Speech by Senior Minister of State for Manpower Dr Koh Poh Koon at Committee of Supply 2023
Dr Koh Poh Koon, Senior Minister of State for Manpower
COS 2023 Speech for
Senior Minister of State for Manpower Koh Poh Koon
A1. Mr Chairman, in today’s challenging economic climate, senior workers and Platform Workers require stronger safety nets for their housing and retirement needs, and better protections for their livelihoods.
B. Mandating Basic Protections for Platform Workers
The proportion of Self-Employed Persons (SEPs) has remained steady at 8-10% of the resident workforce. However, with the rise of platform enabled work, Platform Workers has become a fast-growing group of SEPs.
Several members, including Ms Hazel Poa, Mr Liang Eng Hwa, Mr Saktiandi Supaat, and Ms Yeo Wan Ling, highlighted the need to reduce the risks that Platform Workers face during the course of their work, and made suggestions on how to better support them.
Indeed, the Government recognises the precarious nature of platform work.
Unlike typical SEPs, Platform Workers are subject to management control by Platform Companies, and tend to have modest incomes.
This is why in November last year, the Government accepted the Advisory Committee on Platform Workers’ recommendations in full.
CPF Ordinary and Special Account contributions, enhanced representation and work injury compensation for Platform Workers will commence from the second half of 2024.
Other countries are also looking at ways to protect their Platform Workers.
In Spain, the Government passed the Riders’ Law in 2022 that recognises food delivery riders working for digital platforms as employees.
The United States Labour Department proposed a rule that would make it easier for platform workers to be considered as employees, with the same access to benefits and federal labour protections.
While the UK has no Platform Worker-specific legislation, their Courts have ruled on Platform Workers’ status using the case law approach.
In Singapore, instead of simply designating Platform Workers as employees or leaving it to the Courts to decide on a matter of policy, we have taken a carefully considered Tripartite approach to provide three specific areas of legislated protections for our Platform Workers.
Over the course of wide-ranging engagements by the Advisory Committee that lasted for over a year, Platform Workers and Platform Companies emphasised that the flexible nature of platform work was a key feature of the ecosystem that should be preserved.
Platform Workers desire the flexibility to choose when and how much they want to work;
Platform Companies need the flexibility to efficiently match the supply and demand of labour to meet consumer needs.
Simply designating Platform Workers as employees would constrain this flexibility and autonomy that both the workers and companies desire.
Our approach strengthens the protections for Platform Workers while retaining the advantages of platform work, so that the platform ecosystem can remain sustainable in the longer term.
This is our unique Tripartite approach.
Since the Government’s acceptance of the recommendations, we have made good progress working through complex issues with our key stakeholders, including tripartite partners, Platform Workers, and Platform Companies. Let me provide an update.
We started a new Platform Workers Work Injury Compensation Implementation Network (PWIN) to look into how the existing Work Injury Compensation system for employees can be adapted to reap its benefits, such as adequate coverage and expeditious claims, while taking into consideration the unique features of platform work.
Ms Hazel Poa and Ms Yeo Wan Ling spoke about the need to address concerns on the housing and retirement needs of Platform Workers.
In principle, Platform Workers of the same age and income as employees should be able to achieve a similar level of retirement adequacy through their CPF savings, if they have worked the same number of years.
However, unlike employees, Platform Workers only make MediSave contributions on their own and do not receive CPF contributions from Platform Companies today.
Hence the Committee recommended aligning CPF contribution rates by Platform Companies and Platform Workers with that of employers and employees respectively.
This will help Platform Workers build up their savings in their CPF Ordinary and Special Accounts, on top of their MediSave Accounts.
It also ensures a level playing field for all companies operating in the same field in Singapore and allows Platform Workers to receive similar basic protections as employees.
This alignment will be gradually phased in, starting from the second half of 2024. It will be mandatory for the cohort of Platform Workers below 30 years old in the year of implementation, meaning those born in or after 1995.
In fact, a study by the Institute for Policy Studies (IPS) found that younger Platform Workers expressed stronger preference for additional CPF contributions to help meet their housing needs, as they were more likely to have housing obligations, or plans to buy a house.
One of the Platform Workers IPS spoke to as part of their studies last year was Hamza (not his real name), who had to fork out a large amount of cash for his new house just when he first switched to private hire driving.
This caught him off guard. He felt it would have been less of a concern for him if he had a job that provided CPF contributions.
Once the Committee’s recommendations on CPF have been implemented, Platform Workers like Hamza will be able to tap on the additional CPF contributions to the Ordinary Account to pay for their housing loans instead of using cash.
We hope that this will help to relieve the stress felt by many younger Platform Workers on servicing their housing loans.
Older Platform Workers born before 1995 can opt in for CPF contributions. To Ms Hazel Poa’s question, the decision to opt in would not be reversible.
Platform Workers today have a concession to opt in for CPF, which is a choice that employees do not have.
Staying committed to these CPF contributions and allowing the earnings to accumulate interest over time is what will help these workers to develop housing and retirement adequacy.
Furthermore, in discussions with Platform Companies, it would be complex and add to compliance cost if Platform Workers are allowed to opt out after opting in. This is the feedback we get from the implementation discussions we have with these companies.
We strongly recommend that older cohorts of Platform Workers opt in, as they can similarly benefit from having additional contributions by the Platform Companies to build up their retirement nest egg.
In fact, with the additional CPF contributions from Platform Companies, Platform Workers aged above 65 will be able to receive the same level of CPF contributions as employees of the same age, without having to make additional CPF contributions themselves.
Like employees, Platform Workers who earn between $50 and $500 per month will also be able to receive CPF contributions from Platform Companies without having to make CPF contributions themselves.
Companies, workers and consumers all recognised the need for more protections for Platform Workers during our engagements with them. But there were concerns about the cost impact of the recommendations.
Ms Hazel Poa will be happy to note that the Government intends to phase in the additional CPF contributions evenly across 5 years,
at around 2.5 percentage points per year for Platform Workers
and 3.5 percentage points per year for Platform Companies.
This will help to address their concerns and smoothen the transition.
We will calibrate this further if necessary.
Providing transition support to Platform Workers and aligning Workfare Income Supplement (WIS) framework for Platform Workers with WIS for employees
Platform Workers are likely to see an increase in their total earnings after factoring in additional CPF contributions from Platform Companies. At the same time, I know that some Platform Workers are concerned about the impact of the CPF changes on their take-home pay.
This is why we will provide transitional support targeted at lower-income Platform Workers earning up to $2,500 a month who see an increase in their CPF contribution rates, as DPM announced during Budget. I hope this addresses the concerns from Ms Hazel Poa, Mr Liang Eng Hwa, Mr Saktiandi Supaat and Ms Yeo Wan Ling.
In addition, Platform Workers who align their CPF contributions to employees earlier will receive stronger support.
In the first year, we will offset 75% of the additional contribution the Platform Worker makes to the Ordinary and Special Accounts.
The offset will taper down gradually over the next 3 years of the phase in period for CPF contribution.
And to Mr Liang Eng Hwa’s appeal for the Government to support Platform Workers with reemployment and reskilling, I would like to assure him that regardless of how long Platform Workers decide to stay in platform work, we will support those who wish to transit to other sectors, through the Career Conversion Programmes which provide salary and training support to employers to reskill new workers, and the Jobs and Skills Centres, which provide career coaching and advice, both of which Minister had mentioned earlier on in his speech.
Once the CPF contribution rates of Platform Workers have been fully aligned with that of employees, we will also permanently increase Workfare payments for these Platform Workers to match those of employees.
This means that eligible Platform Workers could receive up to $4,200 per year,
an increase from $2,800 per year today,
with 40% given in cash compared to the 10% today.
Their increase in Workfare payments will be fully in cash.
From the second half of 2024, all Platform Workers eligible for WIS will also start to receive monthly instead of yearly WIS payments. We will be able to do so by then, as Platform Workers’ CPF contributions will be made more regularly, instead of the current arrangements in which they receive WIS on a yearly basis only after they declare their Net Trade Income and made the required MediSave contributions. So,as a result of a more regular contribution, we will be able to have a mechanism to give WIS more regularly as well.
The above measures will mitigate the concerns in take-home pay while ensuring Platform Workers receive a significant boost in their retirement savings.
Take for example a median income Platform Worker who turns age 30 in 2024 and opts in from the start for the CPF contributions.
Based on our estimates, he can use about $450,000 in CPF savings by age 65 for his housing and retirement needs.
Addressing potential discrimination against Platform Workers who opt in
In my engagements with Platform Workers, they also raised concerns about Platform Companies discriminating against those who opted for CPF, by assigning less jobs to them.
The Tripartite Committee on Workplace Fairness has, in its recently released interim report, recommended that the Tripartite Guidelines on Fair Employment Practices (TGFEP) be enhanced to provide clarity that intermediaries, such as Platform Companies, should treat contracted workers fairly.
What this means is that Platform Companies must not discriminate when assigning work.
MOM will investigate any unfair practices.
This is an assurance we want to give to all workers if you have this concern.
While the impact of discrimination on earnings has been top of mind for Platform Workers, in my engagements with them, many also raised concerns about issues such as working conditions, earnings, safety at work and timely dispute resolution with customers.
A prevalent sentiment amongst these workers, is that they are often not accorded due recognition on their feedback and concerns.
Addressing these issues requires a balanced relationship between Platform Workers and Platform Companies. Platform Workers should be provided a clear representative voice to surface their concerns to maintain industrial peace and harmony within the platform ecosystem.
This relationship must be premised on Singapore’s unique approach of tripartism that encourages consultation, open communication and conciliation.
The ability for Platform Workers to represent themselves and negotiate for their interests is critical as the industry continues to evolve and business models continue to change.
In other countries like the UK and Spain for instance, unions have entered into collective agreements with platform companies to negotiate better working conditions, in areas such as earnings, grievance handling and safety.
In Singapore, currently, there are associations that represent these platform workers, but they are not formally recognised within our industrial relations framework and therefore lack the mandate to negotiate on their behalf.
While other jurisdictions have taken the approach of allowing platform workers to unionise in the same way that employees do, we recognise that the platform sector is distinct from traditional employment sectors.
For instance, unlike employees, Platform Workers multi-home on different App platforms and are more geographically dispersed and transient. This has implications on how they can organise themselves and how their representatives are chosen.
The platform economy is also dynamic. Business models can evolve rapidly, and this has implications on what both parties can negotiate on.
Therefore, the representation framework has to be suited to the needs and characteristics of the platform sector.
A Tripartite Workgroup (TWG), comprising our tripartite partners, representatives from Platform Companies and existing Platform Worker associations, is currently in discussions to determine how a representative body can formally seek mandate to represent Platform Workers collectively, through a framework that is backed by law.
This tripartite set-up was a deliberate move.
The TWG was designed as an avenue for tripartite partners to co-create a new framework.
Through this process, they develop shared ownership of the eventual framework and more importantly, build mutual trust.
This is fundamental to fostering harmonious industrial relations in the platform space, which has been a core strength in Singapore’s labour landscape.
We need to cultivate this same spirit of Tripartism in the platform ecosystem.
The discussions are making good progress and the tripartite partners have been guided by three key principles.
First, stakeholders agree to uphold the spirit of Tripartism,
which has achieved good outcomes for businesses and workers,
and can also help the platform sector evolve sustainably
to benefit both Platform Companies and Platform Workers.
Second, stakeholders recognise that while the current representation framework in the employment space works well and is a useful reference, the platform space is different from regular employment, and the representation model will need to be adapted accordingly.
Third, stakeholders agree that the representation framework should be flexible enough such that individual representatives of Platform Workers and Platform Companies have the maximum space to negotiate and find win-win outcomes that are fair to all parties. Exercising good sense and goodwill is key to this endeavour.
We will provide further updates once the TWG has completed its work in a few months.
Implementation of recommendations
Mr Chairman, strengthening protections for Platform Workers will require a whole-of-community effort.
These decisive moves are necessary for a more inclusive society.
Each stakeholder is already primed to play a part to safeguard the interests of Platform Workers today, so that they can be better prepared in the face of future economic uncertainties.
Platform Workers themselves will need to set aside savings for their component of CPF contributions, and they will in turn receive contributions from Platform Companies who tap on them for labour.
Singaporeans, as consumers, are willing to bear increases in costs to platform services, knowing that their contributions will make a difference to enhance protections for Platform Workers.
The Government will implement the recommendations in stages over the next few years and provide transition support to allay impact to the platform ecosystem and to consumers. This is how we build a social compact and engender a more inclusive society.
As Ms Denise Phua and Mr Saktiandi Supaat pointed out, there are other groups of SEPs who have greater control over their own business models and are not subject to similar levels of management control as Platform Workers, but who also face unique challenges over the course of their work.
We will continue to review if there is a need to go beyond encouraging SEPs to make voluntary contributions to their CPF accounts, taking into account the needs and challenges of SEPs, as well as the nature and context of their work arrangements.
As a diverse group with different needs, support to SEPs is usually tailored to the needs of the sectors they function in.
Specific to Ms Denise Phua’s question on the support for arts and sports SEPs, MCCY will share more about initiatives to better support their professional needs in their COS speech.
C. Sustaining Employment Opportunities and Retirement Adequacy for Senior Workers
Next, I would like to focus on our efforts to support our mature workers.
With better health and life expectancy, more seniors are capable of remaining in productive employment and supporting their own retirement.
Hence, over the last few years, we have put in place structures and policies to support senior workers who wish to work longer, and to achieve stronger retirement adequacy while doing so.
Through these efforts, our senior resident employment rate has remained healthy and even increased despite the economic turbulence in the past few years of the pandemic.
Between 2019 and 2022, the employment rate rose
from 67.6% to 70.6% for seniors aged 55 to 64,
and from 44.6% to 47.5% for seniors aged 65 to 69.
This places our employment rate at 11th and 4th respectively when compared with OECD countries.
This is comparable to other Asian countries such as South Korea.
We will seize this momentum and continue to strengthen support for our senior workers who wish to continue working.
Initiatives to support senior workers and companies that employ senior workers
Let me continue my speech in Mandarin.
I thank Mr Desmond Choo, Mr Heng Chee How, Mr Liang Eng Hwa and Mr Sharael Taha for their support for these efforts that will benefit senior workers. Ms Jessica Tan also asked how many enterprises have taken up both schemes and the roles those senior workers took on. The SEC has in fact benefitted almost 100,000 employers that hire over 461,000 senior workers since it was introduced.
At the same time, more than 5,700 employers successfully applied for the Part Time Re-employment Grant (PTRG) and committed to implementing progressive senior employment policies, which we expect to benefit over 45,000 senior workers.
Employers from a wide variety of sectors have benefitted from both schemes, such as Wholesale and Retail Trade, Accommodation and Food Service Activities, and Manufacturing, and these employers offer a wide range of job roles.
Mr Leslie Basil Danker is one of our senior workers who has been with the renowned Raffles Hotel Singapore for 51 years. He has been the beneficiary of the PTRG.
Since starting out with the maintenance department in 1972, Mr Danker has taken on various events management roles and supervisory responsibilities.
Today, he is the Mentor Resident Historian at Raffles Hotel, working on a part-time basis.
This arrangement allowed him to wind down and spend more time with his family, while continuing to share the hotel’s rich history with guests through guided tours. Perhaps some of you might be on his guided tours one of these days.
His detailed knowledge of the hotel’s roots came to the fore during the hotel’s landmark restoration process from 2017 to 2019, where he worked closely with engineers, architects and interior designers for the undertaking of the renovation.
This is an excellent example of how the PTRG has benefited both the senior worker and the employer!
Applications for PTRG will reopen in April. We hope that employers will leverage the resources provided through these schemes to put in place progressive practices.
Our tripartite partners have also been working with companies to improve senior workers’ employability. SNEF (Singapore National Employers Federation) introduced a guidebook to help employers conduct Structured Career Planning, and NTUC is working with employers to adopt Structured Career Planning through their Company Training Committees. Structured Career Planning provides employers with a process to proactively map out future business needs, identify the skills that senior workers need to develop to grow with the company and support them in acquiring these skills. This not only protects our senior workers’ employability and extends their career longevity, but also helps employers retain an experienced pool of workers amidst a tight labour market.
Ensuring Retirement Adequacy for Senior Workers
As Mr Abdul Samad, Mr Heng Chee How and Mr Mohd Fahmi Aliman pointed out, retirement adequacy is another key area that we support senior workers on.
As DPM Wong has announced at Budget, we are committed to raising the CPF contribution rates for senior workers.
We have implemented the TWG-OW’s recommendation to increase senior workers’ CPF contribution rates in 2022 and 2023, and will continue to do so in 2024 to strengthen their retirement adequacy.
With this, we will have completed the scheduled increase in CPF contribution rates for workers aged 65 - 70.
For those between 55-65, we will press on ahead. Mr Abdul Samad would be glad to hear that by the time we complete the full increase around the year 2030,
those aged 55 - 60 will have their CPF contribution rates equalised to that of younger workers,
and a 55-year-old member today can expect monthly retirement pay-outs to be boosted by about 10%.
We will also continue to support employers with the CPF Transition Offset and I want to thank our tripartite partners for their support and consensus for this very important move. These recommendations are necessary for senior workers who continue working to enter retirement with more confidence.
Mr Chairman, we have put in place measures to uplift our platform workers and senior workers. We will need to work closely with stakeholders to implement the initiatives I have shared about and will count on support from fellow Singaporeans to mutually reinforce an inclusive and strengthened workforce where no one is left behind. Because as my sisters and brothers from the unions would say - Every Worker Matters. Thank you.