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Keynote Address by Mr Tan Chuan-Jin, Minister of State for Manpower and National Development at Ministry of Manpower Workplan Seminar, 17 April 2012, 10.40am, Compass Ballroom, Resorts World Sentosa

DPM Tharman Shanmugaratnam

Ms Diana Chia, President, NTUC

Mr Lim Swee Say, Secretary-General, NTUC

Mr Stephen Lee, President, SNEF

Mr Tony Chew, Chairman, SBF

Mr John De Payva, President Emeritus, NTUC

Distinguished Guests,

Fellow MOMers,

A very good morning to all of you.

  1. The video you have just watched is a small testimony to all the hard work that all of you have put in, not just in MOM, but by all our tripartite partners as well, in making a difference to the lives of Singaporeans and to all workers in Singapore. What we need to understand is that what we do here makes a real difference, and this is the purpose of our work on a day-to-day basis. We also need to understand, the responsibilities that we shoulder. We cannot create policies from our ivory towers precisely because it impacts lives on a daily basis in a very real way. So we need to apply our wisdom and our compassion in all that we do. Thank you very much for all your hard work and in trying your very best to make things better for all Singaporeans.
  2. Let me provide a quick overview: Firstly, we all know the economy grew by 4.9% in 2011. By all counts, that is a good solid figure. But the figure here itself doesn't mean much, unless we also consider that this strong economic growth generates jobs for Singaporeans. At the same time, we created 122,600 new jobs. Unemployment rate dropped to a 14-year low of 2% overall, and 3% for Singapore citizens. This is lower than most other economies around the world. Amidst this tight labour market in 2011, the average nominal earnings of our workers grew by 6.0%, which after compensating for inflation, is 0.7%.
  3. Overall, 2011 was a good year. 2012 remains uncertain. On the outlook, there are moments of hope, but there are also bouts of panic and weakness that can tilt things over. In Asia, growth is slowing down as a result of slowing export growth.
  4. Against this backdrop, we expect economic growth for Singapore in 2012 to come in at between 1% and 3%, barring further uncertainties such as a disorderly Eurozone debt default, or a global oil price shock.
  5. We cannot change the world in Singapore, but we can certainly manage the space that we own. We must continue to focus on our longer-term goal - which is to restructure our economy, to transform it, and to focus on productivity improvements, so as to ensure sustainable growth.

    A Brighter Future for Singaporeans
  6. As reiterated in Budget 2012, what we want to build is "An Inclusive society" and "A Stronger Singapore".
  7. What is an inclusive society? In many ways, it is one where all citizens can aspire and work towards a better life for themselves and for their families. An inclusive society is also one where everyone can contribute and play a part in shaping the kind of Singapore that we want to build.
  8. What is MOM's role in all this? For a start, we will endeavour to provide Singaporeans access to good jobs. And through good jobs, we can look forward to higher wages, and have the opportunity to achieve financial security for the long-term, especially in our retirement years. What this means, therefore, is that we play a very important role in providing a strong foundation on which Singaporeans can realise their dreams and aspirations, to build a brighter future for all of us and our families.

    Access to Better Jobs
  9. The best protection that we can give comes from providing Singaporeans with good jobs. Providing for Singaporeans must be the central focus of all that we do. So the dots must connect. If it doesn't add up to providing for Singaporeans, it will not make any sense. So we must stay focused on that. To do so, we need to create more good jobs as well as raise the quality of existing jobs.

    Creating more good jobs
  10. We need to ensure that Singapore remains an attractive place for business. Why is this important? It is only when businesses come here, when our own businesses stay here, and thrive that we are able to create jobs and good jobs for our people. They create jobs both directly when businesses are here, and indirectly because there are also businesses that exist and grow to support them in turn.
  11. There are many reasons why companies come here. A stable and secure environment is one factor. Another factor that draws companies and keeps them here is that we have a skilled and competitive workforce. We also have a flexible and responsive labour market. This is really quite critical for us. It is a very competitive world out there and some of these factors provide us with the edge. It is why companies do come, why companies continue to stay on, and in turn, create jobs.

    Raising the quality of existing jobs
  12. We also want to raise the quality of our existing jobs, by ensuring that Singaporean workers are treated fairly and responsibly. We do so in several ways:

    • First we must ensure that our legislative framework remains relevant, and updated;

    • Second, we must make sure that employers keep to their bargain. So what this means is that they adhere to our employment laws – this is about compliance and enforcement; and

    • Third, we also need to encourage good HR practices where our employers can be responsible stewards of their workforce.
  13. The Employment Act (EA) is Singapore's main labour law that sets out the minimum employment terms and shapes the responsibilities and relationships between employers and employees.
  14. The EA has been in place since 1968, and we have had several reviews over the years. So far, it has been effective in safeguarding the rights and interest of our workers, particularly for workers who are more vulnerable and needs to be protected by law.
  15. There is a need to ensure the EA keeps up with the times as there are changes in employment practices and employment landscape.
  16. First of all, the character of our labour force is changing. Singaporeans are becoming more educated. We are seeing more Professional, Managers and Executives (PMEs) in our workforce. Today, PMEs form about 32% of our resident workforce, up from 27% in 2001. We can expect this proportion to increase.
  17. At the same time, employment norms and practices are also evolving. Today, we see a lot more outsourcing that is taking place. As a result of that, there are changes to work arrangements, so we have short-term contracts, for example, emerging over the years. Thus, we need to look at the EA in the context of these changes.
  18. As we are looking at improving the wage conditions for our low wage workers, we should also look at how the EA can better look after workers where the relationship with employers is less than balanced.
  19. Therefore, MOM will review the EA this year. We will work very closely with our tripartite partners. We will work closely with the rest of the stakeholders to ensure that any amendments take into account the interests of both workers and employers. We will also be seeking feedback from the public.
  20. We acknowledge that regulations are only as good as their compliance rates, and laws are only relevant and make sense when we can enforce it. We will therefore also step up efforts to ensure compliance with our employment laws, including the CPF Act and the Employment Act.
  21. In 2010 for example, CPF audits and investigations helped recover CPF arrears for 6,000 workers in 2,600 companies. We stepped up audits in 2011 and recovered $9.5 million in CPF arrears for 10,000 employees in 3,700 companies.
  22. MOM and CPFB will step up our efforts in the coming years.
  23. Finally we also have a promotional role, to encourage and facilitate fair and responsible employment through good HR practices.
  24. We have tapped on our strong tripartite relations, through the Tripartite Alliance of Fair Employment Practices (TAFEP), to do so:

    • First, we intend to effect mindset change. That is really important. It is not just about legislation, but how we can change attitudes in terms of the way we hire.

    • Second, we will facilitate the adoption of good practices by providing the necessary tools and resources.
  25. Tomorrow, there will be a Conference on Fair Employment Practices, organised by the Singapore Tripartism Forum. I will be sharing more on this at the Conference.

    Achieving Sustainable Real Increases in Incomes
  26. In order to achieve inclusive growth, good jobs must come with decent pay. We must grow the incomes of all Singaporeans, particularly those at the lower end, so that all Singaporeans can enjoy a better quality of life both for themselves and their families.
  27. We have done reasonably well - real median income gains averaged about 2.0% per annum in the last five years from 2006 to 2011. In comparison, income levels in many other countries have largely stagnated or even declined. And this increase is not just confined to the middle and upper segments, but it has also been quite pronounced in the lower end as well.

    Nurturing our Human Capital
  28. Recently, we all have been reading in the newspapers about the ongoing discussion on the need for a 'wage revolution' to close the income gap in Singapore. Let me be quite clear. The fact is that we all want to uplift the wages of Singaporean workers, especially those at the lower end. What seems clear to me, is that in spite of the economic difficulties of the last decade, our economic approach, while not perfect, has not been too bad. We have provided good employment for Singaporeans for many years. Good economic growth has enabled us as a country to provide more for our people and country at large, especially for the lower income groups.
  29. But we are rightfully unhappy with the levels of our low wage earners. We have said this before. Some of the wages earned in the cleaning services sector are not acceptable. We intend to address this robustly but we need to do so sensibly so that we do not adversely tilt our economy over. That can happen, and when that happens, it affects all Singapore workers.
  30. Let us tread carefully. Economic restructuring does not come just by raising wages alone. It requires a range of reforms and initiatives to boost productivity, and to increase the quality of our workforce, for example, through our extensive efforts in CET, and to make sure we move up the value-chain in the goods and services that we produce, and the jobs that we create.
  31. This will ensure Singapore remains relevant in a very competitive world market and this will also allow jobs to continue to grow in Singapore.
  32. One key thrust of our efforts is to help companies improve their productivity and move into more productive, higher value-added sectors. MOM has worked and will continue to work extensively with MTI to spearhead this.
  33. For example, WDA has helped companies build up their productivity capabilities through courses, schemes and sharing of know-how.
  34. We also need to help our workers pick up the relevant skills to take on better and more productive jobs.
  35. The Government has over the years invested quite a lot of time, effort and money to make sure that the CET system works and is accessible to all, while ensuring that it remains relevant for our workers. This means we do not just create courses, but make sure that these courses make sense for our workers. It does not always start out perfectly. There will always be courses that will need adjustments and we take in feedback seriously. So far, the feedback from those who have taken part in the courses provides strong indicators that we are on the right track. So this CET framework allows our workforce to remain well-skilled and well-trained. This enables them and their companies to stay ahead of the game, and thus help with the employment landscape in Singapore.

    Uplifting Low-Wage Workers (LWWs) to ensure Inclusive Growth
  36. Low-wage workers need additional help to boost their income and employability.
  37. Our workfare schemes – for example, the Workfare Income Supplement (WIS) and the Workfare Training Support (WTS) – are two very good solutions that we have come up with, that in turn have helped low-wage workers, while ensuring that we maintain our work ethic and remain fiscally prudent. It has worked well and we have taken on board useful lessons learnt. We will comprehensively review these two Workfare schemes next year.
  38. Aside from providing direct financial support, we will also tighten the regulatory frameworks for the cleaning and security sectors, so that workers in these sectors can enjoy better employment terms. We will continue to identify sectors where low-wage workers are concentrated and consider targeted interventions.

    Ensuring Financial Security
  39. Now, life expectancies are increasing. As our population ages, there is a pressing need to make sure that Singaporeans are self-reliant and financially independent in their old age.
  40. When the CPF was introduced in 1955, the retirement age was about 55, and life expectancy then was about 62. In 1997, when the minimum sum was introduced, life expectancy was 75. For those of you who are younger, as healthcare and nutrition continues to improve, life expectancy will increase beyond the age of 85. So we will be living longer on average, and we need to cater for our retirement needs.
  41. We have taken a two-pronged approach to ensure financial security:

    • First, we want to ensure lifelong employability for Singaporeans so that they can continue to work if they need to or wish to, and the opportunities are there for them to improve their financial security.

    • Second, we want to make sure that Singaporeans are able to accumulate adequate savings for their retirement needs.

    Ensuring lifelong employability
  42. An ageing workforce is a reality that employers have to face and embrace.
  43. To encourage employers to attract and retain older workers, the Retirement and Re-employment Act (RRA) was implemented starting from this year. So far, implementation has been relatively smooth. We will continue to monitor this and get feedback along the way. The government also announced the Special Employment Credit (SEC) in 2011 and we have also improved on it this year. The SEC will now benefit nearly 350,000 workers, about 80% of older Singaporean workers. It will be in place for the next 5 years, up to 2016.

    Ensuring retirement adequacy
  44. While remaining employed is one critical step towards better retirement adequacy, we must also continually refine our CPF scheme to boost the retirement savings of older Singaporeans.
  45. The CPF system has been a key pillar of our social security system for a long time. Singaporeans have enjoyed the CPF system for many years. It has evolved from a simple savings scheme into a comprehensive social security system that has helped Singaporeans save not only for their retirement, but also for homes and healthcare needs.
  46. CPF LIFE evolved from the Minimum Sum Scheme, for instance. Singaporeans are living longer, and a growing proportion of Singaporeans would run out of, or outlive their CPF savings if they were on the Minimum Sum Scheme. CPF LIFE will provide a lifetime of payouts as long for as long as one lives.
  47. Another recent change is the increase in CPF contribution rates for older workers. A few years ago, it had been decreased in order to encourage employers to employ older workers. The situation has improved significantly and it is timely to increase it and it ties in well with our efforts to raise retirement age and to encourage Singaporeans to work longer.
  48. We will continue to review and refine our CPF system to make sure it remains relevant for Singaporeans.

    Achieving Our Goals through Internal and External Stakeholder Engagement
  49. Our three goals of better jobs, higher incomes and financial security can only be achieved with the active support and involvement of all our partners, including the public at large and stakeholders, both within and outside MOM.
  50. We have a more educated, well-informed and connected citizenry who want more transparency and who want to be involved in the policymaking process. All of us are part and parcel of this. We want our voices to heard, and to be able to put their views across. With the rise of social media, the modes of human engagement and expression have expanded significantly
  51. This new landscape presents new challenges for all of us in the public service. Public engagement will take more time, there will be more to-ing and fro-ing, but we will be the better for it at the end of the process.
  52. Yet our policies should not be guided by popular preference alone or the views of a vocal minority. Our polices must be made on the basis of what is right for Singapore, what is right for Singaporeans, and what makes sense for today, and what makes sense for tomorrow. That is our responsibility. To take on the feedback, we need to take into consideration all the different views out there, and make a balanced judgement.
  53. We should tap on the collective wisdom of the public. Public engagement should be an integral part of our policy-making process. This allows us to better understand stakeholders’ concerns, share perspectives and constraints, formulate more robust policies, and ultimately, for us to implement policies which make sense, are relevant, and effective on the ground and achieve our national objectives.
  54. MOM, like many other organisations, has been stepping up in the way we engage the public to develop policies. One such effort was our foreign domestic worker (FDW) policy consultation and engagement exercise which took place last year.
  55. FDW policies, as we all know, can be highly contentious with a wide range of stakeholders – employers and employment agencies, NGOs, source country embassies, and the FDWs themselves. Many of these stakeholders have conflicting interests and very divergent views.
  56. To ensure that we captured the full spectrum of views, for the first time, we held a Townhall that brought various stakeholders together to share their conflicting viewpoints and generate solutions that they wanted MOM to prioritise. To extend the reach of our engagement and test out the ideas generated with more people, we ran polls on Facebook and kept members of public updated about the stakeholder engagement exercise through MOM's Facebook page.
  57. The engagement exercise has deepened our understanding of ground sentiments and stakeholders' experiences in recruiting and managing FDWs. It enabled us to collaborate with stakeholders to co-create solutions, and also helped stakeholders to appreciate the challenges that Government faces in trying to balance diverse interests. This is something we hope to do more off across the policy space.
  58. Aside from tapping on the wisdom of our external stakeholders, it is equally important that we have a strong and highly dedicated team within MOM.
  59. I am glad that we have such a committed and engaged team at MOM. The FDW consultation and engagement exercise which I mentioned earlier took quite a while, about one and a half months to execute, and would not have been possible without the participation of more than 40 MOMers across different divisions, most of whom had volunteered to spend time to prepare and conduct the exercise.

  60. In conclusion, MOM clearly has a very challenging but very meaningful task ahead of us. It is important to understand that all the things we do make sense. At times we may wonder how the different things we do connect. But we must make sure that the dots always connect and eventually lead to the well-being of our people. The goals that I have laid out earlier are not something we can achieve overnight, and certainly not by ourselves.
  61. Our brand of tripartism has been our key competitive advantage. It is something that very few countries have. Many countries do look at Singapore and wonder how all this is possible. Perhaps in the earlier years there was scepticism. But in recent years, through the economic difficulties, we have seen the way we have managed to steer the ground, between the government, the unions, the workers, and the employers. There is something here that we have got right. It is something that we must continue to nurture. It is only possible because of the trust that we have built up over the years. But we must continue to grow our tripartite partnership with employers and unions at all levels.
  62. Other than our tripartite partners, we also have many important stakeholders partners whom we need to work closely with, for example, other government agencies, industry associations, skills and training providers, NGOs, academics, and of course the public at large, of which all of us are also members of. They will all have to increasingly play a part in the way we do business.
  63. Let me end by saying a big thank you to all our partners, who have walked this journey with us in making a difference for our people and to our country. I just want to leave this with you -- what you all do, what we do, what all of us do, can definitely create a brighter and better future for all Singaporeans. Thank you very much.

Factsheet on Employment Act Review