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Speech by Mr Sam Tan, Minister of State for Manpower at Committee of Supply 2016

Introduction
  1. Mr Chairman, I will now brief the House on three of the Ministry of Manpower’s focus areas:

    One
    , to help older workers remain employable;
    Two, to improve low-wage workers’ earnings; and
    Three, to improve workplace safety and health.

    Older Workers
  2. Allow me to first touch on older workers.
  3. Sir, our labour force is aging quickly. The proportion of residents in the labour force aged 50 and above is about one-third now, up from about one-quarter a decade ago. This trend will continue over the next two decades; and we must be prepared to accept and embrace this new reality, and turn it into opportunity. 
  4. The Government has been engaging Singaporeans of all ages in various platforms. One common feedback we hear is that seniors want to have meaningful jobs that tap on their wealth of experience and expertise.

    Encouraging employment of older workers
  5. But the responsibility for creating a sustainable working environment for older workers does not just lie with the Government alone although the Government can take the lead in this area. Employers and employees are important stakeholders and partners as well in achieving this goal. The Government, employers and employees must walk this journey together.
  6. My Ministry has therefore been working closely with tripartite partners to help older workers, under the Tripartite Committee on Employability of Older Workers, or Tricom in short. 
  7. The Tricom, which I chair, has introduced many initiatives to help older workers work for as long as they are willing and able to. And we have made encouraging progress in this direction.

    Overall employment of older workers
  8. Sir, today, our employment rate for older residents aged 55 to 64 is 67%. This is well above the OECD average of 57% and is comparable with some of the developed and advanced countries like Japan (70%) and South Korea (66%).

    Encouraging hiring of older workers
  9. Notwithstanding this encouraging progress, I share Mr Chong Kee Hiong’s view that more can still be done to encourage the hiring of older workers. However, we cannot achieve this goal by just giving incentives alone. For there to be a truly age-friendly workplace, mindsets must be changed. The nature and the design of the jobs must also be changed.
  10. To change mindsets, the Tricom works through the Tripartite Alliance for Fair & Progressive Employment Practices, or TAFEP in short, to champion positive workplace attitudes towards older workers. TAFEP has been conducting many ongoing publicity campaigns to emphasise the value that older workers can bring to companies and their younger co-workers. 
  11. To change the nature of jobs and the working environment, we need to support employers to adopt good age management practices and redesign job processes for their older workers, a point highlighted by Mr Chong Kee Hiong. We have been providing our support through the WorkPro grants. To further enhance the effectiveness of the WorkPro scheme, MOM and WDA are in the process of reviewing this scheme. Details will be released soon. I wish to take this opportunity to strongly encourage more employers to make use of the enhanced WorkPro grants.

    Balancing employability and wages of older workers
  12. Sir, one key concern of the Tricom has been to balance wages with the employability of older workers. 
  13. In the early days, older workers were less wage-competitive because of rigid seniority-based wages. So, when the minimum retirement age was raised to 62 in 1999, the tripartite partners at that time agreed that the law could provide some flexibility for employers to reduce the wages of workers turning 60 by up to 10%.
  14. Since then, tripartite partners have worked very hard to promote flexible and performance-based wage regimes and systems. And today, the vast majority, actually more than 98%, of companies no longer reduce wages at age 60, so the wage-cut provision that was put in place in 1999 is no longer relevant today.
  15. I am very happy to announce that from 1 July 2017 onwards, we will remove this provision from our law. 
  16. Going forward, pay should be reflective of workers’ job scope and values, rather than their age.

    Raising of re-employment age to 67
  17. Let me now turn to re-employment of older workers. Four years since we introduced the re-employment concept, I am pleased to say that the implementation of this scheme has been relatively smooth. And in recent years, over 98% of local employees who wished to continue working were offered employment beyond 62.
  18. When we introduced re-employment in 2012, we also committed to raising the re-employment age from 65 to 67 at an appropriate time. PM shared at last year’s National Day Rally that we will do so by 2017. I am very happy to announce that tripartite partners have discussed and agreed that the effective date will be 1 July 2017
  19. I would like to assure Mr Chong Kee Hiong that before the law is changed in July 2017, the Government will continue to support companies who voluntarily re-employ older workers beyond 65. The additional wage offset of 3% for employers who re-employ older workers above 65 will similarly be extended to 1 July 2017. This is to help smoothen the transitional process.

    Expanding re-employment options
  20. Even as we work towards raising the re-employment age, the Tricom has considered other ways to expand re-employment options for employees. 
  21. We have received feedback that sometimes, employers are unable to find suitable jobs in their own companies, but can help the worker secure re-employment in a related or subsidiary company. Unfortunately, the existing law does not provide for this. 
  22. We will therefore amend the law to allow a new employer to take on the re-employment obligations of the original employer, subject to the employee’s agreement. As with the other changes introduced and announced earlier, this will also take effect from 1 July 2017.

    Revised EAP 
  23. The tripartite partners strongly agree that employers should consider all available re-employment options to identify suitable jobs for their employees. However, there will be situations where re-employment is just genuinely not possible. 
  24. As a last resort, we have provided for an Employment Assistance Payment, or EAP in short. In line with the raising of the re-employment age, the tripartite partners agreed to increase the EAP amounts and age coverage accordingly.

    Updated Tripartite Guidelines on the Re-employment of Older Employees
  25. Taken together, all these measures represent significant changes to our re-employment landscape. To better prepare employers and workers, the Tricom has updated the Tripartite Guidelines on the Re-employment of Older Employees, and they will provide details on many of the changes that I spoke on earlier. We will be releasing these guidelines in the next few weeks.
  26. Sir, we strongly encourage employers to adopt both the spirit and the letter of the new re-employment practices, ahead of the formal change in law. This is especially important given our tight labour market in the coming years.

    Low-Wage Workers
  27. I will now turn to the second issue - low-wage workers. Mr Zainal Sapari has asked for an update on the measures the Government has taken in this area. Let me highlight two of the Government’s initiatives targeted at uplifting our low-wage workers. They are Workfare and the Progressive Wage Models.

    Workfare
  28. The Workfare Income Supplement or WIS scheme has been instrumental in encouraging low-wage Singaporean workers to continue working. 
  29. The Workfare Training Support scheme or WTS also provides significant support to low-wage workers to upgrade their skills so that they can stay employable and enjoy higher wage growth. 
  30. As announced by the Minister for Finance in his Budget speech, the WIS and WTS schemes will be enhanced in 2017 to provide more support for our low-wage Singaporean workers who work and train.

    Progressive Wage Model 
  31. In specific sectors with a larger concentration of low-wage workers, prevalent cheap-sourcing was causing wages to stagnate. To address this concern, we set up tripartite committees to develop Progressive Wage Models, or PWMs. This is something that Mr Zainal Sapari is very familiar with. He is a champion for this.
  32. These PWMs provide cleaners, security officers and landscape workers with a clear pathway of career progression. The workers can look forward to earning higher wages, in line with higher skills and productivity improvements. 
  33. The PWM has been fully implemented for the cleaning sector since 1 September 2015. As of 31 December 2015, about 40,000 resident outsourced cleaners are covered by this scheme.
  34. We will implement the PWMs for the landscape and security industries through Government levers from 30 June and 1 September this year. 
  35. We are encouraged by the early PWMs adopters in the security and landscape industries, who have already sent their workers for the requisite training, and they are also already paying them according to the PWM models. We strongly urge remaining employers to expedite their plans to meet the PWM requirements, so that more workers can benefit from their higher skills and better wages, and their employers can also benefit from workers’ higher productivity.
  36. Mr Zainal Sapari has proposed mandating annual wage supplements (AWS) and annual increments (AI) for low-wage workers in the cleaning, security and landscape sectors. This is a major proposal which will not only affect workers’ well-being, but also employers and the industry. It is therefore crucial to seek the views of the various stakeholders in the usual spirit of tripartism. 
  37. We will raise Mr Zainal’s suggestion to the tripartite committees responsible for the PWMs for these sectors. And the tripartite partners will need to decide on what is appropriate and feasible, taking into consideration the interest of workers and bearing in mind economic conditions.

    Conclusion for LWW
  38. Sir, we are starting to see results of our various efforts to support low wage workers. They are bearing fruits now. Over the last 5 years, real incomes of full-time employed Singapore citizens at the 20th percentile grew by 2.9% p.a. in real terms. This is comparable with the growth in the median incomes over the same period. We will continue to work very closely with our tripartite partners on this important issue. 
  39. Before I move on to my next subject, I would also like to address Mr Patrick Tay’s points on freelancers.
  40. Freelancers are not covered by the Employment Act (EA) and the Work Injury Compensation Act (WICA) because there is no employer-employee relationship between them and their clients. 
  41. This is a complex issue which we should study carefully and not rush into. In the meantime, we will support efforts like those from NTUC’s Freelancers and Self-Employed Unit which has different initiatives for different groups of freelancers ranging from taxi drivers to those in the creative and media sector. This is in recognition that freelancers are a diverse group comprising many different trades, skills, values and services. It is therefore difficult to prescribe a one-size-fits-all solution to address such diverse and complex needs and situations.

    Raising Workplace Safety and Health (WSH) Standards
  42. Sir, let me now turn to my last subject - Workplace Safety and Health (or WSH in short). In 2015, our workplace fatality rate was at 1.9 fatalities per 100,000 employed persons. This is a slight increase from 1.8 in 2014. We are concerned, although the increase is quite marginal. Just this year alone, we lost 22 lives at work. That is 22 too many. In fact, every fatality is one too many.
  43. Accidents can be prevented. Hence, I agree with Mr Melvin Yong and Ms Thanaletchimi that more needs to be done to raise our WSH standards. 
  44. We will adopt a four-pronged approach to reduce the workplace fatality and incident rate:

    First, raise awareness,
    Second, build WSH capability,
    Third, strengthen enforcement, and
    Fourth, impose heavier penalties. 
  45. My Ministry has put in a large amount of effort over the years to raise WSH awareness among workers, employers and general public. To build WSH capability, we work closely with the industry to assist them in bringing good WSH practices to their workplaces. 
  46. In terms of enforcement, we conduct around 16,000 workplace inspections a year. That is more than 1,300 inspections every month. In the last few months, I have participated in three inspections, and I will continue to do so until I feel that the level of workplace safety reaches a satisfactory level. To strengthen deterrence, my Ministry will be taking tougher actions against recalcitrant employers. We will impose harsher penalties if things do not improve. 
  47. But fundamentally, WSH needs to be driven from the top.
  48. At the very top, we want industry leaders to set the tone and be committed to WSH. Recently I started a series of dialogue sessions with top management from various industries, starting with those that have higher workplace injury and fatality rates. 
  49. My message to them is a simple and sincere one. My Ministry is always ready to work together with the industry to improve safety standards. For those who need help to improve, we will assist them through different schemes. As pointed out by Ms Thanaletchimi, we will also recognise those companies which have achieved good WSH performance because we want to hold them up as a good role model to emulate. However, if companies do not take WSH seriously and flout safety rules despite warning and advice, we will come down hard on them through stiff penalties. We are doing this as a last resort as we have a responsibility to protect our workers to ensure that they work in a safe and healthy environment. 
  50. Mr Melvin Yong is right that some SMEs need more help with WSH training and capability building. Others lack the awareness. We will therefore be launching programmes later this year that specifically cater to them. More details on the WSH capacity building programme will be announced later. 
  51. Sir, I have just outlined key efforts of my Ministry in the area of Older Workers, Low Wage Workers, and Workplace Safety and Health. The Minister for Manpower will now address the remaining issues in his round-up speech.