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Committee of Supply (Speech 2) by Mr Tan Chuan-Jin, Minister of State for Manpower and National Development, 05 March 2012, 3pm, Parliament

Employment practices Skills, training and development Statistics and publications

(I) Developing the Singaporean core in our workforce

A. Labour Market Update

  1. Let me begin by first saying that our focus today is about developing a Singaporean core in our workforce. There are three main themes I would like to highlight – Firstly, our responsibility is to make sure that good jobs are available for Singaporeans. Secondly, we need to ensure a good work environment for our workers in Singapore, and in particular, I would like to highlight our older workers, the disabled, the low wage earners, and also PMEs, which a number of you have raised concerns about. Thirdly, it is about how we continue to develop Singaporeans in order to nurture them as well as to help them to remain employable so that they can provide for their families.
  2. Let me first start with an update of our labour market.

    Job Growth / Unemployment
  3. Last year, we created 121,300 new jobs. Our annual average overall unemployment rate dropped from 2.2% in 2010 to a 14-year low of 2.0% in 2011. These figures are lower than any of the 34 OECD member countries, and Asian NIEs like South Korea, Hong Kong and Taiwan.
  4. For Singapore Citizens, unemployment also fell from 3.4% in 2010 to 3.0% in 2011.

    Wage Growth
  5. Ms Tan Su Shan raised a few questions. I would like to state that traditionally we have reported our manpower statistics based on the resident workforce as this is in line with international norms and reflects the labour market attributes and outcomes by differentiating our permanent pool of workers, which comprises Singaporeans and PRs, from the transient population. Nonetheless, we also recognise that going forward, there is increasing public interest over how Singaporeans are faring and how they are performing. So we complement our statistical publications on residents with occasional papers on Singaporeans in the workforce. For example, in October last year, we provided analysis and statistics on the employment rate, unemployment rate, and incomes of Singapore citizens. In addition, we are now regularly releasing key labour market outcomes for Singaporeans. For example, unemployment rate on a quarterly basis, and median and 20th percentile incomes annually in regular statistical releases.
  6. To Ms Tan Su Shan’s question, what is important is for us to look at the actual outcomes for Singaporeans – in terms of their income and employability. Despite going through three downturns in the last decade, at the turn of the century with the dotcom bubble burst, the SARS crisis and the global financial Crisis, the median full-time Singaporean worker has done reasonably well. Real median income gains averaged 2.0% per annum in the in the last five years from 2006 to 2011. Including employer’s CPF contributions, it averaged 2.5% per annum. At the 20th percentile level, real income grew at 2.2% per annum between 2006 and 2011.
  7. In contrast, median incomes have mostly either stagnated or declined in real terms in economies like Japan, the United Kingdom, the United States and Taiwan.
  8. The employment rate of Singaporeans aged 25 to 64 also grew steadily over the decade, from 73.7% in 2001 to 78% in 2011, one of the highest internationally.
  9. As shared earlier, unemployment is low. Even among our Singaporean PMETs, it is low at 2.4% in 2011. We cite these figures, not to make us feel better, but it is important to use them as reference points and markers to compare ourselves with how other developed countries are faring in this fairly challenging climate. I would like to suggest that while the figures may seem low, but in terms of how other countries are doing, and in the midst of fairly difficult circumstances, I think we are not doing too badly.

    Structural Unemployment
  10. Ms Tan also talked about structural unemployment, which we monitor closely. One of the key indicators is the resident long-term unemployment rate.
  11. Our resident long-term unemployment rate is and remains low at 0.7% in 2010, and ranged between 0.5 to 1.4% in the past decade.
  12. Our labour force has remained resilient through the ups and downs. From our perspective, a key reason is that the Continuing Education and Training (CET) system, and our education system, which is part of the larger landscape, has enabled our workforce to remain globally competitive. By being globally competitive, our companies can thrive and when they thrive, jobs are created for our people to keep them employed.

    B. Improving CET: More Choices for Individual Needs

    Improving CET
  13. Let me now talk about CET and how we are looking at improving it. Mr Zainudin Nordin has asked for an update on what we have achieved with CET.
  14. In 2011, almost 250,000 workers went through WSQ training, of which 68% were lower-skilled workers, and about 44% of them were aged 40 and above.
  15. In a 2011 WDA survey of a very sizeable sample size of 12,500 trainees, most of them found WSQ training useful and this is from the trainees’ perspective – that 90% of them reported better work performance. I will elaborate more later.
  16. Mr Zainudin and Mr Ang Wei Neng also asked how we keep our CET system relevant. This is a very important question. Our WSQ is benchmarked against world standards which WDA develops in close consultation with key industry representatives because it does not make sense if the training has no relevance to the industries. Currently, our WSQ system comprises 30 sectoral frameworks, with more than 14,000 courses. MOM also works closely with MOE on a whole-of-government approach towards CET.
  17. Mr Zainudin spoke about the need to have creative and innovative workers for a knowledge economy. Ms Jessica Tan asked how we can help locals seize good job opportunities through skills transfer.
  18. We all know that the nature of work is evolving and the environment is changing as well. Workers who are prepared to apply their skills in a more diverse and flexible way will stay relevant. What this means is that on-the-job training becomes critical. This is something that Mr Gerald Giam talked about, and this is something that we have been placing emphasis on and will continue to emphasise on that.
  19. For instance, EDB’s Initiatives in New Technology (INTECH) grant funds for training in such growth areas, and the Strategic Attachment and Training Programme (STRAT) funds overseas on-the-job training with leading companies. On average, over 3,500 locals were trained under these programmes annually over the past five years.
  20. Mr Zaqy Mohamad stated that Singaporeans are ready to take greater ownership over their personal development. I agree and think that this is important. WDA is seeking to make CET more accessible, personally relevant, and individual-centric.
  21. By end March this year, WDA will launch its revamped website, where users can obtain information on industries and occupations, and identify suitable career options and training pathways for themselves.
  22. For those who prefer further personalised assistance, they can still approach our career centres at the Community Development Councils (CDCs) and the Employment and Employability Institute (e2i).

    Helping PMEs
  23. Mr Patrick Tay, Mr Zaqy Mohamad and Mr Zainudin expressed concerns about the challenges facing PMEs and how we can help them with training and job facilitation. Madam Halimah Yacob raised similar concerns during the budget debate. We recognise that PMEs, who are the fastest growing segment of our workforce, have very diverse professional development needs and is a group we need to pay attention to.
  24. The percentage of employed Singaporeans in PMET jobs grew from 42% to 49% over the last 10 years. If we just look at PMEs alone, it is nearly 30% of employed Singaporeans.
  25. We are therefore looking at how to improve our competency-based CET offerings for PMEs to complement our academic CET programmes, and we are open to suggestions from PMEs and employers on what would be most useful to them. Again, staying relevant is important, so feedback is critical.
  26. The Skills Training for Excellence Programme (STEP) was introduced last year to better support the CET needs of our increasing PME workforce. Within one year, there are now more than 500 courses available under STEP and over 50,000 PMEs have undergone the various programmes. In addition, 360 STEP scholarships for Singaporeans valued at $12 million have been set aside for eight sectors, which include aerospace, retail, tourism and healthcare.
  27. Many PMEs already take the initiative to upgrade themselves. But they have also fed back that they need more assistance to find the right job. This year, we will focus on employment facilitation and we will introduce three programmes to help PMEs:
  28. Firstly, we will officially launch CaliberLink, a one-stop service point for PMEs that integrates training assistance with career services. CaliberLink will complement the existing career centres based at the CDCs as well as that operated by e2i.
  29. PMEs can look forward to services such as career coaching, training advisory, career transition programmes, networking sessions with employers and employment facilitation. CaliberLink will allow us to effectively and holistically assist PMEs.
  30. I received an email in December last year from Mr Tan Wei Thong (aged 42), a professional who, after working several years in China, wanted to return to Singapore to be closer to his family. He shared his views about what could be improved and some of the challenges and difficulties he faced. I received an email from him just a few weeks ago, and he told me that career consultants at CaliberLink helped him with resume and interview skills workshops, and provided job referrals to prospective employers. The knowledge he gained complemented his own job search efforts and he found a job as a Director in a regional manufacturing company. I was very happy to receive that email from him. This is because CaliberLink is pretty much at a soft-launch stage, but to have such a response from the public at such an early stage, is encouraging. I hope he will be one of CaliberLink’s many success stories in years to come.
  31. Secondly, WDA will appoint the Association of Small and Medium Enterprises (ASME) as a Programme Partner to manage Max Talent, which is a pilot Place-and-Train programme for SMEs to recruit and retain PMEs. As we focus on helping PMEs, we are also looking at how we can help SMEs in the process as well.
  32. Some members spoke about helping SMEs hire talented Singaporean workers. This programme, we believe, will help achieve this. Besides enhancing the talent pool and capabilities of SMEs, who traditionally would highlight that they find difficulties attracting and recruiting PMEs, it also widens job opportunities for PMEs themselves and to realise that SMEs also offer very positive and viable career opportunities. ASME will work closely with the SMEs to identify PME vacancies and help them improve their HR management. For PMEs, ASME will help place them and equip them with the essential management skills and knowledge. The programme will start in April 2012 and WDA will provide more details.
  33. Thirdly, we have studied how countries like Australia and the UK have successful leveraged on the private sector in providing employment facilitation services. WDA has begun to engage private sector agencies to tap on their expertise and resources to improve our employment facilitation efforts and better match different segments of the workforce, including PMEs, to jobs.
  34. Mr Patrick Tay has made many useful suggestions which we will consider as we refine our CET system to better support PMEs. The group of PMEs is one big area of focus for us going forward in this year and the years to come.

    CET to Support Economic Restructuring
  35. In terms of CET supporting the economic restructuring effort, Ms Jessica Tan and Mr Vikram Nair asked what we are doing to help companies and workers in a possible slowdown or during restructuring. Mr Heng Chee How suggested monitoring job displacements, and matching displaced workers to firms who need workers.
  36. This is a very good suggestion and we fully support it. WDA and e2i will step up job seeker and employer outreach efforts as economic growth potentially slows this year.
  37. Unemployed, vulnerable, and needy job seekers often have needs that go beyond job assistance. This is something important to recognise. WDA will now increasingly collaborate with community groups, grassroots and self-help groups to establish a structured referral process to ensure that these job-seekers get the comprehensive help that they need. As we help them find jobs, in the process, they get to know their applicant more personally, we may surface other needs beyond job assistance.WDA will then link them to the agencies involved to provide more complete assistance.
  38. There are also two additional measures that we will introduce this year to help them manage as our economy restructures:
  39. First, for companies, as DPM Tharman announced in the Budget Speech, we will enhance training subsidies and absentee payroll support for SMEs.
  40. SMEs will receive 90% training subsidies when they send their local employees for WSQ and other certifiable courses, and academic CET courses. About 8,400 courses will potentially fall under this scheme.
  41. Additionally, SMEs can also claim higher absentee payroll funding at 80% of basic hourly salary capped at $7.50 per hour, a significant increase over the current cap of $4.50 per hour.
  42. This three-year initiative takes effect from July 2012 and will cost an additional $30.5 million per year, benefiting an estimated 8,000 SMEs and 65,000 workers a year.
  43. Second, for workers, WDA will expand the intakes of Place and Train (PnT) programmes, including the Professional Conversion Programme (PCP), and cover more growth sectors such as Animation and Biomedical Sciences. This will provide more options for those who are willing to consider a switch to a career, whether by choice or by circumstances.
  44. Ms Vany Ramakrishnan (aged 35) successfully switched from working in a bank to leading a team of 35 Guest Service Agents in Marina Bay Sands after taking a WSQ Diploma in Tourism under the PCP. Through her dedication and diligence, she has been promoted twice after two years on the job and currently earns almost 50% more than when she first started.

    CET and Productivity
  45. Besides giving individual Singaporeans more pathways to fulfil their individual aspirations, our CET system is also designed to help businesses restructure to improve their productivity through upgrading the skills of their workers.
  46. Mr Zainudin and Ms Low Yen Ling asked how we will maximise our limited pool of workers and facilitate job-redesign to improve productivity. Our main strategy to achieve this is through the various productivity roadmaps which have been endorsed by the National Productivity and Continuing Education Council (NPCEC).
  47. CET plays an important role in these roadmaps by ensuring our workers have the required skills to be more productive. We have made good progress and already have CET strategies for 9 of the 16 NPCEC sectors.
  48. For instance, in the Precision Engineering (PE) productivity roadmap, WDA, together with EDB, SPRING and Nanyang Polytechnic, will be nurturing 2,800 highly skilled Master Craftsmen in Singapore over 10 years. Through the establishment of a progressive career pathway and WSQ training certifications, we will enhance the attraction and retention of skilled craftsmen in the industry. WDA will be providing $7.7million to support this initiative, which will enable our companies and workers to move into more complex and higher value-added activities.
  49. All our efforts to raise productivity of workers rely on businesses that believe in the value of training good people, and workers that believe in taking the step to up-skill and contribute more. It takes two hands to clap, and the Government will step in to facilitate the process.
  50. The right team can make significant improvements at the workplace – Advanex is a manufacturing firm that sent ten of its managers for WSQ productivity training in 2010. Subsequently, they streamlined some of their work processes to halve the number of steps and reduce the time needed by three-quarters. They even managed to save enough floor space to start renting the excess to other users.1
  51. Mr Christopher de Souza spoke about the importance of improving productivity so that workers benefit. Advanex did just that by leveraging on WSQ courses and their employees’ creativity. This is what we hope to see more of; because it shows how productivity improvements can be simple, come from the ground-up, and produce real impact.

    Bringing economically inactive Singaporeans back to work
  52. Several members have asked how we can help economically inactive or vulnerable workers participate more fully in the workplace and contribute more. Tapping this latent pool of workers can also help companies address their manpower needs in a tight labour market. The numbers go up to slightly about 150,000 of them.
  53. Mr Teo Siong Seng proposed waiving CPF contributions for employers who recruit home-makers for part-time work. While this may lower the cost of hiring these workers, it will be at the expense of their retirement adequacy as many have little in their CPF to begin with. Many home-makers also choose not to rejoin the workforce because of the lack of suitable flexible working arrangements, or because they lack the confidence and skills to go back to work.
  54. Hence, our approach is to both tackle the barriers to them re-entering the workforce as well as to give them the opportunity for skills upgrading through CET.
  55. As Members Low Thia Kiang, and Mary Liew pointed out, one of the first things to be done is to promote flexible work arrangements.
  56. Flexi-Works! scheme and the Work-Life Works! (WoW!) Fund help companies do this. In 2010, 35% of establishments offered at least one form of work-life arrangement to their employees, up from 25% in 2007.2
  57. Despite the progress, there is still much that the Government and tripartite partners can and must do. During the budget debate, Mdm Halimah called for the review of our assistance schemes. Ms Mary Liew also asked if we will make these schemes more user-friendly and less restrictive.
  58. Together with our tripartite partners, we will review and improve Flexi-works!
  59. Home-Fix is one company that has tapped on the Flexi-works! Scheme. They offer flexible work timings and permanent part-time arrangements which allows them to hire economically inactive persons such as housewives, who are then able to balance work and care-giving responsibilities.
  60. Ms Georgiana Francis is one such employee who managed to re-enter the workforce, even while she had a young child to care for, due to the permanent part-time arrangement offered by Home-Fix. Clearly, providing flexibility in working arrangements can attract economically inactive persons back to the workforce and allow workers to better manage both work and family responsibilities.
  61. And as we begin to tighten the workforce in terms of the availability of the foreign workforce, I think this is one area that companies should seriously consider to look at bringing in this group back into the workforce.

    Low-wage workers
  62. On low wage workers, which my colleague Mr Hawazi will speak more later, the CET needs of vulnerable workers are of a key concern to us. Ms Sylvia Lim asked how much low wage workers benefit from training. I think this is a valid and important question that we also ask ourselves all the time, not just for low wage workers, but also for all workers. Mr Low Thia Kiang also asked about the effectiveness of our training programmes.
  63. As Ms Lim had noted, the Workfare programme provides both an income supplement and generous training incentives. In 2011, close to 50,000 low-wage workers benefited from the WTS.
  64. Training alone may not lead to immediate wage improvements. Rather, it must be a result of improved productivity, which, amongst other factors, depends on the knowledge and skills of the worker and whether these are effectively applied to the job and workplace. It is true that sometimes actual improvements in profits may not filter down to the workers immediately, but a rational employer would have to do his calculations and adjust wages commensurately. Otherwise, he would not be able to retain his good staff.
  65. Ms Lim mentioned data from WDA’s annual WSQ Training Outcome Evaluation Survey. In 2011, 90% of low wage workers said they performed better at work as a result of the training. This is from the low wage workers’ perspective. 95% of companies surveyed also agreed that the training improved the performance of their low wage employees. In addition, 88% of low wage trainees indicated that they will continue to take up other WSQ courses. So this is actually very important because it shows that for the workers themselves, they find tremendous value in undergoing training. I would suggest that it is not just in terms of skills, but also a higher degree of confidence and enhanced respectability at their own workplace. And this can only auger well for the long-term for the individual.
  66. That such a large proportion was willing to continue training is a strong indication of the value of WSQ training. But this is something we will continue to monitor and improve.
  67. We recognise there are costs to training. But these should not stop workers from taking the first step because even a little training will go a long way.
  68. For example, Mr Mohamed Hardi (aged 33) was previously working as an odd-job worker. Career consultants at Northwest CDC helped him enrol in a five-day Forklift Driver Training Course and find a job at Caterpillar Pte Ltd for an almost 50% increase in salary.
  69. We cite real life examples to illustrate possibilities and inspire Singaporeans to continuously upgrade and up-skill. They are not exceptions but realities which Singaporeans should aspire for. Like I said earlier, feedback from the workers themselves is a clear indicator of the value that these training provide.

    Older workers
  70. Mr Seng Han Thong spoke about how it is important to help older workers go for training. As I shared earlier, 44% of workers who obtained WSQ training in 2011 were above 40. That is about 109,000 older workers.
  71. The perception among some employers that older workers benefit less from training is something we hope to correct.
  72. In fact, older workers who go for training are more likely than younger workers to have a positive experience. From the earlier mentioned survey, we also found that 82% of workers aged 50 and above found training useful, as compared to 77% of workers aged 30 and below. 74% of older workers were also more motivated at work, as compared to 66% of younger workers. This is something that companies should pay attention to as well, especially now that we are encouraging re-employment.

    Persons with disabilities
  73. Our CET system must also be inclusive and cater to Singaporeans with special needs. Ms Denise Phua and Mr Ang Wei Neng have suggested extending CET to persons with disabilities.
  74. Given the customised needs, our approach is to let organisations with expertise in this field take the lead in developing such programmes with WDA playing a supporting role.
  75. For example, the Centres for Training and Integration (CTIs) initiated by the Enabling Employers Network (EEN) and supported by MCYS and NCSS provide structured training for persons with disabilities through on-the-job training and placement programmes. WDA has been supporting these programmes since July 2011, and will provide over $600,000 in funding.
  76. WDA will also provide 90% pilot funding for Workplace Literacy and Numeracy (WPLN) assessment for students from selected Special Education Schools, Assumption Pathway School, and Northlight School. The WPLN credentials are recognised in lieu of GCE qualifications by about 3,700 employers, and allow progression to vocational education courses.

    C. Inclusive Growth – Older Workers
  77. As we restructure our economy for sustainable growth, we need to ensure that this growth is also inclusive. Mr Zainudin spoke about the importance of preparing our workforce and workplaces for an aging population.
  78. The percentage of our labour force aged 55 and above has more than doubled from 8.5% in 2001 to 18.2% in 2011. The employment rate for residents aged 55 – 64 rose to a new high of 61.2% in 2011, up from 59% in 2010.
  79. Our older workers will also become more educated over time. They are experienced and valuable members of our workforce who can contribute long into their silver years with the right workplace arrangements. Many companies are already recognising this.
  80. Based on findings from MOM’s 2011 Survey on Retirement and Re-employment Practices, the proportion of companies that allowed their employees to work past 62 has increased from 77% in 2010 to 79% in 2011.
  81. With the Retirement and Re-employment Act (RRA) in effect since 1 January 2012, we expect the employment rate of older residents to continue to improve towards our target of 65% by 2015, which will bring us closer to the older worker persons’ rates in mature economies such as Japan and Sweden.
  82. We want to ensure older Singaporeans always have the choice to keep working if they are able to, whether to better sustain ourselves in retirement, or to remain active in society and derive satisfaction from a meaningful job. We will help older Singaporeans who want to keep working in two main ways:
  83. First, the enhancement of the Special Employment Credit (SEC). As outlined in the Budget Speech, the SEC will be enhanced from this year to provide employers with continuing support to hire older Singaporeans.
  84. Mr Teo Siong Seng has asked whether we could lift the wage cap of the SEC for PMEs who earn higher than $4,000 to benefit. During the budget debate, Mr Patrick Tay expressed similar concerns for the employability of older PMEs due to the increase in CPF contribution rates.
  85. This group of PMEs would largely comprise senior executives and professionals. Some of these executives, with deep expertise and experience, continue to be highly sought after. Some senior executives will have difficulty finding a new job late in their careers. We will be introducing several job facilitation schemes targeted at PMEs this year to help them.
  86. Spreading out our SEC budget thinly to cover all older workers including such senior executives, would mean that we can only give an SEC of up to 4% of wages, instead of the 8% we currently give. At $3,000, the SEC covers about 70% of older Singaporeans. At $4,000, it is about 80%.
  87. Second, the ADVANTAGE! Scheme will be extended until March 2013, to provide generous funding support to help companies re-design jobs, work processes and workplaces to make them more age-friendly. I agree with Mr Low Thia Kiang that integrating older workers into the workforce requires different approaches for different groups. The best way to illustrate this is to show the example of St Luke’s ElderCare, which has re-designed jobs for its older workers.
  88. They are a voluntary welfare organisation that offers care services for seniors. Over 90% of its local staff are aged 40 years old and above. St Luke’s recognises the importance of enhancing its work processes to make them more age-friendly.
  89. With the help of ADVANTAGE!, St Luke’s ElderCare has equipped all passenger vans with hydraulic wheelchair lifters. This is very a simple enhancement, but one that has a big impact in helping its older workers perform their jobs better. It reduces the physical strain on the care staff and drivers. Everyday, they have to lift the immobile elderly up onto the vehicle, and this simple device has made it a lot easier for them.
  90. Mr Ang Wei Neng asked what we are doing to help companies change the way they operate to fit an ageing workforce. St Luke’s ElderCare harnessing ADVANTAGE! is a good example and I would like to encourage more companies to follow suit.

    Retirement Age / RRA
  91. Mr David Ong has suggested doing away with the statutory minimum retirement age. There are many different models and we decided to adapt our re-employment model from Japan, which today enjoys one of the highest employment rates for older workers. The RRA only came into effect this year, and implementation has been smooth. Nonetheless, we are monitoring its progress and to make sure it remains effective.
  92. We must also continue to equip our workforce with the right skills. Employers must take the initiative to encourage the development of their older employees and adoption of age-friendly jobs and workplaces. We need a concerted effort by society at large, accompanied by a fundamental belief in the value of older workers and the contributions they can make. It is important for us to remember that as we look after older workers, the younger workers are also looking on because eventually they themselves will become older workers. I think it is also a reflection of the values we hold as a society in terms of how we regard our older workers.
  93. Let me move on to managing the inflow of foreign workers.

    D. Managing Inflow of Foreign Workers
  94. There are really no easy answers to the issue of foreign manpower. Despite the various tightening measures, some have asked why the foreign manpower numbers have continued to increase. Some have asked why haven’t we done more and implemented more quickly?
  95. On the other hand, we also hear from Singapore business owners and HR managers who said the changes have taken place too suddenly and would affect their operations and plans. Can we calibrate it? Can we hold back? Can we slow it down?
  96. We fully understand where all these different Singaporeans are coming from. I think these are concerns and frustrations that are valid from their perspective. However, as the Government, we have to manage all these tensions that pull in different directions. We need to find a balance where our economy can thrive and create better jobs for Singaporeans. That, at the core of it, is what we are trying to do.

    Singaporean Core
  97. Meanwhile, we must ensure that Singaporeans remain at the core of the workforce. Members Jessica Tan, Foo Mee Har and Mary Liew have asked how we can encourage employers to develop Singaporeans as the core of their workforce.
  98. The tripartite partners released a set of Tripartite Guidelines on developing a Singaporean core last October.
  99. Employers are expected to adhere to the guidelines – they should make reasonable efforts to attract and consider Singaporeans for job positions on merit, and to train and develop their potential and careers.
  100. Since the launch of these guidelines, the Tripartite Alliance for Fair Employment Practices (TAFEP) has reached out to employers and responded to allegations of discriminatory employment practices. So far, each employer that TAFEP has approached following a complaint understood and accepted the need to abide by these guidelines.
  101. Most employers believe it is in their interest to develop Singaporean workers and they do not condone discrimination. We met a number of CEOs in our various dialogues. One was quite forthright and he said that he was genuinely surprised to hear feedback from TAFEP and from his own employees, about the perceived discrimination that was taking place and said he would address this issue. Many employers have showed TAFEP their efforts to recruit Singaporeans. Some have even taken extra steps to review the hiring patterns of their individual business units to check for and to address biases.

    Controlling Growth of EP Holders
  102. Alongside these guidelines which are important, we also have another arm of our efforts, which is to ensure the quality of the foreign manpower. Mr Heng Chee How has expressed concerns about a possible sharp rise in the EP stock during an economic upturn. Ms Foo Mee Har suggested employers show proof they tried to hire Singaporeans before being allowed to hire EP holders.
  103. Requiring such proof will subject employers to additional administrative hurdles, lengthen the hiring process and add more friction, costs and rigidities. It will be more onerous for employers, in particular SMEs which may have other pressing HR needs and fewer resources to deliver such proof quickly and affordably. It will affect labour market flexibility, and that is a key part of our competitiveness. This will also affect the viability of some of these companies in their decision to stay here or to come here, and in turn, affect creating jobs in Singapore. This is something we bear in mind, and we have decided to take a more pragmatic approach for now to regularly review our EP criteria to ensure only high calibre EP holders are brought in to complement our local PMEs.
  104. As highlighted earlier, a tremendous amount of effort will be put in to help PMEs, not only just to upgrade themselves but also in terms of job facilitation as well. We recently took two significant steps – the first in July 2011 when we raised the salary requirement for EP holders and again in January this year when we raised the salary requirements well as tightened quite significantly, the eligibility criteria.
  105. However, we have to be very careful and find the right balance. Skilled manpower bring with them expertise, knowledge and networks that our economy needs in order to grow and create better jobs for both our PMEs and rank-and-file Singaporeans. Having an open and diverse workforce is important for not only Singaporean companies, but also foreign companies, as it ensures that they remain viable and are able to thrive and in so doing, create good jobs for Singaporeans.
  106. Mr Zaqy Mohd asked how EP holders have been affected by our tightening measures as compared to WP and S Pass. It is not possible to compare the impact of the measures that have been introduced for the various work pass categories as they target foreign workers differently. The measures for EP holders focus on raising their quality while those for S Pass and Work Permit holders are mainly price mechanisms – i.e. levy increases - to moderate the growth in numbers.
  107. We are only halfway through the levy increases (July 2010 – July 2013) while the EP tightening measures only took effect last month. As DPM said earlier, if the foreign workforce continues to grow rapidly despite all these measures, we will have to consider further measures to dampen reliance on FWs. These steps have been taken in the last few years. The economy has been doing well and the demand for foreign workers has continued to be high. This is why we are stepping up on our efforts to manage the numbers.

    Industry-specific DRCs
  108. Let me now spend some time to talk about the Dependency Ratio Ceilings (DRCs). Several members today and at the Budget Debate, suggested a finer differentiation of the DRCs between industries rather than just between the various broad sectors.
  109. Mr Low Thia Kiang suggested tightening DRCs in industries where Singaporeans can be trained to take up jobs, and relaxing them in industries which have difficulties attracting Singaporeans. Our broad sectoral approach already recognises that in some sectors like Construction, it is much harder to attract Singaporeans. That is why their DRCs are more generous.
  110. This concern that Mr Low and other members have raised is a very relevant one. Our current approach takes it into account. The question is really about the practical side and the implementation side of the house. It is about how much more can we go down into the details and how much more finely we can disaggregate the industries, while still achieving the broader objectives of reducing overall growth of foreign workers to within one-third of the workforce, and boosting productivity. These objectives remain important.
  111. DPM addressed this issue earlier but let me take the opportunity to reiterate.
  112. Firstly, we need to achieve an overall reduction in the growth of foreign workers but most industries that we speak to – the companies, in emails they sent us, at the various dialogues, say that they are different and they cannot find Singaporeans. Almost consistently, many of them will say that they need more foreign workers. In fact, the industries calling for more foreign workers are the same ones that contributed most of the foreign workforce growth in the past five years. Mr Low’s point about easing the DRCs in such industries will have the effect of opening the floodgates further because many of these companies themselves are already hiring many foreign workers. This is something we need to be very careful about.
  113. Furthermore, these companies also have much lower productivity levels as compared to their counterparts in developed countries. The Construction industry is one that I highlighted earlier. I acknowledge that it is not easy to bring in young Singaporeans to do the work in that sector, but it is a very large industry with some professional jobs which we believe, after changing the job scope and wage levels, young Singaporeans could be attracted to move into. But, importantly, in terms of the reliance on foreign workers, it is a sector that already has too many foreign workers. When you compare the Construction sector to those in developed countries like Australia or Japan, we believe that we need to tighten to force productivity improvements and that in turn would have a significant impact on the overall numbers of foreign workers in Singapore.
  114. To give more liberal DRCs to some of these industries would actually lead to fairly perverse outcomes. It will constrain the growth of high-productivity industries, because the overall objective is to bring down and to manage the overall numbers. If we liberalise in some of these low-productivity industries which actually draw on many foreign workers, it will mean that we will have to tighten in some of the high-productivity industries and this will affect them more significantly. This will be counter-intuitive as it will constrain the growth of high-productivity industries while we incentivise some of the low-productivity industries. And this will also affect their capacity to create more good jobs for Singaporeans.
  115. Secondly, we cannot and should not take it as a given that industries that find it difficult to hire Singaporeans today will always find it so. If we look at many of the developed countries in Europe, Germany for example, some of the jobs that Singaporeans seem to shun here, are well-regarded and undertaken by competent and educated Germans. We believe that a lot of it has to do with how we re-design the work and work environment. Wages also have to move. If we continue to give such industries more foreign workers, they will not have any incentive to improve productivity and change the nature of the work in order to draw in Singaporeans. These good jobs can be created. I totally agree with Denise Phua that we need to re-design jobs and the environment. We see that happening in developed world and we believe this can be done in Singapore as well.
  116. Several industries experiencing manpower shortages have in fact conceded that remuneration, job image and working conditions are in fact important factors which need to be addressed to attract local workers. And this is something that we believe can and should be done.
  117. Industry associations play a very important role in this. Mr Zaqy Mohamad asked how MOM plans to help SMEs share best practices for productivity gains. This sharing of best practices is quite critical. You will find companies in an industry complaining about how difficult it is, but a rival competitor in the same industry has begun to try to change. How do we manage the exchange of good practices and ideas? I think it is not easy but it is something we should endeavour to do. This is where associations and federations come in. My Ministry has already started work with the Singapore Retail Association and the Singapore Hotel Association on initiatives to attract locals and to increase productivity, including industry benchmarking and job-redesign.
  118. D25.   Thirdly, industry-specific DRCs are difficult to implement in reality. Mr Low Thia Kiang has also acknowledged that the range of SME operations is actually very complex and we fully agree. It is precisely because it is very complex that it is very difficult to go in and start differentiating between industries because each is fairly unique in their own way and will have its own arguments on why it should have more liberal DRCs. It is also important to highlight this point that actually, most companies in Singapore have not maxed out their DRCs. There is still space for them to hire Singaporeans and even foreign workers, if they need to.
  119. The boundaries between industries are not a clear-cut. As DPM Tharman explained, some companies, especially the bigger ones, may have work that reside in Manufacturing as well as Services. Some of these companies are actually provided an advantage over the very SMEs and some of the members have asked why we should look after them. This is why we think that having a broader based sectoral approach makes sense.
  120. The detailed micro-management of the DRCs will literally amount to a central planning system for the allocation of labour. The fact is technology, jobs and work environment change. We have seen this happen even within a span of just a few years and it will become very difficult for the Government to constantly tweak the system to allocate foreign workers differently, as industry and work conditions will change. This will have a tremendous impact in terms of uncertainty for businesses and affect long-term planning and investment. Firms would not know whether to invest in productivity to try to attract locals, or hold off their efforts in hope of a more liberal DRC. Such a system would also be prone to constant lobbying, which would unfairly advantage well-resourced and larger industries to the detriment of the smaller ones, particularly the SMEs.
  121. Let me just say that this is a very complex landscape. Our foreign labour framework basically operates with the DRCs and the foreign worker levy. The DRC system looks at the context and the nature of the different sectors, and we define broadly the different DRCs for them and this defines the boundaries. The foreign worker levy is the precise tool that will delve into the details. It is transparent and everybody knows what the foreign worker levy is. Companies will decide how much they are prepared to pay. If they are not prepared to pay, they will re-engineer and change the process. We believe that this system, a combination of the sector-based DRCs and levies, has worked well for Singapore and a mechanism that makes sense for us.
  122. Mr Low also suggested that differentiated DRCs would help low wage workers. We are quite concerned about this because having liberal DRCs in some of these industries which we assume Singaporeans would not be interested in may actually have the opposite effect. For example, allowing more low cost foreign workers in the cleaning industry would actually undo many of the initiatives we are taking to encourage companies to best-source. We believe that even in the cleaning industry, there are good jobs for Singaporeans. Liberalising the DRCs will permanently keep out the older and low wage Singaporeans. Those who remain, more likely than not, will continue to see stagnant wages and poor working conditions because firms are not pressured to restructure. These jobs, like many other jobs, have the potential to be good jobs, and it is possible to make them so for Singaporeans in the industry. We need to do this re-design across the whole spectrum of jobs that are in Singapore.
  123. We are also aware of the pressure on healthcare and social services. That is why we do focus substantial attention on them through the NPCEC to help them improve their productivity and efficiency, by adopting technology and best practices.
  124. MOH and MCYS will talk more about their strategy to ensure adequacy of healthcare and social services manpower, and enhance the attractiveness of careers to Singaporeans in these two sectors during their COS debates. MOM will continue to support the two ministries to ensure that the two sectors have the necessary manpower to deliver their essential services to Singaporeans.
  125. Members Zaqy Mohamad, Christopher de Souza and Nicholas Fang are concerned about the effect of tighter access to foreign workers on local firms and inflation. Mr Low Thia Kiang also raised this point.
  126. We are aware of the pitfalls and that is why our DRC reductions affect a small proportion of firms, especially those with the highest reliance on foreign workers. These firms largely need only to replace one or two foreign workers, and they have two years to do so. We believe that there is adequate time for them to re-design and adjust. All our efforts are aimed at encouraging firms to pursue productivity improvements now, a move that will not happen soon enough if we continue with generous DRCs or as suggested by Mrs Lina Chiam, an elimination of the levy altogether.
  127. Our objective must be to upgrade and restructure our economy. It is painful but it is something we need to do now, to avoid the pain that we could suffer later as competition grows in the surrounding region and beyond. But we know the current balance must be adjusted carefully. For firms that need help to adjust to the new environment, we want them to use our generous schemes to restructure and thrive. This is the best way to help companies make the necessary transition. We cannot afford to keep postponing this.

    Conclusion
  128. Let me sum up our focus. At the heart of everything, our people remain at the centre of what we do. We create the conditions to provide good jobs for them. Being able to stand on one’s own two feet and to respect the dignity that comes with work, are part of the ethos that our forefathers have handed down to us. When we talk of the low-income earners, notwithstanding the wide range of assistance provided, we believe that providing jobs is the best form of welfare. When we talk about economic growth, it is not just for economic growth alone. It is not just about the GDP numbers. It is about providing an environment where good jobs can exist for Singaporeans.
  129. As you can tell, developing and nurturing our people is one of our core areas of focus. Our CET focus is extensive in scope and breadth. It complements our education system.
  130. This year, we have placed great emphases on PMEs and to assist SMEs. To keep growth inclusive, we are looking out for our elderly and disabled. The group of low wage workers is a big focal point and would be covered in greater detail by my colleague Mr Hawazi.
  131. Managing our Foreign Workforce is also an important ongoing effort as we seek to maintain our competitiveness while at the same time, manage the overall numbers and its impact on society.
  132. I would like to take the opportunity to thank our stakeholders and the public for all your inputs and suggestions, many of which we have taken onboard to factor into some of the measures we have highlighted. And most significantly, to thank our tripartite partners. Where many countries find this a point of conflict, in Singapore - it is a tremendous source of strength where Government, unions, the workers, and employers can come together for a common cause.
  133. Thank you.

1 The firm was featured on television for their productivity achievements. (4 Mar 2012)

2 MOM’s Conditions of Employment Survey 2010

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