Singapore Government Press Release
Media Relations Division, Ministry of
Information, Communications and the Arts,
MICA Building, 140 Hill Street, 2nd
Storey, Singapore 179369
Tel: 6837-9666
SPEECH BY DR NG ENG HEN, MINISTER FOR
MANPOWER, AT THE COMMITTEE OF SUPPLY DEBATE 2005 – 10 MARCH 2005
PART 2:
MANPOWER CHALLENGES
1.
Mr. Chairman,
MPs have highlighted manpower challenges that have resulted as the economy
restructures, and asked what the government can do to help Singaporeans
overcome these challenges, as well as what opportunities exist for
Singaporeans.
OPTIMISM:
OUR POLICIES ARE WORKING - IMPROVEMENT IN EMPLOYMENT CLIMATE
Job
Opportunities for All
2.
While
competition is tougher with globalization, Singaporeans can face the future
with optimism. The good news is that the sacrifices we have made through wage
restructuring and CPF cuts have made the difference. It has not been a jobless
recovery.
3.
1998 to 2004
were difficult years, but even through this difficult period, net jobs were
added. Last year, preliminary estimates show that overall employment grew by
some 66,200 jobs. Locals took up
two-thirds of these jobs, with the remaining one-third going to
foreigners. These trends indicated that
our policies including our foreign worker policy are working – jobs have been
created for Singaporeans. As the chart shows, this is due to a large part
through the judicious use of foreign workers. In difficult times, less foreign
workers were needed. Indeed their population shrank, while the local workforce
continued to grow, albeit at a slower pace. When the economy rebounded, it
allowed companies access to foreign workers to meet demand. So in both
difficult and good economic circumstances, the majority of jobs went to
Singaporeans.
4.
Overall unemployment has also fallen, to 3.7%
as at Dec 2004. This is a substantial
improvement from the peak of 5.7% in Sep 2003. Better still, the improvements
were generally across the board, affecting most age and educational
groups.
5.
In September
last year, job vacancies rose to three-and-a-half year high. Private sector
companies that were surveyed had about 18,900 job vacancies. This was 5,800
more than a year ago.
6.
As a result most
of our school leavers have found jobs soon after graduation and starting
salaries have been maintained. Last
year, 91% of our polytechnic graduates found employment within 6 months of
completing their examinations. Their average monthly starting
salary for full-time permanent employment was about $1,620. Our ITE students fared extremely well too.
84% found employment within 3 months of completing their examinations, and had
an average monthly starting salary of $1,208. Graduates too from our
universities are getting employed faster. About 90% of NUS and NTU graduates have
already found jobs, with starting salaries of $2,370 and $2,500
respectively. As
for SMU, it reported that its entire first graduating cohort had found work.
FOREIGN
WORKER POLICY
7.
These positive
results even in difficult years tell us that our labour
policies have been flexible enough to adapt to economic challenges. But from
time to time, we will have to adjust the levies and quotas to maintain this
fine balance of access to foreign workers and maintaining jobs for
Singaporeans.
a. Increase in Skilled Foreign Worker Levy to $100
8.
Some MPs have
voiced concerns during the Budget Debate about the announced levy increases,
fearing that this will dampen an economy that is still recovering.
9.
Sir, I want to assure the house that this
increase is justified and will not affect our recovery. In 2004, the stock of Work Permit Holders
increased by slightly above 4% whereas local workers increased by just below
3%.
As the rate of growth of Work Permit holders has been growing faster
than local workers, it is timely to restore the foreign worker levy. This will promote the productive use of Work
Permits. Otherwise the total number will rise disproportionately as employers
bring in more foreign workers than they need. Local wages will be affected.
10.
The increase
will be graduated – from $50 to $80 on 1 July 2005, and subsequently to $100 on
1 January 2006 – to allow time for companies to adjust. I would like to remind
Members that this increase is a partial restoration to previous levels. The
skilled foreign worker levy was $200 in 1996. Foreign worker levy rates were
reduced substantially in 1998 and again in 1999 to help companies tide over the
economic downturn. The new total levy that companies have to pay after the
increase remains a small percentage of overall business operating cost.
11.
There have been
suggestions for a “fencing out” approach for specific industries, rather than a
blanket restoration of the skilled levy rate.
Government is in no position to decide which industry is more deserving
of skilled foreign workers than another. It is more equitable and efficient
overall for the economy for Government to set a single levy rate and let
businesses decide how best to optimise the use of labour.
b.
Increase in Dependency Ceiling for Manufacturing and Services
12.
Let me also
elaborate on the changes which PM had announced in his Budget Statement: in
allowing companies to hire workers beyond the current Dependency Ceiling (DC)
at a higher levy of $500, up to a higher limit.
13.
Sir, I want
members of this house and the public to understand that this specific change is
not to allow all companies more foreign workers. It is really to allow those
companies who have reached their DC to respond to surges in demand, when they
suddenly need more workers than anticipated. Under the old scheme, we either
responded with a flat no if they had already reached their DC, or said yes
after a laborious process where the company went to great lengths to justify
why they needed this temporary increase. This wasted a lot of time and effort
of many parties as companies had to lobby one economic agency after another.
Even after this process, few companies were allowed to hire foreign workers
beyond the DC.
14.
So instead of
this cumbersome system, MOM has decided to use the higher $500 levy to control
use. But this increase will not be unlimited.
From 1 July, the new dependency ceiling, or DC, will go up to 60% for
manufacturing companies, up from 50%. The DC for services companies will also
go up to 40% DC, from 30% DC today.
15.
In essence there
will be a new higher tier above the existing DC. Companies who have not reached
the current dependency ceiling will not be affected by the $500 levy. They will
only be subjected to the new $80 or $100 skilled levy, or the existing
unskilled levy. Some 93% of manufacturing companies and 75% of service
companies who hire Work Permit Holders are operating comfortably within their
DC. So the $500 levy will not affect them. The higher levy only affects the
remaining companies that are operating at their DC and wish to take on more
Work Permit Holders.
16.
I also want to emphasise that this higher tier should be sufficient to
meet the demand of companies. A 10% increase in DC actually translates to a
potential increase of 50% in foreign workers. The DC reflects the number of
foreign Work Permit Holders that a company can hire as a percentage of its
total workforce. As the slide shows, a manufacturing company employing 50
locals and 50 Work Permit holders can now employ up to 75 Work Permit holders
after the DC increase.
17.
Manufacturing
companies will now be able to hire 1.5 Work Permit Holders for every local
worker, up from a 1:1 ratio. I think the use of dependency ratios provides a
clearer picture and my Ministry will move towards using ratios more in our
public communications henceforth.
18.
Business cycles
have become less predictable, and companies need greater flexibility to take
advantage of new opportunities quickly. Ensuring that employers are able to get
the skilled manpower they need will, in turn, help create more jobs for
Singaporeans over time when businesses grow. As the PM said, if too many
foreign workers are hired even with the $500 levy, we will raise the levy to
control numbers. Correspondingly, if few companies use this, it means that the
levy has been set too high and we will reduce it.
c. Better use of manpower in construction - Remove Rigidities in
MYE
19.
The raised DC affects only the manufacturing and service
sectors. The marine industry is not affected as it has a much higher dependency
ratio is at 1 local worker to 3 foreign workers. For construction, while the
ratio is 1:4, the main limitation is the MYE system. The system is too rigid
and does not optimise use of foreign workers.
20.
I
have therefore decided to loosen controls to allow the construction industry
better use of their manpower resource.
21.
Currently, contractors need to produce MYEs
when they renew the work permits of their existing workers and when they take
over workers from other contractors, even if these workers have existing work
permits. With effect from 1 Apr 2005:
d.
Enforcement
22.
Reducing upfront
rules to allow industries to utilize manpower more efficiently is the right
thing to do. But I also understand the concerns about potential abuse of the
system. These
changes are to allow optimal use of manpower. But I would like to caution those
who abuse these relaxations and illegally deploy construction foreign workers
into other sectors. The Ministry will be
doubling the size of the enforcement team from about 70 to 130 in the coming
financial year. MOM will intensify its enforcement efforts to police deployment
of construction workers outside the sector and contractors who violate the law
will be taken to task.
23.
We will not hesitate to punish errant contractors. Current
penalties include a life time ban from employing foreign workers, fines and
jail sentences.
24.
I also want to urge contractors that the well being of
foreign workers also needs to be ensured. Salaries must be paid on time, and
their well being looked after. MOM will educate construction foreign workers on
their rights and act on complaints. We will not hesitate to punish contractors
who abuse their workers.
LONG TERM OUTLOOK
25.
Sir, I like to now move on to medium and long-term challenges. While our
present policies have helped us ride through these few difficult years, we need
to prepare now to face future challenges.
26.
Even after
taking into account the unemployment peak in 2003 due to SARS, we still
averaged about 3.4% over the period 1997-2003, lower than other developed or
developing countries. But over time, as our economy experiences technology-driven
productivity improvements, and shifts to higher value-add activities, it will
require fewer but more skilled workers. Other developed and developing economies
have also faced the same situation. Japan has posted negative employment growth
since 1993. Similarly, whilst Korea, Taiwan, Australia and Hong Kong enjoyed a
slight rebound in employment in recent years, their overall employment growth
trend since 1991 has been negative.
27.
Like other developed countries, fewer jobs will be created for the same
level of GDP growth than in the past.
When we last had 8.0% economic growth in 1995, and 8.2% in 1996, the
economy grew some 109,000 and 103,000 jobs respectively. Last year, with 8.4% GDP growth, our economy
created 66,200 jobs[1].
With slower growth, and lower rates of job creation, unemployment is unlikely
to fall back to the 2% levels of the early 1990s.
28.
For 2005, our
economic growth rate is expected to be within the 3-5% range, well below the
8.4% experienced in 2004. So job
growth this year might not be as strong as 2004, and unemployment would remain
at about 3.5-4.0%. Even at these levels,
our unemployment rates remain lower than most other countries.
Manpower Challenges
29.
Looking ahead,
our workforce faces the challenge of increased globalization. To continue to grow, we
must maintain our cost competitiveness.
Over the past 10 years, the cumulative increases in wages have far
outstripped increases in productivity.
30.
Even during the
recessionary years after the Asian crisis and during the dot-com bust and
September 11, wages did not fall as the chart indicates. Only now is the cumulative increase in
productivity “catching up” with the increase in real wages. Rather, the adjustment to labour
costs had come about due to reductions in CPF. In other words, these
cost-cutting measures have worked to bring wage costs in line with productivity
growth. But Government cannot keep on reducing CPF, without adversely affecting
the retirement security of Singaporeans.
Even as our economy improves, we must ensure that our wages do not again
move at a faster pace than our productivity increases. Companies must also continue with the wage
restructuring so that wages can respond more flexibly to changes in market
conditions.
Keeping
to the Fundamentals
31.
Sir, I am optimistic that so long as our tripartite partnership is
strong and we collectively take adequate measures to face our challenges head
on, our economy will grow and jobs will be created. We are in far better position than countries
which have chosen to be protectionist and as a result have fallen far
behind. Even some countries with
traditionally confrontational labour relations have
come to realize that it is unsustainable. The government of the eastern Germany
town of Leipzig persuaded BMW to locate there instead of the neighbouring Czech Republic, and managed to take nearly 500
unemployed persons off the dole and onto BMW’s assembly line. The union played
a part by agreeing to longer working hours during peak phases and to cut hours
when demand is low. This shows what can be accomplished when companies and
unions work with the government to turn things around.
LOCAL WORKFORCE EMPLOYMENT ISSUES
32.
Sir, we cannot shield ourselves or Singaporeans from changes, but we can
prepare them to adapt. I share the concerns that members raised during the Budget
Debate, such as if Singaporeans had the skills for the jobs, and whether jobs
provided income security, or were ‘dirty’.
a.
Job Opportunities – Providing information
33.
MOM and WDA will do more to help Singaporeans know where the job
opportunities are. We may not be able to avoid some sectors shrinking as a
result of restructuring but we should be able to give assessments of the
employment outlook in broad industry groups so that Singaporeans can make
informed choices about their prospects and careers. We currently have vacancies
in jobs such as finance and administrative managers, electronics engineers and
IT personnel, aerospace technicians, sales representatives, customer service
personnel, sales and service workers, security guards, welders, electronic
equipment or component assemblers, sewing machine operators, kitchen assistants
– to name a few. The public sector has another 3,100 job openings for teachers,
management executives and for the uniformed services. We will improve our
communication efforts so that information is packaged in useful actionable and
digestible bite sized nuggets.
34.
Looking ahead, the services sector will continue to create substantial
numbers of new jobs. Last year, more jobs were created in sectors such as
business and real estate services, health, social and community services,
transport and logistics, and financial services. We expect strong employment growth to
continue in areas such as education,
healthcare and social services industries.
In the manufacturing sector, most of the growth will be in areas such as
Biomedical Sciences and Petrochemical industries. Employment
in the Electronics cluster is expected to remain stable, with new jobs created
in higher-end areas in semiconductor and wafer fabrication balancing jobs lost
in other areas. On the whole, we expect
to see employment in the sector changing its mix towards more skilled
manpower.
35.
I believe that we will continue to benefit from business outsourcing.
Despite the immense competition posed by China and India, we were still ranked
the fourth most desirable location for
Business Process Outsourcing (BPO) by AT Kearney last year. In another recent study by the Economist
Intelligence Unit, Singapore ranked as the top location for outsourcing,
with 22.6 projects per million people, well ahead of China and India, and other
countries like Ireland, the Netherlands and Hong Kong.
36.
While the world comes to Singapore for business process outsourcing,
Singapore is also going to the world, like other small countries such as
Switzerland, Denmark, and Sweden. We will need people with the international
skills and capabilities to fill these jobs whose companies must find external
markets to survive, the need is even greater.
Maersk, the Danish shipping company, sends its
people wherever it sends its ships.
Likewise, so does PSA and SIA, to operate their international port and
air networks. My Ministry will work with other agencies to internationalise
Singaporeans’ mindsets and prepare them for these opportunities.
b.
Right Skills for the jobs
37.
The WDA has launched the
employability skills system (ESS) to help workers at all levels, including
executives and managers, to enhance their foundational or soft skills. WDA will
also push ahead with workforce upgrading in specific industry sectors to raise
skills competitiveness and to support Singapore’s restructuring into higher
value added activities. In particular, WDA will be focusing on skills upgrading
to achieve a higher level of service standards in various services industries. The agency will also be working with SMEs to step up workforce development.
38.
These CET programmes give our workers opportunities to
upgrade and enhance their employability. For the older ones who might not have
had the chance to complete their education, this is a second opportunity to
upgrade and secure professional certification. We should
reduce barriers to entry as far as possible. That is why, we have only minimal
formal entry criteria for our programmes, so that the lower skilled who may not
have completed formal education can benefit.
39.
On developing
entrepreneurship, WDA will build on its efforts to help job seekers take up
self-employment in retail businesses. We will explore similar opportunities in
other areas.
c.
Who is benefiting from current skills training and employment facilitation
efforts?
40.
Members have
asked if our programs have succeeded, and if so, for whom.
41.
Let me give some
quick statistics. In 2004, WDA, together
with its Distributed CareerLink Network (DCN)
partners, helped place more than 27,000 Singaporean job seekers into jobs, of
whom some 17,600 were lower skilled workers with secondary education or below,
and 15,000 were workers above 40 years old.
42.
Under the
various Place and Train programmes, WDA has placed and trained some 1,800
unemployed Singaporeans in new jobs, of whom 45% are workers above 40 years
old. For example, TextiLE is a Place and
Train programme that has benefited older and lower
skilled workers. Some 124 unemployed Singaporeans have been placed and trained
since the start of this programme, out of which about
68% were workers aged 40 years and above, and 95% are lower skilled. Another 1,400 unemployed Singaporeans have been
re-trained and placed into jobs in sectors such as Healthcare, under the
Strategic Manpower Conversion Programme and other re-training programmes.
43.
WDA has also assisted employed workers
upgrade their skills. In 2004, the Skills Development Fund supported some
600,000 training places, of which 36% went to older workers and 28.6% went to
lower skilled workers with less than “O” levels qualifications. In particular, the Skills
Redevelopment Programme, which is jointly promoted by
the WDA and NTUC supported some 37,000 places in
2004, out of which 60% went to workers above 40 years old and 61%
went to lower skilled workers with less than ‘O’ Level qualifications. We think that this is generally the profile
of workers who need retraining, as lower skilled workers have a greater need
for training, to stay employable or take up better jobs.
44.
But there remain some barriers to training,
and WDA will work on overcoming them. We recognize that training needs to be
customized, especially for older workers, many of whom do not have formal
education. Training is also organized
into bite-size modules and designed in a way that facilitates easy and
effective learning, as well as shortens training duration. Unlike the PET
system, there are minimal formal entry criteria. This maximizes access for
adults especially the lower skilled who may not have completed formal
education.
45.
But the schemes and programmes are not just
about statistics. They are about real people, and knowing how we can make a big
difference in lives of fellow Singaporeans will spur us on. Let me give just
two examples to illustrate how our programmes have
helped. Ms Cheong Leng Sin,
50 years old, a former bank supervisor, had been with the company for 23 years
before she was retrenched in 2003.
Undeterred, Leng Sin decided to explore new
job opportunities. She subsequently attended the NTUC/WDA STEER programme and took up a Nursing Assistance course. Leng Sin’s performance during the Nursing Assistance course
impressed the National Heart Centre so much that they offered her a scholarship
for a full-time nursing course. Although
Leng Sin earns less today, she derives immense job
satisfaction in her new career as she is able to reach out and help patients at
the Centre.
46.
Another example is Mr. Lum Hon Cheong. He worked in Damen
Shipyard Singapore for almost 13 years until he was retrenched last May. While
many of his retrenched counterparts made a career switch into transportation
and services sectors, Mr. Lum signed up for the
Trainee Charge-Hand (TRAC) Scheme which places retrenched or unemployed
Singaporeans into shipyard jobs as trainee charge-hands or supervisors. Mr. Lum has been working with Jurong
Shipyards for the past 7 months. He had to take a $600 pay cut and bear his own
transportation costs. However, he is now undergoing a string of certifiable
upgrading training sponsored by the company and can be assured of a promotion
to project supervisor if he performs well. On completion of the traineeship, he
will be drawing about $1300 to $1400 per month.
47.
Adapting
to changing circumstances is not easy, but many have succeeded with the right
attitudes and persistence.
d.
Are the jobs “good jobs”?
48.
We must give
Singaporeans hope through better and stable careers. I was cheered when I read
Ms Carmen Tan’s letter in the Straits Times Forum on 9th March. Her
mother works as a cleaner in Tan Tock Seng Hospital,
and does so with pride, even though others may think that cleaning or
street-sweeping jobs are menial or dirty. Ms Tan said: “Such jobs may be dirty,
literally, but they are decent jobs that should be valued”. She has rightly
pointed out that there is dignity in an honest day’s work. We can help further by improving the
productivity of current jobs. Members
would have read about NTUC’s efforts in spearheading a nation-wide Job Re-Creation Programme
(JRP) to raise the level of productivity
as well as improve the image and work conditions of existing jobs to make them
more attractive to Singaporeans. JRP will redesign jobs in various sectors, such
as Cleaning, Horticulture, Healthcare, Marine, Textile and Education. There are also opportunities
in the retail, construction, security, and community services sectors. Sir,
these combined efforts by tripartite partners will provide Singaporeans more
opportunities to find meaningful jobs and have stable incomes.
Employment Act
49.
The Employment Act
does not cover executive and managerial staff as they are in a position to
negotiate their own terms and conditions of employment with their
employers. Generally, the employment
terms of managerial and executive staff are equal, if not better, than those
provided in the Act. The Ministry’s Labour Relations Department also provides voluntary
conciliation service to assist them in settling their disputes with their
employers. Furthermore, the Ministry
amended the Industrial Relations Act in 2002 to allow representation for
executives by the rank-and-file union in the same company on issues relating to
unfair dismissal, retrenchment benefit payment and the breach of employment
contract.
50.
On contract and
part-time workers, contract workers in Singapore enjoy the same statutory job
protection as their permanent counterparts. In the case of part-time workers,
they also enjoy the same benefits on a pro-rated basis under the Employment
Act. Our records show that the percentage
of contingent workers (both contract and part-time employees) who lodged claims
with MOM is not higher than the proportion of contract workers in the
workforce. This suggests that employers of contingent workers generally comply
with the statutory employment terms stipulated in the Employment Act.
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