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Committee of Supply Speech by Mr Tan Chuan-Jin, Acting Minister for Manpower, 07 March 2014, 1:00 PM, Parliament

Mr Tan Chuan-Jin, Acting Minister for Manpower, Parliament

  1. I thank Members for sharing their views about our manpower policies.
  2. As Minister and Member of Parliament, I have had the privilege to meet many Singaporeans from all walks of life. To me, and many of you will agree with me, this is actually the most meaningful part of life in public office. They share with me a slice of their life stories. I have listened to their aspirations and hopes for themselves and their children. They work hard and seek to have good jobs and good incomes, to buy a home, and save for their retirement and their children’s needs.
  3. Our low income families worry about how to make ends meet; young graduates worry about competition; mid-career workers worry about whether they have enough savings when they retire, and business owners worry about rising costs and manpower constraints.
  4. Sometimes, there are contradictions and tensions. Some feel that we should slow down and smell the roses only to later express their concern if we can remain dynamic and vibrant enough to create good opportunities for their children, and if the economy would be strong enough to provide for all our needs, especially when they themselves grow old. Some grumble about the fickleness of our local workforce and want to see a loosening of our foreign manpower policies, only to later lament our loss of character with too many foreigners and the crowdedness they encounter. I will always ask them, "So which part of your request would you like me to fulfil?"
  5. We have to listen, discern and decide. It is really never just about doing more. We have to face the inevitable tradeoffs even as we still try to settle for win-win outcomes whenever we can. There are always competing demands to balance.
  6. Our responsibility as a Government is to provide for our people’s needs, and this forms the bedrock and foundation for them to pursue their dreams. We are responsible for not only the individuals but also the broader community. Their needs are not exactly the same. We also have to be responsible for our future generations by ensuring sustainability.
  7. The practical side of governance needs not be incompatible with the aspirational desires and values that many of us share. Making our economy work for every Singaporean is at the core of what we need to do. Better jobs and higher incomes for Singaporeans are at the centre of our mission at the Ministry of Manpower (MOM). How we do it will reflect the values that we hold. Achieving it will also provide us with the ability to realise those very aspirations, and ensures that Singapore remains a nation of opportunities for our people.

    Our Present: A Look at Our Labour Market
  8. I will first update Members on the present state of our labour market, before going on to the future economy and other issues. Our economy grew by 4.1% last year. The unemployment rate – 2.9% for Singapore citizens – is among the lowest in the world.
  9. To Mr Gerald Giam’s question, I am especially encouraged that Singaporeans, in particular older workers and women, have benefited from our economic restructuring efforts. The labour force participation rate of women aged between 25 and 64 rose significantly over the decade, from 61.0% in 2003 to 72.2% in 2013. The labour force participation rate of older citizens (aged 55 to 64) also climbed to 66.8% in 2013, from 47.2% in 2003. This is an enormous improvement over the past decade. Mr Gerald Giam raised the issue of the economically inactive and those who are discouraged (to find jobs). This is important and we are particularly concerned about this group as well and the many diverse challenges that they face. SPS Hawazi will elaborate further about our efforts and some of the measures that would help in this area. Some have been out of the workforce for quite some time. They need substantive support and skills training to improve their employability. We heavily subsidise training programmes in our Continuing Education and Training (CET) system to help them pick up skills so that they can re-enter the labour market. We have also introduced WorkPro to incentivise employers to hire them. It is not only about skills, but also about helping them regain confidence to return to work. We have started traineeships, where we attach trainees to companies to undergo on the job training programmes. These enable them to try out and adjust to working life again, and hopefully they can transit and rejoin the workforce.
  10. Singaporeans have benefitted from economic growth and are better off than they were. Growth in real median monthly income (including employer CPF contributions) for full-time employed Singapore citizens was 4.6% in 2013. Over the past five years from 2008 to 2013, real median income increased by 1.7% per annum. This is not bad, especially when we compare to other economies facing wage stagnation. For the same period, real income growth at the 20th percentile was 2.0% per annum, keeping pace with real income growth at the median.
  11. The foreign manpower tightening measures that were introduced over the past years are beginning to 'bite'. In 2013, foreign employment (excluding FDWs) grew by 48,400, down from the increase of 67,100 in 2012. About two-thirds of this growth was driven by the Construction sector and we can understand why, with the need to ramp up public infrastructure. Excluding the Construction sector and FDWs, foreign employment grew by 16,800 in 2013, about half of the growth of 32,200 in 2012, and the lowest since 2009. Nonetheless, we still have some way to go in reducing overall foreign manpower reliance. This efforts needs to continue.
  12. When we compare ourselves to other advanced economies, and when I meet foreign counterparts, it becomes quite apparent that we are in pretty reasonable shape. While certainly not perfect, we should not short-change ourselves; what we have here is respected and admired.

    Our Future: Evolving Challenges in the Labour Market
  13. Ms Denise Phua and Mrs Lina Chiam asked important questions about our future; the competencies we may need and the impact of technology. Let us take a glimpse at what the future would be like.

    Rapid Changes in the Economy
  14. We believe Singapore's future economy will create many diverse and exciting career opportunities for our people. We are well placed in our region to capture growth, and we are transforming our economy to develop higher skilled, higher value industries. New growth opportunities will emerge as technologies like data analytics, robotics, and 3D printing become more pervasive.
  15. The future economy will be driven by rapid technological change and shorter skill cycles. Longer life expectancy and shorter skill cycles mean that workers – both white- and blue-collar workers alike – are unlikely to have just one career, but two or more distinct careers over their working lives. Hence, it is crucial that workers are able to master new skills. Change will be the permanent feature. We all remember Nokia. In 2005, Nokia had about a third of the world’s mobile phone market. But, it failed to adjust to the iPhone’s introduction in 2007 and evolving Smartphone technology. By 2009, its profits fell sevenfold and it was sold to Microsoft last year. Today, Smartphone technology continues to evolve. A single, simple messaging application – Whatsapp – can be valued at US$19 billion. We are seeing wearable mobile electronics, such as Google Glass and Samsung’s Gear. Our workforce of the future should have both the hard and soft skills to confidently adjust, not to mention having the ability to communicate with acronyms, hashtags and emoticons!

    Continuous Learning
  16. This is precisely why workers, including PMEs1, must be able to adapt to change and have a commitment to lifelong learning. Ms Jessica Tan talked about our need to help workers adapt and move on. MOE is doing its utmost to continuously strengthen our education system. On MOM’s part, we believe that our cutting edge would be provided by our CET system, which will raise the quality of our local workforce. I totally agree with Ms Denis Phua’s comments about the way we teach and the way we learn. That is something we will have to embrace, and I think it is happening in classrooms already. To better prepare for our future, our entire system needs to help us all build a broader and deeper foundation for learning, and enable our people to be adaptable in picking up new knowledge and skills throughout their lives. Mr Teo Siong Seng expressed concerns about PMEs and their re-employability. Sometimes we do get feedback that people look at CET as something that is required for blue collar workers. CET is something everyone needs to embrace; PMEs themselves need to embrace it and participate. We will do our part to support it as best as we can with programmes and assistance.

    Changing Workforce
  17. The composition of the workforce will also change. More are aspiring to enter university and as a result, an increasing number of graduates will enter the labour market. By 2020, we will see 40% cohort participation in our local universities. There are also many who are pursuing private education or overseas degrees. In theory, this can mean that we have an increasing pool of better educated and skilled workforce. We should be better able to move up the value chain.
  18. We need to understand that these jobs will only be created by good companies. These companies, both local and foreign, will only be here if there is healthy economic growth and a conducive business environment for them to be here. Let us not kid ourselves – companies and labour are increasingly mobile. The competition is real. It is not about if, but about when.  Labour and capital are exceedingly mobile and will increasingly continue that way. We need to compete to have the companies, even our local companies, remain here so that opportunities can be provided for our children as they grow up and pursue their educational opportunities. Therefore, it is important for us to understand that even as we look at providing for our people across different areas (especially on the social side), we still need to make sure our future economy needs to be strong, robust and vibrant, so that these opportunities can be created for our people. That is the base which they can go on to fulfil their dreams and aspirations. Our economic agencies will continue to anchor Singapore as a regional headquarters for high value-added activities, while helping local enterprises to grow.
  19. Other countries are facing a different type of challenge. We should note the situation in South Korea and Taiwan which Mr Zainudin raised earlier. Their relentless pursuit of paper qualifications resulted in a glut of graduates2. The Director-General of Taiwan's MOE stated that "the abundance of (university) places had undermined the quality of degrees and created a skill mismatch in the job market3. People have become over-educated and underemployed4". Taiwan is now taking steps to address this.
  20. We cannot take for granted that we would not face these problems in the future. We will need to watch this development carefully and help Singaporeans make informed educational choices. We will also develop viable career pathways and options for those who may prefer a more vocational and technical route instead of pursuing a university education. Singaporeans should not have to feel that the only way to succeed is to become a university graduate. The ‘ASPIRE’5 committee helmed by SMS Indranee Rajah, will play an important role to help address this situation. Ultimately, as people move up the value chain in terms of their education process, we need to make sure we continue to create jobs. This is something which we are doing fairly well at the movement. At the same time, we should equip our people with the skills and improve the transparency of the labour market so that we know where the jobs are.

  21. Going forward, we must continue with our efforts to restructure the economy, and change the way jobs are being performed. Restructuring for higher productivity will be painful. There is no way around this. We need to invest more in technology, streamline processes, and create higher value products through innovation. This is the only sustainable way, to ensure wage increases for all workers.

    Lower-Skilled Jobs
  22. Let me end this section about the future by stating that even as we transform the economy, there may be natural limits to what education and training can do. There are still Singaporeans working in lower-skilled jobs and this segment of society will still remain. We must not neglect their contributions, as they play an important role in our society and we will and must continue to support them in their endeavours.

    Making Our Economy Work for All Singaporeans
  23. Given how the future may unfold, what do we do to ensure that our economy will work for all Singaporeans? I will highlight three areas –

    • Creating better jobs and raising incomes for Singaporeans through upgrading our workers and supporting restructuring;

    • Achieving inclusive growth and retirement adequacy; and

    • Making sure that workplaces get better and safer.

    Creating Better Jobs and Raising Incomes for Singaporeans through Upgrading the Workforce and Supporting Restructuring
  24. We all know that raising productivity is central to our efforts to create better jobs for Singaporeans.
  25. For businesses, it means taking a long hard look at their business models and processes, to see how they can produce higher value goods and services, and reduce their overall reliance on manpower. We are already seeing some changes. More F&B outlets have started using iPads for food orders. Others are asking customers to pay at the cashier on their way out, reducing the number of service staff required. All of us as consumers have a part to play in supporting this effort as well.
  26. I am happy to hear the story of The Jellyhearts, a bakery selling customised cakes. The owner, Mr Darren Loh, partnered e2i6 to prototype moulds that helped reduce the overall time taken to produce these customised cakes. Workers at The Jellyhearts saw eventual wage increases of 10-20% as a result of improved productivity. This is why productivity is important.
  27. I agree with Mr Zainudin when he says that for workers, raising productivity means undergoing training to improve their skills so that they can add more value to their jobs. The Government is committed to providing Singaporeans with the fullest support to improve their skills through CET. We are in the midst of a major review of our CET Masterplan, and we will make our CET system more relevant for our workers and businesses, and to further strengthen the link between training and skills utilisation at the workplace. This ensures that our workers can adapt quickly to industry needs, and provide Singaporeans with more assistance to achieve their career aspirations. SMS Amy Khor will be elaborating on these in her speech.

    Crane Operators
  28. Let me now address Mr Png Eng Huat's queries on employment opportunities for local crane operators. All firms must first employ or train at least one local crane operator, before they can get their first foreign crane operator. But, there was a need for the Government to nonetheless relax the crane operator ratio temporarily, as the expected demand for crane operators outstripped the number of locals we were able to attract and train. We also allowed companies to hire PRC crane operators on S Passes.
  29. It is nonetheless a temporary measure. As more locals are trained, we will reduce the quota from 1:4 to 1:2 by 2017. I must state however, that this is not an easy job. I have the experience of helping Singaporean crane operators find employment, only for them to drop out later.
  30. The Building and Construction Authority (BCA) has introduced a Crane Apprenticeship Programme (CAP) to attract locals for the job. It offers apprentices an attractive monthly package of at least $2,500 without overtime pay. BCA has enrolled about 100 locals in the CAP since Apr 2013. I encourage Mr Png to share with me the details of the cases he has seen, so that we can work with BCA to facilitate employment for Singaporean crane operators.

    Achieving Inclusive Growth and Retirement Adequacy
  31. Many Singaporeans remain worried that they do not have sufficient savings for healthcare and living expenses upon retirement. These are important issues, and we need to ensure that we are able to support these schemes in a sustainable manner. The Ministry of Health will share more details during their COS. Others have also shared their concerns over the more vulnerable groups of Singaporeans, who struggle to make ends meet and have fewer opportunities to move ahead.
  32. The Government remains committed to fostering inclusive growth. We want all citizens to enjoy the fruits of Singapore's economic success and achieve financial security for themselves and their families.
  33. Work is the best form of financial security. Our strategy at the broadest level is to keep unemployment low by keeping the economy healthy so that good jobs can be created, maintaining a tight labour market and encouraging more to work. With increasing life expectancy, many Singaporeans are able and want to work until they are older.
  34. As announced in Budget 2014, we will be increasing the CPF employer contribution rates to the Medisave Account (MA) for all workers. Older workers will also enjoy further increases to CPF contribution rates, to help them build up more savings for their retirement needs.
  35. I share the concerns of Mr Christopher de Souza, and recognise that even as we transform our economy, certain groups of Singaporeans, particularly lower income Singaporeans, may require more help. Mr Teo Siong Seng, Mr Gerald Giam and Ms Denise Phua also asked how the Government can assist retrenched mature workers, the unemployed, and other vulnerable groups. This is a whole of Government effort, not just in terms of work, but education, housing and so on.
  36. Workfare remains the key pillar of our social security landscape. We made enhancements to the Workfare Income Supplement (WIS) quantum and income cap last year, to boost take-home pay and retirement savings of low wage Singaporeans. We also further enhanced the Workfare Training Support (WTS) scheme, to provide greater subsidies for training. With better skills and capabilities, our low wage workers can raise their productivity and employability, to enjoy positive wage outcomes. We need to continue to help workers move up the value chain.
  37. For the unemployed or those seeking a career switch, they can tap upon our existing networks of Career Centres at CDCs7, e2i, and CaliberLink (which is focused on helping the PMEs), to enjoy employment assistance and training advisory services. We also have targeted career conversion programmes, to help individuals re-skill and acquire necessary competencies, to take on new jobs. SMS Amy Khor will speak more on these efforts and retirement adequacy, while SPS Hawazi will touch on measures to uplift low-wage workers later on.
  38. We are also paying particular attention to lower-income Singaporeans, especially those who work in industries that are more prone to stagnating real wages. Where productivity improvements do not translate well into wage increases, for example, in sectors where there is cheap sourcing, the Government will introduce sector-specific and targeted measures. I am glad that the unions are helping us with this, by developing the Progressive Wage Model (PWM). We have incorporated this into Government regulation for the Cleaning and Security sectors. We will also set up a tripartite body to assess the need for a PWM in the Landscaping sector. SPS Hawazi will further elaborate on this.

    Making Workplaces Better and Safer
  39. It is essential to complement the earlier measures by making our workplaces better and safer. We will re-double efforts to entrench a safety mindset and culture in the workplace. In 2013, Singapore had 59 workplace fatalities, a slight increase from 56 in 2012. The Construction sector continues to be the main contributor to workplace accidents. In the first two months of 2014, we had nine Construction workplace deaths. This is unacceptable. MOM will step up enforcement efforts against errant employers, who will face harsh penalties under the law, including imprisonment.
  40. Harsh penalties aside, it is about having a safety culture. What we need is not just big stick, we must all instil a strong safety mindset. This is something we cannot mandate.
  41. As we build safe and healthy workplaces, we are also embarking on encouraging progressive workplace practices. Singaporeans have increasingly indicated a stronger desire to have a more fulfilling pace of life; and more time to pursue other goals and priorities outside of work. Many have called for greater support for flexible work arrangements and more pro-family practices. We will strengthen our efforts to promote more progressive employment practices, to support work-life priorities of Singaporeans. SPS Hawazi will talk more about this.
  42. Even though the Employment Act was recently amended to protect more Singaporean workers, I know that Singaporean PMEs who earn more than $4,500 a month and fall outside the scope of the Employment Act have approached NTUC and MOM for assistance on workplace disputes. There are cases where employees have legitimate grievances but might not be able to afford to take legal proceedings. MOM is presently working with our tripartite partners to enhance employment dispute resolution mechanisms, as part of the Employment Act Phase Two review. We are looking to provide an affordable and expeditious avenue for employees to resolve disputes relating to breaches of individual contract of employment. As part of this review, we will also look at how we can enhance the current tripartite mediation framework for union members in non-unionised companies. We are discussing with the relevant stakeholders and will provide an update in due course.

    Supporting Economic Restructuring
  43. Let me now return to our efforts to restructure the economy. Mr Teo Siong Seng and Mr R. Dhinakaran have expressed the strains businesses are feeling, due to the tight labour market and rising business costs. In fact many of you have raised this in the past few days. Ms Jessica Tan spoke about how access to quality manpower is key for businesses to locate high-value operations in Singapore. This is important because ultimately jobs and opportunities are created for our people.
  44. My recent dialogue with Pasir Ris East residents reveals the tensions involved. Mr Benjamin Wan, a resident, shared how he was affected by employers who he claimed preferred to hire foreigners to locals. Some Singaporeans, like Mr Wan, want us to be more stringent on admitting foreign talent; others call for a "Singaporean first" policy.
  45. At the same dialogue, another participant, Mr Leong Weng Kuan, lamented about our tightened controls on foreign workers. Mr Leong runs a local business and shared how difficult it was to find locals to fill jobs that are available in his firm. Mr Leong was less concerned about PMEs as he felt that these Singaporeans are actually quite mobile, and that there are already significant good career opportunities for them. Within a single dialogue, there are already divergent views. How then, should we strike this balance?
  46. I have one over-riding consideration when I look at how to shape our manpower policies; does it, on balance, benefit Singaporeans and Singapore? I had mentioned earlier that it is critical that our economy remains healthy so that good jobs can be created to meet the needs of a better-educated workforce. As a country with a small domestic market, Singapore must remain open to the global economy for us to thrive and create those opportunities. An important part of this equation is to have a diverse global workforce that allows employers to tap on skilled foreign manpower who can complement and augment. Some global and regional setups need a cosmopolitan make-up due to the nature of their business. Yes, it will mean that when foreigners are here, they will compete for jobs, but yet at the same time, by being here, it allows companies to be here and generate more jobs for our people, directly from these companies and indirectly from supporting businesses. Again, it is a fine balancing act.
  47. But given Singapore's small physical size, we will need to grow within the constraints that we have. This explains why we need to tighten foreign manpower access at all levels. And here, there is yet another balancing effort to be struck; that between maintaining our competitiveness and this need to moderate growth in our labour force. Again, we need to ensure that whatever the tradeoffs, the net effect is positive for our people and society.
  48. We have introduced tightening measures in a progressive manner since 2010. Foreign employment growth has slowed down significantly, for the non-Construction sectors. We know that many local companies, both SMEs8 and non-SMEs, are feeling the pain of our earlier tightening measures. Take Yang Kee Logistics for example. This is a local SME with more than 60% local employees. The company provides end-to-end logistics solutions for various sectors. Similar to many Logistics firms, Yang Kee faces difficulties in servicing their clients, given the tighter manpower situation.
  49. Yang Kee has adapted by forming an alliance with four other transport companies to pool excess trucking capacity through an order exchange cloud server. This has helped to alleviate manpower constraints in its trucking positions, as companies are able to fully utilise their resources at their disposal. The companies are also able to tap upon each others' expertise, and enjoy access to resources previously unavailable. These changes have allowed Yang Kee to enjoy productivity improvements of up to 20%. This is an example of how companies have embraced change.
  50. We want our SMEs to do well so that they can create better jobs and opportunities for Singaporeans. But we cannot proceed with business as usual. The Government is committed to helping companies like Yang Kee transform their existing business models. This includes support through the Productivity and Innovation Credit (PIC), which has been extended until 2018, and other schemes, such as the new PIC+ that is targeted at SMEs specifically. We will take in the feedback received, to make the PIC schemes more easily available.
  51. I would like to take this opportunity and it is important to do so to remind all businesses that a few of the foreign manpower tightening measures that we had previously announced will take full effect this year and in 2015, when the transition period ends. This includes the higher S Pass minimum qualifying salary, and the reduction in Dependency Ratio Ceilings (DRCs) and S Pass Sub-DRC from 25% to 20%. We are not introducing further tightening measures this year, with the exception of the increase in foreign worker levies for the Construction sector. We will monitor foreign manpower growth and productivity improvements in each sector carefully, before deciding whether any further measures are necessary.

    Raising the Quality of our Foreign Workforce
  52. I thank Mr Zainudin Nordin, Mr Yeo Guat Kwang and Mr Teo Siong Seng for their views on the foreign workforce. The measures that we have announced in the Budget this year signal our intent to raise the quality of our foreign workforce and by extension, productivity. We need to encourage firms to recruit and retain skilled foreign workers, and move towards having a smaller pool of skilled foreign workers, rather than relying on sheer numbers of inexperienced and low skilled foreign labour. This transformation must happen, we cannot grow at the same rate as before.
  53. We have introduced a new market-based skills recognition framework for the Construction sector, to encourage firms to retain experienced 'Basic Skilled', or R2 Work Permit Holders for a longer period, on higher salaries. With this, companies can upgrade their R2 workers to 'Higher Skilled', or R1 status, and will not have to bear the higher foreign worker levies that we announced in Budget 2014. We will also extend the maximum Period of Employment (POE) for R1 workers from Non-Traditional Source (NTS) countries and the People’s Republic of China, who work in the Construction, Marine and Process sectors.
  54. Together with the Ministry of National Development / BCA, we will also be consulting the industry, on a longer term proposal to impose a minimum level of R1 workers across all Construction firms.
  55. We will also review our Skills Recognition Framework, and the eligibility criteria for foreign workers to qualify for R1 status. We want to ensure that we raise the quality of the foreign workers here and encourage employers to retain experienced and skilled workers. We have already begun discussions with firms in the Process sector, and will soon be extending this review to cover the Marine sector. We encourage companies to provide your feedback to us. In response to Mr Yeo Guat Kwang, we feel that the situation is less pressing for Services and will not extend this move to that sector.
  56. These measures mean that firms that are more reliant on new, inexperienced workers, or who choose to constantly churn foreign workers, will be subjected to higher levy bills. Conversely, firms that rely more on experienced, higher quality workers, will be less affected.

    Foreign Manpower Management Issues
  57. As I had mentioned in Parliament in January, while the situation with regard to foreign worker well-being is generally good, we strive to do better. Mr Yeo spoke about holistically and deliberately planning for the needs of foreign workers. Not just in their workplaces, but also where they live and play. Indeed, this has been so in our on-going efforts in managing the foreign workforce in Singapore. Since 2008, an inter-ministerial committee has been looking into issues such as foreign worker housing and transport. One of our ongoing priorities is to speed up the construction of dormitories so that foreign workers can stay in these purpose-built accommodations. As part of these efforts, we intend to enhance our levers with the larger foreign worker dormitories by developing new regulations. I mentioned previously that the government will also be launching more dedicated foreign worker recreation centres. In all, these measures will enable us to better meet the evolving needs of foreign workers, as well as facilitate a harmonious co-existence with the communities in the vicinity of large dormitories.
  58. I will like to thank Mr Yeo and his team at the Migrant Workers Centre (MWC), and private bus associations, on their initiative to enhance weekend transport for workers. We want to celebrate such ground-up initiatives, as they help complement the government’s efforts.
  59. MOM regularly reviews our legislation to ensure adequate protection for workers. We will study Mr Yeo’s suggestions to facilitate electronic salary payment and we have already begun discussing with industry on how to broaden the circumstances under which foreign workers may change employers, with a view to reduce churn of experienced workers. This is something that MOM has been looking at for some time and I am keen to take it further, to see if we can make this possible.
  60. With regard to having a standardised employment contract or sector-specific guidelines, a sample contract covering key employment terms has been worked out in consultation with the tripartite partners, and this has been made available on the website of the Tripartite Alliance for Fair Employment Practices (TAFEP). We further welcome any efforts by industry associations to come up with sample contracts covering specific terms that are relevant to their sectors. Please do come forward with your suggestions.
  61. With a large and diverse workforce, some employment disputes will be inevitable. I would like to reassure Mr Yeo and Members of this House that where these involve basic employment standards under our laws, we will ensure that standards are upheld. We will continue to build on existing processes for NGOs like MWC, HealthServe etc, to help workers to seek assistance from MOM. MOM will also continue to step up enforcements against contraventions of the Employment of Foreign Manpower Act (EFMA). In 2013, we prosecuted about 550 employers for EFMA contraventions.

    Further Segmentation to Services Sector
  62. Mr Dhinakaran raised a suggestion to further segmentise the DRC for the Services sector. This is an issue that had been debated several times in this house.
  63. We have applied our foreign manpower policies consistently across the Services sector. However, in exceptional circumstances, we have been flexible. Healthcare is one industry that we have granted more liberal controls, due to their essential nature and an acute shortage of trained locals.
  64. We do not rule out further flexibility where warranted, but we would want to be assured first that the industry is essential, that productivity is already high, and that the locals therein are relatively well paid and have reasonable career and wage progression pathways.
  65. For industries appealing for more generous foreign worker quotas and lower levies, we need to ask whether the industry is as manpower-lean as it is in other developed countries, whether the local workers are paid better than alternative jobs in Singapore, and why these industries are not generating good jobs for locals.
  66. Mr Dhinakaran has also asked whether we should increase levies when we have reduced quotas. We have looked at this extensively over the past few years, and we need to do both in a judicious manner because:

    a. Despite the DRC cut, the number of Services work permit holders and S pass holders is still growing, albeit at a slower pace;

    b. If the cost of foreign labour is significantly lower than for local workers, firms will be incentivised to recruit foreign workers first on the basis of lower cost, and will seek to maximise their usage of foreign workers;

    c. Too low a cost of labour will also delay the adoption of labour-saving technology.
  67. Firms can reduce their levy burden by either becoming more manpower-productive to rely on fewer foreign workers, or in hiring "higher skilled" R1 workers where they are needed. The more foreign workers they rely on, the more levies they pay. It is a fair and simple principle and it is meant to shape the economy. It sends a clear signal to less productive firms and industries that behaviours and business models will have to change in order to survive.

    S Pass
  68. Let me next address the concerns raised by Mr Patrick Tay, over the relevance of the S Pass, in our work pass framework.
  69. The S Pass was introduced in July 2004 to enable companies to bring in middle-level skilled manpower, such as Associate Professionals and Technicians (APTs), to augment manpower gaps across various industries within a given quota. Even as our local workforce becomes more educated and skilled, the S Pass will remain relevant in two ways. First, there will still be APT manpower gaps which our local workforce may not be able to fill. In the 2013 Job Vacancy Survey9 administered by MOM, there were more than 4,000 APT vacancies reported by employers in September 2013, which they found hard to fill with locals. Second, more junior-level foreign PMEs will fall into the S Pass category as we progressively raise the Employment Pass (EP) qualifying criteria to level the playing field for local graduates, and they will be subject to the S Pass Sub-DRC and levies. This forms part of our effort to raise the quality profile of our foreign workforce over time, so that they continue to complement our increasingly educated local workforce.
  70. To strike a careful balance between meeting the manpower needs of industries and maintaining a level playing field for locals, we have been progressively tightening the S Pass qualifying criteria, raising the foreign worker levy and cutting the S Pass Sub-DRC since July 2011. Most significantly, in July 2013, we required S Pass holders with more experience to qualify at higher salaries and further cut the S Pass Sub-DRC for the Services sector from 20% to 15%, as locals tend to look for jobs in that sector. As a result, Services S Pass growth has moderated from 8,100 in 2H2012, to 1,000 in 2H2013.
  71. We will continue to monitor the situation closely as the effects of the recently announced S Pass tightening measures are still working their way through. We will continually review the S Pass framework, to ensure that the quality of S Pass holders continues to meet the manpower needs of industries and complement our local workforce.

    Update on the Fair Consideration Framework and Jobs Bank
  72. Mr Patrick Tay and Mr Zaqy Mohamed have asked for an update on the implementation of the Fair Consideration Framework (FCF), and the specific actions that we had taken on those with nationality-based discriminatory HR practices.
  73. The purpose of the FCF is to encourage a level playing for Singaporeans and signal the importance of considering Singaporeans fairly for job opportunities. From 1 August 2014, firms must advertise their vacancies in the Jobs Bank for at least 14 days before they are eligible to apply for an Employment Pass if it is needed.
  74. The Government has started identifying firms that may have scope to improve their hiring and career development practices. These are firms with a disproportionately low share of Singaporeans within the PME levels in their industry. Since the start of this year, we have identified and started initial discussions with more than 50 employers.
  75. Firms with shortcomings in their HR practices will be required to implement an action plan to address these shortcomings. In some cases, the issue may not be a problem with their HR practices, but rather a gap in the skills that are available in the local workforce. We will work closely with the industry, to explore ways to support more manpower-lean business models, or develop a local pipeline of workers with the relevant skills and experience. We will work closely with MTI on this.
  76. The new Jobs Bank will be launched in the middle of 2014. WDA is now in the process of engaging groups of employers and potential job seekers, to test the beta version of the Jobs Bank. I don’t think it will be perfect from the word 'Go', and users will take some time to become familiar with it. We will refine and improve the Jobs Bank, as we gain more experience and feedback from Singaporeans and employers.

  77. Madam Chair, allow me to summarise. While we have not announced major foreign manpower tightening measures for the non-Construction sectors in Budget 2014, businesses must press on with restructuring and should lose no time in making the adjustments needed to remain viable. Some companies have embraced change, but we need to push others to move along. There will be casualties and it will be painful for many. But for those willing to adapt, the Government will help through our Transition Support Package.
  78. All of us, Government, employers and employees play a part in our restructuring journey. This strong spirit of Tripartism is a real strength for Singapore. In addition to restructuring their businesses, employers have a role to play to make their firms attractive places to work. This means paying attention to career and wage progression, engaging employees, and designing work arrangements that enables their employees to contribute their best to the firm. Employers also have a significant role to play in training and upgrading their employees' skills. Singaporeans too, must seize these training opportunities and ask what value we as employees, can add to the firm and not simply focus on what the firm can offer to us. All of us really, have a part to play.
  79. So long as we keep working together, we will continue to ensure that Singapore remains a Nation of Opportunities, for all Singaporeans.
  80. Thank you.

1 PMEs refer to Professionals, Managers and Executives.
5 ASPIRE refers to the Applied Study in Polytechnics and ITE review (ASPIRE).
6 e2i refers to Employment and Employability Institute
7 CDCs refer to Community Development Councils
8 SMEs refer to small & medium enterprises.
9 Data pertain to private sector establishments each with at least 25 employees and the public sector.