Ministerial Statement by Dr Tan See Leng, Minister for Manpower for the Parliament Sitting on 6 July 2021
Dr Tan See Leng, Minister for Manpower
- In his statement, Minister Ong Ye Kung has explained why FTAs are critical to Singapore, as well as how they have helped us to reap significant benefits for Singaporeans. The same goes for our openness to foreign workers. We take the same approach when we decide on foreign workers coming to work in Singapore: how does it help Singaporeans?
- At the start of the 1970s, our GDP was $20 billion. Now, the economy has grown to $454 billion. Foreign workers account for around a third of our workforce. More than 2.3 million locals are employed, and our resident unemployment rate is 4.1%, half of what it was in 1970.
- We need to understand the real challenges we face in order to have a constructive debate on the way forward. And that is why we are having these two Ministerial Statements.
- I will explain with data and details exactly how our foreign workforce policies are implemented, in order to benefit Singaporeans.
- I will also give our perspective on the real challenges we face, and the real solutions they demand.
FTAs and ICTs are a Red Herring
- Assoc Prof Jamus Lim and Mr Leong Mun Wai asked for the number of intra-corporate transferees, professionals and dependants that come in through CECA.
- Let me reiterate a point Minister Ong has made, which is that none of our FTAs, including CECA, gives intra-corporate transferees, or ICTs, unfettered access to our labour market. They all have to meet MOM’s prevailing work pass criteria.
- Under the ICT route, the employer does not have to advertise on MyCareersFuture.sg, but the ICTs are subject to additional checks on their seniority, employment history, and work experience. They are also subject to more conditions in their eligibility to bring in dependants, and apply for permanent residency or future employment in Singapore. And if they have brought in dependants, the dependants do not have automatic rights to work here. They can only do so if they qualify for a work pass on their own merits.
- Thus, and as mentioned by Minister Ong, the total number of ICTs has consistently been very small. In 2020, there were only about 4,200 ICTs. Of these, about 500 were from India. That is 500 out of 177,000 EP holders in Singapore.
- As for the number of “professional visas” issued, there is no such category. As Minister Ong explained, all 127 categories of professionals under CECA currently come in under our regular work pass framework.
- The PSP has made Indian nationals coming in through CECA a focus of contention. I am afraid the PSP has been barking up the wrong tree. The number of ICTs coming in under our FTAs, and in particular CECA, is very small relative to our total number of EPs. I suggest we set aside this red herring and move on to the heart of the matter.
Finding Real Solutions to Real Challenges
- The heart of the matter is this. How do we as a small country devoid of any natural resources remain open to global talent to create opportunities for Singaporeans, while managing the attendant social repercussions? Singaporeans are pragmatic, and understand that we need to remain open to global talent. However, they also face real challenges. In particular, they are worried about three things. First, that the growth in EP holders has come at the expense of local PMEs. Second, that some workplaces have become more concentrated with a single nationality. Third, that there may be discrimination against local job seekers and employees. I understand and empathise with these concerns and anxieties.
- I would like to address each in turn, to lay out the facts and share our approach in dealing with them. I am not suggesting that our current approaches are perfect. We will continue to refine them in the light of experience, always with a focussed view to having a system that can deliver good jobs, livelihoods, and a thriving economy for Singaporeans.
- I hope that this will enable us to arrive at a better understanding of the choices and trade-offs that we constantly have to make.
Competing with Foreign PMEs
- First, on the increased competition from foreign PMEs.
- In Singapore, we have one of the best local talent pools in the world. But it is insufficient to meet all the needs of the investments that generate the quality and range of jobs we have today. And when we bring in new investments, we will sometimes need to attract foreign expertise, while we build up local capabilities.
- Ms Hazel Poa, Assoc Prof Jamus Lim and Mr Saktiandi Supaat asked for the breakdown of local and of foreign workforce numbers by sector.
- Given the issue at hand, let me focus on EPs. As of 2020, we have around 177,000 EPs in our overall workforce. Manufacturing and Construction account for about one-tenth. The rest are in the Services sector – looking at the top three sub-sectors, Infocomm and Professional Services account for around one-fifth each, while Finance accounts for another one-seventh.
- Looking at the change from 2005 to 2020, the total number of EPs has increased by around 112,000. Over this period1, the number of local PMEs increased significantly by more than 380,000.
- There have been questions asked, both inside and outside of this House, whether most of the growth in local PME jobs was accounted for by Singapore Citizens. If you look at our unemployment statistics, we provide the figure for Singapore Citizens. The citizen unemployment rate over the past decade has been consistently low at around 3%, hence the answer must be yes. For those who have asked how much of this local PME job growth has gone to “born and bred” Singaporeans, notwithstanding the divisive intent of such questions, let me state simply that the majority of this growth over this past decade went to Singaporeans born in Singapore. As we have shared in response to a written PQ yesterday, 87% of Singapore citizens were born here.
- Much attention has been placed on the Finance and Infocomm sectors, which alone accounted for 40% of the increase in EP holders. This is significant.
- But what is even more significant is that these two sectors saw even stronger job creation for local PMEs.
- In Infocomm, the number of EPs increased by around 25,000. But the number of jobs created in this sector for local PMEs was greater at around 35,000.
- In Finance, the number of EPs increased by around 20,000. But the number of jobs created for local PMEs was even greater at around 85,000.
- We focused on these two sectors because they bring good quality jobs, and Singapore could carve out an advantage and value-add significantly in these areas. As a result, there has been significant job creation.
- But as we attract foreign banks and infocomm companies to create jobs here, they also need foreign workers, to complement the Singaporean workforce.
- I want to deal with a fundamental misconception, which lies at the heart of some of the things being misconstrued. When a company comes in to invest, and say it needs 3,000 people, it may find about 2,500 of these talents in Singapore, but it will need to supplement this 2,500 and bring in 500 from overseas. If we objected and insisted on the balance 500 to all come from Singapore regardless, we cannot expect the investment to come in, and these 2,500 jobs for locals would be greatly compromised.
- The simple point is that we while we have a good Singaporean talent pool, our pool is not large enough to fulfil all of the needs – the breadth and the depth – of these enterprises. And often foreigners bring in skills which complement the Singaporeans’ skills. The misconception is that if we said “no” to the foreigners coming in, the jobs they would have taken will therefore all go to Singaporeans. How do I know this is a misconception? Today we still have about 22,000 PME jobs that are not filled. Companies are desperate to fill these jobs, and would love to take in Singaporeans if they could, because they would be more productive. So why are these jobs not filled till now? I would invite Mr Leong to think about that, and deliberate more deeply.
- Mr Leong Mun Wai also suggests that doing away with foreigners will reduce the displacement of our older PMEs. I wish that were so, but the private sector and real economy do not operate this way. There will always be some displacement of PMEs, whether older or younger, in any economy. Why? Because the business world is never static – industries change, companies relocate, companies downsize etc. Not having foreigners does not change this.
- What matters most is whether we are able to find jobs for these displaced PMEs. To do this, we need new companies to start up in Singapore, new investments, expanding MNCs. And so far, we have done credibly in this regard – new jobs created have far exceeded the jobs lost, our unemployment rate has been kept low, and the re-entry rates for displaced PMEs are high.
- That said, it is not always possible to find every single displaced PME an equivalent job in the same industry, especially if there is a skills mismatch – an IT sales manager who loses his job may not find a job as a cybersecurity expert. But we do our best to help them find jobs in other growth sectors.
- However, if we tell companies which want to invest in Singapore that they can only employ Singaporeans, or first employ Singaporeans who have been displaced, regardless of skills, the answer will be simple: they just will not come to Singapore. They will hire Singaporeans, but they also need the flexibility to hire the best available talent, from around the world to complement the Singaporeans.
- I understand what the displaced Singaporeans are going through. We are doing our best to help you and your families. But it is important that we diagnose the situation correctly, tackle the root cause and not just treat and relieve the symptoms. Then we can identify the right solution and provide precise and appropriate treatment.
- The fundamental question is how to strike a balance between ensuring that businesses have access to skills and manpower to grow and succeed, while creating opportunities for local workers to grow and progress.
- Our strategy to achieve this has always been two-pronged – ensuring our workers can compete fairly, and can compete strongly.
- The first is to make sure that our local workers can compete fairly. We do this through our work pass controls.
- Our view is that foreign manpower should not come to Singapore just because they are cheaper to hire than locals. They should complement and not displace the local workforce. They should bring in extra skills to help the companies, and create more Singaporean jobs.
- In line with these objectives, at the Work Permit and S Pass level, we have quotas and levies in place to regulate foreign worker numbers. We have been progressively tightening quotas and raising levies to reduce manpower reliance, spur job re-design and push for quality growth. Over the past decade, we have steadfastly held our course, despite numerous calls from businesses to relax our rules. We commit to productivity-led growth because we believe many of these jobs have the potential to be transformed into good jobs that provide higher real wages and rewarding careers for Singaporeans.
- For EPs, we do not impose quotas or levies because there is fierce competition for global talent and worldwide shortages in areas such as technology and digital skills. A quota would be a hard cap that would limit our ability to compete at the high-end of the global economy, while for a levy to have any effect on EP numbers it would have to be set very high and would substantially increase business costs. Instead, we have focused on setting and raising the quality bar for EP holders, through requirements on salary and qualifications, to make sure that the EPs who come in are at the right level and bring the right skills, necessary expertise, and experience to contribute significantly to our economy.
- Last year, we raised the EP minimum qualifying salary in two steps, from $3,600 to $3,900, and then to $4,500. The salary requirement increases with age, which reflects the candidate’s experience and length of time in the workforce, in order to provide sufficient protection for our mature workers. We also introduced a higher bar of $5,000 for applicants in the Finance sector to take into account the higher wage norms in that sector. We will continue to review and revise these thresholds regularly, to ensure they remain appropriate as our economy develops and our skill and income levels go up.
- Mr Leong has previously raised in this House his concern that foreign EPs are cheaper to hire than locals, simply because their employers do not make CPF contributions. Mr Leong fundamentally misunderstands the purpose of the CPF. It is set aside for our retirement needs, and can also be used for housing. As foreign PMEs are not working in Singapore on a permanent basis, we are not responsible for their retirement adequacy or home ownership needs. Hence it does not make sense for us to extend CPF coverage and benefits to them. Fundamentally, our CPF system is designed to benefit our resident workers, not to help attract or deter foreigners. Instead, when reviewing the qualifying salary to maintain a level playing field, we take into account CPF contributions as part of the cost to employers.
- Mr Leong did not suggest that employers should pay foreigners CPF too, perhaps because he realises this. Instead, he says he wants to impose a $1,200 levy on EP holders. But as I just explained, a levy is not the right way to manage the population of foreign PMEs. It should be managed by setting the right salary level for entry into Singapore.
- Ms Hazel Poa has asked for numbers on dependants in Singapore. This is relevant, insofar as they are competing with locals for jobs. But as shared previously, the vast majority of dependants do not work during their stay in Singapore. The number of Dependant’s Pass (DP) holders who have sought employment in Singapore via a Letter of Consent (LOC) constitute only about 1% of all Work Pass holders. In fact, Members would remember that we regularised the work arrangements of DP holders in May this year – DP holders who wish to work in Singapore can no longer obtain an LOC. Instead, they will have to qualify for a relevant work pass on their own merit, and go through normal work pass routes.
- There will always be calls from workers to tighten our foreign workforce policies further, just as there will always be calls from businesses to relax them. It is the constant tightrope that MOM and MTI have to navigate delicately amidst highly competitive global markets for both investments and talent.
- There are limits to how far we can tighten our controls, without eventually hurting Singaporeans. With remote working becoming more prevalent, companies increasingly do not need to site their manpower in Singapore. In fact, we may find more businesses simply choosing to move entire business functions offshore, if it becomes too difficult, onerous or expensive to operate here. Singaporeans will end up losing their jobs too.
Helping Singaporeans Win
- That is precisely why the second prong of our approach – ensuring that Singaporeans can compete strongly – is just as important. In an open and globalised labour market like ours, competition is intense and stiff. There will be some Singaporeans who are displaced from their jobs, and need to find replacement jobs. This happens not only because of competition from foreign workers, but because of other factors like technological change and industries phasing out. This is why the government invests so heavily in retraining and skills development, so that displaced workers can gain new skills and reinvent themselves, either by doing a different job in the same industry, or transiting to another industry altogether. In fact, as some industries enter the sunset phase, we have to help them pivot and transform even faster. That is the purpose of the 23 Industry Transformation Maps. As Mr Lim Swee Say used to say, in Singapore, we cannot guarantee your employment, but we will work very, very hard to ensure your employability. Upgrading skills and staying relevant is ultimately the workers’ best form of protection.
- We do this through our system of education and training, that goes beyond formal schooling. We do this via SkillsFuture. We also help displaced Singaporeans through job facilitation and support.
- COVID-19 has been an especially difficult time for many Singaporeans. Therefore, we have stepped up support.
• As announced at Budget this year, we have extended the SGUnited Jobs and Skills Package (SGUJS). MOF has set aside an additional $5.4 billion to support the hiring of 200,000 locals through the Jobs Growth Incentive (JGI) and provide 35,000 traineeships, attachments and training opportunities this year. These programmes are in addition to long-standing programmes such as Workforce Singapore’s (WSG) career conversion programmes.
• To make our career matching services even more accessible to locals, WSG has set up SGUnited Jobs and Skills Centres in all 24 HDB towns. The Retrenchment Taskforce, led by WSG and supported by NTUC’s Employment and Employability Institute, reached out to nearly all retrenched local workers in 2020. Of those who took up the Taskforce’s employment facilitation assistance, two-thirds of them have found jobs within 6 months.
- Ms Mariam Jaafar asked about the effectiveness of different capability development schemes in building a local talent pipeline. As of end-April 2021, more than 110,000 locals have been placed into jobs and skills opportunities as a result of the SGUJS Package. Within the first three months of implementation, the JGI supported 27,000 employers who hired 130,000 new locals.
- With the support of employers and the unions, our policies have preserved jobs for Singaporeans amidst the crisis of our generation. The numbers speak for themselves. Total employment in 2020, excluding migrant domestic workers, shrank by 166,600. Foreign employment took the most hit, shrinking by 181,500. Resident employment, on the other hand, managed to expand by 14,900 despite the downturn. We are not quite out of the woods yet and there is more work yet to be done, but let us also build on what we have collectively achieved.
- Second, nationality concentration amongst foreign PMEs.
- Mr Leong Mun Wai and Ms Hazel Poa have asked for the nationality profile of our work pass holders and their dependants, from China, India, USA and Australia. Ms Hazel Poa has asked for even more granular data on the sector and jobs commonly held by these same nationalities.
- Mr Speaker, for foreign policy reasons, we do not publish detailed statistics on our foreign workforce, especially by nationality. We are not aware of any country that reports at the level of granularity requested. Nevertheless, we recognise that if misconceptions continue to spread, in spite of all our attempts to address them in other ways, even more damage will be done. So I will share some numbers, to address misconceptions and allow for a meaningful engagement on the issue at hand.
- The top nationalities that comprise around two-thirds of our EP holders has been consistent since 2005 – namely, China, India, Japan, Malaysia, Philippines, and the UK. The interest is really in Indian EP holders. The proportion of EP holders from India has increased from about one-seventh in 2005 to a quarter in 2020. In comparison, the proportion of EP holders from China has remained relatively stable across this time period.
- Is this the result of more favourable treatment for Indian EP holders due to the CECA? The answer is No.
- As I shared earlier, all work pass holders in Singapore have to meet the same criteria before they are allowed to enter our labour market. There is no differentiation based on nationality.
- Rather, these numbers reflect trends in the global demand and supply of tech talent.
- The larger increase in Indian EP holders compared to other nationalities is driven by the rapid growth of our digital economy. As every sector seeks to be digitally enabled, their need for technology talent has grown significantly.
- We do not have enough locals to fill the jobs available. In the Infocomm sector alone, 6,000 jobs currently remain unfilled. Companies decide which overseas countries they want to bring in their manpower from. Based on their needs, and the availability of the required talent, China and India are two of the largest suppliers of tech talent. But China has sprouted so many unicorns, and has a huge demand of its own, so many Chinese talent decide to stay in China to work.
- India’s talent, on the other hand, continue to look outwards. They also have the advantage of being English speaking.
- This phenomenon is not unique to Singapore. It is global.
- India is currently the largest country of origin for international migrants. In 2020, it accounted for 18 million international migrants, up by 10 million from 2000. India has grown to become the second largest source of immigrants in the US, and the third largest in the UK, two countries which are also heavily invested in developing technological capabilities. Our companies are both creators of technology as well as adopters of tech talent.
- Given our shortage of manpower, even if the workers don’t come from India, they will come from somewhere else. I assume and hope that Mr Leong is not objecting to Indians per se. The point is: are they helping us grow the economy, and create Singaporean jobs? The answer is yes.
- It is not surprising that this increasing concentration has caused some social frictions, and anxiety to Singaporeans. But in some ways, this is understandable and to be expected, because EP holders are transient. They work in Singapore for a number of years and contribute to our economic growth. Apart from some EP holders who settle down and become PRs or Singapore Citizens, most EP holders work here a few years, and either return home or move on elsewhere. So it is to be expected that they are different, and we feel they are different. This is the challenge of living in our multicultural society and a globalised world, as Minister Lawrence Wong spoke about recently.
- This is something that has to be constantly monitored and managed. Indeed, when a single nationality becomes too prominent, that can have a disproportionate impact on our existing culture, or cause Singaporeans to feel less at home in their workplaces or neighbourhoods. In the 2000s, we experienced a similar situation when the share of PRCs in our foreign workforce increased significantly, before tapering as China’s growth took off. Both then and now, the larger numbers did not go unnoticed, and created frictions within our communities.
- We understand these concerns, which is why we review and update our work pass policies regularly. We seek to balance the needs of our economy with the needs of our society. We have to bring in the talent and skills to keep our economy growing, while tracking that the number of foreigners in our midst stays at a level we are able to cope with, and manage the social frictions that will arise from time to time. It is a series of trade-offs. It is not a once-off adjustment, but a constant balance that we have to continuously monitor and get right.
- Today, the government does monitor the concentration of nationalities at the firm level. Mr Leong Mun Wai asked whether the threshold percentage of a company's workforce from a single nationality is a criterion for the Fair Consideration Framework, or FCF, Watchlist. The answer is yes. In shortlisting firms, MOM looks at whether they have a high concentration of foreigners from a single nationality source, in addition to a high share of foreign PMETs relative to their industry peers.
- However, being flagged in the FCF Watchlist is not evidence that the firm has committed any wrong. Potentially it could be a sign that unfair hiring may be occurring. The purpose of the FCF Watchlist is to have the Tripartite Alliance for Fair & Progressive Employment Practices, or TAFEP, actively engage these companies to review and improve, where needed, their hiring practices and human resource capabilities. The majority of firms are cooperative, respond positively, and exit the Watchlist. For the small minority that are unresponsive, they can have their work pass privileges curtailed or suspended for a specific time period, which is not a small penalty.
- This is an effective process, albeit resource-intensive. We currently have about 400 firms placed on the FCF Watchlist, and there are limitations to the reach and number of firms that we can put through this process. We will be looking to complement and strengthen the FCF Watchlist with a more scalable approach.
- As mentioned in MOM’s Committee of Supply speech this year, we are exploring further refinements to our EP framework. Today, we primarily rely on salary as a gatekeeper to select complementary talent, because it is easy to understand and administer. We have been exploring additional refinements to achieve our objectives of a strong Singaporean core, complemented by a diverse foreign workforce, and will share more details in due course.
- Last but not least, discrimination.
- We know that not all employers play by the rules. We have zero tolerance towards discriminatory hiring practices. All employers are expected to comply with the requirements of the FCF, and not discriminate on characteristics that are not related to the job.
- When it comes to hiring foreign PMEs, employers must first advertise on MyCareersFuture.sg, and consider all candidates in the local workforce fairly, before submitting a work pass application. TAFEP investigates potential cases of pre-selection based on proactive surveillance using data analytics, as well as complaints from the public.
- Since its introduction in 2014, MOM has been progressively enhancing the FCF. In January 2020, we stiffened penalties further for discrimination cases, so errant employers can have their work pass privileges suspended for at least 12 months, and up to 24 months.
- Last year, we extended the FCF job advertisement requirement to cover S Passes as well as EPs. We doubled the minimum advertisement period from 14 days to 28 days to give local jobseekers more time to respond to job openings.
- Mr Liang Eng Hwa has asked about the results of our efforts. Over the past three years, TAFEP has handled an average of 170 nationality discrimination cases arising from complaints annually. The top three sectors making up about half of the complaints are wholesale and retail trade, administrative and support services, and other service activities. These cases are investigated by TAFEP and where warranted, referred to MOM for enforcement.
- Going forward, we will do more to clamp down on egregious employers with discriminatory employment practices. Several MPs like Mr Louis Ng, Mr Patrick Tay and Mr Vikram Nair had earlier suggested strengthening our levers to give more bite to our Tripartite Guidelines on Fair Employment Practices. We take these suggestions seriously and have been studying various options.
We will continue to do better, together
- On a fundamental level, the Government’s goal has always been to create a better life and future for Singaporeans. We do that through:
a. Growing the economy, enlarging the pie so that more locals enjoy better jobs and a higher standard of living
b. Tirelessly building up the Singaporean core through a world-class education system and continuous upskilling and reskilling, and
c. Working closely with all the stakeholders involved to stamp out discriminatory employment practices, ensure a fair playing field and protect our Singaporean workers.
- There are careful balances to be made all the time. The Government is intent on keeping this balance right to achieve the goal of creating win-win outcomes for all. MOM will always be both pro-worker, and pro-business.
- This is necessarily a joint effort. The power and the responsibility to make this happen does not lie with the government alone.
- Businesses must be fair and progressive employers. They must win the confidence and trust of their employees and the wider public, by investing in a strong Singaporean core, even as they complement it with a diverse foreign workforce.
- Workers too must adopt a growth mindset and continuously develop their skills. This is the spirit of our pioneers, who were resilient in the face of challenges and daring in new opportunities.
- Unions and Trade Associations and Chambers, or TACs, must continue to serve as multipliers of these positive changes. They help to build the bridge between government and businesses and workers. They have spearheaded important initiatives to help our businesses and workers transform and upskill.
- And members of all parties must take their responsibility as representatives of the people seriously and work towards constructive solutions, and avoid exploiting divisive fault lines.
- This tripartite partnership – between unions, employers and the government – is the real reason why we have managed to succeed over the years.
- We are at a critical inflexion point in our economic development. The pandemic has caused significant economic damage all over the world. We face many challenges in the post-pandemic era, but there are also opportunities if we play our cards right. We have distinguished ourselves internationally with how we managed COVID, and enhanced our trust premium. Many businesses are looking seriously at investing more in Singapore, which will create good jobs, but only if they can get enough foreign workers to supplement our local workforce. If we can bring them in, we can continue to grow our economy for another five to 10 years. But if we lose this opportunity, we will take longer to recover, and the impact will not only be borne by our older workers, and also by our youths who will graduate into the workforce these next few years.
- It is a golden opportunity for Singapore to pull ahead. But if we turn protectionist and make it difficult for companies to hire talent from around the world – then we will lose the opportunity. A business hub means being cosmopolitan, having people from around the world, doing business with the whole world, and creating more opportunities for Singaporeans. That will bring in competition. But if the competition is not here, it will be outside, helping other companies in other countries to beat ours here, and displace our workers.
- Let us work together to continue improving Singaporeans’ lives and building a better future for all.
1Residents data is not available for 2005 as the Labour Force Survey was not conducted in 2005 due to the conduct of the General Household Survey. Hence, data for the closest available period of June 2004 was used for comparison periods that involve the year 2005.