magad and Mohamad Maliki.
60. For specific groups, women and homemakers (Irene, Jennifer) we will explore ways to improve their retirement adequacy. For part time and casual workers (Gan SK), CPF Board has implemented the ERC's recommendation to raise the floor for CPF contribution from the earlier threshold range of $200-$363, to a new threshold range of $500 -$750.
61. I also agree with Zainudin Nordin that we should facilitate collection of CPF dues. The late payments actually form less than 1% of all accounts but we can still improve by collecting CPF through electronic means. We will expedite this. Retaining Jobs, Job Redesign, Placements and Training.
62. I agree wholeheartedly (Nithiah Nandan, Wang Kai Yuen, Heng Chee How, Yeo Guat Kwang, Ang MS) that we should use these sacrifices that workers have made to translate to more jobs. The CPF changes will position us well for job creation. For example, Venture Corporation and Philips Electronics Singapore both welcome the changes. Venture Corporation told my staff that together with their efforts to improve their employees capabilities and skills, the CPF cuts will "give a boost to migrating more businesses and investments to Singapore."
63. In the meantime, we must redouble our efforts to place Singaporeans in new jobs. This means that we must move faster to develop new sectors that Singapore can be competitive in and train our workers for jobs in these sectors. This includes new business initiatives from international players and from our own entrepreneurs and businessmen.
64. Second, all of us must do more to place Singaporeans in jobs that are available today. Warren Lee and Ang Mong Seng raised again the importance of local workers being willing to take menial tasks. Yes. But I have also seen good evidence of worker attitudes changing in the past half-year. I agree with Nithiah not all are choosy. We must not tar all workers with the same brush. For instance, many cleaning companies have told us that they can now hire locals for cleaning jobs and they do not need to ask for so many foreign workers. This is good news.
65. But there is much more that we can do. A unionist told me that some Singaporeans are afraid to work in hotel kitchens because they feel out of place, as they are the only Singaporeans there. Or that the supervisor is a foreigner and is perceived to be partial to hiring more foreigners. We must and will break these psychological barriers down. My Ministry has been working closely with the hotel sector to better understand how to successfully place Singaporeans in jobs in this sector which has so many vacancies. The hotel management assures us that they are committed to help make this happen. Other sectors also need to review how jobs can be redesigned to employ Singaporeans (Cedric Foo).
66. In parallel, I have asked union leaders of NTUC unions to get their members to mentor new workers. From their over 400,000 members perhaps even find mentors that stay in the same estate with new workers, travel and eat together at least in the beginning and help Singaporeans overcome the settling-in challenges, be able to adjust and stay on the job.
67. Yes we should improve the efficiency of job matching and info provision. This was a point raised by Ang MS. The WorkForce Development Agency or WDA will be launched soon to give this greater focus. As suggested by Seng HT, Chew HC, we will have to make sure that training is more effective. This is an important effort and we understand the urgency.
Social Safety Nets Reform
68. Many MPs (Yeo GK, Ahmad Khalis, Fang Ai Lian, Low Thia Kiang, Jennifer Lee, Ang Mong Seng) have brought up the need for more and new solutions to assist workers during unemployment. I agree that we need to study this and the Government is indeed doing so. But when we are in a situation where there are a large number of foreign workers here and jobs available that Singaporeans don't want to take, I believe that we should focus the message on getting people into jobs, not subsidizing people for not working. The measures that DPM announced on Fri such as the Training for Employment scheme, which is a general place-and-train scheme, the extension of the People for Jobs Traineeship Programme for older workers, and the Work Assistance Programme led by the CDCs all offer funding support for people to get and keep jobs. Getting people into jobs and helping them settle in and stay in their jobs must be our emphasis.
Employers and Older workers
69. I agree also the employers must play their part. I am glad that SNEF and SBF have come out in strong support for the changes we are making to the CPF. We all understand that business is very competitive. But there are many employers that I have come across that are competitive and yet treat their workers and Singaporeans well. Because there is now flexibility in the wage structure as well as CPF cut, retrenchments should be minimised (Ahmad Khalis). They should not discriminate against older workers (Nithiah). The cost of hiring mature workers would be less because of these CPF changes, and they bring value through their experience and networking. They are also likely to stay longer on the jobs. There are good employers in Singapore.
70. For example, Murata Singapore Pte Ltd, which has been in Singapore for more than 30 years, has not retrenched any worker. In good times, the company rewarded the workers well with additional bonuses under their Flexible Wage System and enhanced the company benefits. In bad times, the company, with the support of its union, implemented various cost cutting measures. These measures include the implementation of shorter work week and temporary plant shutdown, arrangement for workers to take their leave during the lull period, re-scheduling of production operations and the adoption of flexible working arrangements to reduce cost. Through these measures, Murata has been able to manage their cost well, stay competitive and avoided retrenchment for the last 31 years. It is indeed an enlightened and a good employer.
71. UPS or United Parcel Services as mentioned by Braema Mathi, is another example of a company with enlightened Human Resource practices and one which has enabled the company to ride the downturn without retrenching anyone. UPS, led by Singaporean MD Mary Yeo, has encouraged multi-tasking and emphasized career development for their van drivers. During SARS, workers willingly worked flexible hours. The company was also disciplined in recruiting staff in good times.
72. Mdm Yu-Foo YS has highlighted that we have to tailor our solutions for older workers to upgrade their skills and find jobs, to be more successful. We agree. Companies should also play their part to accommodate older workers who may be able to do the job very well. One HR manager related how her company had problems with an unproductive worker in one of its factories. Instead of just sacking the worker, they studied the problem and found that she had difficulty doing the work because of the height of the production line. She was too short. So instead of sacking her, all it needed was minor adjustments to make it easier for her to do her work more productively. This sounds simple, but simple things are often not done. This story should cheer Seng Han Thong who called on companies to help local workers through job redesign. I think we all agree, but the fact is that job redesign has taken place very slowly in companies. We want to see renewed emphasis and effort on the part of companies to help make it easier for local workers, including older workers, to take the jobs and do them well.
Will Singapore continue to thrive?
73. Apart from wages and jobs, at the end of this debate, the question that still remains in all our minds is, "Will Singapore prosper again?" It depends on whether Singaporeans think our way of life is worth preserving. It depends if Singaporeans think this place is worth fighting for. Not with bullets of steel but with steely resolve, an innovative sprit to capitalize on our strengths, diligence and determination.
74. Is the Singapore Dream dead? As Mark Twain said, the news of the demise has been grossly exaggerated. Far from it. This doctor has examined the patient and found it well! The patient is not sick, she only needs to shed a few pounds. Too many good years and over-indulgence have added girth. Some weight trimming is necessary and may not be bad for the overall health.
75. Even with the contribution rate at 30%, the majority of Singaporeans can own homes and retire adequately with their medical and retirement needs taken care off, if they are. As I showed earlier even the 25th percentile worker can still afford a 4-room flat, and would have provided enough for his medical and retirement needs till 80. How many countries can achieve that?
76. Almost every child born in Singapore today can be certain of 12 years of solid education. Every student is subsidized about $4,000 for each year in primary school; $6,000 in secondary school; $8,000 in ITE, JC or poly and $11,000 in University. Which means that every child receives at least $60,000 in education subsidies.
77. 70% will obtain higher education that is a passport anywhere in this world to further his study. Access to good medical care will continue to be available to the masses, and not only to the privileged or rich. Here in Singapore you walk the streets feeling much safer than in many other cities. Children grow up well here. We the adults spend half the time debating why we spoil them, and the other asking why we stress them. This same debate will be continued by our children when they become adults.
Why I believe Singapore will succeed
78. Why do I believe so emphatically that Singapore will not only overcome but that we will prosper further? Because Singaporeans will not falter. Years of nation building have bonded a people with unique characteristics. Shared pains and gains have created a uniquely Singaporean way of life that is worth preserving - with all its quirks and eccentricities.
79. The Singaporean can do. His ingrained beliefs in hard work, justice, integrity are universal premiums. Presidents of Ivy League Universities in USA tell me that there is only one thing wrong with their Singaporean students - that there are not enough of them! They say this even though Singapore students form the largest contingent from any state in their campus. They want more of us. They wax lyrical about how they wish every freshman performed like our Singaporeans. In typical Asian humility, I respond by saying that we have some strengths but many weaknesses too. But inwardly, I swell with pride.
80. CEOs of MNCs here in the biopharmaceutical and process industry sectors tell me we have among the best technical workers in the world. They only wish that Singaporeans would be less driven because many leave to further their education, not content to stay still. I like this drive.
81. Singapore companies tell us that two positions within their overseas companies must be occupied by Singaporeans - the manager and the financial controller. No prizes for those who guessed the reason - because they trust Singaporeans.
82. Despite the catch-up of other countries like China and India, we can still hold our own in technical and engineering skills. Our efforts in educating Singaporeans still stands us in good stead. Do not underestimate these strengths.
83. Am I overly optimistic? Do I not fear the tiger of globalization? When a tiger is chasing you, you need not be the fastest to survive. Just run fast enough so that there is one other person for the tiger to satisfy its hunger.
84. We have built up our strength in these past years to run well. With these CPF and wage reforms we would have further lighten our loads. We are well positioned to avoid hazards and pitfalls. If we continue on this new road, expand our minds to see possibilities and capitalize on our strengths and opportunities, we will prosper.
Annex A
ADEQUACY OF CPF AT 30% CPF CONTRIBUTION RATE | 25th Percentile Worker | 50th Percentile Worker | Contribution Rate | 30% | 30% | Starting Pay | $1,160 | $1,600 | Ending Pay | $1,050 | $2,370 | | Total Career Savings | $205,000 | $354,000 | OA | $109,000 | $181,000 | MA | $41,000 | $81,000 | SA | $55,000 | $92,000 | | Type of Housing Purchasable1 | 4-room HDB flat | 5-room HDB flat | | Present Withdrawal Rules at 55 | | | Withdrawable at 55 from SA + MA2 | $35,500 | $108,000 | Property pledge | $40,000 | $40,000 | Medisave | $25,000 | $25,000 | Amount set aside in Minimum Sum | $35,500 | $40,000 | Monthly Value of 18-Year Annuity from age 623 | $256 | $2893 | | Minimum Sum of $120,000 | | | Withdrawable at 55 from SA + MA | $11,000 | $88,000 | Property pledge | $60,000 | $60,000 | Medisave | $25,000 | $25,000 | Amount set aside in Minimum Sum | $60,000 | $60,000 | Monthly Value of 18-Year Annuity from age 624 | $433 | $433 |
Notes: 1. According to MND, the price for direct purchase flats are as follows: Price Range for 4-room flat | Price Range for 5-room flat | $85,000 to $297,000 | $161,000 to $450,000 |
2. The amount withdrawable at age 55 from SA and MA will be less if the member uses his MA to pay for his medical expenses before age 55. 3. For a member turning 55 in 2003, S$289 for Minimum Sum of $40K is the monthly payout from age 62 in 2010 dollars. This is equivalent to $252 in 2003 dollars. 4. For a member turning 55 in 2003, $433 is the monthly payout from age 62 in 2010 dollars. This is equivalent to $378 in 2003 dollars.
Last updated on 11 Apr 2007 11:01:16
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