Committee of Supply – Head S (Ministry of Manpower)

1.00 pm

Strategic Manpower Focus

Mr Zainudin Nordin (Bishan-Toa Payoh): Sir, I beg to move,

"That the total sum to be allocated for Head S of the Estimates be reduced by $100."

Sir, over the last week of COS, many Members have spoken about the plight of our older and lower income workers. It is easy to think that some workers are stuck in low-paying jobs because they are not productive.

It is even easier to hold this view of our older, less educated workers, given that we live in a world of ever-changing IT innovations, and new means of communications that have increased the pace of work. These are convenient but ultimately dishonest stereotypes that I disagree with. My experience on the ground, Sir, tells me that a large segment of our workforce is, in fact, under-employed, and is stuck in low-skilled jobs because of a lack of higher prospects and real opportunities for upgrading.

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This situation is particularly ironic, given that we have scarce human resources in Singapore, and have to turn to foreign labour to supplement our workforce at various levels. Sir, we must ask ourselves two hard questions – firstly, whether we have done enough to truly maximise the potential of all our workers, and secondly, whether there are higher value jobs they could be doing, which are being done by others.

I wish to ask the Ministry of Manpower (MOM) if it has sufficiently studied the systemic barriers facing older and lower skilled workers, in their efforts to upgrade themselves. Could the Ministry share its plans to help the older and less skilled workers to climb up the productivity ladder and whether there are better jobs awaiting our workers at the end of the long tunnel of upgrading? What steps are being taken to encourage our companies to achieve a minimum standard of competency among its workforce, so that they can be more productive? Similarly, what steps are being taken to help our school leavers who are going to be our future workers to become knowledge workers, so they can take up jobs that are today being filled by foreign talents?

Sir, it is understandable that new MNCs or companies that come to invest in Singapore may require to be kicked off by foreign talent who are more familiar with the operations and organisational requirements. However, Sir, once they have been operating here for some time, we should have a system to ensure that over time, the core of every company must have a good representation of Singaporeans, especially in the key posts in management and operations.

With this suggestion, I am certainly not advocating job protectionism, and saying that Singaporeans must be given these roles even if they are not suitably qualified. I am not saying that. I believe, instead, that it is possible to have proper measures and policies that can identify areas where Singaporeans can lead, where they can be consciously developed to match or even surpass the talent that foreigners bring with them. At the same time, we must ensure that companies are incentivised to transfer knowledge and skills to our local workers, so that our dependence on foreign talent is lowered even in the future. In this way, also, our local workers will get the good promotion and the career advancement prospects they deserve, and be more motivated to pursue upgrading to move up the employment value chain.

To support this initiative, I hope that MOM will consider and study how to develop a steady stream of highly productive, innovative and creative workers in Singapore, and at the same time also the jobs to absorb them.

Sir, finally, I would like MOM to also look at the retirement savings for our workers. Is the Ministry taking steps to improve the rate of return on CPF savings so that workers can grow their retirement savings, and are there also other measures to increase the living standards of workers once they stop working and earning an income? What are the ways are we going to look at to tap the potential of our older workers because Singaporeans are now living longer? This is an increasingly urgent issue given our increasing life-expectancy and, at the same time, the cost of living in Singapore.

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Retirement Adequacy

Mr Yeo Guat Kwang: Sir, this is a tale I hear often and it is always a disheartening one. Elderly folks who have very little cash savings and low CPF balances – it is a situation that makes every day a struggle; too old or sickly to work and without family support for one reason or another. Some of them live hand-to-mouth. For the lucky ones, they have a home at least and can be assured of a shelter over their heads; however, there are others who are not so well off.

One elderly lady in her 70s shared that she and her husband have no children and only have some savings but not enough to afford a rental flat in Singapore. Sometimes, they rent a room in Johor Baru or when living in Singapore, stay a few nights with friends for a while before moving on to the next house. Without sufficient retirement savings, they have to rely on the kindness of relatives and friends. Although some relatives have offered to take them in, this is not something they feel that they can burden their relatives with.

Can MOM give us a clearer and fuller picture of the state of retirement adequacy of our older Singaporeans? Has the CPF system provided good enough returns thus far to preserve the value of its savings? The Silver Housing Bonus that we have announced is a good scheme that can help some of these older Singaporeans unload the wealth stored in their homes for their retirement. Will this scheme make a sufficient impact on the retirement adequacy of our Singaporeans? Would our elderly have enough Medisave to cope with their medical expenses? Lastly, what is MOM's evaluation on the CPF LIFE scheme and how effective it has been? Will MOM further enhance it? Sir, allow me to continue in Mandarin.

( In Mandarin ): [Please refer to Pg 1984 for Vernacular Speeches.] Sir, "to take care of the aged folks of other people as we take care of our own" is a traditional Confucius ethical ideal. However, the reality that we face today, is that many elderly Singaporeans no longer pin their hopes on their children to take care of them when they are old. Hence, to a large extent, both the Government and the people must work together to try their best to help our old folks stay healthy, stay employed, and work for as long as they wish to. Furthermore, we must ensure that they have enough savings and CPF funds to retire comfortably. We must continually adjust and enhance our plans that cater to the elderly, so that our old folks will have enough support as they age.

CPF for Women and Retirees

Mrs Lina Chiam (Non-Constituency Member): Sir, older women in Singapore is a vulnerable group that needs more of our attention. Income security is a key concern for them. The economic development of Singapore was achieved in an incredibly short time – it means that older women today are less likely than their counterparts in the developed world to have gone to university. This has implications for their late-life employment.

Women are often the caregivers, not just of infants, but also of the elderly and the sick. Sometimes they are forced by circumstances to stop work in formal employment to devote themselves entirely to care-giving. Our retirement policies for this group of women seem to imply they are to depend on their husbands and children to support them in old age. But if they are unmarried, widowed, or have no children, there will be no one to care for them. Furthermore, women have longer life expectancies than men. That is why in my speech at the Budget debate, I proposed the idea of pension credits in Singapore as an example of an instrument that may be more effective in protecting older women financially compared to labour market policies.

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In countries like Sweden and Germany, pension credits or care-giver credits may be earned during time taken off from work for maternity leave or for the care of the elderly and the sick. These would be used to help women qualify for full pension and retirement benefits. There are various formulae to work out the exact benefits, but they usually take the woman's last drawn salary and compute a supplement based on it for their pension accounts. In Singapore, we may not want to adopt the idea of pension credits for women care-givers on a full scale. But currently no semblance of such scheme exists at all, and this is not sustainable. Otherwise, it is a contradiction that the Government encourages women to have more babies, but also expect them to remain in the workforce.

Other issues affecting older women also affect retirees in general, including men. Again, when compared to our counterparts in the developed world, the raising of our official retirement age has taken place at a faster pace.

The CPF should offer higher contribution rates and interest rates at an earlier age, so that the effect of interest rates compounding will have a much larger impact on the individual retirement fund. If the concern is to better prepare Singaporeans for retirement, increasing CPF contribution when one reaches 50 may be too late. If the aim is to increase contribution at all, the earlier the better. Increasing CPF contribution only at the age of 50 makes little policy or financial sense, especially at a time of their life when their salaries may actually start to dip. This leaves the older workers with less disposable income, at a vulnerable point of their lives in terms of health and for other potential costs.

Also, I am worried that low-income elderly workers will become less attractive to employers, who may then prefer to hire foreign workers for the same job, since that would not require them to make a single cent of CPF contribution.

Rising CPF Rates

Mr Nicholas Fang (Nominated Member): The move by the Government to curb the country's reliance on foreign labour represents a continuation of a long-term policy. With an eye towards ensuring sustainable growth and productivity improvements in the decades to come, this move is certainly a step in the right direction. At the same time, the decision to raise CPF rates for older workers, with the ultimate aim of bringing it in line with that of younger employees, was also announced. This will hopefully make older workers more employable and lure more of them back to the workforce.

Both these initiatives are clearly aimed at strengthening our economic infrastructure with an eye to long-term growth, while maintaining a balance within the social compact and ensuring that concerns of citizens are met, and our society remains an inclusive one.

As many Members have already shared, the initial response to the measures has largely been positive, but concerns have been raised, especially from small and medium-sized enterprises (SMEs). There is worry that the two measures, coming at the same time, could leave such companies already grappling with their dangerously tight labour market unable to meet their resource needs.

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The move to cut the ratio of foreigners that firms can hire comes as part of a series of efforts that kicked off in 2010, when a schedule of foreign worker levy hikes was introduced. And stricter criteria for employment pass and S-pass issuance also took effect earlier this year. It is worth noting that despite the higher levies, the foreign workforce has grown 7.5% annually over the last two years. It is no surprise then that companies have expressed dismay and fears that they simply may not be able to find enough people to do the work with the new measures implemented. This is especially the case in labour-intensive sectors such as retail, food and beverage, and logistics. And the hard truth may be that such short-term pain is a necessary tough decision that must be made as Singapore restructures for the long haul.

The Finance Minister has provided assurance that help will be provided to SMEs to enable them to adjust, especially those that are willing to improve productivity, design better jobs to attract local workers and innovate in order to grow. The issue for industries such as the services sector has always been that it is hard to attract and recruit local workers for such jobs, resulting in lower productivity compared to other sectors.

Now, on top of broader measures to help smaller firms, the Budget also includes a Special Employment Credit (SEC) of up to 8% of a worker's wage when they hire Singaporeans over 50 years of age. Some observers have said that this may provide a boost to firms looking to tap on the latent pool of local manpower that includes homemakers and early retirees. However, employers may be forced to offer higher wages to entice these homemakers and retirees back into the workforce, thereby outweighing the benefits of the SEC.

With our greying population, it only makes sense to put in place measures to optimise our elder workforce and to help companies take advantage of it. It also shows the priorities of the nation to take care of our elders in the wide range of measures introduced in the Budget, on top of the higher CPF and SEC incentives being offered to firms.

That being said, it will be necessary for caution to be exercised when we cut the traditional reliance on foreign labour, and to allow productivity enhancing measures to kick in to avoid undue tightness of skilled labour. We may have to expect a gap in the number of jobs phased out due to the reduction in foreign labour ratios, and the number of Singaporeans willing to take up such jobs in the next few years.

For industries such as the labour intensive manufacturing sector, where shift work, extended working hours and rigorous physical activity are the norm, it might not even be possible to tap into the target homemakers and early retirees pool of workers.

The calibration of future measures to achieve the goal of reducing dependency on foreigners while ensuring that our elder population are able to be financially secure and can find fulfilment in employment will depend on the equilibrium our labour force achieves following the measures introduced in Budget 2012.

The Chairman: Mr Seng Han Thong, please take both your cuts together.

1.15 pm

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Minimum Sum

Mr Seng Han Thong (Ang Mo Kio): Yes, Mr Chairman. According to the statistics dated 2010, only 40% of active CPF members turning 55 years old in 2010 met the Minimum Sum of $123,000; 60% of members could not meet the target.

This scheme has been in place since 2003. It was set at $80,000, with increase of $4,000 per year to $120,000 (in 2003 dollars) by next year. The Minimum Sum has been increased to $131,000 since July 2011 to account for inflation. The questions asked are: who are the 60% who cannot meet the target? Why set the target where more than half cannot make it after nine years of implementation?

It is observed that with the allocation of higher percentage to Medisave and many members have higher outstanding housing loan payment, the number of CPF members who cannot meet the Minimum Sum will increase. Many mature workers who are in the middle and lower income groups also feedback that while they have contributed to their CPF, they have to cough out quite a big proportion of cash from their monthly salary to service their housing loan as they do not have enough savings in their Ordinary Account. The long-term plan for these groups of workers to save more for their retirement needs has resulted in the short term "money not enough" issue for them.

Sir, with the introduction of CPF LIFE, which is mandatory for all with at least $40,000 in CPF savings, may I propose that the Government review the principle and basis for setting the Minimum Sum especially for the lower income workers.

Sir, CPF LIFE came into life after the Government accepted the five recommendations by the National Committee on Longevity Insurance in 2008. CPF LIFE was offered to older Singaporeans in 2009 to provide lifelong income for our elderly in their retirement. As it is a new scheme and is an improvement over the Minimum Sum scheme, many members are not clear of the difference between the two schemes.

May I ask Minister about the lessons learnt from CPF LIFE and the achievements and impact of the scheme? With more than 70,000 members signing up for CPF LIFE, may I know which kind of LIFE is most preferred – LIFE Plus, LIFE Balanced, LIFE Basic or LIFE Income? In fact, many commented that the four LIFEs are "same, same" but different. But the differences are not much different. Thus, may I ask the Minister whether MOM will finetune members' LIFE? As CPF LIFE will be implemented for all members turning 55 next year, it is good that MOM review the scheme at this juncture and make it a Better LIFE!

Increasing Singapore's Productivity

Mr Christopher de Souza (Holland-Bukit Timah): Mr Chairman, Sir, it is heartening that the Deputy Prime Minister and Manpower Minister Tharman Shanmugaratnam is committed to "treading a balanced path in our manpower policies". I believe that for Singapore's economy to continue to thrive, we must indeed remain welcoming to businesses and talent from abroad, in order to create and sustain good jobs for our local populace. At the same time, this must be balanced out by policies which guard against an over-reliance on foreigners. To this end, the Ministry has assured Singaporeans that it will seek to keep the overall share of foreigners in the workforce at no higher than one-third over the long term.

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I would like to ask the Ministry what measures are being put in place to increase the productivity of Singaporeans, even as we seek to reduce reliance on foreigners in the workforce. First, how is Singapore's national productivity data obtained and is it possible to distinguish foreign workforce productivity from that of the local workforce productivity, so as to enable us to craft more targeted policies to tackle the productivity issue head-on? What are the concrete plans the Ministry has in place to enhance the skills, capabilities and productivity of each worker, so that we can provide more complex and customised services which would ultimately translate into higher profits for the industries and higher wages for our Singaporeans? Therefore, the question is, how do we differentiate between our local workforce productivity and the foreign workforce productivity? If, indeed, our local workforce productivity is already very good, then we should do less for those industries or any other intervention measures for that matter. Besides higher foreign worker levies and tighter quotas on employment of foreign workers, can more be done to help companies shoulder higher-wage costs so that more locals can be hired? And can incentives be offered, for example, to encourage more housewives and retirees to do part-time work?

Maximising Resources through Job Redesign

Ms Low Yen Ling (Chua Chu Kang): Sir, like many advanced economies, Singapore faces the twin challenges of an ageing and shrinking workforce. Our businesses need to reduce their reliance on foreign labour amidst a tight labour market. It is even more urgent now to maximise our manpower and resources more efficiently and effectively. Job redesign, capital productivity, automation and process improvements are some of the ways that the Government is already helping companies to improve their operational efficiency. Job redesign can certainly keep our workforce flexible, nimble and responsive, especially in a time of rapid changes in the global economy and Singapore's demography. Our demographic profile suggests that more of our workforce will want to work flexibly moving forward. This is especially so for older workers, retirees or those who will be retiring. Flexibility and job redesign are also important factors to women who are thinking of re-entering the workforce as well as mothers with young children.

To this end, I hope MOM can nurture a healthy, skills ecosystem with job redesign for better skill deployment − an ecosystem of healthy networks and support between policymakers, businesses, tertiary tuitions, trade and industry associations as well as community groups, such as Active Agers and women's interest groups. The Government can also take a proactive approach as an aggregator as well as an educator in harnessing the latent pool of manpower and talents, as well as levelling up their skills. The environment and spirit of cooperation will provide more accurate information on skills demand and supply between the stakeholders and facilitate a better matching for redesign and deployment of manpower and resources.

There are certainly strong reasons for the Government to play an even more active role. The potential benefits are: (1) better alignment with economic restructuring; ( 2) support for workers and employers; (3) more efficient distribution of manpower resources; (4) ability to support job redesign through policies and interventions where needed; and finally, closer alignment with the institutes of higher learning. Today's jobs are being challenged by tomorrow's demand – all too quickly. If we can collectively maximise our manpower though job redesign across industries and sectors, we have a chance to recreate value, increase productivity, provide long-term employability and future-proof our workers for the better.

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Foreign Manpower Dependency Ratio

Mr Low Thia Khiang (Aljunied): Sir, currently the dependency ratio ceiling for foreign manpower is based on broad industry sectors. It will be helpful to further finetune the sectors based on specific industries to better ascertain and calibrate the need for foreign manpower vis-a-vis Singaporeans in specific industries. In industries where Singaporeans can be trained to take up the jobs, there is room for the dependency ratios to be further tightened. In industries where attracting Singaporeans poses a challenge due to the nature of the work and working conditions, the dependency ratio can be relaxed. MOM may also want to consider a step further by looking at the work scope of jobs within the specific industry to determine whether more can be done to allow Singaporean workers to reclaim specific jobs.

I believe that a targeted approach is needed to achieve the objective of increasing the wages of lower income workers through productivity while minimising the possible fallout of the SME because: (a) the range of SME businesses and industries is complex and a macro policy instrument will not be effective in helping the industries restructure; (b) an abrupt forced transformation of certain industries, such as the cleaning and construction industries, could result in a rapid rise in costs and eventually end up with the consumers paying higher prices; and (c) some industries may also result in a monopoly by a few companies that will dominate the market, as others may not be able to cope with the required change.

Yes, a targeted approach will be a more cumbersome process and will require more resources. However, this will show that the Government cares to look into the problem and concerns of the SMEs and is prepared to help solve the problem and minimise the pain and suffering of a restructuring process. I believe that the outcome will be more satisfying.

A Singaporean Core for Quality Jobs

Mdm Foo Mee Har (West Coast): Mr Chairman, our manpower policies must help Singaporeans raise their skills and expertise, secure the best jobs and support increases in their incomes. Over the past week, Members of this House have discussed measures to curb the growth of lower wage foreign workforce under the work permit scheme. However, there remain significant concerns on the ground about whether or not the same is being done for higher level jobs, mainly those professionals, managers and executives. This is a significant group that makes up more than half of our workforce. Singaporeans want and aspire to do these jobs. However, it is worrying to observe the rapid increase in foreign professionals who hold Employment Passes − a growth of 24% over the last two years – the fastest growing category of foreigners.

Government has tightened the qualifying salary levels as well as education qualifications for Employment Pass holders. Whilst we wait to see the impact of these changes, can we do more? Sir, there is absolutely no doubt that Singapore needs to remain open to international talent in order to be globally competitive. We recognise that Singapore is home to corporations that operate at world class standards and, therefore, we need to ensure their ranks are staffed with the best talent from around the world.

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The question is, how can we ensure Singaporeans with the right skills are being considered first for the best jobs and where there are gaps, employers take determined steps to develop Singaporeans for these jobs? Our current system relies too much on the conscience of companies to adopt fair and responsible employment and staff development practices. The reality is that business is all about pragmatism. Given a choice, companies will turn towards the most convenient and cheapest option to fulfil their objectives. As long as there is an easily accessible pool of foreigners to tap into, there is less impetus to seek out Singaporeans to fill the best jobs.

The concern is amplified by global trends that have shifted growth drivers from the West to the East. Whereas in the past, competition for jobs had primarily come from the lower cost Asian countries, Singaporean executives now encounter competition from even the developed but job-scarce nations of the West. Given our country's strong proposition as one of the world's most liveable cities, and also our attractive position as the hub of the vibrant Asia, we have become a magnet for the talent from all over the world competing for a limited number of quality jobs.

Sir, I would like to ask the Minister to consider strengthening our Employment Pass system so that we ensure that Singaporeans have the first consideration for the best job: first, EP approvals be subject to employers showing clear evidence of efforts to employ Singaporeans first before having to resort to hiring foreigners; and second, even when employers demonstrate they are not able to find Singaporeans with the relevant skills, they are obliged to put in place a plan to invest in the training and development of Singaporeans to fill these jobs.

Many other countries that welcome foreigners as a supplement to their local workforce already have such measures in place. This allows corporations to employ the best international talent without adversely impacting the job prospects of local professionals. At the same time, there is impetus to continuously develop local talent to world-class standards. From the standpoint of security, such a systematic manpower plan will also protect strategic industries and guard against vulnerability from over-reliance on foreigners in selected sectors.

1.30 pm

Sir, we cannot leave to the employers' sense of corporate citizenship to ensure they undertake fair and responsible employment and staff development practices. Companies need to be given a clear directive. Their human resources planning must be obliged to adopt a "Singaporeans First" policy to place locals at the core of their workforce.

The Senior Minister of State, Prime Minister's Office and Deputy Leader of the House (Mr Heng Chee How): Mr Chairman, Sir, the Government understands the need to manage the inflow of foreign manpower more stringently, both to achieve a better social balance as well as to spur productivity and stem the trend of an ever-increasing reliance on foreign manpower as we strengthen and build up the Singapore core. Sir, in the case of work permits and S Passes, this is done through a system of dependency ceilings. But in the case of the Employment Pass category, there is no dependency ceiling. There are qualifying salaries and there are educational requirements but no dependency ceiling.

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With the growing sophistication of the Singapore economy, and with tighter controls at the S Pass level, would there be pressure for more Employment Passes to be issued? Have the numbers, over the past year or so, been indicative of this? And as there is no dependency ceiling, would it lead to a scenario of surging numbers of EPs being issued in boom times and a less than proportionate reduction in bad times, as would automatically be the case with work permits and S Passes because of the presence of dependency ceilings? How would the MOM then balance between the legitimate needs of business for talent, both local and foreign, and the need to also ensure a Singapore core at the levels comparable to Employment Pass qualifications?

Foreign Worker Industry Segmentation

Mr Chen Show Mao (Aljunied): Sir, the further tightening to reduce our economy's dependence on foreign workers is a necessary step in the right direction. However, I would like to ask the Minister for Manpower to do more, by refining the Ministry's current segmentation of industries in coming up with foreign manpower policies including Dependency Ratio Ceilings (DRCs). This does not divert us from our specified goals of reducing our overall foreign manpower dependence and raising productivity. Because given an overall target and roadmap, the idea is to make it possible for foreign manpower policies to be less stringent for some industries than for others, not for them to be less stringent than the status quo . Such refinement will allow the Government to gradually implement additional measures for industries where there is room for tightening. It will allow more targeted measures to help us more effectively meet our set goals by taking into account the different realities faced by our businesses in the different industries such as their prospects for further productivity gains and the different ways foreign workers complement Singapore workers.

The Minister mentioned that it will be quite inequitable if a large firm that undertakes both the high and low end segments in the aerospace industry is entitled to a higher foreign worker quota, while a small firm that is competing with it at the high end is forced to operate within the more stringent quota. But regrettably, inequity also results when you apply the same requirements to two firms that may be differently situated. As the Minister pointed out, there are differences between industries and even among companies in the same broad industry. The question is, practically, can something be done to take them into account? Practically, how are the differences between these two firms addressed, when, for example, the Government works with Singaporean companies to set different productivity targets and roadmaps for different industry sectors? It seems to me that we would have a more effective and targeted and equitable approach if companies and industries with different characteristics with different productivity targets and roadmaps, for example, need not all face the same DRC when it comes to their foreign manpower requirements.

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Policy on Dependency Ratio Ceilings

Ms Mary Liew (Nominated Member): Sir, recently I was travelling in a taxi and the taxi driver shared with me that he used to work as a container truck driver, earning some $4,000 a month for some 13 years. He was happy with his job but, sadly, his pay was gradually reduced to $2,000-plus. And due to competition from foreign truck drivers, he eventually lost his job and became a taxi driver. This Budget announcement to reduce our dependence on foreign labour is welcomed by many Singaporeans. Mr Chairman, Sir, I wish you were there to witness the glow and the smile on his face when this taxi driver shared with me that he was looking forward to returning to his previous job as a container truck driver, which he enjoyed doing very much.

I would like to join this taxi driver to applaud the Government for restoring the hope and confidence of many Singaporeans by putting in place a calibrated approach of reduction in the DRCs and S Passes. While I understand the pain and the difficult transition that the companies have to go through, we also understand that it is absolutely necessary. Rather than to prolong the pain, I think it is wise to act on it now and not only to do it now, but to do it well. I am glad that the Ministry has now put in place a more stringent set of criteria to keep pace with improving salaries of our Singaporean workers and PMEs and this helps to ensure our local workers will not be unfairly undermined. I noted that the real wage increase has been low over the past years. I would like to ask the Ministry what are our plans to encourage companies to tap on the incentive schemes to upgrade their businesses and processes, so that our workers can have a fair share in this productivity gain.

I would also like to urge the Government to close all loopholes to ensure that employment and development opportunities will be given to our Singaporeans and this should not be compromised. My concern is whether this change of policy can be effectively implemented, bearing in mind that there will be employers who will always try to circumvent the restrictions. I would also like to ask the Minister how enforcement measures will be stepped up to ensure compliance with this new requirement. Further, could the Minister elaborate on how the MOM intends to monitor employers to ensure that they provide more employment opportunities and to develop Singaporeans to fill up these job vacancies?

Foreign Labour Curbs

Mr Nicholas Fang: Mr Chairman, the Finance Minister has explained that the timing of the new measures to curb foreign labour is deliberate, given that we are now facing a slow growth year, which presents an opportunity to lower the dependency ratio ceilings while companies are ostensibly not facing a demand crunch.

It is heartening to hear from the Minister as well in his wrap-up of the Budget Debate that no effort will be spared to help SMEs to upgrade and increase productivity, and that the foreign labour curbs will be implemented in a calibrated and measured way. Greater flexibility has also been promised to enable companies to maximise their use of foreign staff.

Now, it is clear that there is a definite need to restructure our economy to remain competitive even as we take into consideration the social concerns expressed by Singaporeans. But I believe that in doing so, we run the risk of contributing to rising costs in Singapore in the short term. Inflation in 2011 was 5.2% and the Monetary Authority of Singapore has said earlier that inflation in 2012 will average between 2.5% and 3.5%. And while consumer price inflation in January eased slightly to 4.8%, down from 5.5% in December, core inflation which discounts accommodation and private transport costs soared to a three-year high of 3.5%.

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Now, some observers are already attributing this to earlier cost increases, including labour cost hikes. And the domestic labour market is very tight. We are seeing an almost fully employed resident labour force, with our jobless rate at a 14-year low of 2% in 2011. Companies, especially SMEs, might not be able to reduce their dependence on foreign labour and offset cost increases despite the assistance schemes provided.

The focus on boosting wages for lower income Singaporeans and using more local workers is possibly likely to drive prices for goods and services up as businesses pass on cost increases to consumers. Economists have said that they see significant upward cost adjustment in the economy already underway, as the tight labour market gives rise to higher business costs to add to already higher transport costs and rents. Just last December, Singapore rose two notches to become the sixth most expensive city in Asia, surpassing Hong Kong for the first time in at least a decade, according to a survey conducted by ECA International. And globally, we have also moved up to 31st spot from 42nd a year ago.

The Finance Minister has indicated that there may be further adjustments to policies, especially pertaining to levies if the curbs do not seem to be working. I would like to ask the Manpower Ministry (MOM) if there is the possibility for adjustments to be also made if it becomes apparent that the curbs on foreign labour are contributing to rising inflation in Singapore.

Ensuring a Motivated Foreign Labour Force

Mr Christopher de Souza: Sir, this year, MOM is reviewing the Employment of Foreign Manpower Act to strengthen enforcement and hold employers and other stakeholders more accountable for the basic employment standards and well-being of foreign workers. The Ministry also helps to educate foreign workers on their employment rights and sources of help, and is piloting a series of pre-departure briefings on topics such as employment laws and terms for construction workers.

While I applaud these moves that the Government is implementing on an infrastructural level to advance the welfare of foreign workers and enhance the protection of their rights, I am uncertain just how many of these well-intended measures actually translate into practical and effective solutions for workers embroiled in on-the-ground difficulties and disputes. It is an unequal playing field, which works against the vulnerable. How far can education of their rights really go, when foreign workers risk losing their jobs, which is the only means of financial support for their families back home?

Let me give three examples. First, ensuring foreign workers, including construction workers, are paid on time. Just two weeks ago, it was reported that some 200 foreign workers had protested in a field in Tampines over the non-payment of their salaries. According to these workers, they had not been paid since last November and were owed amounts ranging from $2,500 to more than $3,000. The workers also alleged that they had been given inedible food to eat, and were made to pay illegal charges of $1,500 to renew their work permits. One of the workers who was interviewed was close to tears as he recounted how his wife had been begging him for money to pay his child's school fees in Bangladesh. I am not commenting on the merits of the case. But, what can the Ministry do to enhance the policing of employment practices if indeed their plight is true?

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The second issue is: adequate rest for our foreign domestic workers. Everyone deserves rest. Maids are no different, for everyone deserves rest. Some have said that we should leave it to agencies and the maids to work out contractually whether they will have a rest day. However, the maid is inevitably in an unequal bargaining position with many if not most unable to comprehend contractual terms written in English. Therefore, any analysis on the topic of rest days must be viewed through that reality. In this House, I had previously raised the issue of rest days for Foreign Domestic Workers, with the MOM saying it is analysing this. Is the Ministry of Manpower in a position to provide an update on this? After all, everyone deserves rest. We are all human.

The third issue has to do with the controversial Maid Review section of a blog that allows employers to post and view alleged misdeeds of maids. VWOs have complained that the site violated the rights and privacy of maids by revealing details such as their names, photographs, Work Permit and passport numbers. Although the Maid Review section has now been made private, the problem is not totally resolved from the domestic workers' point of view as employers may still have access to their particulars and any uncomplimentary remarks made about them. If something untrue is said of them, this could ruin any prospect of re-employment with a subsequent employer. This is extremely unfair. Would we want that to happen to ourselves? Surely not. So, whoever it is running that blog, have more compassion. What more can MOM do to ensure that maids have at least some recourse to action or a channel for complaints to be made? Would the Ministry consider exploring legislation which prevents users from uploading personal profile data such as those in identity cards and Work Permits?

1.45 pm

Impact of Foreign Worker Quota Reduction

Mr Zaqy Mohamad (Chua Chu Kang): Mr Chairman, many are heartened by the Government's efforts, through the improved PIC and other measures, to try and mitigate operating cost hikes for companies here as a result of our foreign worker quota reduction. However, many companies, especially smaller SMEs, do not seem to be able to benefit from these as much as their larger counterparts.

What are MOM's plans to enhance our channels to reach out to these companies, and what resources can MOM provide which are best practices within each sector or sub-sector on how they can achieve the expected productivity gains? Unlike larger companies, smaller SMEs do not have the luxury of R&D, HR or finance functions. Deputy Prime Minister Tharman had said that the increase in foreign worker levies may continue beyond our current plan. I hope that MOM will continue to monitor the cost impact of our foreign manpower policy that is transferred on to consumers in the long term before we look at extending the plan.

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I would also like to reinforce the point I made during the Budget debate that our public services organisations should also lead by example on productivity improvements and hiring of local workers. In addition to the past efforts to transform the security services and cleaning sectors, we should look at transforming the transport sector to focus on job redesign to improve wages and productivity for our transport workers. With the recent funding of the bus transport services, there is an opportunity to transform this sector to look at how we can make these public transport jobs more attractive to Singaporean workers.

The concern of many employers is that if we reduced the foreign labour, can we attract or persuade more locals or Singaporeans to take up jobs that are currently done by foreign workers, for example, in healthcare, cleaning, transport and construction? What is the Government doing in this regard? How confident is the Government of keeping to its targeted reduction in quotas without causing serious stress to these sectors and, ultimately, the living standards of us in Singapore?

The Chairman: Mr Dhinakaran is not here. Mr Tharman Shanmugaratnam.

The Deputy Prime Minister and Minister for Manpower (Mr Tharman Shanmugaratnam): Mr Chairman, Sir, I would like to thank Members for their very useful observations and questions so far. I would like first to address the questions related to retirement adequacy and the CPF, whilst Minister of State Tan Chuan-Jin and Senior Parliamentary Secretary Hawazi Daipi will respond to the other important matters raised.

Mr Zainudin Nordin, Mr Yeo Guat Kwang, Mr Seng Han Thong and Mrs Lina Chiam had raised relevant issues concerning retirement adequacy, particularly as Singaporeans live longer. Some questions were also raised during the Budget debate, including by Ms Mary Liew.

How well does the CPF system provide Singaporeans for their retirement? The short answer is that for the current generation of older Singaporeans, as I mentioned in my Budget Statement, cash savings are low for many. At the same time, the majority of them have significant wealth in their homes. On the other hand, for the younger generation, and especially for those in the middle and lower income groups, which is the group that the CPF principally aims to serve, their CPF savings provide significantly higher income for their retirement; in fact, at a level that is comparable to the median for the OECD countries. And this is even without taking into account the fact of higher home ownership in Singapore. For the younger generation that will be saving throughout their working lives and eventually retiring, the CPF system will be able to provide a level of income in retirement that is comparable to the median of the developed countries, and this is without taking into account the fact that they will also own a home, which is not as common in the developed countries when we talk about the middle and lower income groups. So, that is the sum of the matter.

Let me say that the CPF system aims to help Singaporeans save enough to meet a basic level of needs in retirement. What do we mean by a basic level? The Minimum Sum (MS) that is to be set aside at age 55 is set at a level necessary to meet the typical expenditure needs of retiree households in the lower middle income group. It should cover the needs of those in the second quintile of incomes, that is, between the 20th percentile and 40th percentile of incomes. That is how we go about planning the system and setting the parameters, making adjustments from time to time, making sure the Minimum Sum is sized right. Not too low but not too high either. It should meet the retirement needs of the lower middle income group. It should, therefore, of course, also cover the needs of those further down, those in the first quintile.

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For middle income households, too, although their spending in retirement is usually higher than for those in the lower middle or lower income group, the CPF still forms an important part of their retirement savings. However, the Minimum Sum is not adequate to support the expected needs of those in the higher income households, and it was not designed for that purpose. They would usually have private savings outside of the CPF to tap on. It is not the aim of the CPF to cater fully to their needs, or those, in fact, higher up than the upper middle income group. If we had to cater to those needs, we would need much higher contribution rates or a much higher CPF contribution ceiling, and a much higher Minimum Sum. That would be excessive for those in the bottom half of incomes. It would not be appropriate to design the system to cater to the needs of those in the upper middle and higher income groups because it will cause problems lower down.

Mr Seng Han Thong, therefore, rightly asked whether the Minimum Sum is too high or unattainable to those with lower incomes, which is the key target group. A member who is 55 today – current generation of those retiring - and who has full Minimum Sum in his CPF can expect to receive a monthly payout that is just enough for an average two-member retiree household in the lower middle income group, that is, in the second quintile of incomes.

It is not uncommon for one spouse amongst such families to not have worked consistently. Sometimes not at all but, typically, they would have worked a little bit but not consistently over their lifetime. Indeed, this is one of the reasons why a significant proportion of today's retired persons have not met the Minimum Sum. Many are spouses who work infrequently or not at all. This is why it is prudent for the Minimum Sum of an active individual to be adequate to support the basic needs of a two-member retiree household because it is quite common within that income group that one spouse has not accumulated much CPF savings. MOM reviews the Minimum Sum regularly. We have to bear in mind that CPF members may also make a property pledge and withdraw sums above half of the Minimum Sum. Bearing all these in mind, the Minimum Sum is not excessive. We review it regularly and there is, in fact, little room to have a reduced Minimum Sum for the purpose of ensuring an adequate stream of retirement income.

Let me now turn to the question of whether our CPF system will provide adequate retirement income for today's younger workers – not for the retirees but those who are young today but will eventually be retiring in the future. Will the Minimum Sum also be unattainable for many, like it is for many in today's older generation?

The percentage of active CPF members who meet their Minimum Sum at age 55 has, in fact, been improving year by year, for instance, from only 36% in 2007 to 45% in 2011. It will keep improving because with each successive cohort – it is a very unusual experience Singapore has had over the last 40 years – we see improved educational profiles and improved lifetime incomes. So, it will keep improving.

Amongst those starting work today, about 70%-80% should be able to attain the current level that is set for the Minimum Sum in cash, not with property pledge, by the time they retire, adjusted for inflation, even after they have withdrawn money for a home. So the current level of Minimum Sum can be backed fully in cash, adjusted for inflation, by the time today's starting generation reaches retirement, 70-80% of them should be able to achieve this. So, our CPF system, with current contribution rates, is broadly appropriate for the younger generation of Singaporeans.

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During the Budget debate, Ms Mary Liew had also cited an academic study which showed that income replacement rates in retirement, in other words, retirement payouts compared to pre-retirement income – we call that the income replacement rate – the study had found that income replacement rates were low in Singapore. Those low rates were, however, for a worker in the upper middle income level, the 70th to 80th percentiles. As I mentioned earlier, it is not the purpose of the CPF to cater fully to the needs of better-off Singaporeans. Our own projections showed that for the median and the bottom half of Singaporeans, income replacement rates for younger workers, once they retire, will be comparable to the OECD average. We will publish an Occasional Paper on this topic setting out all the assumptions and data before too long.

I should add that for those at the higher income level, we have the Supplementary Retirement Scheme (SRS). This is mainly helpful for those in the upper third of incomes because they get the income tax deductions. In last year's Budget, we had raised the yearly cap on the amount of savings that one may save under the SRS to $12,750. I am not sure how we got such an exact number, but it is $12,750, yearly cap. For a member who consistently saves the maximum amount over 30 years, he will be able to set aside almost $400,000, without counting the interest or investment incomes he gets from the savings – quite a substantial sum.

I should add that for the younger, lower wage workers, a further source of retirement assets comes from our housing grants, which will allow them to own a home that grows in value. The vast majority of Singaporean households in the bottom 20% of incomes own their homes. This is a key and distinctive feature of our social security system. Unlike most countries, even the developed countries, our low-income group owns an asset that can grow in value as our economy grows, and which they can monetise in their retirement years, if necessary. As I have shown, however, for our younger cohorts, as I just mentioned earlier, monetisation may often not be necessary as their CPF savings in cash will itself yield a stream of income in retirement.

Plus, our low-income workers, they get Workfare Income Supplement (WIS). For a low-income worker who starts off at, say, $1,200 a month, WIS will raise his CPF savings by about $35,000 by the time he reaches 65. Not a small sum. So the Housing Grants plus the WIS are actually major boosts to the retirement savings of the lower income group.

One of our tasks in MOM, as we go forward, therefore, is to ensure that most low-wage workers are in the CPF system. If they are in casual jobs and not receiving CPF from their employers as they should, they lose out on many things. They lose out on Workfare and they lose on the various other Government top-ups that come from time to time. And when we add it all up, it is a fair bit. So, Senior Parliamentary Secretary Hawazi Daipi will talk about this later. We are stepping up both our enforcement and promotion efforts to ensure compliance with the CPF Act.

Next, the current generation of elderly, which is all among us – Mr Yeo Guat Kwang, Mr Zainudin Nordin, Mr Seng Han Thong and Mrs Lina Chiam had raised this issue. The CPF balances of our older Singaporeans are much lower than what we will see in future generations. There are several reasons.

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First, wages were much lower 20 to 30 years ago. Amongst the women, it was not just wages being low, but labour force participation was far lower. Many of us will remember what it was like in those days.

Second – and this is a very important factor – our older Singaporeans invested a larger proportion of their CPF savings in their homes. The withdrawal rules were different in those days. For much of their working lives, 80% or so of their CPF contributions could be used for housing, and many used them. We have moderated this since so that now less than two-thirds can be used for housing so that we can provide more for retirement and healthcare needs.

Third, our older Singaporeans were in the past not required to set aside as much savings in their CPF accounts when they turned 55. A person turning 65 this year would have had to set aside only $70,000 as his Minimum Sum, a big difference from the prevailing Minimum Sum of $131,000. And for those who did not meet their Minimum Sum, which would have been the majority of members of that generation, they were still allowed to withdraw at least half of their CPF balances in cash at age 55 under the 50% withdrawal rule. In other words, even if they did not meet the Minimum Sum, they were allowed to withdraw half of it under the old rules. Some of our older members, those aged 72 and beyond this year, were able to withdraw all of their CPF balances by pledging their property. So the rules were quite different in those days. For all these reasons, the amount of savings retained in the CPF accounts of older Singaporeans is low.

2.00 pm

The CPF has, however, helped this generation of older Singaporeans to own their homes, and most have fully paid up their housing loans. They therefore have substantial CPF savings locked up in their homes. This is why we want to give them more support to unlock the savings in their homes and supplement their retirement income, not just to get the one-off large lump sum but to supplement their income throughout life, through to the end of their lives.

Some retirees rent out a spare room, especially after the children have moved out. It is a very useful form of income. That is one way in which you monetise the value of the home. To add to their options, we have introduced, as I mentioned in the Budget Statement and as we have debated, the Silver Housing Bonus (SHB) and we have enhanced the Lease Buyback Scheme. MND is also building more studio apartments, many of them in mature housing estates and, at the same time, introducing the new Ageing-in-Place Priority Scheme so that the elderly can live near their family and friends.

Many older Singaporeans do not need to take advantage of these schemes. Two-thirds of those aged 65 and above, in fact, receive a monthly allowance from their family. The family is quite happy that they keep the home; they want the asset to be there, continue to appreciate in value and the family provides them a monthly allowance. That is quite common. And many also receive other forms of support in the community or sometimes through Government transfers, especially for the lower income group. But as our society ages, we must be prepared. The need for different ways to convert savings in the home into retirement income will grow. That is why the Silver Housing Bonus and enhanced Lease Buyback Scheme are important.

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On the question of older women in their retirement, in fact, Senior Minister of State Grace Fu has raised this in the Budget debate and Mrs Lina Chiam has just raised it as well. The Silver Housing Bonus, in fact, will help older women significantly. For retiree couples where the husband had worked and the wife was either a homemaker or worked for short periods, moving from a 3- or 4-room flat to a studio apartment will provide a significant boost to their CPF LIFE payouts. If the husband was a median income earner, let us say, if you look at the wage profile of median income earners in the past, it was not very high. If the husband was a median income earner, his RA balances would typically have been slightly above half of the Minimum Sum. Therefore, when they take advantage of the Silver Housing Bonus Scheme, because his RA balances already above half of the Minimum Sum, he would be able to take substantial cash proceeds out, besides getting higher CPF LIFE payouts. So they move to a smaller flat, put some money into the CPF to reach the Minimum Sum, but still a substantial amount of cash comes out, and they get significantly higher CPF LIFE payouts for the rest of their lives. So, the husband and wife benefit.

The CPF also encourages – this is an important point – family support, particularly within the immediate family. For instance, the Minimum Sum Topping-Up scheme provides tax incentives for members who top up the CPF of their wives and mothers. The number of top-ups today is not large, but we are thinking of ways to improve and simplify the current schemes to encourage more top-ups.

However, this does not solve the problem for widowed homemakers with little savings, or poor elderly couples who do not own a home, for example, the case that Mr Yeo Guat Kwang mentioned. For these groups, we must help them in other ways, through ComCare which we have expanded by providing rental flats, which MND is building more of, and by partnership with the community, which we are also doing more of and also finding more ways of supporting the community as it gets involved. So, that is a very important area of work for those whom the CPF scheme cannot serve their needs – widowed homemakers or those who are very poor and cannot afford a home, not a large group, but an important group – we have to find other ways to help them, and we will.

Next, let me turn to the issue of returns on CPF monies. Mr Yeo Guat Kwang had asked about this. We have to take a long-term perspective on CPF returns. In fact, over the long term, CPF interest rates have provided reasonable returns, on top of inflation. Over the last 10 years, for example, the return on the Special, Medisave and Retirement Accounts (SMRA accounts), after accounting for inflation, was 2.5% per year. Over the last 20 years, it was 2.2% per year, real returns, after accounting for inflation. This was despite the extra 1% interest on the first $60,000 which we introduced only in 2008, despite this starting only in 2008, when you look at the last 20 years, the average real returns is still 2.2%.

If you look forward now, the compounding effect of this extra 1% interest, on top of market determined long-term bond rates will, over the long run, help to shore up members' CPF savings, especially for those in the lower income group who benefit most from this extra 1% interest. Current interest rates are very low, because of extremely easy monetary policies of the US. This may persist for another two years or so, but few people expect such low interest rates to stretch over the longer term.

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We should also bear in mind, as I mentioned earlier, that a large proportion of CPF savings of Singaporeans is, in fact, invested in housing, which is a hedge against inflation.

If a typical 55-year old median earner considers the rate of return on his total CPF savings – comprising not only what he still has in his CPF balances but what he took out and put into the home, the CPF savings component of the home – if he adds it all up and computes the total return on his CPF savings, it would have been about 6%-8%, or in real terms, 4%-6% per year, on average, until he reaches 55.

So, apart from the savings he gets from CPF LIFE, he can choose to realise some of the gains he has accumulated in his property through the various ways I discussed earlier, plus he has a place to stay in, quite important, because in many developed countries, you have to factor in rental cost in retirement. Coming out of retirement stream of income, you still have to pay rental cost.

We will nevertheless review our CPF system regularly to ensure it meets Singaporeans' needs, especially as we live longer, which brings me to the next part of my response, which has to do with CPF LIFE.

2013 will be a milestone year for the CPF. From 1 January next year, the majority of members turning 55 will join CPF LIFE, instead of the Minimum Sum Scheme. Members with balances of above $40,000 in their Retirement Accounts will be automatically included in CPF LIFE, while those with lower balances may opt in.

CPF LIFE is a significant enhancement. The current Minimum Sum Scheme provides payouts for a limited period – slightly more than 20 years. In contrast, CPF LIFE provides Singaporeans with an income for life, doing away with the worry that savings may suddenly run out towards the end of their lives.

In fact, for Singaporeans who are aged 65 today, about half of them are expected to live beyond 85, and one-third are expected to live beyond 90. We have to keep reminding ourselves of that – one-third of the group, that is, 65 today, is expected to live beyond 90. Future cohorts of those who will reach 65, including those who are going to reach 55 in the next few years, will live even longer. That one-third figure is going to get larger. So, more and more retirees will outlive their CPF savings if they were on the Minimum Sum Scheme. CPF LIFE is therefore an important and timely evolution of the Minimum Sum Scheme.

There are still some misconceptions about CPF LIFE. Some people think the Government introduced CPF LIFE to hold on to their money for life. You can read about this rather easily, by the way. Actually, all it means is that you get paid for life under CPF LIFE, instead of for about 20 years under the Minimum Sum Scheme. CPF LIFE does not change how much you can withdraw from the CPF in cash, and it does not change how your savings in other CPF accounts can be used.

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The second misconception is that some people believe you will end up losing your CPF savings if you do not live long enough under this new pooled insurance scheme. If you do not live long enough, you are unlucky, you will lose your CPF savings. But this is not the case because when you are on CPF LIFE, you will leave a bequest. The bequest goes to your loved ones, not to other CPF members, and not to the Government certainly. You will get all of your capital back, either through your monthly payouts, or in a bequest that you leave to your family and loved ones.

We have had some experience operating CPF LIFE since late 2009, when members above 55 were able to opt into the scheme. This was an opt-in phase in the last two years. About 73,000 members, in fact ,signed up for CPF LIFE – not large compared to the total number of eligible members we have, but this 73,000 is already equivalent to the total number of private annuities in force today. We did not market CPF LIFE aggressively during this opt-in phase.

Mr Seng Han Thong asked for a breakdown of the various plans that members have opted for. Members could choose from four plans – Plus, Balanced, Basic and Income plans – different levels of bequest and different levels of payouts. The higher the payout, the lower the bequest.

The most popular plans were the Plus and the Balanced Plans, with nearly 90% of members opt-in for either plan. They preferred the features of these two plans – relatively high monthly payouts, but also a bequest. The least popular plan was the Income Plan which does not offer a bequest. In fact, only 3% of this group of 73,000 opted for the Income Plan.

However, this is important and relates to Mr Seng Han Thong's question, we also received feedback during this very useful opt-in phase that members had to put significant effort into understanding and choosing from amongst these four plans. But the payouts between the plans were not so significantly different, as Mr Seng Han Thong more vividly expressed. For instance, the difference in payouts between our two most popular plans – the Plus and the Balanced Plans – is only about 4% on average, the difference in payouts, or about $30 at the projected median balance in 2013 of $90,000.

Both Mr Seng Han Thong and Mr Yeo Guat Kwang had asked what enhancements we might make to the current scheme. Learning from our experience during this opt-in phase, we will make CPF LIFE simpler, starting with the first cohort next year. We will refine the scheme so as to bring the number of CPF LIFE plans down from four to two. It will provide simplicity, but retain the best features of the existing plans.

First, we will combine the features of the Plus and Balanced Plans. These were the two popular options. We combine the features of these two plans into a new option called the Standard Plan. The Standard Plan will also serve as the default plan – the plan that will automatically include members if they do not make a choice.

Compared to the Balanced Plan, which was previously treated as the default plan during the opt-in phase, the new Standard Plan will provide slightly higher payouts. The payouts for the Standard Plan will be very close to the previous Plus Plan. However, members on the Standard Plan will retain the flexibility to use their Retirement Account monies for housing between 55 and 65, just as the previous Balanced Plan allowed. So it borrows from the flexibility feature of the Balanced Plan, and you could use your money for housing until 65 with the slightly higher payouts for the Plus Plan.

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A second change – we will remove the Income Plan. It had not been popular. This is the Plan which offered no bequest. It had not been popular, as I mentioned, only 3% of members chose it. There is also a drawback of the Income Plan, in that members may choose the plan without careful consideration and regret their choice later.

A few months into the opt-in phase, the CPF Board wrote to the members who had signed up for the Income Plan to confirm their choice, highlighting once again that it did not offer a bequest. About 30% of them who had chosen the Income Plan thought again about it and changed their minds.

So, even if the member feels he is making the right decision at the time, first, people change their minds; second, even if he feels he is making the right decision at the time, family circumstances can change. That is a reality we are all familiar with. For example, a member who may have been estranged from his child or spouse, but subsequently be reconciled, may prefer to have made a bequest.

Another disadvantage of this no-bequest feature is that you lose all of your savings to the LIFE fund if you pass away not long after you join the Income Plan at age 55. And even if you pass away later but soon after age 65, you lose most of your savings, and your family gets no bequest. It is natural that the next-of-kin will be most unhappy in such a scenario, when the member unfortunately passes away early. After careful consideration, therefore, we decided that as part of the simplification of CPF LIFE in our effort to reduce the number of plans, we will remove this no-bequest Income Plan.

2.15 pm

With these changes, CPF LIFE will therefore comprise just two simple choices – the Standard Plan, which you see there on the left [ indicating ], which will serve as the default plan, and the current Basic Plan, which will remain unchanged. These two plans provide a meaningful choice for members. The Standard Plan will meet the needs of most members, slightly higher payout but still they get a bequest. It will also give members flexibility to use their Retirement Account monies for housing until age 65 years. The Basic Plan will continue to cater to members who prefer a higher bequest and are willing to accept slightly lower monthly payouts. They will also have the flexibility of using the monies for housing even after age 65.

For members who join CPF LIFE when they turn 55 next year, the transition will be a smooth one. We already have the Minimum Sum Scheme that everyone is used to. Monthly payouts begin after the draw-down age of 65, and a bequest for members' beneficiaries upon their demise is also part of the Minimum Sum Scheme. So, those are existing features of the Minimum Sum Scheme. You get a monthly payout after age 65 and there is a bequest upon your demise. This will continue under CPF LIFE. What CPF LIFE does is to extend the Minimum Sum Scheme for life with minimal reduction in monthly payouts. So, we have a scheme that everyone is familiar with, it will continue but CPF LIFE will extend the Minimum Sum Scheme for life with minimal reduction in monthly payouts.

Take the example of a CPF member who has $90,000 in his Retirement Account at age 55. Ninety thousand dollars is the median Retirement Account balance for active members in this cohort. If he were under the Standard Plan, the default plan, his monthly payouts will be only 2% lower than what it would have been under the Minimum Sum scheme, but he will get payouts for life. He has no risk of finding that if he lives long, fortunately, but suddenly the money runs out – no risk of that.

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This is why we introduced the CPF LIFE scheme. Members will have income for life and for those who are needy, who have other needs, such as severe medical needs which may crop up for some as they get older, we have to help them through other schemes, which I have detailed in the Budget Statement and which are in many of our existing Government policies which we will review from time to time. Those are budgetary schemes, other ways in which we could help the needy elderly.

These refinements to the CPF LIFE will take effect from 1 January next year, in time for the cohort turning 55 in 2013. We will engage and communicate with CPF members to help them to understand this well, understand the choice they have to make between these two CPF LIFE plans. They will each receive an individualised letter, a customised letter, for themselves a few months before they turn 55.

And for those who already opted into the CPF LIFE scheme over the last two years, they will have the option to switch over to the new Standard Plan before the end of next year, 31 December 2013. They, too, will receive individualised letters explaining the matter, and those who prefer to stay on existing plans can do so.

Finally, Sir, just another change that we are making, a related change also to help raise CPF LIFE payouts in retirement. As Singaporeans work longer, CPF contributions made after age 55 will become an increasingly significant component of their retirement savings. The increase in older workers' CPF contribution rates will further reinforce this. Members would expect that these additional contributions after age 55 should translate into higher monthly payouts once they reach their drawdown age at age 65, and rightfully so.

To help them achieve this, when a member reaches 65, we will automatically transfer his Ordinary and Special Account monies into the Retirement Account, up to the cohort Minimum Sum. This is similar to what is currently performed at age 55. We will do it as well at age 65 because there have been contributions between 55 and 65 and this is going to become increasingly important in the years to come.

The change will not affect how much a member can withdraw in cash from their CPF accounts. Without this new arrangement, the balances may remain untapped in the Ordinary Account and Special Account until the member's demise, unless the member activates a transfer himself. His OA balances would also earn lower interest rates under that arrangement. The change is a helpful one. It will help raise payouts, ensure that everything is swept into the Retirement Account so members can enjoy higher payouts for life.

Sir, the CPF system, together with our public housing system, is an essential pillar of a strong social security system. We have improved it over the years, and made it a unique system to serve the needs of our society. We will continue to build on it and strengthen it, to serve Singaporeans' needs.

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Continuous Education and Training

Mr Zainudin Nordin: Sir, in the current competitive globalised world and uncertain economic conditions, my belief is that we need to continuously strengthen our workforce and build resilience in them. That is one sure way to ensure that our economy can remain competitive and our workers can remain relevant to the fast changing industrial landscape. Thus, I am glad that our Government is investing in our workers' training through the strategic CET Master Plan. Sir, these resources for our workers will be very important and I am confident that we will benefit from it in the long term

Beyond the provision of the good infrastructure like the CET campuses and more, I would like to ask the Minister to update the House on the progress of the CET Master Plan. Are we providing more resources and support for training and the re-training of our workers, especially the low-wage workers and older workers?

As Singaporean workers continue to face new challenges in the uncertain economic landscape, how are we supporting the PMEs, especially the mature PMEs, to cope with upgrading and the challenges of this ever changing economic landscape?

Sir, we have also in the past few years introduced the Workforce Skills Qualification (WSQ) system and other industrial certification standards for our workers to be recognised for their skill sets and also their experiences. I would like to ask whether the training systems and certification standards set up by WDA and the tripartite partners are getting good recognition by industries and industrial practitioners. Are our workers more employable after attending the WSQ courses and other WDA-endorsed courses?

Training and Low-wage Workers

Ms Sylvia Lim: Sir, low-wage workers do not earn enough to meet Singapore's cost of living. The Government recognises this by introducing the Workfare Income Supplement and encouraging re-training through schemes like Workfare Training Support. I too am a strong believer in training, but for low-wage workers, the outcome they seek is better employment conditions or prospects. I recognise that this is a challenging deliverable.

The Workforce Development Agency has disbursed close to $1.02 billion in grants from 2007 to 2010.To what extent has the money poured into training produced the desired results of uplifting low wages?

WDA currently conducts an annual survey on the effectiveness of its Workforce Skills Qualifications training. The survey provides a rough snapshot of the return on investment in training. According to the 2010 survey, 65% of companies reported positive outcomes in productivity after training, but only 25% of trainees experienced pay increments after training, while 44% experienced an expanded or new job scope. It appears that training is benefiting companies and making workers work harder more than it is uplifting wages.

At the Budget or National Day Rally speeches, it seems customary to highlight success stories of how some individuals have moved into higher value work after training. Are they the norm, or are they exceptions? What proportion of low-wage workers went for training but saw no improvement in their wages? What sort of tracking or return-on-investment is being done?

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Proportion of New Jobs for Singaporeans

Ms Tan Su Shan (Nominated Member): Sir, the current Budget seeks to reduce our overall reliance on foreign workers and to cultivate better jobs for all Singaporeans. Yet, a recent The Straits Times article cited an MOM report as noting that two-thirds of jobs created in 2011 went to foreigners, that is, only one-third went to "locals". And, incidentally, the term "locals" somehow includes Singaporeans and PRs. So Singaporean citizens had fewer than one-third of the jobs created, while having to deal with the problems of overstressed domestic resources.

With that, Sir, I have three questions and one suggestion point to make. The three questions I have are geared towards asking the Ministry for more clarity on their definitions and also more clarity on how Singaporeans are benefiting from these jobs. The suggestion point I have is to see how we can be more effective in encouraging more women back to the workforce. Let us begin with the three clarifying questions.

Firstly, why is it that most MOM statistics, with the exception of the unemployment rate, co-mingle Singaporeans and PRs in the segment termed "locals"? This can be misleading, as the official statistics show how well the locals are doing on the job front, but does not differentiate between Singaporeans and PRs.

Secondly, what is the distribution of new jobs created in each of the past 10 years amongst Singaporeans, PRs and foreigners in each segment?

To have a sense of the extent that new job creation benefits Singaporeans, it will be good to know how many jobs have gone to Singaporeans alone, and the percentage that represents. The add-on to that question is what percentage of total pay flows to Singaporeans in each of the last 10 years? This enables us to have a sense of whether Singaporeans have a fair share in the high-paying jobs created.

Thirdly, in 2011, our resident unemployment rate was 2.9%. This was higher than our overall unemployment rate of 2%. How would our situation look if we combine the current or projected structural unemployment of Singaporeans? There is definitely enough evidence on the ground that PMETs in their 40s and 50s are finding it hard to be re-employed, even with significant pay cuts.

There was a recent Channel News Asia programme dated 27 February and a report on CDC donations that revealed that in 2011, 27,300 residents had employment and training assistance. However, only 10,800 found jobs. Should we take this to mean that the job placement success rate was only 39.5%? If not, what is a more accurate way to interpret this information?

Sir, what these questions attempt to do is to understand the basis of our official unemployment rate calculation, and help reconcile official numbers with ground experience.

Finally, let us talk about the suggestion to get more women back to the workforce. It is a good one. And the latest statistics are very encouraging. In 2010, the numbers showed that 71.2% of the women aged between 25 and 64 are working, up from 69.4% in 2009. But for older women, aged 55 to 64, the figure is still very low at 43.4%. The good news – there is plenty of help available to help younger working women get back to work. From the "Back to Work" and flexi-work programmes started by Government agencies, to websites like Careermums.com to Mums@work to the newly formed WEWAM – it is a nice name! WEWAM. It stands for Women Empowered for Work and Mothering – there seems to be plenty of outreach programmes.

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What this House and the Ministry perhaps should know is that there are also many women's groups and associations who have stepped up to help. These groups tend to be sector based, and one such example, if I may, is the Financial Women's Association, which has helped women in finance who lost their jobs during the Lehman crisis, find new jobs, and which is still championing the networking of women who wish to return back to work in the financial sector. The Singapore Council of Women's Association has also successfully pioneered the Women's Register to mentor women needing help in the workplace. However, these many outreach programmes need support in order to succeed, especially to reaching out to the women who need help, and especially for older women who may not be that Internet savvy. These women's groups are run by full-time working mothers like me who have limited time and resources and, hence, in order for them to be more effective, they need funding, administrative and execution support for their various initiatives. They will also need some time and some help in advertising some of their good work that they can do, in order to reach out to a wider audience and in order to place more women in the right sector and in the right jobs. So, my suggestion is – may the Ministry provide some umbrella support to these various women's groups and to help link women looking for job with the right association and the right channels that are already available?

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Competitiveness of Professionals, Managers, Executives and Technicians

Mr Zaqy Mohamad: Mr Chairman, the Government's commitment to reduce the number of foreign workers at the S Pass and the Work Permit levels in Singapore received largely positive support by many Singaporeans. However, many professionals are concerned that the Government has not sent similar signals for the Employment Pass (EP) segment which concerns PMETs and professional jobs that Singaporeans hope to be given more opportunities to prove themselves in the face of competition.

I believe most PMETs are prepared to face foreign competition and recognise the value and the foreign expertise if they are better qualified and have the expertise to offer that locals are not able to provide. Can MOM share what is the rate of tightening of EP categories compared to S Pass and Work Permit categories? Has the MOM conducted studies on capability or experience gaps of Singaporean PMETs and how they can maximise job opportunities at this level, as in a globalised economy it may not be practical or realistic to lock in all professional employment to Singaporeans? But can we adopt a policy whereby employers should justify what if Singaporeans cannot fulfil the role, or one who is currently employed within a company cannot be groomed into the role before a foreign professional is recruited if their competency levels especially are similar?

What is MOM's assessment on how more Singaporean PMETs can take leadership and management positions and how the Government can help at this level? There are many foreigners heading our local companies, including banks and public-listed companies. Can these leadership positions otherwise have been filled by local PMETs with the right competency, skills and experience? In our small market, our local PMETs sometimes like the exposure and the opportunity to run large-scale business units or projects. Thus, how can we help our level PMET workforce overcome this inherent weakness?

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In terms of training, PMETs, according to a Labour Force report of 2011, are "most receptive" and "active in training". On average, PMETs' participation rate in training is about 6.8 days a year in 2011. Can the Government do more to help PMETs with training and job facilitation as they have specific needs which may not have been fully met under our current CET framework?

We would also like to ask if there are measures to help middle-aged or older PMETs – with Singapore's economy facing more challenges in the upcoming years, it is more likely that middle-aged PMETs will lose their jobs with the structural changes in the economy – and how this group will be given more assistance by the Government.

Finally, the SEC scheme is a welcome move, thanks to the Finance Minister. This gives assistance to older workers up to 65 years of age and those earning $4,000 a month. But many PMETs are earning above $4,000 a month. In fact, we have seen more of them earning more than $4,000 substantially since 2011. Can the SEC help our older PMETs and can we extend the age limit to above 65 years old since the Government encourages lifelong employability?

Professionals, Managers and Executives and Worker Issues

Mr Patrick Tay Teck Guan (Nee Soon): Sir, this group called the Professionals, Managers and Executives (PMEs) is going to form the majority of our workforce in the coming years. In my engagements with PME union members and PME residents, we have found out some key challenges and issues which concern them.

First, older PMEs getting employment, being retrenched, unemployed and re-employed; second, for female PMEs, they are concerned about flexible work arrangements and ease of rejoining the workforce after being laid off for some time; third, young PMEs facing under-employment and contract employment; fourth, competition from foreign PMEs; fifth, career advancement and learning opportunities to move up the career ladder; and finally, sixth, mismatch of current skills and future jobs.

These are some of the concerns. I would like to just focus on a few as I have highlighted the others during the Budget debate. Firstly, we need to have a better and deeper appreciation of the issues, challenges and opportunities facing PMEs. For a start, we need to know potential PME jobs within the intermediate term. Our current students and future PMEs are particularly concerned about their future job prospects. For example, in the latest NTU Career Fair in February 2012, it is widely reported that the number of job vacancies had dropped from 4,500 to 3,000. I believe for many of them securing a job first may be all that matters. All PME segments in whichever life stage would also like to understand where the future growth sectors are and whether the remuneration will commensurate with the investment of time and efforts in the area of discipline that they have taken on for their education, continuing education and work experiences.

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By the same token, the issues and challenges facing PMEs are varied and sometimes complex. It is therefore appropriate we set up a PME taskforce to examine the specific concerns and issues involving and concerning PMEs and possibly at a tripartite level especially for issues revolving around unemployment, employment, under-employment and employability.

On the vulnerability of older PMEs, those above 40 years of age, what can we do to help "future-proof" their jobs? I foresee that more and more of them will be affected by layoffs during restructuring exercises. They may have top qualifications such as Masters or even First Class Honours. Nonetheless, once retrenched, they take a long time to find the next job. It is not uncommon that they will take at least half a year to one year to do so. Some are forced to go overseas to look for greener pastures whilst others have to take on significantly lower-skilled jobs or embark on a freelance career. Speaking to some of these PMEs online and offline, we should not just look at the employment of these PMEs but also the quality and pay of their new jobs. The current approach to scaling up career fairs for PMEs is but one approach. I feel we should also try to change the perception of employers about older PMEs. I would like to therefore propose a three-pronged pre-emptive approach to disprove such a perception that older PMEs are not as valuable – namely, conversion, placement and employee-cum-employer education.

On conversion, the Government can first work with the private sector by promoting better career mobility through different tracks for PMEs. For companies who are prepared to hire PMEs from a different industry, there has to be greater funding for a career conversion programme in terms of both training and wages on a once-off basis. We should embark on a drive to get our employers to support this programme. On placement, the public sector should lead by example in setting a better rate in hiring PMEs who are aged 40 and above. The current rate is about 1,200 per year which is about 9% of new hires. To signify a change in paradigm, I feel the public sector should take the lead and raise this hiring percentage and perhaps even raise it higher during times of economic uncertainties. On employer and employee education, we should promote the hiring of older PMEs, investigate any discriminatory practices and provide a formal mechanism for the aggrieved to seek redress, and older PMEs should be equipped with the knowledge of the employment landscape and opportunities.

I would like to seek further clarifications on how a better link for our Continuing Education and Training and Skills Training for Excellence Programme, the CET and STEP systems, can correspond to the life stages of a PME.

First, when a typical Polytechnic or University graduate seeks to land his or her first job, their concerns will be usually on the pay, career prospects and development of their job. I mention job and not career as the former is defined by a financial need which is understandable as the graduates need to pay off their study loans. Our current approach is to provide the maximum catchment of prospective employers for the graduates to embark on their first job. I would therefore like to suggest a closer collaboration between the educational institutions and WDA on a more proactive approach. This can be a start to map out the career needs and history of the individual PME. The State's involvement in this is important as prospective employers can have access to a ready pool of PMEs with different expertise for the various vacancies. From the PMEs' perspective, they can have a more detailed understanding of the employers they are working for since this is a national database.

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Second, continuing with the life stage, after five to 10 years of working, the individual PME may have at least one or two job switches. He or she may have a clearer sense of the longer- term career that they want to be involved in and the particular industry they want to be in. We ought to find a mechanism to capture this information as well on a participation basis by the PMEs. This is important as it will help to cut down on funds invested into unnecessary training, studying or skills upgrading if there is a clear job profile that the PME is going for. There has to be a clearer link to the qualifications obtained, how it has helped to raise productivity and thereby leading to a real wage increase. Coupled with other life stage needs at this time such as setting up a family, our PMEs need a national training infrastructure to be future-ready. Many years ago you could learn something in school and use it for the rest of your life. This has changed. The entire landscape has changed. Previously, we used to learn, work and then retire. Now it will be: learn, work, learn, work, learn, work and then retire. Second-skilling is now ever more crucial to ensure employability especially during uncertain times. In order to motivate the individual to take a larger interest in his or her own skills and capabilities, I would also like to urge the Government to study the successful lifelong learning models in Scandinavian countries such as Denmark and Sweden. This is in terms of how public spending in adult education can help to enhance the creativity and innovation of our workforce, adding value to them and helping them to raise their pay. I further suggest that whatever amount the individual has invested into his or her upgrading should be eligible for tax relief as well and that the current tax relief limits should be reviewed. Similarly, there also ought to be a tighter framework and subvention for students and adult learners who are enrolled in private universities. Can we consider establishing even more adult education colleges so that our PMEs can undertake study sabbaticals if needed and supported by the employers?

In the third life stage, where our PMEs are 40 years old and above and have their own families, future proofing their jobs becomes a top priority.

To sum up on the three life stages that I have outlined, I hope to see the Government play an even bigger role to support PMEs in their career development beyond what we see today. Are there plans to set up a national PME jobs databank? For our local PMEs, I have mooted previously for a PME Capability Development Fund. There is an entire train of activities in enhancing the employment and employability of PMEs. It is not merely placing them in a job but in the right job. Before we land them a job, there is a need for proper career counselling and even professional coaching. Some PMEs I spoke to said all they need is for us to connect them with prospective hirers and they are more than able to do the rest. Unlike traditional job fairs utilising a one-to-many approach, PMEs will require one-to-one or one-to-a-few approach as the types and range of PME jobs, requisite capabilities and development opportunities are extremely diverse and vacancies are mostly one to a few in a single company. Efforts needed are thus more extensive. Are we able to develop new capabilities to train, equip, re-design, counsel, coach, place, retain, and nurture our PMEs? Resources required are going to be huge. This PME Capability Development Fund can well be for the tripartite partners to tap on to train and equip PMEs including second-skilling them and also rolling out initiatives and programmes identified by the PME taskforce. There is also the possibility of setting up a "one-stop shop" to meet and serve the needs of PMEs. It could well be a comprehensive resource portal for PMEs with updated information and pointers and also link to job search engines including coaching and pre- and post-job placement career counselling.

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In continuing the theme on PMEs, my final area of concern is with regard to strengthening measures to help female PMEs cope better with the challenges of managing their careers and raising their families. The lack of family-friendly work practices and flexible work arrangements is forcing many women to delay starting their families or, even worse, give up their careers. May I ask the Minister what more could be done to introduce a more conducive working environment for back-to-work women, in particular, female PMEs who wish to re-join the workforce after an extended period away from work? Without flexible work arrangements, it would be difficult to encourage our families to have more children. I am aware MCYS is aggressively developing our childcare services and providing support from various angles. However, we also need to get employers to provide better work-life balance as this is critical to support women with families.

Talent Development

Ms Jessica Tan Soon Neo (East Coast): Mr Chairman, unlike the US and many of the economies in Europe, Singapore has had economic growth, a strong job creation and low unemployment. This is an enviable position to be in. Singapore must continue to have quality jobs so that Singaporeans will continue to have good job opportunities and real wage growth.

The education profile for Singaporeans in the workforce is set to improve as the younger cohorts entering the workforce are better educated. Residents employed in 2011 who are degree-holders are up 17%, from 2001. Including those with diploma and professional qualifications, the share is 47%. Close to 52% of residents employed in 2011 were in professional, managerial, executive and technical jobs. Resident unemployment is also low in 2011.

Against this backdrop of skills and profile of our resident labour force, we must ensure that we continue to have good career prospects for PMETs as they form a large portion of our labour force. Singapore continues to be an attractive base for companies to locate their regional and hub operations. This creates good job opportunities, especially higher-end PME jobs. While we need to maintain Singapore as an attractive and open market for talent, can the Ministry share what strategies are there to incentivise companies based in Singapore to ensure development of local PMEs and skills transfer to build a strong and relevant local talent base for higher-end jobs? What placement help is also given to help PMEs who have been displaced, especially in the later part of their careers?

The hon Mr Patrick Tay had talked about the Government doing more with regard to helping with the placement and training of PMEs. I would suggest that if there could be better incentives to help companies build partnership with companies to scale the capabilities and focus on development of PME resources so that we can ensure that they continue to be relevant as the jobs change, as they move higher into the higher end of the PME roles. And I really like to understand what closer partnership the Ministry is planning with regard to working with companies, rather than the Government doing it themselves.

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I also would like to ask what measures are there in place to ensure that relevant skills are being developed for quality jobs. One of the things we may not be cognisant of as we look at having PME jobs for Singaporeans, is that Singaporeans also have the opportunity to get out of Singapore. The PMEs in Singapore actually have opportunities and continue to have opportunities. One of the things we must do is to ensure that we do not lose that talent base as well and therefore it is imperative that we continue to look at how we can keep our local PMEs in the high-end jobs.

Special Employment Credit and CPF

Mr Teo Siong Seng (Nominated Member): ( In Mandarin ): [Please refer to Pg 1985-1986 for Vernacular Speeches.] Mr Speaker, Sir, firstly I would like to declare that I am the President of the Singapore Chinese Chamber of Commerce & Industry (SCCCI), and Managing Director of Pacific International Lines. Last Thursday, Deputy Prime Minister Tharman said in Parliament that Government will go out of its way to reach out to SMEs, via working with the business associations, Enterprise Development Centres, and CDCs. This is to ensure that SMEs could benefit from all assistance schemes. At the same time, the Government would be making more land available under the Government Land Sales Programme to help reduce rental overheads. It has also declared exercising greater flexibility in the foreign worker policy. This move has my wholehearted support.

On raising productivity, I feel that effective communication and timely policy adjustments would enable the Government and businesses to work together to address business challenges. This is indeed the objective of our active participation in the Budget debate. I take this opportunity to share what we have encountered when promoting various government assistance schemes. In 2006, SCCCI set up the Enterprise Development Centre with the support of SPRING Singapore. Over these five years, we discovered this common problem. Start-ups and "micro companies", like HDB neighbourhood shops and shops in Chinatown, Little India and the Malay Village, cannot meet the application criteria because they are simply too small.

EDC@SCCCI holds regular briefings or workshops in Mandarin to explain Government policies to businessmen. When our EDC staff make calls inviting them to participate in these sessions, they get this standard response: "I don't need to listen. In any case, our company is too small and can never qualify." Going forward, Government and associations need to look into improving the promotional outreach, and simplify the application procedures. This is to ensure that more SMEs could really take good advantage of these schemes. This is truly the challenge faced by the Chamber and the government agencies. As Deputy Prime Minister Tharman has said, the Government is prepared to go out of its way to help the SMEs, and hold their hands to help them improve productivity.

There is a Chinese saying: "A capable man needs three helping hands to do a good job." Every successful entrepreneur would go through an initial phase. He may be full of ambition and passion. If he cannot find workers, he would be fighting a lonely battle. At such a time, any solution would be most encouraging and gratifying. Hence, I would like to suggest broadening manpower sources and adjusting the management process and remuneration for part-time workers. This would encourage students, housewives and older individuals to re-enter the workforce by working part-time. This would relieve the labour shortage for "micro companies" and SMEs. This year, the Ministry of Manpower has relaxed the policy to allow foreign spouses to apply for employment under the Long-term Social Visit Pass-Plus. This move would also help to relieve the acute manpower shortage.

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One of the Chamber's members has indicated that part-time workers prefer to be paid in cash upfront. If we were to let go one foreign worker, the company needs to recruit two or more part-time staff to fill the vacancy. If the Ministry of Manpower could allow employers to pay part-time workers like housewives in cash and waive CPF, these part-time workers could have more ready cash. Employers could cut down on administrative work and this could be one way of raising productivity. Thus, I hope the Ministry of Manpower could consider relaxing the policy of CPF for part-time workers to encourage more employers to recruit them.

My second point is on Special Employment Credit (SEC). Engineers, professionals, managers and other older middle-income workers would be affected by the economic restructuring. Under the SEC, employers who employ older workers earning $3,000 or lower, could get 8% wage subsidy. For workers with a monthly wage of between $3,000 and $4,000, the SEC would be lower. For those earning more than $4,000, SEC would not apply. However, the older workers who earn more than $4,000 are also the people whose service companies would like to retain. Thus, I would suggest that the Government raise the salary level for SEC, to include this group of middle income workers.

Finally, I would like to emphasise that foreign workers are an important component of the Singapore labour force, and they have also made great contributions to Singapore's economic development. Foreign workers are not cheap labour. They take up jobs in industries that most Singaporeans are either unwilling to take up or unable to undertake. Hence, training provided by companies should also be extended to foreign workers. This would enable them to improve their skills and effectiveness, and raise overall productivity.

Elderly Workers, Retirees and Homemakers

Mr Low Thia Khiang: Sir, weaning the economy off foreign labour requires us to look inwards to our existing pool of elderly workers, retirees and homemakers. We share the view of the Finance Minister that many of our homemakers in Singapore who retire early are willing to work either part-time or full-time. We are a small nation, we are a small population. It is imperative that we find ways to maximise our manpower needs to meet the requirements of the economy to grow and to compete globally.

Older workers as potential employees in the workforce differ in abilities, desires and needs. Hence, re-integrating them into the workforce may call for customised approaches depending on their abilities and situations. Re-integrating the retired professional versus integrating the production worker will require a different approach. I would like to know what programmes MOM has to encourage industries to re-design work processes to cater to elderly workers and how successful these programmes have been.

Homemakers who wish to join or re-join the workforce are another pool of human resource. However, attracting them into the workforce has a different set of challenges. I would also like to know what progress has been made in this area so far.

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Given the various schemes in place, for training and re-training, how does the Ministry measure the effectiveness of its programmes and what other strategies does the Ministry have to further encourage these groups to go back to the workforce? Besides working conditions, attractive pay and flexi-working hours, I believe proximity to their home is another important factor for them. The Government may want to relook at the land use and usage of property in residential areas to allow some suitable industries to be located within the residential zones.

More Measures to Support Flexi-work

Ms Mary Liew: Sir, as we reduce our dependence on foreign labour, getting Singaporeans to fill these gaps becomes very critical. We still have a large proportion of women who are not working but are contributing meaningfully to their families. We noted that women with young children aged between 0 and 12 years old are more likely to quit the workforce to focus on the development of their children.

Unlike the developed countries like Sweden, Finland and Norway, we do not have a double hump for women's participation in the labour force. Our women leave their jobs to take care of their children and many never return to the workplace and thus resulted in a single hump. The longer the women stay out of the workforce, the more challenging it will be for them to return. Most employers also become more reluctant to employ them. I think we should take the approach of prevention is better than cure.

Mr Chairman, Sir, as women become more educated and more are carving a niche for themselves in their careers, they find themselves hard pressed because of the lack of flexibility in how work is being done. If we are going to call ourselves an inclusive society, then women should be given the opportunity to work, have a family and be able to take care of their loved ones while still having a career with progression and decent pay. And the only way to do so is to ensure that we have a culture that supports flexi-work in our workplace.

Getting women back to work is not just providing a lactation room but also requires the support and the change of mindset of employers and fellow workers to provide the conducive and supportive environment so that our women can return to work and juggle their responsibilities, to have a work life balance without having to feel guilty that they could not perform their multiple roles well and ultimately they have no alternative but to quit their jobs.

We would like to see more support from the employers who are willing to offer flexi-work arrangements and are willing to do job re-design. Given that there is a tightening of foreign labour, I think this is the best time for us to really look at tapping on this available pool of women to encourage them to come back to the labour force.

Mr Chairman, Sir, allow me to share the case of Joanne that the NTUC's Women Back to Work Programme has helped. She is 40 years old and she has one eight-year-old child and a sickly father. She is a graduate working as a bank officer earning some $3,000 a month. Joanne quit her banking job in 2005 when she found that she had to juggle between her young daughter, who was one year old then, and her father who suffered a stroke. In 2007, after nursing her father back to health, she decided to return to the workforce. After trying for a year, she was very disheartened that no employer was willing to consider her at all. Subsequently for Joanne, she came across the NTUC Women's Development Secretariat (WDS) who worked with enlightened employers who were mindful of the gap. In October 2008, they finally secured a job for her with a financial company as a deals executive. Today, I am glad to say that she is still employed as a senior executive.

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I believe that for every Joanne that we helped, there are many more out there needing support, especially our female PMEs. Besides the existing efforts that the Government has made, I would like to ask the Ministry to consider the following: (i) being the largest employer, to take the lead by creating more flexi-work for women in the public sector; (ii) to consider some forms of incentive or tax relief to help women who do not rely on domestic help but very much dependent on nannies or their relatives for child care help and support. And I think this will also continue to encourage women to return to the workforce; (iii) I support the call by Mr Ang Hin Kee to extend the Special Employment Credit to employers to recruit back-to-work women in the workforce. I understand the Minister's view, and we are not giving up and we are trying again; (iv) to launch annually a nationwide "Flexible Work Arrangement (FWA) Campaign" to generate more awareness as well as to encourage companies to implement FWA in a more concerted way; (v) besides offering flexi-works funding to companies, try to make it fit the process of claim user-friendly and also make it more attractive to tap on, with minimal restrictions and administrative procedures; (vi) to adopt additional measures to support back-to-work PMEs who face greater obstacles compared to the rank and file women as opportunities are even more limited for them, including developing a database of both the employers and the back-to-work PMEs to support job-matching efforts.

Sir, last but not least, I would like to ask the Government to make every attempt to encourage our women to return to the workforce. They have gone through the different challenges in life and are mature and responsible. I am confident that most will be resilient to stand by their employers. Especially during the tough time when the company is facing crisis, you will see that women are like tea leaves – you will never know their strength until they are in hot water. We will be there for you.

Supporting the Vulnerable and Displaced

Ms Denise Phua Lay Peng (Moulmein-Kallang): Sir, three areas of recommendations: First, on job re-designing and job re-creation, and expertise for low-income jobs. Sir, beyond enforcing best sourcing and offering cash grants to the SMEs and industries such as cleaning and F&B which host jobs that are typically low paying, low skill and low appeal, MOM should seriously assemble a team of job designing and job re-creation expertise to help transform these jobs.

I remember when I was a young officer at an American multi-national, all staff from production operators to our managing director must return our used utensils to a belt that led to the back of the cafe where the cafe workers then pick them up for washing.

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The cafe workers when they were not cleaning also took on additional duties in food preparation. Their uniforms were specially designed and all of us "internal customers" treated them with respect and dignity. This was the best practice some 20 years ago. It is sad that the cleaning and F&B sectors of today have not progressed that much or beyond that.

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I therefore seek MOM's further intervention to enhance the cleaning, lower-end F&B sectors, and the like. Can turn-around teams help study and design the jobs and the work environment in such a way that these jobs can be expanded and made more dignified? If these jobs are better designed and presented, perhaps fewer locals will shun the job and there is no need for such a high percentage of foreign workers in this industry.

Next, on Continuing Education and Training (CET) for the Disabled. Sir, the typical workforce in Singapore benefits from the structured CET that is rolled out very well by MOM under the WDA since the last recession. The CET programme for the able-bodied workforce has gone from strength to strength with expanded offerings and target groups like the PMEs. However, there is little attention or resources allocated to ensure that the workforce comprising the disabled (PWDs) is continually trained and can count on lifelong learning to ensure that their skills are relevant and their employment sustained. If the CET issue is not addressed, the Special Employment Credit for the disabled (PWDs) will lose impact soon as their skills will become obsolete due to a lack of lifelong structured training and development. I urge the Ministry to provide headcounts, expertise and funds to form a CET taskforce to work with key disability groups in Singapore to develop a future-proof special-needs workforce.

Finally, on Proactive Career Management. Sir, the Government has expended millions of dollars to ensure the Singapore workforce is relevant and can work for as long as they wish to. I wish to highlight the need to inculcate in all Singaporean workers, the PMEs especially, the ability to retrenchment- and future-proof themselves through more proactive career management on their own. Prevention is better than cure. It is often too late and too traumatic to receive career counselling only when one is retrenched or displaced, or about to be retrenched or displaced. I urge the Ministry to take the lead in launching bite-sized, multi-lingual training programmes delivered in the appropriate media, to coach Singaporeans, especially the PMEs, how to proactively manage their careers and make themselves retrenchment- and future-proof.

Changing Profile of Our Workforce

Mr Ang Wei Neng (Jurong): Mr Chairman, thank you for allowing me to touch on issues pertaining to the changing profile of our local workforce. Firstly, our local workforce is ageing. According to the annual reports on labour force in Singapore, about 18% of our workforce was more than 50 years old in 2001. In 2011, 10 years later, more than 30% was above 50 years old. The median age of our workforce had also increased from 38 years old in 2001 to 42 years old in 2011. In view of this, how can the Government help companies to change the way they operate to take into account the ageing workforce besides providing Special Employment Credit?

Secondly, as we transform our economy to be less reliant on foreign workers and seek expansion in new growth areas, how do we ensure that our CET system can stay relevant for the workers and employers? I understand that MOE is also pumping more resources into CET. Thus, how does MOM plan to coordinate with MOE in CET for better synergy?

Thirdly, MOE is working very hard to provide vocational training to Persons with Disabilities (PWDs). The desired outcome is to get more PWDs to be employed so that they can also contribute to the society. However, we cannot assume that the vocational training for the PWDs will last them a lifetime. PWDs need CET like any other workers. How can WDA or e2i help in this area?

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Mature Workers

Mr Seng Han Thong: Mr Chairman, when the labour movement advocated the review of CPF rate for mature workers last year, some employers were concerned that it might increase their manpower cost while others said that, that was the adjustment they had to make.

Similarly, many mature workers are of the view that their CPF should not be reduced just because they hit the age of 50 while other workers, especially the lower wage and contract workers, feared that their employers might lower their wage to offset any increase in CPF. That is what the Chinese say:“有人欢喜,有人愁” . There will be people who are happy; there will be people who will be worried.

The announcement of the Special Employment Credit indeed made everyone happy as the credit (8%) is adequate to cover the increase in mature workers' increased CPF rate. This is a good case of tripartism at work. However, to achieve the employment rate for older persons, aged 55 to 64, of 65% by year 2015, as the national target, the challenge of how to match the skill gap between the jobs available and the mature workers remains. We need the tripartite effort to resolve the issues at the workplace and most of which is how flexible we are in work arrangements.

For employers, may I suggest, instead of being inclined to ageism, we should look at ways of harnessing the "intrinsic value" of the older workers? There are definitely things which younger persons cannot do as well as the older persons. For employers, may I suggest to embrace opportunities given by employers to adopt new ways of applying the tacit knowledge which they possess? And for the Government, that is most important, to provide funding on training systems which facilitate such positive shift in employment of older workers. So instead of looking at just basic employability and vocational skills, there are soft skills which older persons need to acquire before they can transit to new jobs.

Senior Employees – Retirement Age

Mr David Ong (Jurong): Sir, many Members of this House have spoken about the ageing population. Yes, our population is ageing and the pattern of retirement is changing rapidly in Singapore. People are increasingly coming to terms and understanding the impact of living longer and the need to adequately prepare for an extended period in retirement. These changes in demographics represent a squeeze on those of working age, as well as on the Government, as we look to provide retirement incomes and healthcare for the ageing population.

The economic benefits of prolonging working lives should not be underestimated. There is a key link between health and productivity. If you have a population that is healthy and productive later into life, not only do they contribute longer to the economy, but they also help to lessen the burden on the society. Employers must prepare for a new employment landscape of an ageing society with a growing pool of older workers. This entails a change of mindset as to how employers perceive our senior workers who are and will get much fitter and able to work much longer than 65.

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Sir, allow me to relate two real life cases to illustrate my point. Albert, aged 62, is now working as a Property Officer. Although he is still healthy and energetic, he is worried that he will be told to retire or take on a lesser role in the same organisation soon. He wants to continue working in the same job that he believes he is good at. He knows that if he were asked to retire, it would be difficult for him to find a similar job. Albert feels that his performance is on par with his younger colleagues and if not better, considering his richer work experience and ability to relate better with people of all ages. He wonders why an older worker is viewed and treated differently.

My second example relates to Michael, aged 65, who will retire end of this month. He has been very loyal to the organisation, having worked there for over 40 years. He is on a yearly contract since reaching his retirement age two years ago. He is still able to work well with no let up in age, ability and agility. He receives good appraisals for his performance yearly and he is still able to contribute at the same level for another few more years. However, he now has to take on a lesser role in the same organisation. In fact, it is a waste for someone with a vast experience who is able to work and want to work, but has to retire or redeployed once he reaches retirement age. Sir, I am sure there are many more of such examples.

I would like to ask the Ministry to relook at the relevance of the retirement age and how it can help promote and support pro-elderly employment with no age discrimination or prejudice. People can be more productive into their 60s and 70s, and the last thing we want is to lose their talent and enthusiasm from the workplace due to an arbitrary retirement age. The Government can continue to actively support companies and older workers with training, job re-design and workplace restructuring. So, instead of justifying their employment purely from a cost and renewal angle, it is time employers recognise their contribution, loyalty, seniority and experience with a pay that is fair and just. There should not be any age discrimination where we have to make older workers cheaper to be employable. The concept of a "retirement age" is becoming irrelevant, whether it is a desire to stay connected or active at work, reach a certain nest-egg number, dealing with health-care costs, or grappling with mortgage debt, more workers are deciding to delay retirement.

Although the Government can help and support employers with various schemes to retain older workers, both public and private employers need to change their perception and attitudes on how we treat our older workers. It is time for employers to embrace them, treat them with dignity and give them a rightful place in our workforce. Taking the words of the hon Member Patrick Tay, it should be " work, learn, work, then play and come back to work again".

The Chairman: As we think about the concept of "work, learn, play and come back to work again", I propose that we take the break now.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.30 pm.

Sitting accordingly suspended

at 3.11 pm until 3.30 pm.

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Sitting resumed at 3.30 pm

[ Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

Head S (cont) –

Help for Workers and Companies

Ms Jessica Tan Soon Neo: Sir, ours is an open economy and with globalisation, Singapore's workforce and companies based in Singapore are vulnerable to the impact of the current global uncertainties and jobs of Singaporeans will be affected. In the event of a protracted subpar growth scenario in Singapore, will there be measures and help extended to workers and companies, especially those in the externally oriented sectors, to assist them to cope? Will there be programmes to help companies weather the impact of economic downturn and to prevent any large retrenchments and keep unemployment rate low? Will there be support to help workers retrain so that they will be able to move to other industry sectors that may be less affected and have employment growth opportunities?

Asia continues to present opportunities for growth despite the uncertain economic conditions that we see from the EU sovereign debt crisis as well as the current weak economic conditions in the US. What are the Ministry's strategies to provide assistance to companies and Singaporean workers to maintain and grow our employment base to continue to be able to capture the growth in Asia?

Transitional Unemployment

Mr Vikram Nair (Sembawang): Mr Chairman, I understand that the drive to raise wages for Singaporeans will involve bringing in new and higher-paying industries to Singapore. A corollary of this is that some other industries may die out. Now, in a recent Institute of Policy Studies called "Singapore Perspectives", economist Hui Weng Tat suggested a possible increase in structural unemployment. But, in particular, he noted a rising share of those among the unemployed with post-Secondary level education and a rising share of PMETs will be among those retrenched.

In The Straits Times report on 16 December, it is also noted that six in 10 workers retrenched between March and June last year were holding PMET positions. One of the other difficulties that The Straits Times reported was that only around half of the laid off PMETs managed to find jobs within six months. To me, this suggests that there exists a potential for structural unemployment. The people who might be heavily affected by this include the PMETs. Is there any assistance for people currently working in industries that may die out to ensure that they can get jobs in the new ones that may emerge?

The Minister of State for Manpower (BG [NS] Tan Chuan-Jin): Sir, I thank all Members for their thoughts and suggestions.

Let me begin by first saying that the focus of what I will be sharing today really is about developing a Singaporean core in our workforce. There are three main themes I would like to highlight. One, our responsibility is to make sure that good jobs are available for Singaporeans. Secondly, it is to make sure that there is a good work environment for our workers in Singapore and, in particular, I would like to highlight our older workers, the disabled, the low-wage earners, and also PMEs, which a number of Members have raised concerns about. And thirdly, it is about how we continue to develop Singaporeans in order to nurture them as well as to help them to remain employable so that they can provide for their families.

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Let me first start with an update of our labour market.

Last year, we created 121,300 new jobs. Our annual average overall unemployment rate dropped from 2.2% in 2010 to a 14-year low of 2% in 2011. These figures are lower than any of the 34 OECD member countries, and Asian NIEs like South Korea, Hong Kong and Taiwan.

For Singapore citizens, unemployment also fell from 3.4% in 2010 to 3% in 2011.

Ms Tan Su Shan raised a few questions. I would like to state that traditionally we have reported our manpower statistics based on the resident workforce as this is in line with international norms and reflects the labour market attributes and outcomes by differentiating the permanent pool of workers, which largely comprises Singaporeans, PRs and the non-transient population. Nonetheless, we also recognise that going forward, there is increasing public interest over how Singaporeans particularly are faring and how they are performing. So we complement our statistical publications on residents with occasional papers on Singaporeans in the workforce. For example, in October last year, we provided analysis and statistics on the employment rate, unemployment rate, and incomes of Singapore citizens. In addition, we are now regularly releasing key labour market outcomes for Singaporeans – for example, unemployment rate on a quarterly basis, median and 20th percentile incomes annually in our regular statistical releases.

To Ms Tan Su Shan's question, I think what is important is for us to look at the actual outcomes for Singaporeans – in terms of their income and employability because that ultimately is where the rubber hits the road. Despite going through three downturns in the last decade – at the turn of the century with the dotcom bubble burst, the SARS crisis and then the 2008 crisis – the median full-time Singaporean worker has done reasonably well. Real median income gains averaged 2% per annum in the last five years from 2006 to 2011. This is real median income. Including employer's CPF contributions, this would average about 2.5% per annum. At the 20th percentile level, the real income grew at 2.2% per annum between 2006 and 2011.

In contrast, median incomes have mostly either stagnated or declined in real terms in economies like Japan, the UK, the US and Taiwan.

The employment rate of Singaporeans aged 25 to 64 also grew steadily over the decade, from 73.7% in 2001 to 78% in 2011, and this is one of the highest internationally.

As shared earlier, unemployment is low. Even among Singaporean PMETs, it is low at 2.4% in 2011. We cite these figures, not to make ourselves feel better, but it is important to use them as reference points and markers to compare ourselves with how other developed countries are faring in this fairly challenging climate. And I would suggest that while the figures may seem low on its own but from a contextual basis in terms of how other countries are doing, in the midst of fairly difficult circumstances, I think we are not doing too badly.

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Ms Tan also talked about structural unemployment, which we monitor closely. One of the key indicators is the resident long-term unemployment rate. Our resident long-term unemployment rate is and remains low at 0.7% in 2010, and ranged from 0.5% to 1.4% in the past decade.

Our labour force has remained resilient through the ups and downs. From our perspective, a key reason is that the Continuing Education and Training (CET) system, and our education system, which is part of the larger landscape, has enabled our workforce to remain globally competitive. By being globally competitive, companies can thrive and when companies thrive, jobs are created for our people to keep them employed.

Let me now talk about CET and how we are looking at improving it. Mr Zainudin Nordin had asked for an update on what we have achieved with CET.

In 2011, almost a quarter of a million workers went through WSQ training, of which 68% were lower-skilled workers, and about 44% of them were aged 40 and above.

In a 2011, WDA survey of a very sizeable sample size, 12,500 trainees, most of them found WSQ training useful and this is from the trainees' perspective – 90% of them reported better work performance. I will elaborate later.

Mr Zainudin and Mr Ang Wei Neng also asked how we keep our CET system relevant. This is a very important question. Our WSQ is benchmarked against world standards which WDA develops in close consultation with key industry representatives because it does not make sense if the training has no relevance to the industries, so we try to make sure that it remains relevant. Currently, our WSQ system comprises 30 sectoral frameworks, with more than 14,000 courses. MOM works closely with MOE on a whole-of-Government approach towards CET.

Mr Zainudin also spoke about the need to have creative and innovative workers for a knowledge economy. Ms Jessica Tan asked how we can help locals seize good job opportunities through skills transfer.

We all know that the nature of work is evolving and the environment is changing as well and workers who are prepared to apply their skills in a more diverse and flexible way will stay relevant. What this means is that on-the-job training becomes critical. This is something that Mr Gerald Giam talked about, and this is something that we have been placing emphasis on and will continue to emphasise on that.

For instance, EDB's Initiatives in New Technology or what we call INTECH grant funds for training in such growth areas, and the Strategic Attachment and Training Programme (STRAT) funds overseas on-the-job training with leading companies. On average, over 3,500 locals were trained under these programmes annually over the past five years.

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Mr Zaqy Mohamad stated that Singaporeans are ready to take greater ownership over their personal development. I agree and think that this is important. WDA is seeking to make CET more accessible, personally relevant, and individual-centric.

By end March this year, WDA will launch its revamped website, where users can obtain information on industries and occupations, and identify suitable career options and training pathways for themselves.

For those who prefer further personalised assistance, they can still approach our career centres at the Community Development Councils (CDCs) and the Employment and Employability Institute (e2i).

Mr Patrick Tay, Mr Zaqy Mohamad and Mr Zainudin expressed concerns about the challenges facing PMEs and how we can help them with training and job facilitation. Mdm Halimah Yacob raised similar concerns during the Budget debate. We fully recognise that PMEs, who are the fastest growing segment of our workforce, have very diverse professional development needs and is a group that we need to pay attention to.

The percentage of employed Singaporeans in PMET jobs grew from 42% to almost half, 49% over the last 10 years. If we just look at PMEs alone, it is nearly 30% of employed Singaporeans.

We are therefore looking at how to improve our competency-based CET offerings for PMEs to complement our academic CET programmes, and we are open to suggestions from PMEs and employers on what would be most useful to them. Again, staying relevant is important, so feedback is critical.

The Skills Training for Excellence Programme (STEP) was introduced last year to better support the CET needs of our increasing PME workforce. Within one year, there are now more than 500 courses available under STEP and over 50,000 PMEs have undergone the various programmes. In addition, 360 STEP scholarships for Singaporeans valued at $12 million have been set aside for eight sectors, which include aerospace, retail, tourism and healthcare.

Many PMEs take initiative to upgrade themselves. But many have also fed back to us that they need more assistance to find the right job. This year, we will focus on employment facilitation and we will introduce three programmes to help PMEs:

Firstly, we will officially launch CaliberLink, a one-stop service point for PMEs that integrates training assistance with career services. CaliberLink will complement the existing career centres based at the CDCs as well as that operated by e2i.

PMEs can look forward to services such as career coaching, training advisory, career transition programmes, networking sessions with employers and employment facilitation. CaliberLink will allow us to effectively and holistically assist PMEs.

In December, I corresponded. I received an email from Mr Tan Wei Thong. He is a professional who, after working several years in China, wanted to return to Singapore to be closer to his family. He shared his views about what could be improved and shared about some of the challenges and difficulties he faced. I received an email from him actually just a few weeks ago, and he told me that career consultants at CaliberLink helped him with resume and interview skills workshops, and provided job referrals to prospective employers. The knowledge he gained complemented his own job search efforts and he found a job as a Director in a regional manufacturing company. I was very happy to receive that email from him. This is because CaliberLink is pretty much at a soft-launch stage, but to have such a response from the public at such an early stage, is encouraging. I hope he will be one of CaliberLink's many success stories in years to come.

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Secondly, WDA will appoint the Association of Small and Medium Enterprises (ASME) as a Programme Partner to manage Max Talent, which is a pilot Place-and-Train programme for SMEs to recruit and retain PMEs. So in the focus, in terms of helping PMEs, we are also looking at how do we then help SMEs in the process.

Some Members spoke about helping SMEs hire talented Singaporean workers. This programme, we believe, will help achieve this. Besides enhancing the talent pool and capabilities of SMEs, who traditionally would highlight that they find difficulties recruiting and attracting PMEs, it also widens opportunities for PMEs themselves and to realise that SMEs also offer very positive and very viable career opportunities. ASME will work closely with SMEs to provide PME vacancies and to help them improve their HR management. For PMEs, ASME will help to place them and equip them with the essential management skills and knowledge. The programme will start in April 2012. WDA will provide more details.

3.45 pm

Thirdly, we have studied how countries like Australia and the UK have successfully leveraged on the private sector in providing employment facilitation services. WDA has begun to engage private sector agencies, discussing with them how best to tap on their expertise and resources to improve our employment facilitation efforts to better match different segments of the workforce, including PMEs, to jobs.

Mr Patrick Tay has made many useful suggestions which we will consider as we refine our CET system to better support PMEs. As Members can see, PMEs is one big area of focus for us going forward this year and the years to come.

In terms of CET supporting the economic restructuring effort, Ms Jessica Tan and Mr Vikram Nair asked what we are doing to help companies and workers in a possible slowdown or during restructuring. Mr Heng Chee How suggested monitoring job displacements and matching displaced workers to firms who need workers. I think this is a very good suggestion and we fully support it. WDA and e2i will step up job seeker and employer outreach efforts as economic growth potentially slows this year.

Unemployed, vulnerable, and needy job seekers often have needs that go beyond job assistance. This is something important to recognise. Therefore WDA will now increasingly collaborate with community groups, grassroots and self-help groups to establish a structured referral process to ensure that these job-seekers get the comprehensive help that they need. Not just in terms of helping to find jobs but in the process of getting to know the applicants and their circumstances more personally, we may help to link some of them who have needs that go beyond the jobs, with the various agencies involved to provide a more complete set of assistance.

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There are also two additional measures that we intend to introduce.

Firstly, for companies, as Deputy Prime Minister Tharman announced in the Budget Speech, we will enhance training subsidies and absentee payroll support for SMEs. SMEs will receive 90% training subsidies when they send their local employees for the Singapore Workforce Skills Qualifications (WSQ) and other certifiable courses and academic CET courses. About 8,400 courses will potentially fall under this scheme.

Additionally, SMEs can also claim higher absentee payroll funding at 80% of basic hourly salary capped at $7.50 per hour. This is a significant increase over the current cap of $4.50 per hour. This three-year initiative takes effect from July 2012 and will cost an additional $30.5 million per year, benefiting an estimated 8,000 SMEs and 65,000 workers a year.

Secondly, for workers, WDA will expand the intakes of Place-and-Train (PnT) programmes, including the Professional Conversion Programme (PCP), and cover more growth sectors such as Animation and Biomedical Sciences. This will provide more options for those who are willing to consider a career switch, whether by choice or by circumstances.

Ms Vany Ramakrishnan, for example, successfully switched from working in a bank to leading a team of 35 Guest Service Agents in Marina Bay Sands after taking a WSQ Diploma in Tourism under the PCP. Through her dedication and diligence, she has been promoted twice after two years on the job and currently earns almost 50% more than when she first started.

Besides giving individual Singaporeans more pathways to fulfil their individual aspirations, our CET system is also designed to help businesses restructure and to improve their productivity through upgrading the skills of their workers.

Mr Zainudin and Ms Low Yen Ling asked how we will maximise our limited pool of workers and facilitate job-redesign to improve productivity. Our main strategy to achieve this is through the various productivity roadmaps which have been endorsed by the National Productivity and Continuing Education Council (NPCEC).

CET plays a very important role in these roadmaps by ensuring that our workers have the required skills to be more productive. We have made good progress and already have CET strategies for nine of 16 NPCEC sectors. And we will continue to work hard at this.

For instance, in the Precision Engineering productivity roadmap, WDA, together with EDB, SPRING and Nanyang Polytechnic, will be nurturing 2,800 highly skilled Master Craftsmen in Singapore over 10 years. Through the establishment of a progressive career pathway and WSQ training certifications, we will enhance the attraction and retention of skilled craftsmen in the industry. WDA will be providing $7.7 million to support this initiative, which will enable our companies and workers to move into more complex and higher value-added activities.

All our efforts to raise productivity of workers rely on businesses that believe in the value of training good people, and workers that believe in taking the step to up-skill and contribute more. It takes two hands to clap, and the Government and the agencies will step in to facilitate that process.

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The right team can make significant improvements at the workplace – Advanex is a manufacturing firm that sent 10 of its managers for WSQ productivity training in 2010. Subsequently, they streamlined some of their work processes to halve the number of steps and reduce the time needed by three-quarters. They even managed to save enough floor space to start renting the excess to other users.

Mr Christopher de Souza spoke about the importance of improving productivity so that workers benefit. Advanex did just that by leveraging on WSQ courses and their employees' creativity. And this is what we hope to see more of; because it shows how productivity improvements can be simple, can be ground-up, but produce very real and very significant impact for companies and for workers.

On bringing economically inactive Singaporeans back to work – several Members have asked how we can help them or vulnerable workers participate more fully in the workplace and to contribute more. Tapping this latent pool of workers can also help companies address their manpower needs in a tight labour market. The numbers go up to about slightly over 150,000 of them.

Mr Teo Siong Seng proposed waiving CPF contributions for employers who recruit home-makers for part-time work. Now, while this may lower the cost of hiring these workers, it will be, in their case, at the expense of their retirement adequacy because many of them would have very little CPF to begin with, because they have been out of work for a long time. Many home-makers actually choose not to rejoin the workforce largely because of a lack in suitable flexible working arrangements, or because they lack the confidence and skills to go back to work.

Hence, our approach is to both tackle the barriers to them re-entering the workforce as well as to give them the opportunity for skills upgrading through CET. As Members Mr Low Thia Khiang and Ms Mary Liew pointed out, one of the first things that needs to be done is to promote flexible work arrangements. Flexi-Works! Scheme and the Work-Life Works! (WoW!) Fund help companies do this. In 2010, 35% of establishments offered at least one form of work-life arrangement to their employees, up from 25% in 2007.

Despite the progress, there is still much that the Government and tripartite partners can do. During the Budget debate, Mdm Halimah called for the review of our assistance schemes. Ms Mary Liew also asked if we could make these schemes more user-friendly and less restrictive.

So, together with our tripartite partners, we will review and improve Flexi-Works!

Home-Fix is one company that has tapped on the Flexi-Works! Scheme. They offer flexible work timings and permanent part-time arrangements which allows them to hire economically inactive persons such as housewives, who are then able to balance work and care-giving responsibilities.

Ms Georgiana Francis is one such employee who managed to re-enter the workforce, even while she had a young child to care for, due to the permanent part-time arrangement offered by Home-Fix. Clearly, providing flexibility in working arrangements can attract economically inactive persons back to the workforce and allow workers to better manage both work and family responsibilities. And as we begin to tighten the workforce, in terms of the availability of the foreign workforce, I think this is one area which companies should seriously consider expanding so that we can look at bringing more of these people into the workforce.

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My colleague, Senior Parliamentary Secretary Hawazi Daipi will speak more on low-wage workers later. Let me just say that the CET needs of vulnerable workers are of key concern to us. Ms Sylvia Lim asked how much low-wage workers benefit from training. I think that is a valid and important question. In fact we asked that of ourselves all the time, not just for low-wage workers, but for all workers – does training help? Mr Low Thia Kiang also asked about the effectiveness of these training programmes. As Ms Lim had noted, the Workfare programme provides both an income supplement and generous training incentives. In 2011, close to 50,000 low-wage workers benefited from the Workfare Training Support (WTS).

Training alone may not lead to immediate wage improvements. Rather, it must be a result of improved productivity which, amongst other factors, depends on the knowledge and skills of the worker and whether these are effectively applied to the job and workplace. It is true that sometimes actual improvements in profits may not filter down to the workers immediately, but a rational employer would have to do his calculations and adjust wages commensurate. And this is something that we will encourage companies to do. Otherwise, he would not be able to retain his good staff.

Ms Lim mentioned data from WDA's annual WSQ Training Outcome Evaluation Survey. In 2011, 90% of low-wage workers said they performed better at work as a result of the training. This is from the low-wage workers' perspective. This is not a feedback on the courses itself but after they have re-joined the workforce. Ninety-five percent of companies surveyed also agreed that the training improved the performance of their low-wage employees. In addition, 88% of low-wage trainees indicated that they will continue to take up other WSQ courses. So this is actually very important because it shows that for the workers themselves, they find a tremendous value in undergoing this training. And I would suggest that it is not just in terms of skills, but because they are better skilled, I think it also brings with that a higher degree of confidence and also enhanced their own respectability at their workplace. And this can only auger well for the long-term for the individual.

That such a large proportion indicated they are willing to continue training, I think it is an indication of WSQ training. But this is something that we will continue to monitor and to make sure that we improve. And we recognise there are costs to training. But these should not stop workers from taking the first step because even a little training will go a long way. For example, Mr Mohamed Hardi was previously working as an odd-job worker. Career consultants at Northwest CDC helped him enrol in a five-day Forklift Driver Training Course and find a job at Caterpillar Pte Ltd for an almost 50% increase in salary.

We cite real life examples to illustrate possibilities and inspire Singaporeans to continuously upgrade and up-skill. And they are not exceptions but realities which Singaporeans should aspire for. Like I said earlier, the feedback from the workers themselves is a clear indicator of the value that these training provide for older workers.

Mr Seng Han Thong spoke about how it is important to help older workers go for training. As I shared earlier, 44% of people who obtained WSQ training in 2011 were above 40. That is about 109,000 older workers. The perception among some employers that older workers benefit less from training is something we hope to correct.

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In fact, older workers who go for training are more likely than younger workers to have a positive experience. From the earlier mentioned survey, we also found that 82% of workers aged 50 and above found training useful, as compared to 77% of workers aged 30 and below. Seventy-four percent of older workers were also more motivated at work, as compared to 66% of younger workers. And this feedback is something that companies should pay attention to as well as to look at who they might choose to employ, especially as we are now encouraging re-employment; and this something that reflects well of older workers.

Our CET system must also be inclusive and cater to Singaporeans with special needs. Ms Denise Phua and Mr Ang Wei Neng have suggested extending CET to persons with disabilities. Given the customised needs, our approach is to let organisations with expertise in this field take the lead in developing such programmes and WDA will play the supporting role. For example, the Centres for Training and Integration (CTIs) initiated by the Enabling Employers Network (EEN) and supported by MCYS and NCSS provide structured training for persons with disabilities through on-the-job training and placement programmes. WDA has been supporting these programmes since July 2011, and will provide over $600,000 in funding.

WDA will also provide 90% pilot funding for Workplace Literacy and Numeracy (WPLN) assessment for students from selected Special Education Schools, Assumption Pathway School and Northlight School. The WPLN credentials are recognised in lieu of GCE qualifications by about 3,700 employers and allow progression to vocational education courses. We hope that more employers will come on board.

4.00 pm

As we restructure our economy for sustainable growth, we need to ensure that this growth is inclusive. Mr Zainudin Nordin spoke about the importance of preparing our workforce and workplaces for an ageing population. The ageing population is a demographic reality. This is something that is going to happen. The percentage of our labour force aged 55 and above has more than doubled from 8.5% in 2001 to 18.2% in 2011. The employment rate for residents aged 55 to 64, encouragingly, rose to a new high of 61.2% in 2011 from 59% in 2010. Our older workers will also become more educated over time. The experienced and valuable members of our workforce who can contribute long into their silver years, with the right workplace arrangements. Many companies are already recognising this.

Based on findings from MOM's 2011 Survey on Retirement and Re-employment Practices, the proportion of companies that allow the employees to work past 62 has increased from 77% in 2010 to 79% in 2011. With the Retirement and Re-employment Act (RRA) in effect since 1 January this year, we expect the employment rate of older residents to continue to improve towards our target of 65% by 2015 which will bring us closer to the older worker employment rates in mature economies such as Japan and Sweden.

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We want to ensure older Singaporeans always have the choice to keep working if they are able to and if they want to, whether to better sustain ourselves in retirement or simply to remain active in society and to derive satisfaction from a meaningful job. We will help older Singaporeans who want to keep working in two main ways.

Firstly, the enhancement of a Special Employment Credit (SEC). As outlined in the Budget Speech, the SEC will be enhanced from this year to provide employers with continuing support to hire older Singaporeans. Mr Teo Siong Seng had asked whether if we could lift the wage cap of SEC for PMEs who earn higher than $4,000 to benefit. In the Budget debate, Mr Patrick Tay expressed similar concerns for the employability of older PMEs due to increase in CPF contribution rates. This group of PMEs would largely comprise senior executives and professionals. Some of them clearly with deep expertise and experience will continue to be highly sought after. But there will also be those who will find difficulties in their new job late in their careers. We will be introducing several job facilitation schemes targeted at PMEs this year to help them. And some of these have been elaborated earlier.

Spreading out our SEC budget thinly to cover all older workers, including such senior executives, would mean that we can only give SEC up to 4% wages, instead of the 8% we currently give. It is instructive to know that at $3,000, SEC covers about 70% of older Singaporeans. As it moves up to $4,000, it covers 80%. The SEC itself actually covers between 70% and 80% of our older workers.

Second, the ADVANTAGE! Scheme will be extended until March 2013, to provide generous funding support to help companies to re-design jobs, work processes and workplaces to make them more age-friendly. I totally agree with Mr Low Thia Kiang that integrating older workers into the workforce requires different approaches for different groups. The best way to illustrate this is to show the example of St Luke's Eldercare who has re-designed jobs for its older workers.

They are a voluntary welfare organisation that offers care services for seniors. Over 90% of its local staff are aged 40 and above. St Luke's recognises the importance of enhancing its work processes to make it age-friendly.

So, with the help of the ADVANTAGE!, they equipped all passenger vans with hydraulic wheelchair lifters. This is a very simple idea and a very simple enhancement, but one that has a big impact on helping its older workers perform their jobs better. It reduces the physical strain on the care staff and drivers. Every day they have to lift the immobile elderly up onto the vehicles and with this simple device it has made it a lot easier for them. And this also reduces the number of employees needed to perform certain tasks.

Mr Ang Wei Neng asked what we are doing to help companies change the way we operate to fit an ageing workforce. I think St Luke's Eldercare harnessing ADVANTAGE! is one good example of how it can be done and we encourage more companies to follow suit.

Mr David Ong also suggested doing away with the statutory minimum retirement age, something which has been talked about. There are many different models out there in the world. We have surveyed and taken a look and explored the various models, and we have decided to adapt our re-employment model from Japan. And Japan today enjoys one of the highest employment rates for older workers.

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So, the RRA had only come into effect this year and implementation has by and large been smooth. Nonetheless, we need to monitor its progress and to make sure that it remains effective. We must also continue to equip our workforce with the right skills. Employers should take the initiative to encourage the development of their older employees and the adoption of age-friendly jobs at workplaces. I think we all need a concerted effort by society at large because there is a fundamental belief in the value of older workers in the contributions they can make. And it is important for us to remember that as we look after older workers, the younger workers are also looking on because they eventually themselves will also become older workers themselves. I think it is also a reflection of the values that we hold as a society in terms of how we regard our older workers.

Let me now move on to the topic on managing the inflow of foreign workers. As the Committee would have appreciated during the Budget debate, there are really no easy answers to the issue of foreign manpower. Despite the various measures announced, such as SEC, some have asked why we have not done more and implemented more quickly? On the other hand, we also hear from Singapore business owners and HR managers who say that changes have taken place way too suddenly and will affect their operations and plans. Can we calibrate it? Can we hold back? Can we slow it down? We fully understand where all these different perspectives are coming from. I think their concerns and frustrations are valid from their perspectives. However, as a Government, we have to manage all these tensions that pull in different directions. We need to find a balance where our economy can thrive and create better jobs for Singaporeans. That, at the core of it, is what we are trying to.

Meanwhile, we must ensure that Singaporeans remain at the core of the workforce. Members, Jessica Tan, Foo Mee Har and Mary Liew, have asked how we can encourage employers to develop Singaporeans as a core of their workforce. The tripartite partners released a set of guidelines on developing a Singaporean core last October. Employers are expected to adhere to the guidelines. They should make reasonable efforts to attract and consider Singaporeans for job positions on merit and to train and develop the potential and careers. Since the launch of these guidelines, the Tripartite Alliance for Fair Employment Practices (TAFEP) has reached out to employers and responded to allegations of discriminatory employment practices. So far, each employer that TAFEP had approached, following a complaint, understood and accepted the need to abide by these guidelines.

Most employers believe it is in their interest to develop Singaporean workers and they do not condone discrimination. We met a number of CEOs in our various dialogues and one of them, who was quite forthright, said that he was genuinely surprised to hear TAFEP's feedback and feedback from his own Singaporean employees themselves about how some perceived discrimination was taking place at the workplace. He said that he would address this issue. Many employers have shown TAFEP their efforts to recruit Singaporeans. Some have even taken extra steps to review the hiring patterns of the individual business units to check for and to address biases.

Alongside these guidelines, which are important, I think we also have another arm of our effort which is to ensure the quality of foreign manpower. Mr Heng Chee How has expressed concerns about the possible sharp rise in the Employment Pass (EP) stock during an economic upturn. Mdm Foo Mee Har suggested employers show proof that they try to hire Singaporeans before being allowed to hire EP holders.

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Requiring such proof will subject employers to additional administrative hurdle, lengthen their hiring process and add more friction, costs and rigidities. It will be more onerous for employers, particularly SMEs, who may have other pressing HR needs and fewer resources, to deliver such proof quickly and affordably. And we think that it will affect labour market flexibility and that is a key part of our competitiveness and this will also affect the viability of some of these companies in their decisions to come or stay here. And that in turn will affect creating jobs in Singapore. But this is something we have to bear in mind and we have decided to take a more pragmatic approach for now, to regularly review our EP criteria to ensure that only high-calibre EP holders are brought in to complement our local PMEs.

With regard to PMEs, as highlighted earlier, a tremendous amount of effort will be put in to help all PMEs not only just upgrade themselves but in terms of job facilitation as well. We recently took two significant steps. The first was in July 2011 when we raised the salary requirement for EP holders. Then again in January this year, we raised salary requirement as well as tightened quite significantly their legibility criteria. I would like to remind Members that we have to be very careful in these policies. We need to find the right balance. The skilled foreign manpower bring with them expertise, knowledge and network that our economy needs in order to grow and create better jobs for both our PMEs and rank-and-file Singaporeans. I think having an open and diverse workforce is important to Singapore because not only for Singaporean companies but foreign companies. It ensures that they remain viable and they are able to thrive and, in so doing, they create jobs for Singaporeans.

Mr Zaqy Mohamad asked how EP holders have been affected by our tightening measures as compared to the Work Pass and S Pass. It is not possible to compare the impact of the measures as they have been introduced for the various Work Pass categories and they are quite different. And we target the foreign workers quite differently. The measures for EP holders focus on raising quality while those on S Pass and Work Permit holders are mainly price mechanisms – that is, levy increases – to moderate growth in numbers.

We are only halfway through the levy increases which began in July 2010 and will run through July 2013 while the EP tightening measures only took effect last month. As Deputy Prime Minister said earlier, if the foreign workforce continues to grow rapidly despite all these measures, we will have to further consider changes and further measures to dampen reliance on foreign workers. These steps have been taken in the last few years. The economy has been doing well, companies have been doing well. So, notwithstanding all that, the demand has continued to be quite high. So, this is why we are stepping up our efforts to manage the numbers.

Let me now spend some time to talk about the Dependency Ratio Ceilings (DRCs). Several Members today and at the Budget debate, suggested a finer differentiation of the DRCs between industries rather than just between the various broad sectors.

Mr Low Thia Kiang suggested tightening DRCs in industries where Singaporeans can be trained to take up jobs and relaxing them in industries which have difficulties attracting Singaporeans. Our broad sectoral approach already recognises that in some sectors like construction, it is much harder to attract Singaporeans. That is why their DRCs are more generous.

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This concern that Mr Low and other Members have raised is a very relevant one. Our current approach takes it into account. The question really is about the practical side and the implementation side of the house. It is about how much more can we go down into the details and how much more finely we can disaggregate the industries, while still achieving, and it is important to remember this, the broader objectives of reducing overall growth of foreign workers to within one-third of the workforce and boosting productivity. Those objectives remain important.

Deputy Prime Minister Tharman addressed this issue earlier but let me take the opportunity to reiterate. There are three reasons to highlight. Firstly, we need to achieve an overall reduction in the growth of foreign workers but most industries that we speak to – the companies, in the emails they send us and when they come to speak to us at the various dialogues, say that they are different, they cannot find Singaporeans, they need to have more foreign workers. Almost consistently, many of them will say that they need more foreign workers. In fact, the industries calling for more foreign workers are the same ones that contributed most to the foreign workforce growth in the past five years. Mr Low's point about easing the DRCs in sectors such as these where they find it difficult to hire Singaporeans, would have the effect of opening the floodgates further because many of these companies themselves are already hiring many foreign workers. So, it is something we need to be very careful about.

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Furthermore, these companies also have much lower productivity levels as compared to their counterparts in developed countries. So the construction industry is one which I highlighted earlier. I would acknowledge that it is not easy to bring in young Singaporeans into that sector but it is a very large industry. There are some of the more professional jobs which we believe, by a change in job scope, by change in the income levels or the wage levels, young Singaporeans could be attracted to move in. But, importantly, in terms of the reliance on foreign workers, it is an industry that has way too many foreign workers when you compare to the construction industry, say, in Australia, and some of the developed countries, say, in Japan. So we believe that by tightening this in some of these sectors, it will force productivity improvements and that, in turn, would have a significant impact on the overall numbers of foreign workers in Singapore.

To give more liberal DRCs to some of these industries will actually lead to fairly perverse outcomes. They will constrain the growth of high-productivity industries, because remember, the overall objective is to bring down and to manage the overall numbers. As we liberalise in some of these sectors, which actually draw on many foreign workers, it will mean that some of the high-productivity industries, we will need to tighten it and actually that will affect them more significantly. So it will be actually counter-intuitive because it will constrain the growth of high-productivity industries while we incentivise some of the low-productivity industries. And this will also affect their capacity to create more jobs and good jobs for Singaporeans.

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Secondly, we cannot and should not take it as a given that it is difficult to hire Singaporeans today and therefore it will remain so. I think if we look at many of the developed countries in Europe, for example; and Germany is a good example, some of the jobs that Singaporeans seem to shun here – educated, competent Germans are undertaking those jobs. In the same way, we believe that a lot of it has got to do with how we re-design the work and the work environment, and wages also have to move. So if we continue to give such industries more foreign workers, they will not have any incentive to improve productivity and change the nature of work in order to draw in Singaporeans into these areas. These good jobs can be created. And I totally agree with Ms Denise Phua who raised that we need to re-design jobs and the environment. In developed countries, we see that happening and we believe that this can be done in Singapore as well.

Several industries experiencing manpower shortages have conceded that remuneration, job image and work conditions are, in fact, important factors which need to be addressed to attract local workers. And this is something that we believe can be done and should be done.

Industry associations play a very important role in this. Mr Zaqy Mohamad asked how MOM plans to help SMEs share best practices for productivity gains. This sharing of best practices is quite critical. You will find in industry one company complaining about how difficult it is, but in the same industry, a rival competitor took everything on board, began to change and actually began to thrive. How do we manage the exchange of good practices and ideas? It is not easy but it is something that we should endeavour to do and that is where associations and federations come in. My Ministry has already started work with the Singapore Retail Association and the Singapore Hotel Association on initiatives to attract locals and to increase productivity, including industry benchmarking and job re-design.

Thirdly, industry-specific DRCs are difficult to implement in reality. Mr Low Thia Kiang also acknowledged that actually the range of SME operations is very complex. We fully agree. It is exceedingly complex. And it is precisely because it is complex that it is very difficult to then go in and start differentiating every industry because every one is fairly unique in their own way and will have their arguments about why they should benefit from more liberal DRCs. It is important to also highlight this point with regard to the DRC that, actually, most companies in Singapore are not maximising their DRCs. There is still space for them to hire Singaporeans and to hire foreign workers, if they need to.

The boundaries between industries are not clear-cut. As Deputy Prime Minister Tharman explained, especially for some of the bigger companies, they may reside in terms of their work nature, they are both production, manufacturing as well as services. For some of these companies, you actually provide them an advantage over the very SMEs that some of the Members have raised about why we should look after them. This is why we think that having a broader-based sectoral approach would make sense.

The detailed micro-management of DRCs will literally amount to a central planning system for the allocation of labour. The fact is that technology changes, jobs change, work environment changes. We have seen that happen even within the span of just a few years. It will become very difficult for the Government to be constantly tweaking the system to allocate foreign workers differently, as industry and work conditions change. This has a tremendous impact in terms of uncertainty for businesses and it will affect their long-term planning and investments. Firms would not know whether to invest in productivity to try to attract locals or not, or to wait for more liberal DRC. Such a system would also be prone to constant lobbying, which would unfairly advantage the well-resourced and the larger industries, to the detriment of the smaller ones, particularly the SMEs.

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Let me just say that this is a very complex landscape. It is precisely because it is complex that we need to adapt for this. Our foreign labour framework basically operates as such: there is a DRC and there is a foreign worker levy. The DRC system, we look at the context, the nature of the different sectors, and we define broadly the different DRCs for the work space at large. These define the boundaries. The foreign worker levy will then be the precise tool that will delve into the details and into this complex world. It is transparent, everybody knows what the foreign worker levy is, and companies will then decide how much they are prepared to pay. If they are not prepared to pay, then they re-engineer and change the process. We believe that this system has worked well for Singapore. This is why, in terms of our basic approach, we believe that having this combination of the DRCs, which is differentiated across the broad sectors, and the levy, will be the mechanism that makes sense for us.

Mr Low also suggested that differentiated DRCs would help low-wage workers. We are quite concerned about this because having liberal DRCs in some of these industries which we assume Singaporeans would not be interested in, may actually have the opposite effect. For example, allowing more low-cost foreign workers in the cleaning industry would actually undo many of the initiatives we are taking to encourage companies to best-source. We believe that even in the cleaning industry, there are good jobs for Singaporeans. Liberalising the DRCs will permanently keep out the older and low-wage Singaporeans who may find relevant employment in these industries. Those who remain, more likely than not, will continue to see stagnant wages and poor working conditions because firms are not pressured to restructure. These jobs, we believe, like many other jobs, have the potential to be good jobs, and it is possible to make them so for Singaporeans in the industry. We need to do this re-design across the whole spectrum of jobs that are in Singapore.

As Mr Zaqy Mohamad has asked, we are aware of the pressure on healthcare and social services. That is why we do have focused substantial attention on them through the NPCEC to help them improve their productivity and efficiency by adopting technology and best practices.

MOH and MCYS will talk more about the strategy to ensure adequacy of healthcare and social services manpower, and enhance the attractiveness of careers to Singaporeans in these two sectors during the COS debates. MOM will continue to support the two Ministries to ensure that these two sectors have the necessary manpower to deliver their essential services to Singaporeans.

Members Zaqy Mohamad, Christopher de Souza and Nicholas Fang are concerned about the effect of tighter access to foreign workers on local firms and inflation. Mr Low Thia Kiang also raised that point.

We are aware of the pitfalls and that is why our DRC reductions affect a small proportion of firms, especially those with the highest reliance on foreign workers. These firms largely need only to replace one or two foreign workers, and they have two years to do so. And we believe that there is adequate time for them to re-design and adjust. All our efforts are aimed at encouraging firms to pursue productivity improvements now, a move that will not happen soon enough if we continue with generous DRCs or, as suggested by Mrs Lina Chiam, an elimination of the levy altogether.

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Our objective must be – and it is important to come back to the objective – to upgrade and restructure our economy. It is painful but it is something we need to do now, to avoid the pain that we will suffer later as competition continues to rise in the surrounding region and beyond. But we know that the current balance must be adjusted carefully. For firms that need help to adjust to the new environment, we want them to use our generous schemes to restructure and to thrive. This is the best way to help companies make the necessary transition. We cannot afford to keep postponing this.

Let me sum up our focus. At the heart of everything, our people remain at the centre of what we do. We create the conditions to provide good jobs for them. Being able to stand on one's own two feet and to respect the dignity that comes with work, are part of the ethos that our forefathers have handed down to us. When we talk of the low-income earners, notwithstanding the wide range of assistance provided, we believe that providing jobs is the best form of welfare. So when we talk about economic growth, it is not just for economic growth alone. It is not just about the GDP numbers. It is about providing an environment where good jobs can exist for Singaporeans.

As you can tell, developing and nurturing our people is one of our core areas of emphasis. Our CET focus is extensive in scope and breadth, and it complements our education system. This year, we have placed great emphases on PMEs and to assist SMEs. To keep growth inclusive, we are looking out for our elderly and disabled. Low-wage workers are a big focal point and would be covered in greater detail by my colleague, Mr Hawazi.

Managing our foreign workforce is also an important ongoing effort as we seek to maintain our competitiveness while, at the same time, manage the overall numbers and its impact on society.

I would like to take the opportunity to thank our stakeholders and the public for all their inputs and suggestions, many of which we have taken onboard to factor into some of the measures we have highlighted. Most significantly, I need to thank our tripartite partners. Where many countries find that this is a point of conflict, in Singapore, it is a tremendous source of strength where the Government, unions, workers and employers can come together for a common cause.

Enhanced Support for Low-wage Workers

Mr Zaqy Mohamad (Chua Chu Kang): Mr Chairman, as a result of reduced CPF contributions for older workers over the years, many seniors today have seen their CPF under-contributed to face today's higher cost of living. These older workers, especially those above 60, have low levels of CPF savings due to the lower CPF rates in the last 20 years. Today, many of them also find it more difficult to make ends meet with a limited income and CPF savings. What can the Government do to help our older workers in this category? While the CPF is important, what many of these older workers really need is cash-in-hand to deal with immediate needs of the day, that is, the rising costs of living in stagnant wages. For older workers, I also urge the Government to consider releasing WIS payments more regularly to help them ease their financial burden. Many of our younger low-wage workers, they are daily-rated freelancers or paid-on-project basis. They face a dilemma which some employers are happy to exploit. These employers compensate them with more cash rather than CPF contributions because it seems a win-win situation for both sides. However, without CPF contributions, these low-wage workers will lose out on many of our Government schemes, such as the WIS and housing benefits. How could we better educate them on the disadvantages of doing this? And what measures are in place to prevent such exploitations by employers against our younger low-wage workers?

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Minding the Income Gap

Mr Laurence Lien (Nominated Member): Mr Chairman, many Members before me have spoken on the important topic of bridging the income gap. But before adding to the list of programme suggestions, I would like to suggest we have better research on Singaporeans' lifecycle of earnings and industry-specific realities.

In MOF's recent research on social mobility, it focused on relative social mobility, or people going up and down the income ladder. There is something unsettling about the research. Yes, we want social mobility and incomes of the lower income to go up. But I do not think we want to do this by pushing the high-income and middle-income earners down the ladder. And we know already of many middle-income earners, who face declining income. Hence, we must worry about declining incomes at all income levels.

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Specifically, we need more longitudinal tracking of Singaporeans at the 50th percentile and below income levels. Cross-sectional data gives an incomplete picture of reality as people are dropping in and out of the data set across time periods. Incomes may also have risen because people are working longer hours or taking two jobs in order to cope.

I would also suggest a study to identify the types of jobs that pay these low and declining wages, and to see if structural changes can be made or even industry-specific programmes and incentives given for employers to pay fairer wages. For example, the PAP Town Councils are now paying their cleaners more. How do we get the private sector to follow suit, where cleaners typically earn only around $4 an hour? Better still, how do we bring cleaners into private homes, where hourly rates can even go up to $15 an hour? We need better studies on the factors that affect wages.

Today, in Singapore, we have the highest density of millionaires in the world, earning among the highest salaries, paying among the lowest taxes and purchasing many services at Third-World prices. We have to change this. As mentioned by Mr Ho Kwon Ping and The Straits Times c orrespondent Radha Basu recently, society and employers need a mindset change to bear the cost of raising the wages at the bottom.

Companies need to practise Corporate Social Responsibility (CSR). Part of good CSR is to train workers well and pay them a fair wage. Companies need to sort out how they earn their profits first, before they do corporate philanthropy to the very same people who might not need their help if they were paid better wages.

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We need more social entrepreneurs like Ms Elim Chew and Ms Sim Sin Sin, successful entrepreneurs who have also put much effort into creating opportunities for the less advantaged to hold stable employment.

Lastly, we also need more extensive job and lifeskills counselling. Such counselling is not just for the unemployed or about setting job expectations right. For many, it is also about a personal encouragement and having self-confidence boosted. This may be more effective than any material incentive to upgrade. Deputy Prime Minister Tharman talked about bringing respect for certain jobs. What is even more needed is their respect for themselves and other people's respect for them.

Workers in Refuse Collection

Mrs Lina Chiam: Sir, we need to take care of our workers in the waste collection industry, whether they are locals or foreigners, since the nature of their work can be quite hazardous physically and biologically.

From personal observations as well as from reports from others, these workers sometimes do not seem to be well covered and protected in their attire. Sometimes they may wear gloves only on one hand and not both; they may be in slippers whereas they should rightly be in boots. They should be also wearing protective hats to protect themselves from killer litter, if there is any.

Some feedback I have received indicate that proper attire for these workers are the norm in other countries and I think that Singapore should follow suit as well.

May I verify with the Minister for Manpower what sort of regulations are in place to protect workers in waste collection, in terms of protective attire and uniforms, and what are the plans to step these up?

Low-wage Contract and Casual Workers

Mr Zainudin Nordin: Sir, I am very happy that the Government has announced that it will only provide contract cleaning and security staff from a list of accredited companies. The underlying motivation is to ensure that workers in these industries are paid a fair wage for their work, and hopefully, companies will be spurred to improve their productivity through upgrading and the use of technology. This is, in fact, a very positive development. But I hope, Sir, we will see more sectors would be considered for this initiative.

Sir, almost all Members in this House have residents who are from low-wage groups, and work as casual and contract workers. Many residents' lives would be significantly improved if only they had better employment conditions, and their employers sought ways to improve their wages through improving productivity, rather than think of ways of reducing or cutting their wage.

Sir, I am totally against the removal of CPF contribution by employers for part-time or casual workers. This could amount to a significant cut to an already low-wage group of employees. Rather than cutting their CPF, we should consider asking the companies to improve productivity and send their workers for training, which will in turn be positive for the companies. I believe that we also need to understand the situation of low-wage and casual contract workers in many other industries.

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Could MOM share information whether the number of low-wage, casual and contract workers has been increasing over the years and what are the plans to improve the situation of the casual and contract workers?

Are these workers being paid a fair wage and receive their proper rights as stipulated in the Employment Act? Do they or their employers contribute to CPF at the correct rates? Is MOM aware of any practices or loopholes that allow employers to avoid paying CPF or shirk from their statutory responsibilities to their workers?

Best Sourcing

Mr Zainal Sapari (Pasir Ris-Punggol): Sir, the economic climate in the coming years will bear great challenges for our companies and workers as we restructure our economy. I believe it is important that we embark on this restructuring when our economy is strong and the Government is in a strong position to provide the necessary support to our companies and workers to make the necessary adjustment.

With regard to the support given to help low-wage workers, I would like to touch on two areas: Workfare Income Supplement and Best Sourcing.

Sir, the Workfare Income Supplement is a permanent scheme put in place by the Government to encourage older, low-wage workers to find and stay in work, and to help them save for their long-term needs. There have been many strong calls for the scheme to be improved. These include calls for the cash component to be increased; to factor in inflation to determine the quantum; to review the criteria for the maximum payout and many others. I would like to ask whether the Government would be making further enhancements to it based on the feedback from the ground.

On Best Sourcing. Sir, I am heartened by the Government's pledge to take the lead in Best Sourcing as it demonstrates that the Government agencies are responsible service buyers. While this is a good move, I would like to propose some measures, based on feedback that I received from the industry players, to make the impact of Best Sourcing more systemic across Government and private sectors to benefit more low-wage workers.

First, I would like to propose for the Government to consider introducing legislation where all service buyers will be held accountable for the employment conditions of the outsourced workers working under their contract. This would be similar to the Work Safety Health legislation where the main contractor is held responsible for ensuring safety of all workers, regardless if they are subcontractors, as long as they are working at the worksite. This legislation will ensure service buyers, regardless whether they are from Government or private sector, to be more careful in awarding contracts and will only award to reliable service providers with good human resource and employment practices that are in compliance with the Employment Act and conform to good practices as being advocated in Best Sourcing.

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Second, I would like to call upon the Government to study the possibility of reviewing existing Government contracts to ensure they are aligned with the Best Sourcing guideline. This is to ensure that our outsourced workers can get the necessary wage adjustment and not having to wait for the contract to end.

Third, I am pleased that MOM is working with its tripartite partners to leverage on the existing cleaning and security accreditations framework to help workers in these industries earn better wages and employment terms. Currently, the Government is working only on the cleaning and security sectors. I would like to ask for the plan or approaches with regard to other sectors where there are low-wage workers, such as landscaping, retail, logistics, F&B and others.

Sir, there is a great urgency to help low-wage workers earn better wages. We need to go beyond moral suasion and leading by example because it is a long road ahead requiring more affirmative action to be taken.

The Senior Parliamentary Secretary to the Minister for Manpower (Mr Hawazi Daipi): Sir, Deputy Prime Minister Tharman and Minister of State Tan have given the House an overview of the measures our Ministry will take over the coming fiscal year to help Singaporeans achieve retirement adequacy and to build a Singaporean core in our workforce. I will now touch on the measures to help low-income Singaporeans benefit from our economic growth.

As we have heard from Deputy Prime Minister Tharman in the recent Budget Statement, our shared mission is to build an inclusive society and a stronger Singapore. Mr Zainudin Nordin asked about the group that might not be able to enjoy this inclusive growth, especially the number of Singaporeans who are low-wage and do casual and contract work.

Our efforts to help low-wage workers have been focused on the bottom 20% of Singaporean workers. Based on income data of 2011, this group of workers earns a monthly income of $1,500 or less. Over the past few years, the number of workers in the bottom 20% has increased in tandem with the growth in the size of our overall workforce.

Currently, 13% of Singapore employees in the bottom quintile are casual and short-term contract workers. They are those who work on an ad-hoc basis or on contracts of less than one year. This percentage has remained fairly constant over the last three years, although the incidence is slightly higher amongst the low-wage group compared to about 12% of Singaporean employees in general. Our overall share of contract employment in Singapore is not unusual among developed countries. For example, it is 15% in Germany and France, and 13% in Canada.

Helping workers in the bottom 20% is a multi-faceted challenge. Almost half are aged 50 and above, and more than three-quarters have secondary education or lower. They also train less compared to the other income groups, and are more likely to suffer poor employment standards. I agree with Mr Laurence Lien that we need to understand low-wage workers and their challenges better, and that this calls for more research and analysis. We agree, and MOM will consider his specific suggestions further.

Helping low-wage workers also requires sustained efforts on multiple fronts. It cannot be done just by one agency, the Government alone. It has to be a concerted effort by different parties – employers, unions, as well as the Government. It is not a sprint, but a middle-distance race. Mr Zainudin Nordin asked about the approach that the Government was taking. During the Budget debate, Mr Ong Teng Koon also asked how we could raise the wages of those at the bottom.

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Our approach is two-pronged. First, we help the lower-income Singaporeans become more productive so that they can earn higher wages. We do so both at the workers' level as well as the employers' level. Through the Workfare Training Support (WTS) and other programmes, we are helping low-wage workers upgrade their skills, so that they can improve their employability, find better jobs and earn more. And through the Inclusive Growth Programme (IGP), we are helping companies improve processes and redesign jobs, so that they can offer higher-value jobs that can pay more to our low-wage workers.

Second, we encourage low-wage workers to work and help create opportunities for them to do so. Again, we approach this at both the level of the worker as well as the employer. The Workfare Income Supplement Scheme (WIS) supplements the incomes and retirement savings of low-wage workers and encourages work. WIS currently benefits about 400,000 workers, with a total annual payout of more than $400 million.

The Special Employment Credit (SEC) provides employers with an incentive to hire older low-wage workers. With the enhancement of the SEC to up to 8% of wages, there is now an even stronger incentive to tap the older workforce to meet manpower needs in a tight labour market.

During the Budget debate, Mr Yeo Guat Kwang offered various suggestions to improve WIS, such as raising the cash component of WIS. Sir, we review WIS every three years and will consider these suggestions when we review WIS holistically next year.

Mr Zaqy Mohamad asked whether WIS can be paid more regularly. Other Members, including Dr Amy Khor, Mr Low Thia Khiang, Ms Irene Ng, Mr Inderjit Singh and Mdm Halimah Yacob, have also asked in the past whether WIS can be paid more frequently to low-wage workers so that they can be used to meet daily expenses.

I am pleased to announce that we will do so, by paying employees WIS four times a year, up from twice a year currently. Each quarter, we will now pay WIS to an employee who works for at least two months in the quarter, and who has an average income in the quarter of not more than $1,700.

The amount of WIS paid out each quarter will be adjusted proportionately. We will implement this change from January 2012, which means the first quarterly payment, which will be for work done in the first quarter of this year, will be received by 1 June 2012.

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With these changes, we estimate that about 440,000 older low-wage Singaporean workers will receive WIS, or an increase of about 10% from today. Employees with a steady income will receive payments quarterly, instead of twice a year. While we are making a move to quarterly payments for employees, I should stress that we will not be raising the payment frequency further, as the intent of WIS is to encourage regular and sustained work.

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Unlike employees whose WIS eligibility is automatically assessed based on their monthly CPF contributions, self-employed persons (SEPs) are required to declare their net trade income before they are assessed for WIS. While SEPs are given the option of declaring both their mid-year and full-year income, less than 1% of all of them do so. The vast majority of SEPs declare their full-year income and contribute to Medisave to receive WIS once a year. The Medisave contribution that needs to be made by SEP for the mid-year payment is also estimated based on their full-year income, which can result in an over or under-contribution to Medisave. Hence, from this year on, SEPs will be paid WIS once a year based on the declaration of their full-year income. For SEPs who are required to file an income tax return with IRAS, no further income declaration is necessary.

Sir, WIS has become an important pillar of our social security system. Regrettably, not every low-wage worker receives it. This is because some fall outside the CPF system, which is used to administer WIS. So, if they are not in the CPF system, they will not be able to benefit from all the WIS payments. Under the law, not paying CPF is a serious offence that can attract a fine of as much as $10,000 per charge; in other words, $10,000 per worker per month. To compound the problem, some workers also prefer that their employer does not contribute CPF, so that they too can avoid contributing their employee CPF and have higher take-home pay. This may give them a better take-home pay, but certainly this is short-sighted.

As Mr Zainudin Nordin and Mr Zaqy Mohamad pointed out that workers lose out in the end when they do not receive CPF. This is because the Government channels a significant part of its assistance, such as WIS as well as any other occasional top-ups, to the low-income via CPF. Furthermore, they also compromise their retirement adequacy.

To illustrate this, a Singaporean worker aged 55 earning $1,000 per month who is not in CPF net over the past five years would have foregone more than $9,000 in cash and CPF from the Government through the WIS, Workfare Special Payment, Workfare Special Bonus as well as top-ups to the CPF Medisave Account. If we were to include the employer CPF contributions due to him, he would have lost out an additional $11,000. In total, this worker would have lost out more than $20,000 over a five-year period, which works out to be about a third of his overall pay. And we have not counted the interest he would have earned in CPF. The worker who is not receiving CPF, whether because of his own will, or because the employer does not want to pay him CPF contributions, will lose out a lot. I would like to urge all Singaporeans who are aware of any relative, neighbour or friend who are forgoing their CPF to remind them that they are losing out, and urge them to make sure they ask their employers pay them CPF.

An associated problem that Mr Zainudin Nordin raised is non-compliance with the Employment Act (EA). The EA sets out basic employment terms that employers must offer their workers. For example, the workers cannot work for more than 12 hours a day. Workers must also be given 14 days of paid outpatient medical leave per year. However, some employers are unaware of the obligations they have to their employees, while some others deliberately circumvent it.

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As Deputy Prime Minister Tharman mentioned in his speech earlier, MOM will step up efforts to bring about compliance with the CPF Act as well as the Employment Act. We will do so in two ways. First, we will step up education of both employers and employees on their obligations and their rights. There are misperceptions to correct. For example, one false impression is that CPF contributions are not mandatory for part-timers and casual workers, such as restaurant workers who only work on weekends or are only called up to help out at large events. This is incorrect. CPF is payable for such employees. To raise awareness, the CPF Board and MOM will launch a media campaign, as well as intensify our outreach in collaboration with NTUC, SNEF and other partners. Second, MOM and CPF Board will ramp up enforcement efforts. We have increased the number of inspections since the start of this year, and we will step this up sharply over the next five years. We will focus on sectors where non-compliance is known to be higher, such as F&B, retail, cleaning and security.

In some sectors, employers attempt to reduce CPF they pay by claiming that certain payments made to the workers are reimbursements. This may form a large portion of what workers receive as take-home pay. Valid reimbursements do not attract CPF. However, many of the expenses may not be valid reimbursements. This is how some employers circumvent their obligations to pay CPF. For example, cleaners and security officers receive large and regular payments as laundry reimbursements. But they typically wash their uniforms at home, rather than incur laundry expenses. We recently encountered a case where the security guard earned a basic pay of $745 but received a monthly laundry reimbursement of $182, based on an income of $745. The laundry reimbursement was close to a quarter of the security guard's basic pay, but the worker did not receive any CPF on it. There are other examples. We will therefore tighten up on enforcement to reduce instances of employers trying to circumvent their obligations under the CPF Act with such malpractices. Workers play an important role in our enforcement efforts. We encourage workers to come together and come forward if their employer did not pay CPF or accord them what is due under the CPF Act and the Employment Act.

Mr Zainudin Nordin and Mr Zainal Sapari have asked whether we will be reviewing existing legislation to protect the rights of low-wage workers, such as holding buyers accountable for the employment conditions of their outsourced workers. We will need to consider any introduction of legislation very carefully in consultation with the tripartite partners, given its potentially wide-ranging impact. But we are not closed to reviewing our legislation where warranted, and we will look into these suggestions further in close consultation with our tripartite partners.

Sir, let me now turn to a different type of challenge faced by some groups of low-wage workers – cheap sourcing. As I have shared with Members at the debate on the President's Address last October, a significant number of low-wage workers are currently employed in outsourced sectors, such as the security and cleaning services sectors. These sectors are often subject to the problem of cheap sourcing, where service buyers award contracts mainly based on price. As a result, service providers bid aggressively low to win contracts, and cut costs by reducing benefits and depressing wages, as manpower is a major cost for such services. When this takes place, low-wage workers bear the brunt, in terms of stagnant wages, poor employment conditions and few opportunities to up-skill themselves.

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The Government has been promoting Best Sourcing to tackle this problem. The tripartite partners recently released an updated Tripartite Advisory on Best Sourcing practices that encourages service buyers to outsource responsibly and adopt best practices when doing so. To accompany the Advisory, we also launched an implementation guidebook to provide practical tips for service buyers. It is a detailed guide, providing even sample text that can be replicated in tender documents and contracts. Buyers, who have the will to best source, now know where to find the way.

Government agencies, as significant buyers of services, play an important role in catalysing best sourcing. Mrs Josephine Teo, at MOF's recent COS debate, announced specific measures that the Government will take through its procurement practices to lead by example.

To recap, Government Ministries and statutory boards will procure only from accredited cleaning companies and well-graded security agencies with an "A" or "B" grade. Our restructured hospitals and autonomous universities have also indicated their support for best sourcing.

Some companies are of the impression that this requirement does not apply to them if they are sub-contractors to the company that wins a Government contract. This is incorrect. This requirement will similarly apply to any cleaning company or security agency that is engaged as a sub-contractor.

Mr Zainal Sapari called for the Government to review existing non-BSI contracts and to provide extra funding to help Ministries cope with any increase in cost that can be expected. Sir, the Government will need to allow sufficient time for the cleaning and security companies who intend to participate in our tenders to meet the new requirements. The Government will study the various options available to manage the transition. All these will come at a cost to the Government. MOF will ensure that Ministries are adequately funded to implement this initiative. But the Government will not stop there. In conjunction with these efforts, we will also tighten regulatory frameworks for the cleaning and security sectors so that workers in these sectors can enjoy better employment terms. So, it is not just the pay, we also want to make sure that workers in these two sectors enjoy better employment terms. Let me elaborate first on cleaning.

Cleaners are a group that require special attention. As Deputy Prime Minister Tharman explained in the Budget Statement, most Singaporeans, including lower income Singaporeans, have enjoyed significant real income growth over the past five years. However, a few occupations at the bottom of the income ladder, such as cleaners, have not seen this lift in incomes. During the Budget debate, Dr Amy Khor, Mr Inderjit Singh and Dr Teo Ho Pin also spoke on the need to help raise the incomes of cleaners. We can help cleaners by strengthening the Clean Mark accreditation scheme, which is a voluntary scheme introduced by NEA in 2010 to evaluate cleaning companies on their ability to deliver good quality cleaning services. NEA has been improving the accreditation scheme so that accredited companies and their workers must meet higher training standards and productivity requirements. MOM is working with NEA to strengthen the employment-related criteria.

5.00 pm

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Due to cheap sourcing, the market does not work as well to ensure that training and standards translate into improved wages in this sector. In fact, while cleaning practices and workers training have improved over the last 10 years, the wages of cleaners have fallen by about 3%. Fortunately, we introduced the WIS in 2007, which helps to make up for the drop in the incomes of this group of workers.

In strengthening the accreditation scheme, we will introduce a requirement that cleaners employed in accredited companies receive appropriate wages, commensurate with the higher training, standards and productivity required of accredited companies.

We have been having very useful tripartite discussions on this. We are also consulting cleaning service providers and buyers. Details will be released once they are finalised later this year. Government is taking the lead in buying from accredited companies. MOM is working with NEA to ensure that we uplift the entire cleaning industry. MEWR will be announcing further measures at their COS debate later this week.

Now, let me turn to the security sector. Our focus here is working hours. Security officers work very long hours. It is not uncommon for a security officer to work 12-hour shifts, six days a week. This translates to a total of 72 hours in a week.

Such long working hours are not ideal from a security standpoint, as vigilance may be compromised by fatigue and loss of attention. The long hours also become a barrier for Singaporeans who are willing to work but who are unable to work such long hours, creating difficulties in recruitment and retention. A recent feedback that I received from a member of the public affirms this. He talked about how the 12-hour shifts that security officers have to put in meant less time for their families. He related how security officers' performance would be improved if the hours were shorter and how more Singaporeans would be willing to join the security industry if working hours were better. I fully agree with him.

Shortening working hours can help ease the manpower shortage in the security industry. Recently, the Singapore Police Force and WDA launched a programme to attract mature workers and back-to-work women to work as security officers by offering 6- to 8-hour shifts, instead of the usual 12-hour shift. More than 150 job-seekers responded in just one job fair. I think this is a significant reaction by the workers who want to look for jobs in this sector. And as I said, we can do better.

We need to reduce the amount of overtime across the sector. This cannot be done instantly as doing so would cause disruptions to current operations and may lead to difficulties in staffing committed projects.

MHA and MOM are studying how we can do so and cut down overtime over the next few years, particularly whether recruitment and training of additional officers can be stepped-up to fill the gap in hours worked. We are also exploring options to increase the use of technology among buyers within the sector to raise productivity. Basic wages can then be adjusted upwards so as to avoid the negative impact on gross wages when overtime hours are reduced.

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For a start, we can use SPF's grading framework for security agencies to encourage employers to reduce the overtime hours in the industry. The Government, as a buyer of security services, will certainly play a part in working towards this goal.

These measures to uplift the cleaning and security sectors will raise manpower costs for such services. Parallel efforts to raise productivity in the sectors will mitigate this, but it is inevitable that cleaning and security services will cost more for some buyers, especially those who cheap-source currently.

Today, the costs of cleaning and security services are typically small compared to overall operating costs. One real estate company told us that outsourced cleaning and security functions make up about 6%-7% of the operating costs of typical offices and shopping malls. A check with a large supermarket chain revealed that these amount to less than 2% of the total operating costs. A hotel that outsourced public area cleaning and night kitchen cleaning said that together these were less than 1% of its operating costs. The incremental costs arising from these measures we are talking would be even smaller – just a fraction of these cleaning and security costs. Furthermore, we will phase in the changes so that they are even more manageable to businesses.

We must be prepared to take some cost increase in our stride, if we want to help our low-wage workers earn more. As Mr Laurence Lien pointed out, we cannot as a society want to do more for low-wage workers, but then begrudge small cost increases which may arise from paying them better wages. Low-wage workers too need to earn a decent living.

Mr Zainal Sapari had also asked about our approach for low-wage sectors such as landscaping, retail and logistics sectors. We have measures for low-wage workers in those sectors as well. Let me give Members some examples, beginning with one from landscaping.

Nature Landscapes is a company that builds and designs natural landscapes and water features for buildings. It invested in new machinery to mechanise the digging of pits, transportation of soil and plants, and so on. Its workers learnt to operate the new equipment and took on new work processes. They became more productive, and the end result was a significant reduction in the man-hours needed. There were cost savings of about $11,000 per month, and the workers enjoyed significant pay increases. There has been a good improvement in their salary as a result of mechanisation and improvement in productivity.

TNT Express is another example, this time from the logistics sector. It offers express delivery services. Its workers have to manually handle a large volume of consignments every day. One notable project TNT has undertaken is the "Red and Green" system, which deploys a high-tech scanner to verify the hundreds of parcels passing through its facility. Workers no longer need to perform eyeball checks on every single parcel. This has enabled each worker to achieve greater efficiency, attain higher targets and share in the productivity gains.

Both projects by Nature Landscapes and TNT Express were funded under IGP, where the sectoral approach is adopted. These projects serve as pathfinders, and the solutions found have wider sectoral applications, meaning it can be applied to other sectors as well. As we learn how to raise productivity in each sector, the wider industry can also upgrade and raise their productivity, so that all workers in the sector can benefit.

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Sir, the uplifting of low-wage workers requires the concerted effort of not just the Government, but also the private sector and the society at large.

As Deputy Prime Minister Tharman pointed out in his Budget Statement, underlying this commitment is the need for us to develop a deep sense of responsibility, not only for ourselves and for our families, but also the people who are amongst us, the less fortunate. Let us work together towards this shared goal of making Singapore a better place.

Workplace Safety and Health

Mr Yeo Guat Kwang (Ang Mo Kio): Sir, the number of industrial accidents has been declining steadily over the years as a result of the efforts of the tripartite partners, in this case MOM, employers, union and the workers, to improve workplace safety and health standards.

Last year, we extended the coverage of the Workplace Safety and Health Act to cover all workplaces. We have also made significant enhancements to the Work Injury Compensation Act to improve the processing of claims as well as the protection of workers. While all these processes are all laudable, I suspect that if we ask the family and their loved ones of workplace accident victims, they would rather have their loved ones safe and sound back home every day after work rather than to know we have the law to punish non-compliances of the Workplace Safety and Health (WSH) or to compensate them well.

Sir, we must focus on prevention and say no to all WSH hazards and risks at work. Small and Medium Enterprises (SMEs) need to do more in this area.

What are the programmes that the Ministry has to help the SMEs to encourage them to build WSH compliant facilities and what are we going to do to support the labour movement in educating the workers?

I also like to highlight that raising productivity and safety are the same thing. Improving WSH is improving productivity. Therefore, I would urge the Government to include WSH framework into our programme for productivity.

Sir, moving forward, we have to aim to attain the safety standards of the developed countries which consistently have a low annual fatality rate of around one per 100,000 workers. There are also still too many cases of permanent disability due to workplace accidents here. The question is how the Government plans to lower this rate and help our workers.

MOM should also make sure that workers are trained with WSH as part of their skill competency, particularly for those foreign workers who come from different job practices and culture.

The Chairman: Mr Seng Han Thong, I believe you have the honour of being the first and only person to deliver a 30-second cut.

Mr Seng Han Thong: Sir, despite stringent measures to ensure workplace safety, workers falling from construction sites and maids falling while cleaning window still happen from time to time. With more construction work, as a result of public housing projects, work at height activities will increase. If we do not step up our efforts, falling accidents may continue. May I ask the Minister whether MOM will introduce dedicated Work At Height (WAH) regulations to address the issue?

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The Chairman: Excellent. Ms Indranee Rajah.

Fast Tracking Foreign Worker Claims

Ms Indranee Rajah (Tanjong Pagar): I received many complaints from residents in the Silat precinct of Tanjong Pagar-Tiong Bahru division about foreign workers loitering at the void decks of the HDB blocks. The residents felt uncomfortable for safety and security reasons.

I asked the agencies why the foreign workers were there, and I could not get a definitive answer. So, I decided to go and find out for myself.

One evening at about 11.00 pm, I went to the precinct, accompanied by two volunteers. I approached the foreign workers and asked them why they were there.

They said that they were from Punjab. They had work related injuries. They were waiting for their compensation claims to be processed, and they could not work in the meantime due to their injuries. As they could not work, their employers were not interested in their welfare. The employers provided dormitory places but no food. Some employers were smarter: knowing many workers were vegetarian, they offered normal fare, but not vegetarian food so that they could not be accused of not feeding them. The employers also did not pay them, so they had no money.

They therefore come to the Sikh Temple at Silat because the temple offers free vegetarian food as part of the charitable programmes. They save on transport by not returning to the dormitories, choosing instead to hang around the precinct next to the temple because of the pleasant greenery and pavilions, which were intended for residents, but which have now become a congregation place for the foreign workers. Some workers had been waiting for eight months for their claims to be processed.

Although this example pertains to Silat, this is in fact an island-wide issue, as I have read of similar complaints in many parts of the island. So, there are actually two main root causes of the problem: (a) the employers' conduct; and (b) the length of time to process the claims in the labour tribunal.

I understand that employers are supposed to give the foreign workers an allowance and food pending claims resolutions. But this is not happening on the ground. So, it is an enforcement issue. I would ask MOM to step up enforcement and, if necessary, increase the penalties and disincentives for defaulting employers. And if MOM says it needs to have information on defaulting employers before it can act, all it needs to do is send its officers down to the Silat precinct, and you will have a one-stop centre with a rich source of information. But to be effective, the investigating officers must come at night, and have Punjabi translators available. If they need tables, chairs and a venue out of which to conduct interviews on site at night, please let me know and I will be happy to make the necessary arrangements.

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The other problem is the time it is taking to process the claims. Whilst a few months is okay for personal injury cases where the plaintiffs are Citizens or PRs, it is a long time for the foreign workers with no work, no money and are dependent on charity for food.

I would urge MOM to fast track the foreign worker claims, in terms of investigation, evidence gathering and hearings. There also needs to be coordination with MOH to expedite the issuance of medical reports and with the insurance companies for quicker processing and payouts in those cases where the injuries are covered by insurance.

Mr Hawazi Daipi: Mr Yeo Guat Kwang, Mr Seng Han Thong, Ms Indranee Rajah and Mrs Lina Chiam have spoken about Workplace Safety and Health (WSH), which I will now address.

I am pleased to note that Singapore's workplace fatality rate remained low at 2.3 fatalities per 100,000 workers in 2011. We also achieved a major milestone in September 2011 with the extension of WSH Act to cover all workplaces in Singapore. This marks a new beginning, as we strive towards even better WSH outcomes for all workplaces in Singapore.

Mrs Lina Chiam expressed concern for the physical protection of workers collecting refuse. These workers, who typically work at refuse collection centres and other workplaces such as roadsides and void decks, are covered under the WSH Act. Employers are required to take reasonably practicable measures to ensure that work is carried out safely. They must conduct risk assessments and ensure that efforts are undertaken to eliminate or mitigate the risks. In refuse collection, this would include the risk of falling objects and cut by sharp objects.

Mrs Lina Chiam further asked how our regulatory regime compared against other developed countries and if there were efforts to further improve it. While the WSH Act stipulates the need for risk assessment and appropriate measures to be taken, it is not practical for MOM to prescribe in the law the exact safety equipment and requirements for every job and for every workplace. Instead, similar to developed countries like the UK and USA, WSH guidelines were developed for the cleaning sector by the WSH Council and NTUC in 2009.

For Mrs Chiam's information, the guidelines, which are contained in this booklet which we have distributed to employers and service buyers, recommend the use of non-slip safety shoes, boots and gloves to prevent cuts from discarded rubbish. MOM will continue to consult the industry and the WSH Council on the need for WSH guidelines in other industry sectors.

5.15 pm

Mr Seng Han Thong asked about the main causes for fall fatalities and our plans to address them. We have noticed a worrying trend of falls accounting for almost half of the workplace fatalities reported to MOM, of which two-thirds are attributed to falls from heights. Accidents resulting from falls from heights are often a result of unsafe practices, such as (i) open sides and lack of barricades in structures; (ii) roof works; and (iii) unsafe use of ladders.

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Over the last few years, we have made extensive efforts to raise safety standards in this area. In August 2009, MOM and WSH Council formed an industry-led taskforce to drive industry engagement and raise the capability of industry to ensure compliance with safety standards of employees working at heights. The taskforce has made a slew of recommendations, such as establishing an Approved Code of Practice and having outreach efforts through Safety Compliance Assistance Visits (SCAV), which we have implemented.

To date, MOM and the WSH Council have engaged more than 12,000 workers at over 1,800 worksites, and trained more than 5,500 supervisors on working at heights safety. Our efforts have seen some positive results especially in the construction and marine sectors. Unfortunately, positive results in the marine and construction sectors alone are insufficient. The number of fall fatalities in other sectors increased last year. As a result, falls continued to be the top contributor of workplace fatalities.

To bring about further improvement, MOM will explore introducing legal requirements to regulate working at heights practices this year. We are currently exploring whether to mandate the use of fall prevention plans, and "Permit-to-Work system" where workers will be required to obtain permits before commencing work at heights, similar to the requirements for other hazardous work such as work in confined spaces. Stakeholders will be closely involved in identifying the most efficient and effective solutions.

We agree with Mr Yeo Guat Kwang that support must be given to help stakeholders build WSH capabilities and raise WSH standards at the workplace. To achieve this objective, we set aside a $70 million fund in 2010 to drive WSH improvements. Through this fund, we have introduced initiatives to help companies build up their WSH capabilities, for example, in the areas of risk assessment and building WSH culture.

Ensuring that workers are trained and competent to manage WSH is a key focus of capability-building programmes. MOM and the WSH Council regularly reviews our assistance programmes to help support the training of workers in WSH. For example, we are currently exploring how we can enhance the training provided for foreign construction workers with a view of extending the Construction Safety Orientation Course (CSOC) from the current one day to two days. We are also piloting a scheme for this safety training to be conducted at the worker's country of origin. Training at source will enable companies to bring in workers who are already knowledgeable in WSH and avoid instances where workers have to be sent back because they fail the training in Singapore. We will leverage on our connection and our coordination with the BCA which is already operating skills training facilities overseas for construction workers before they come to Singapore. I think we will be able to roll this out fairly easily in the future.

Helping businesses, particularly small and medium enterprises (SMEs), improve safety management capabilities is another key area which we are focusing on. Just last year, we topped up the Risk Management Assistance Fund (RMAF), which provides subsidies for SMEs to seek assistance from approved risk consultant, by an additional $11 million, bringing the total funding for the programme to $24 million. To date, more than 2,000 companies have benefited from the programme.

This year, we will further extend our assistance to SMEs through a new WSH-Assist Programme. This programme helps SMEs defray up to 80% of the fees incurred in engaging WSH consultant to provide onsite consultation services, assess WSH standards at their workplaces and develop action plans to close identified gaps. SMEs can also leverage on the programme to identify other appropriate funding schemes that they can tap on to further improve their WSH standards.

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We have started a pilot run for the WSH-Assist Programme since December last year and companies engaged have provided positive feedback. One such company is Heng Khwee Heng Poultry Factory Pte Ltd. Through the WSH-Assist programme, the factory conducted a comprehensive workplace safety review and identified several areas which required risk mitigation as well as the appropriate measures to address them. For instance, they will be installing a machine guard over an exposed pulley belt which could potentially cause injury to workers who come in contact with it. In addition, the factory learnt about the RMAF and decided to apply for it to help them improve their risk management capability. The WSH Council is targeting to launch WSH Assist by the second half of this year.

The last area I would like to address is on Work Injury Compensation (WIC). Ms Indranee Rajah has raised concerns regarding the extended stay of some foreign workers who are claiming WIC, and has suggested that MOM fast track the WIC claim process for foreign workers.

Let me first assure the House that MOM is committed to ensuring that the WIC claim process is fair and expeditious. Our records show that 80% of all cases are resolved within three months. The recent amendments to the Work Injury Compensation (WIC) Act, which will take effect in June this year, are also intended to further speed up the resolution of WIC claims, particularly in instances where insurers are involved.

Nevertheless, there will continue to be some complex cases which may require more time to resolve, for valid reasons. These include scenarios involving workers with serious injuries and can only be medically assessed after their injuries stabilised, or those involving disputes which would require further hearing at MOM's Labour Court. So, for such cases, it may take a slightly longer time but, as I said earlier, we resolve to settle the cases as quickly as possible. While these steps may lengthen the claim process, they are necessary to ensure that both the employer and the worker receive a fair outcome. Ms Indranee Rajah asked MOM to coordinate with MOH on expediting the issuance of medical reports, and I am glad to say that MOM is already in discussion with some restructured hospitals to explore how this can be done.

I would like to highlight that foreign workers whose claims are being processed need not stay in Singapore and may choose to return to their home countries. MOM will continue to liaise with them directly and process their claims even after they have left Singapore.

Ms Indranee Rajah also requested that MOM step up enforcement on employers who default on the upkeep and maintenance of their foreign workers during the claim process. In addition, to upkeep and maintenance, employers are required to pay their injured workers medical leave wages while they are on medical leave during the claim process. Workers who need help should approach MOM or contact their case officer-in-charge for assistance. We will investigate and ensure that employers fulfil their obligations. As Minister of State Tan mentioned in the Work Injury Compensation Act (WICA) Second Reading speech last November, MOM is aware of this issue and is working with various stakeholders to find a practical solution.

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Lastly, the WIC claim process applies equally to all injured workers, both local and foreign. MOM believes that preferential treatment should not be accorded to any parties on the basis of nationality. We are cognisant that injured foreign workers may face greater challenges whilst awaiting the resolution of their WIC claims and, as I have said earlier, we are presently working with the stakeholders, including insurers, healthcare providers, employers and non-governmental organisations (NGOs), to find other practical solutions to further improve our operations.

Let me conclude. Creating better, safer and healthier workplaces are long-term objectives for Singapore, which the Government is committed to achieve. MOM will continually review and enhance our schemes and legislations, explore new measures and also work closely with stakeholders to achieve this shared objective for our workers.

The:

Chairman: Mr Sam Tan is not in the House. Mr Yeo Guat Kwang.

Foreign Manpower Management

Mr Yeo Guat Kwang: Sir, while the Government tries to refine its foreign manpower policies, we must accept that foreign manpower is essential to keep our economy going and will be needed to complement the local workforce and create new jobs for locals. It is good that we have thought creatively about how to maximise our local manpower. For instance, the foreign spouses of Singaporeans who are now on Long-Term Visit Pass Plus do not need to obtain a work permit if they want to work. Now, they only need a letter of consent from MOM that potential employers can obtain online. They are also not subject to levy and company's dependency quota. I hope we can help them more by facilitating employers to employ them, instead of foreign workers from abroad.

Sir, it would be an added benefit if we can support these Singaporean spouses, who have Singaporean children to support, with employability training and skill upgrading. For example, can we extend e2i employment assistance and WDA training support to them at the same level as other Singaporeans?

As we are allowing companies to retain experienced work permit holders, I will again urge MOM to set the WSQ certification as a pre-condition for the renewal and application of work permit. Sir, to ensure that they meet the skills standard required, this will also elevate the service and productivity standards as well, so as to cut down abuse.

I would also like to urge MOM to regularly review and revise the Work Permit conditions under the Foreign Manpower Employment Act, to better protect the well-being of the workers. For instance, currently, the work permit conditions state that employers shall grant adequate rest daily and rest day(s) for workers. There is no clear definition of this so-called adequate rest and rest day. If we go by the international labour standard, the minimum is one rest day per work week. I would like to ask, with the passing of the new International Labour Organization (ILO) Convention 189, would MOM make this employment condition more specific?

With regard to the foreign employment source from overseas, there have also been recent reports of many workers being exploited. I would like to urge MOM to step up enforcement and further strengthen legal measures and penalties against these employer-agencies and employers who get involved in exploitative practices, such as accepting kick-backs, giving loans and also being involved in other malpractices.

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BG [NS] Tan Chuan-Jin: Sir, I will focus on talking about the better management of our foreign workforce. Earlier, we talked about the objectives of the framework that govern the way we manage this phase.

The management of this framework is important for two main reasons. The first reason − I think it is important to highlight this − the framework was put in place to make sure that the system works. Companies that bypass the framework, basically, are trying to get more than their fair share of foreign worker entitlement. What this means is that when they violate the rules and regulations, they are essentially depriving Singaporeans of jobs as well, and this is something that we should enforce. Secondly, it is also about looking after our workers, both local and foreign, and that is the right thing to do.

[Mr Deputy Speaker (Mr Seah Kian Peng) in the Chair]

5.30 pm

Firstly, let me talk about the stronger enforcement to uphold the integrity of the work pass framework. Ms Mary Liew expressed concerns about the effective implementation of the revised dependency ratio ceiling (DRC), and she asked how we are enhancing enforcement to ensure compliance. During the Budget debate, Mr Alex Yam and Dr Teo Ho Pin also raised the possibility of employers who hire phantom workers. I would like to inform Mr Zainudin Nordin, who earlier talked about creativity, that now with the Special Employment Credit (SEC), we will now also have older phantom workers being introduced into the landscape, as companies seek to not only just have phantom workers, but older phantom workers, to benefit from the Special Employment Credit. So we are not short on creativity, certainly not on this front. With that, we are aware that this will invariably happen, and we will tighten our work pass framework, and we know that the temptation for employers to cut corners and bend rules will increase, but the price will have to be paid.

We have a duty to the majority of responsible employers to be tough on errant employers who flout the rules and the system in order to get more than their fair share of foreign labour. Deterring breaches of the work pass framework will, like I said earlier, enhance the employment opportunities for local workers. Employers who have to pay the true cost of hiring a foreign worker would have to consider whether hiring a local worker would make more sense instead. We also need to take firm action against foreign workers who themselves also try to get around the system to get employed here. For example, some will obtain forged educational qualifications in order to get work passes, and sometimes with the connivance of their potential employers.

Over the past few years, MOM has taken stern action against errant employers who over-declare the salaries of their foreign workers to fraudulently obtain S Passes and Employment Passes. They collect kickbacks or they pretend to be employing locals, or what we call the "phantom workers", in order to boost their foreign worker entitlement. We managed to step up our enforcement efforts despite the increasing complexity of such cases and the need for more intensive investigation. Let me highlight this case that has not been made public or did not come into the public's attention. In 2011, Lim Meng Fang and Chua Beng Kiong were sentenced to 43 months and 35 months eight weeks' imprisonment respectively for various employment offences. They set up a shell company in the manufacturing sector and falsely declaring CPF contributions made to 32 "phantom" Singaporean workers. They managed to obtain work passes for 42 foreign workers. Both also collected kickbacks from the workers. They had no genuine business and therefore the workers found themselves being "released" to find their own work. In addition to being jailed, the duo and their company have also been blacklisted by the Ministry from hiring foreign workers.

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Apart from increasing our inspections and enforcement checks, we agree with Mr Yeo Guat Kwang that we need stronger deterrent measures against employers that aim to get around our system. We are, therefore, reviewing the Employment of Foreign Manpower Act (EFMA) to ensure that the penalties for breaches are adequate, and that we hold errant employers and other stakeholders accountable.

MOM intends to strengthen the EFMA in four ways. Firstly, we will enhance the EFMA to crack down on serious contraventions. Explicit provisions will be created to define major contraventions, instead of prosecuting them as part of other less serious EFMA offences. Some new stand-alone EFMA contraventions we intend to create include the collection of kickbacks from foreign workers, the use of local phantom workers to artificially boost their foreign worker quota as well as the submission for forged educational certificates. Secondly, we will boost deterrence by increasing the penalties for serious contraventions, such as the collection of kickbacks. Our current maximum penalties for breaching the Work Permit conditions are a $5,000 fine and/or six months' imprisonment. This is inadequate. They do not reflect the egregious nature of such acts. Under the revised EFMA, we intend for unscrupulous employers who collect monies from their foreign workers to get or retain a job here to be subject to appropriately heavier penalties. Thirdly, we are designing an appropriate mechanism to complement criminal prosecution. This should allow the authorities to have a timely and proportionate response for regulatory breaches of the EFMA. Finally, we are seeking to expand our powers of investigation to crack increasingly complex syndicate operations. The proposed powers will largely be benchmarked to the powers provided to MOM inspectors under the Workplace Safety and Health Act and the Employment Agencies Act.

We will launch a public consultation for the proposed EFMA changes later this month and we target to implement the changes to the EFMA this year. Even as we effect these changes to ensure the integrity of the work pass framework, we are also committed to ensuring an equitable balance of rights and responsibilities between employers and workers. We will therefore separately review the work pass conditions within the Employment of Foreign Manpower Regulations, with a view to rationalise and clarify the employment responsibilities of employers, foreign workers and foreign domestic workers.

On the welfare and employment rights of foreign workers, I would agree with Mr Christopher de Souza and Mr Yeo that we need to treat our foreign labour force decently, particularly to ensure that employment rights are upheld and that workers are not subject to exploitative conditions. Foreign workers play an important role in building our infrastructure, caring for our families and making a difference to our lives in different ways. We should treat them in a manner that reflects our Singaporean values of fairness, of decency and respect for all workers. We have found that, by and large, the majority of our employers are responsible in fulfilling their obligations, and that most foreign workers in Singapore are generally happy and treated fairly. We conducted a fairly extensive survey in 2011 with 3,000 foreign workers and they indicated that workers are generally satisfied with working in Singapore, with the majority intending to continue working in Singapore after their existing contracts expire.

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There are also stories of exemplary employers who go the extra mile for their staff. For example, Sing Moh Electrical Engineering maintains its own dormitory with good conditions for their foreign workers. They provide free modem and wireless Internet for workers to tap on. They also celebrate special occasions with their foreign workers, making the efforts to throw Chinese New Year and Deepavali parties complete with tentages and entertainers. However, as with every system, there will be a minority of people who are irresponsible, and we have irresponsible employers who flout the rules and mistreat their foreign workers. It is important to understand these are the minority. Of course, these incidents get amplified, whether in mainstream media or social media, but it should not colour the employment environment in Singapore. But notwithstanding that, we have to take action against such employers. For instance, we will continue to be tough on companies who do not provide acceptable housing for their workers.

In May 2011, the dormitory operator ST9 Pte Ltd was found guilty of failing to provide acceptable accommodation to their workers. They crowded more than 1,100 workers into three factory-converted dormitories that were meant for half that number. The company was fined $50,000; and that is the highest fine for that offence to date.

To prevent errant employers from mistreating their foreign workers, it is important that the Ministry is informed of possible problems early, whether related to housing, salary or other issues. We need the information and we need to be informed. Unfortunately, some cases have had few early indicators, such as the recent incident cited by Mr Christopher de Souza involving 200 construction workers whose employers delayed the payment of their salaries. Nonetheless, once alerted, MOM was able to follow up quickly with their employers to ensure that all outstanding salaries were paid and other alleged violations investigated. I stress again that it is important for us to receive information. In this particular case, we did not have any prior knowledge of issues. We did not receive feedback from the workers or NGOs. So it is very important, whether from the public perspective, from the workers' perspective, from whistleblowers from within the company and the NGOs particularly, to work closely with us. Unfortunately, from time to time, rather than to inform us, they inform the media and the issue is blown up. But notwithstanding that, we will still follow up and we will still take action.

Workers play an important role and we need to educate workers to inform them of their rights. They need to let us know if there are employment issues early so that we can attend to them, especially when they do not receive their salaries on time. Feedback from non-Governmental organisations and the public is critical. As I mentioned earlier, tip-offs are important. We do have a system of checks and we will step it up. As with all things, there are many companies out there, it is impossible to check every one of them. This is where everybody plays a part and when we do have indicators that there are issues, please let us know early so that we can follow up.

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I will now talk about foreign domestic workers (FDWs). As we uphold laws to ensure the decent treatment of our foreign labour force, we must not forget that it also includes our foreign domestic workers. Mr Christopher de Souza raised two issues related to FDWs. One of the issues is related to a blog with a controversial Maid Review section, and many like Mr de Christopher Souza find this distasteful. We would like to highlight that there are civil routes for redress for the aggrieved party if the comments are defamatory or in breach of a duty of confidence.

The second issue which Mr Christopher de Souza raised, also echoed by Mr Yeo Guat Kwang, is related to the specific provisions for rest days for foreign domestic workers. Let us be quite honest here. This debate on whether to implement a weekly rest day for FDWs has been long standing and contentious. Based on a survey conducted by MOM in 2010, the majority of our employers currently provide at least one rest day a month, but many do not. Since Mdm Halimah Yacob raised the issue in June 2011, we have consulted stakeholders, including FDW employers and FDWs themselves, extensively and considered their feedback carefully. And we received a broad spectrum of views.

I would like to share with Members a sample of what some of these views are. A number of these views have been edited and not included here because they are fairly extreme but this would give you a sense. Some employers felt that their needs should not supersede the needs of their FDW to rest and recharge, and that they appreciated their FDW more after taking over her chores on her rest day. Other employers felt that their FDWs do not need a rest day because they have enough rest on a daily basis, or that giving FDWs weekly rest day will make it difficult for employers to cope when they themselves need a break during their own days off. Fears were raised about forming relationships or potential comparison of employment terms with other FDWs when the FDWs have their days off. One oft-repeated concern is the fear that FDWs will misbehave or become less compliant as a result. Some have claimed that married couples' relationships would be negatively affected if the FDW took time off, and that this would lead to a rise in divorce rates or reluctance to have children. There are many other emails that we have not talked about here.

It is very clear from the robust debate that FDWs play an important role in the lives of many families in Singapore. Improving FDWs' well-being has a direct impact on the quality of care that their loved ones receive. We need to ask ourselves: how should foreign domestic workers, who make significant contributions to many of our households, be treated? How does this reflect on us as a society?

A weekly rest day is regarded internationally as a basic labour right. More than physical rest, it is an important mental and emotional break from work. We all can attest to that. Local workers and non-domestic foreign workers already enjoy this right under the Employment Act. We are currently one of the very few foreign domestic worker destination countries worldwide lacking in provisions for weekly rest days. This has led to us becoming less attractive to FDWs compared to other destinations in the region that provide weekly rest days, such as Hong Kong and Taiwan. Malaysia, too, has recently included this provision in a MOU signed with Indonesia.

While accredited employment agencies currently use a standard employment contract that stipulates the number of days in a month that the worker wishes to take off and compensation for that, not all employers use the standard contract as it is not legally mandated to do so. Employers may also find that actually improving FDWs' well-being by giving them regular rest days will have a positive impact on the quality of care that they and their loved ones receive. Increasing Singapore's attractiveness as an FDW destination will improve the supply of FDWs for employers.

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Happier FDWs will lead to better care for employers, fewer management problems and greater peace of mind. MOM's records and feedback from non-governmental organisations (NGOs) that provide assistance to FDWs in distress indicate that the majority of foreign domestic workers with management problems do not have rest days. Between 2007 and 2010, a significant majority of foreign domestic workers who suffered work-related injuries or committed suicide did not receive rest days. Places that shelter foreign domestic workers reported that those who run away from their employers generally do not have rest days.

While most employers do ensure their FDWs have adequate rest on a daily basis, this is not the same as providing a weekly rest day for a proper emotional and mental break and rest. In fact, in-depth interviews with FDWs revealed that a rest day provides them a much needed emotional and mental break from work and time apart from their employers.

We should move forward now, but in a balanced and pragmatic fashion. Therefore, we will legislate a weekly rest day for foreign domestic workers. However, we will also introduce flexibility in the regulations to respond to the needs and preferences of foreign domestic workers themselves and their employers. The family circumstances of some FDW employers may make it genuinely difficult for them to cope without a FDW for one day every week. These employers may have elderly or disabled dependants to care for. We also understand that some FDWs actually, from their feedback as well, prefer to work on their rest days for extra pay.

Employers and FDWs will have the option of providing compensation in lieu of a rest day, as long as this is agreed upon in writing by both parties. The employer and FDW should mutually agree on the number of rest days she will take each month, and the amount that the FDW will be compensated for the rest days that she does not take. The compensation for each rest day must at least be the worker's daily wage, and be paid on top of her monthly wage. Assuming that the FDW's wage is $400, and she chooses to take two days off, the amount the employer will have to pay is at least $31 to compensate for the remaining two days.

Employers, who have frail elderly and are therefore most likely to offer compensation in lieu , will be eligible for the new $120 grant each month to hire an FDW. Announced by the Finance Minister in his Budget Speech, this grant comes on top of the existing $95 levy concession for households with elderly, young children or disabled members, and this is more than adequate to cover the rise in costs from having to compensate an FDW for working on her rest days.

For employers and FDWs who agree on taking regular rest days, there will also be flexibility for both to agree on which day of the week this rest day should fall on. Instead of monetary compensation, employers can also give FDWs a replacement rest day within the month.

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To give employers time to adjust to the new regulations, we plan for them to take effect for all Work Permits issued or renewed from 1 January 2013. FDWs with Work Permits issued or renewed before 1 January 2013 will not be covered by this regulation until their Work Permits expire and are renewed after 1 January 2013.

One of the key concerns that employers have cited is about FDWs' activities on their days off. I think this is a very common concern, and it has got to do with the security bond. I would like to emphasise very clearly that MOM does not forfeit employer's security bonds if the FDW violates her own Work Permit conditions, for instance, if she moonlights on a rest day and gets caught, or if she gets pregnant. Even in extreme cases where the foreign domestic worker absconds and cannot be located, only half the security bond will be forfeited if the employer has made reasonable effort to locate the foreign domestic worker. In reality, MOM forfeits very few security bonds each year. Last year, 22 security bonds were partially forfeited for missing FDWs. This is not large considering that we have over 200,000 FDWs in Singapore.

The Ministry is also reviewing employers' obligations for medical costs and the cost of sending FDWs home for exceptional circumstances that employers have little or no control over. This is part of the second phase of the review on EFMA which I mentioned earlier.

On this issue of security bond, let me say this. I hope that this would assure all employers, because the fear and the concern over the security bond do shape the behaviour of employers. I would suggest that these concerns are misplaced and I think we should free ourselves of those concerns, and with that managed, the foreign domestic workers are looked after appropriately.

With the provision of a weekly rest day and flexibility for compensation in lieu , I believe we will be taking the correct step. It will be a balanced and pragmatic step forward to improve the employment conditions for our FDWs. While some employers may respond to this decision with apprehension, we really have to ask ourselves what is the right thing to do. In the course of our consultation, we have spoken to many employers with pressing needs for an FDW to care for their children, elderly or disabled dependants. Some have managed to provide rest days for their FDW. For example, Mr Sulaiman Abdullah who stays in Jurong. His FDW, Ms Siti Mufidah, has been a big help to his family, caring for four children with two younger ones in pre-school. He recognised that Siti needed a day to herself for her own personal needs. He has better peace of mind knowing that she has a proper break and would be more motivated to continue caring for his children for the rest of the week. Mr Sulaiman told us that Siti has been using her rest days to attend courses and she can even teach his son English now.

Not everyone is ready to do this; so our regulations will provide the flexibility for employers to negotiate different arrangements with their FDW. But as our country develops economically – I think we have developed quite incredibly on that front - we should not cease to ask ourselves about the kind of society we want to build, about the kind of society that we want to live in. How would we ourselves want to be treated as employees, as workers? We should strive to embody and uphold the right values to our children. Because I am not sure whether we are always aware that our children at home observe our behaviour every day, and they observe the way we talk to and the way we treat our foreign domestic workers. This will have an impact on their own value system and in the way they look at life, the way they look at people and the way they treat people. And we need to help our children learn how to treat our fellowmen correctly. This is important because, as a society, these are issues we need to address.

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Lastly, on a slightly different note, on the training of foreign workers to address the queries from Mr Yeo Guat Kwang. Mr Yeo asked if we can help foreign spouses of Singaporeans on Long Term Social Visit Pass (LTVP) with training and job facilitation. In line with the Government's intention to extend more assistance to families of Singapore citizens with foreign spouses, WDA will provide such services at its career centres to the new LTVP Plus (LTVP+) holders. They will be eligible for needs-based course subsidies, following an assessment at the career centre.

Separately, Mr Yeo also suggested making the WSQ (Workforce Skills Qualifications) a criterion for the renewal of Work Permit (WP) holders. Currently, employers who hire work permit holders with the relevant skills-based test qualifications and certificates, including selected WSQ, which is one of the criteria for assessing work pass upgrades, are considered skilled and can pay a lower foreign worker levy compared to unskilled Work Permit holders. This hopes to encourage employers who need foreign workers to hire those with better qualifications and skills as far as possible. We believe that is on the right track, but imposing WSQ as a pre-condition for the renewal of work permit will impose unnecessary rigidity on employers.

To conclude, the measures to be put in place by my Ministry this year will help us manage our foreign workforce better and to preserve the integrity of our work pass system. I reiterate again that it is important to do this for two main reasons. First, by making sure that it works correctly to ensure that Singaporeans have the correct opportunities at work. If companies bypass the rules, basically, they get more foreign workers than they are entitled to and, therefore, deprive Singaporeans of jobs which would otherwise have gone to them.

Second, I think by enforcing and making sure that the system works correctly, we will look after the workers properly. In this sense, it is not just the foreign domestic workers, but all foreign and local workers. And that is something that ought to reflect the kind of society that we have, and that is the right thing to do. Therefore, these steps will be taken and we will embark on a consultation. And in the second phase, we will look at the EFMA in detail and we look to introduce these new changes during the course of this year.

The Chairman: We have some time for clarifications. Mr Low Thia Khiang.

Mr Low Thia Khiang: Sir, I have a few clarifications. First of all, the Minister of State said my suggestion to relax the dependency ratio ceiling (DRC) in some industries where jobs are shunned by Singaporeans, will open the flood gates. I think he conveniently forgot that I also proposed that in some industries where Singaporeans would want to do the jobs, we should tighten the DRC. And this calibration is done in the national framework of a target, which the Minister of State is saying that one third of the foreign workforce will supplement the Singaporean workforce. What I am asking is to recalibrate the dependency ratio ceiling and redistribute the quota based on industry specifics and the productivity level as well as the level at which they are able to restructure to minimise the fallout.

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Sir, my second clarification is: would the Minister of State be concerned that with the current process of restructuring in which we have a foreign worker dependency ratio, the levy plus the quota at the macro level, by using such a macro tool to tighten the supply of manpower to the industries, it would inadvertently increase the wage cost of the various industries? Would this eventually lead to a higher cost of living for all Singaporeans, because the wage cost will eventually be passed on to the consumers? For instance, if we continue to tighten the construction industry's dependency ratio and quota, it will result in one of the sub industries, like renovation, having manpower supply problems. It will lead to higher renovation costs for younger Singaporeans who got a flat and want to renovate their flat. I think it was the hon. Member Mr Heng, who was concerned that if we continued to tighten the supply of workers in the cleaning industry, then the tender costs will go up. And eventually, will we end up increasing the conservancy charges, and people will have to pay more?

Sir, my last concern which I would like the Minister of State to clarify is this - how sure is the Minister of State and the Government that the current approach we have taken in restructuring the economy will not lead to Singapore losing its competitive advantage, and we might end up with a stagnant economy like Japan?

BG [NS] Tan Chuan-Jin: Sir, I would like to thank Mr Low Thia Khiang for his clarifications. I would say that we share many of the same perspectives with regard to competitiveness and with regard to some of the views in terms of how we want to manage the overall workforce.

Let me address the first issue about opening the flood gates. I think why I raised the point was that Mr Low did mention that for certain industries where we feel that perhaps it would be difficult to draw in Singaporeans, we might think about easing off the dependency ratio ceiling instead of tightening it. What I highlighted in my speech was that in many of these industries that claim that they find it difficult to hire Singaporeans, are the same industries which contribute to a very large consumption of foreign workers. The construction industry is a case in point. By easing off the DRCs in these sectors, it would lead to having more foreign workers coming in, especially in these industries which require many foreign workers.

We feel that the system that we adopt makes sense. Because by comparison, when we look at the same industry in another country, the productivity level is completely different. The Member will be correct to say that if we were to increase the levies and no productivity takes place, cost would go up. But the key focus of a lot of these efforts really is about increasing productivity. We have been speaking very closely with all the different industries in the various sectors, and they have all fully taken on board the fact that there is space to increase productivity. They acknowledge that there are things that can be done. However, having operated for many years with fairly low cost foreign labour, they have become quite used to it. So, this step is going to be painful but we think it is necessary. It is exactly the point mentioned by Mr Low.

This would increase cost, but this increase in cost will take place if productivity improvements do not take place. We have spent a lot of time, both in MOM and MOF, on many measures to work closely with industries to increase productivity, so that even as we increase the levies, we hope to also see that restructuring will take place and productivity increases.

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On the point whether conservancy charges will increase: this is the point that Mr Laurence Lien mentioned earlier about how we have First World salaries and incomes at the upper end, but we are consuming services at Third World rates. Especially at the lower wage levels, for example, with cleaners and security guards – two groups which form fairly large sectors which employ our low-wage workers – we feel that we need to restructure the accreditation system and we expect wages to go up for Singaporean workers there. We think it is important. We do not believe that the present level of wages is acceptable. What it would mean is that we must, therefore, as a society, be prepared to pay for these services. But at the same time, it is not just about services increasing in cost. It is also about up-skilling and bringing in more technology and machinery where possible to increase productivity.

The key thing about us going forward is this: we expect wages to go up for Singaporeans. Obviously, with wages going up, there will be an increase in cost. But this will not make sense if it is not accompanied by productivity. Going forward, our main focus is to increase productivity, force their restructuring. We know that the industries are responding. They fully acknowledge that these things should be done. At the same time, as we increase productivity, we hope that with up-skilling and training, wages will also go up for Singaporeans. That is how we intend to approach this.

We have discussed quite at length with Mr Low on how detailed we can go in differentiating the DRCs. In fact, we had a session offline previously. This is an area where perhaps we need to agree to disagree. We all agree that we need to manage the overall numbers. We believe that in our framework today – it is not just a broad instrument – we have gone down one level to see how to differentiate and, within those sectors, how to nuance it. That provides the boundaries, and using the levy system as a pricing mechanism, for companies to decide how much they want or how much they do not want foreign workers. All this is accompanied at the same time by the whole effort towards productivity.

So, that is my quick response to the Member. I think the DRC issue is something that we have slightly different perspectives. At the broad level, I think we are in agreement. But in terms of implementation, we feel that having operated the system and from the feedback from the companies, we find that it is very difficult to implement his suggestion in a very meaningful way.

The Chairman: Mr Heng, do you have a clarification?

Mr Heng Chee How: Mr Chairman, Sir, my clarification is that in the earlier clarification by Mr Low, he attributed a set of comments to me. I just wish to clarify that I did not make those comments.

Mdm Foo Mee Har: Sir, I wish to thank the Minister of State for giving a very comprehensive response to the extensive investment the Government is putting into the training and development of PMEs in Singapore. That is clearly an area that I think we are doing a lot. I would like to seek a clarification: under our current Employment Pass (EP) system − which is unlike the work permit system where there are quotas and levies – it is basically working on a system where you just need a qualifying salary and the salary minimum is at $3,000 and the relevant qualifications, and there would be plenty of these people in the world who would qualify for that. How do we make sure that even as we absolutely need to welcome foreign talent, professionals to complement our local workforce, how can we be sure that Singaporeans with the right skills are first given the consideration for these best jobs? Also if there are gaps, how do we make sure under our current system that employers take proactive steps to train and develop Singaporeans for those jobs?

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BG [NS] Tan Chuan-Jin: Sir, I would like to thank the Member for the question. Largely, there are two parts to this question. The first I will address is on the structure of our workforce. We have basically the Work Permit and the S Pass which forms the rank-and-file of the workforce. Then, we have Employment Pass, which is treated slightly differently. As I highlighted earlier, the Work Pass framework basically operates on a system of DRCs and also levies as a pricing mechanism to manage the numbers. The Employment Pass framework operates slightly differently, as we specify the qualifying salaries. We have restructured it quite significantly last year. Essentially, we have entry level at $3,000, but it does not remain there. This level of salary will move with age, meaning that a PME from another country coming in, say, at 40 or 45 years, will not be operating at $3,000. We would expect, at the equivalent level for a particular industry, his salary would have to be much higher. That is a fundamental change to the Employment Pass framework. This would have an impact. In the past, when we did not have this, we could end up having engineers coming in from the Philippines who are in their 40s, very experienced, but yet earning $3,000, $3,100, $3,200. That actually sets our local PMEs at that same equivalent age at a disadvantage. This was a very fundamental change.

Secondly, we have also tightened quite considerably the qualifications criteria, meaning that for the Employment Pass level, we do want people to come in who will complement our workforce. We all recognise that we do need an open and diverse workforce, not just at the Work Permit and S Pass level, but at the Employment Pass level as well. There are skill sets that they bring to bear. There are competencies which we are either short of or sometimes do not have the same level of maturity in that area or, in some cases, to supplement because we do need the numbers. The key thing is that even as the Employment Pass holders come in, what they do is that they create a very dynamic and attractive labour environment where companies see that it makes sense to invest here. Because companies come here, they set up their headquarters here. Because it is a diverse workforce, it makes sense to have regional headquarters here, and when these companies set up shop here, they create jobs directly for Singaporeans and also indirectly because of all the supporting industries that operate in order to support these companies that are here. So they create jobs. That is how the system works.

The second part of the question is about how then do we make sure that companies give priority to local PMEs who are equally qualified. The adjustment to the salary level will make a difference so that when companies calculate the costs involved, they would have to calculate the salary levels that are expected for a particular PME coming in from abroad because he needs to qualify at that level. For many of these foreign talents who come here, there are also other allowances that need to be put in place in their remuneration packages, for example, housing, other allowances and so on. All these things have to be factored in and companies will have to decide.

The approach that we are taking is highlighted through the Tripartite Alliance for Fair Employment Practices (TAFEP) which is basically to encourage positive work spaces, for companies to be much more aware of their hiring practices, to make sure that, at all times, we need to have a core of Singaporeans here because Singaporeans remain here. The EP holders will come and go. It is in the companies' interest to have a core group of Singaporeans within their employment. This is something we want to encourage. Right now, we do fully acknowledge there are not just anecdotal instances but in various industries we hear stories of perhaps discriminatory practices. This is something that we are turning the spotlight on. We are following up on feedback from Singaporeans. As we have highlighted earlier, when TAFEP meets up with some of these companies, all of them have cooperated quite significantly and we are encouraged by the feedback so far. So let us let this system unfold, both in terms of the restructuring of the Employment Pass framework as well as TAFEP measures. We believe that as we focus on this emphasis, we would begin to see a movement on this front.

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The Chairman: There are many Members who want to seek clarifications. I will come to you. I have seen your hand. Keep your clarifications short. Mr Ang Hin Kee.

Mr Ang Hin Kee: Sir, can I clarify with Minister of State on Mr Low's concern. Will MOM be increasing your Budget to pay for higher wages for cleaners if those who are consuming their services and those who are concerned about their welfare are not doing so? In short, Mr Low suggested that if the cost gets passed on to consumers and consumers are not paying for them, then, who else would be paying for these services? Mr Low's contention is that the Government should be paying for the services, for the higher wages of cleaners, that we consume their services and we are concerned about their welfare, but we are passing the costs on to the Government to pay for them.

BG [NS] Tan Chuan-Jin: For the cleaners working in MOM, as their wages increase, MOM will pick up the tab to pay and we will be very happy to do so, both for our cleaners and our security guards. I think the issue is that as we look at increasing the wages of our low-wage workers, as I mentioned, as a society, we need to realise that there is a correct price that has to be paid for these services, and there are Singaporeans providing those services. That, invariably, will be a cost that all Singaporeans need to bear.

Mr Zainudin Nordin: Sir, clarification. The Minister of State talked about the Employment Pass changes that will take place in a comparison of apple-to-apple so that we do not disadvantage our junior graduates compared to a foreign professional. I would also like to ask the Ministry to consider if the Employment Pass applicant or the company that is applying for the Employment Pass, every single time that they apply for an Employment Pass, when the gap is really identified and exists, that we work towards filling up those gaps, not just allowing those to continue to exist by working towards filling up those gaps and, hopefully, over time, those gaps will become smaller and smaller, and the dependency will become lesser.

BG [NS] Tan Chuan-Jin: I thank the Member for the suggestion. In fact, this is exactly something that we need to do. As I had highlighted in my earlier speech, WDA and e2i are making efforts to better match PMEs to jobs, whether fresh PMEs or PMEs who are already in the market looking for jobs, we also know employers are also looking for workers. That effort will go a long way. Today, some PMEs have given us feedback that they find it difficult. But a lot of it is finding where the gaps are and to see whether we can match them. This is where, in a sense, as the middleman, we provide not just training opportunities but we are now moving into the space of trying to facilitate employment. This can go quite a long way. Sometimes, companies may not know where to find the PMEs. Because we have contact with the PMEs and the workers, we are able to facilitate that matching and we hope that this will bear positive fruits.

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The Chairman: The Deputy Prime Minister has the floor now.

Mr Tharman Shanmugaratnam: Mr Chairman, if you permit me, I just wanted to clarify with Mr Low his position. First, once again, let me say I am glad that the Member has come to the view that our policy on foreign workers has to keep a very sharp eye on the issues of competitiveness and cost. These are relevant concerns. The Minister of State Tan Chuan-Jin has given our perspective: what we feel we really need to focus on as the long-term solution to this problem of dependence on foreign labour and, at the same, weighing it against competitiveness and cost. But I am intrigued by the Member's position.

First, I am glad that the Member agrees with us that competitiveness and costs are serious issues, and that we have to think through the balance very carefully. But I am intrigued by the Member's position on how we should go about deciding which industries should have more foreign labour and which less. He mentioned looking at productivity. What does he mean by that? Does the Member mean that industries with lower productivity should receive foreign labour?

Mr Low Thia Khiang: Clarification, Sir. What I was saying was that depending on the productivity level of the industry and how much more they can increase the level of productivity. Rather than forcing all the way up by setting a certain productivity target which they cannot achieve. Then they will experience a fall-out or the whole industry might be wiped out.

Mr Tharman Shanmugaratnam: Sir, to express that simply, did the Member mean that industries which he feels have low productivity should basically get more foreign workers?

Mr Low Thia Khiang: What I meant is that we tighten it slowly rather than tighten it at one go.

Mr Tharman Shanmugaratnam: I am glad you said that, because that is, in fact, exactly what we are trying to do. Careful, calibrated tightening in the industries which have the lowest productivity and the highest dependency ratios. That is really the problem we face.

6.15 pm

Ultimately, as the Minister of State Tan Chuan-Jin says, we have to make a transformation in productivity across the board. Although you have just said we should tighten gradually, what you were earlier saying was that we should be a little more liberal in those industries. This view, as I explained earlier, is quite different from the view you had taken earlier on, both in your manifesto as well as in your earlier speeches, where you had, in fact, criticised us for letting in foreign workers in a way that basically dampened productivity and held Singaporean workers' wages down. I have explained previously why I think you were over-simplifying and how, in fact, the dynamic created in our economy through our policy has led to an uplifting of wages. But I am just intrigued at your present position, because it is quite different from what you have stated before.

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Mr Low Thia Khiang: Sir, two points of clarification. First of all, even if you try to increase the level of productivity of all the industries, there will come a point where certain industries' productivity will not be able to increase to whichever level that you wish it to be. So, those industries would probably need more foreign workers to supplement. That was another thought I had in mind.

Secondly, as what I have explained in this House before, all we have said in the past was basically that you are letting in too many foreign workers who have been in competition with Singaporean workers, and there are jobs that Singaporeans can do that are taken away by the foreign workers. That is our complaint. We have not said that we do not need foreign workers in Singapore to complement our workers. We did not say that before. So I do not think we have changed any position at all.

Mr Tharman Shanmugaratnam: One advantage of me being able to sit down while Minister of State Tan was speaking is that I was able to do a quick check on my PDA, and I managed to pull out your manifesto, and this is what it said, "A liberal foreign labour policy has also come at the price of lagging productivity, forcing low-wage workers to depend on government handouts to subsist." It also said that "Singapore should reduce its over-reliance on foreign workers through increased automation and productivity improvements of our local workers." I think that is a very sensible position − that we should basically reduce foreign worker dependency through increased automation, every form of efficiency and upgrading.

Why not concentrate on that task and admit that that is the key task, rather than talk of a situation where eventually you may come to a point where you do not have any more scope of productivity improvements? Can we agree that we are very far from that point? Which sectors are you talking about that you feel should get a more liberal treatment? I can imagine which ones you are thinking about because these are the ones which asked for more foreign labour – F&B, retail, construction. I have explained, and the Minister of State Tan has explained, productivity is well below international standards. We know it is going to be quite a difficult path, a very difficult transition, that we have to make to help them upgrade. We are very well below the standards that we would like to see and which I am sure you would like to see so that our local workers can be paid better through higher productivity operations. So, I think we should focus on that, rather than pose an issue now which is slightly either misleading or academic. Let us assume it is academic. I am trying to be very generous here. Why do we not wait for that day to come when "you" ended up in a situation where you cannot get any more productivity improvements, which I do not think it will come by the way because the history of all developed countries is that there is a continuous improvement in productivity. That is the first point.

Secondly, it would be useful, since you take this position, to let us think about which industries you have in mind that should in fact see a reduced dependency ratio. And I mean this quite seriously precisely because of what has been said before that the industries with low productivity are the ones demanding a lot more foreign workers. In order to achieve the overall target of a slowdown of the foreign workforce inflows, you need to be very draconian on the other industries. You get what I mean? You will have to be very draconian about the industries. So, which are these industries where you would like to impose much more stringent dependency ratios?

Mr Low Thia Khiang: Mr Chairman, Sir, I have not gone into specific industries because, as what I have said, it is a complex issue. But at the broad level, when you look at it, for instance, the banking industry and some other industries which possibly more Singaporeans would want to do the job and work in the industry, I think we can tighten the dependency ratio. Even the Minister's own example, for instance, of the aerospace industry which, on one end, you probably need more high skilled labour, on the other end, you probably need more foreign workers as it is labour intensive. For the part of industry which we are producing enough skilled workers or engineers to do the work, that is the part where you can tighten the dependency ratio. That is one example. And we can look at different specific industries.

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Sir, the next issue he is talking about is why not we agree on the current measure of the Government, rather than talking about dependency ratio in the future. My concern is not only the future. My concern is also the push that you are making now by setting a target for dependency ratio and tightening it and, in the process, what will happen to the SMEs? Many of them may not be able to make it and there will be a lot of fall outs. I am also concerned with the speed of tightening. Of course, I am not saying that we should not do that. I agree that we should move towards the direction of tightening the supply of foreign labour and improved productivity. But at the rate that we are looking at, and for certain industries, I am concerned. Yes, if they are low-productivity industries, you want to push it up, but at the same time, you cannot do it suddenly. Because, eventually, we will end up with high cost of living. The low-wage workers' wages may be increased because of this productivity drive, tightening of foreign workers, but at the same time, they also end up with a higher cost of living. So, what is the trade-off?

Mr Tharman Shanmugaratnam: Sir, on the first point, I do not want to revisit the issue of whether it is possible to go into some segments of industries, or for the Government, either as an omniscient agent or through intensive consultation, in other words, being receptive to lobbying from businessmen, to be able to decide on who needs more and who needs less, it is a very complex matter. Minister of State Tan described it as central planning, and not far from the truth, a very complex matter.

On the second point, where you said that some areas which are skill-intensive, capital-intensive, and so on, they can do with the low dependency ratio, to begin with, they have much lower dependency ratios precisely because they are more capital-intensive, they are more automated, they are more skill-intensive. So they are already so. In fact, then your position − which you should come out with quite openly - is that in those areas of the economy which already have done a good job of becoming less labour-intensive and depending less on foreign workers, you want them to go even further. But by the way, it will have to be much, much further because, to explain to you the arithmetic again, the least productive sectors are the ones that are leading to a very large increase in foreign workers. A very large increase. The rest are flat or even declining.

To offset that very large increase, you need to have a very significant tightening of dependency ratios in what you feel are non-meritorious industries, in other words, highly productive. You should come out and say which are those industries. In other words, do not just say the positive things in order to gain some credit with groups which you feel you can appeal to, but say the not-so-positive things to the industries that will be heard like what you are proposing. That is what I am saying. This is the way we go about it always.

We are quite plain about our objectives. We are quite plain about the pain that has to be endured. We are quite plain about how we will try our best to help, and we make clear that there is no short cut. That is our approach. We are quite open about it. We do not just try to set things on the positive side. That is my advice, that be quite clear about it and state where you think the dependency ratio should be tightened very significantly. There is no playing around with this, very significantly, in order to control overall foreign labour supply. I had made this intervention because I sense that you are changing your position, because you think that there is now some political credit to be gained by talking about the SMEs, like we are all talking about the SMEs and you feel that being as sympathetic as possible to them is a useful line to take.

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I really hope you join us instead in recognising that, first, we have to move forward, recognising that it is going to be an arduous task, but we have to proceed with this task and not be late, and not pretend that there are easy solutions for SMEs or for anyone else. So, you are saying some things which are in accord with us now: competitiveness is important, costs are important, but the specifics of what you are saying are ones where you are saying the nice part, the part that people like to hear - why not give a bit more here, give a bit more there - and you are not saying the not-so-nice part. And that is what I feel is not a very cogent position.

Mr Low Thia Khiang: Sir, the Deputy Prime Minister is trying to suggest that I gain political credit, saying those nice parts but fail to say those not-so-nice parts. He is wrong.

First of all, in my speech, I spoke generally, I said some industries we can tighten the dependency ratio, for some industries we can relax the dependency ratio where Singaporeans shun the jobs. He asked specifically which industry I think the DRC should be tightened. I just told him, and he said, "Then you do not say those things that people feel bad because it has to be tightened." But neither in my speech did I mention which industries where the dependency ratio should be relaxed. So neither did I say the good thing or the bad thing. His claim that I want to gain political credit by saying only the good things, I think that probably is his own imagination.

The Chairman: Deputy Prime Minister, do you have a final rejoinder?

Mr Tharman Shanmugaratnam: I can see the difficulty you have. I think it is quite clear that we all know which are the sectors that want more foreign labour. We all know. You can read the newspapers. You can read all the feedback. We all know that the sectors that want more foreign labour are the ones which are affected by our reduction in dependency ratios, a moderate reduction. If you were not concerned by that, then nothing has changed in our policies. The only change in our policies was that we announced the five percentage point reduction in dependency ratios, which you have responded to. The sectors which are affected by that are well known – F&B, retail, precision engineering, a few sectors like that. That is what you are responding to. I think it was quite a reasonable reading of what you are saying that you are calling for us to rethink some of that tightening. You cannot be calling for us to rethink the tightening of industries that we were not tightening on, right? So, that was a reasonable inference.

I would urge you, even if you feel that that is not what you really meant, to be a little more specific and straight about the matter. These are the sectors which I feel because they are low productivity, they should get more workers, which is a change in the position you originally had advocated, and these are the sectors which should get less foreign workers because they are more productive and state how much. It will have to be quite a significant tightening.

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The Chairman: Let me move on to the next clarification, Mr Seng Han Thong.

Mr Seng Han Thong: Because the term expires next year, may I ask the Minister whether they are allowed to switch LIFE once they have made their choice?

Mr Tharman Shanmugaratnam: Yes, Sir, they are given a 30-day period to review their decisions. And beyond the 30 days, really to be fair to all members who are members of the LIFE pool, you cannot change your decision.

Mr R Dhinakaran (Nominated Member): Sir, Deputy Prime Minister mentioned that WDA is doing a wonderful job, be it training, in terms of WSQ and CET and many more training all around, for the local workers. The DRC is coming down. Every company, every employer, they are forced to look into their productivity enhancement. In order to really improve overall productivity, we need to train all the workers in the company or in their establishment.

6.30 pm

When I mean all the workers, almost as average, one-third of the population is made up of foreign workers. At every company - big companies, small companies - there are some foreign workers. To enhance productivity, you need to train both local workers as well as foreign workers. Whereas in the WDA grants, we give only grants to the local workers, but the Skill Development Levy, which has been collected for Singaporeans, PRs, casual workers, part-time workers and so on and so forth, including the foreign workers. The employers are paying for their foreign workers' Skill Development Levy but they are not getting any grant.

What I am requesting MOM to consider is: in order to achieve the overall productivity improvement throughout the country so that we can adopt the DRC at lower percentages, it is important for us to enhance our productivity. Therefore, we should encourage the employers to train the foreign workers. For any reason we cannot give them the grant, I think it is fair that we better do not collect the SDL for foreign workers.

BG [NS] Tan Chuan-Jin: Mr Chairman, I would like to thank Mr Dhinakaran for the question. I think it is a valid concern. Mr Dhinakaran talked about whether we could fund the training of foreign workers to improve productivity as part of our overall effort. In providing direct training subsidies, our focus should rightfully be on helping our local workforce. Employers who hire foreign workers should ensure that they come with the requisite skills as opposed to coming here and then, skill up. Having said that, nonetheless, employers can still send their foreign workers for training and benefit from the CET infrastructure that is put in place. They can also tap on the Productivity and Innovation Credit Scheme when they send their workers for training and that includes foreign workers.

The Chairman: Any more clarifications? Asst Prof Eugene Tan.

Asst Prof Tan Kheng Boon Eugene (Nominated Member): Thank you, Sir. My clarification relates to the mandatory day-off for foreign domestic workers. I would like to ask the Minister of State what are the plans to ensure that employers do observe the contractual arrangements. I think it will take some time for employers to internalise the value of a day-off for foreign domestic workers and the values that underline this treatment. But more importantly, in the meantime, we could expect some employers to not observe the contractual arrangements and the mandatory weekly day-off.

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BG [NS] Tan Chuan-Jin: I would like to thank the Member for raising this question, which is why I think we have decided that we will kick this in in 2013. Effectively, we have nine months to get ourselves ready. What we would expect following this announcement are reactions and responses from society and various groups, and we would start raising awareness, to talk this through. The Member is absolutely right. There will be employers, as we can see from the emails and feedback I have shared, who will find it difficult and awkward because for the longest time they have been operating on a certain basis. But it is a mindset shift that we need to see happen. It is probably a good thing to start discussing this because it is about how we ought to treat others, and how we should look after the people who are working for us and working with us, living with us. And while nine months, I agree, is not a very long time, I think we expect to see good conversations taking place and, hopefully, that in itself would help employers socialise themselves to get ready. But this is mandated by law.

The Chairman: Next, Mr Low.

Mr Low Thia Khiang: Sir, I mentioned the issue of Employment Pass holders in my main speech in the Budget debate and I also listened to the Minister of State's answer just now about Employment Pass, which is a different framework from the S Pass or the Worker Permit. When we talk about the foreign worker, we refer to the whole group of foreign workers. I wonder whether the Employment Pass is a loophole which will allow foreign manpower to come in to compete with Singaporeans. Employment Pass jobs are the types of jobs that many Singaporeans can perform and would like to do. There have been complaints in the past that the Government has allowed Employment Pass holders to be engineers and depressed the local engineers' wages. I also wonder whether the Employment Pass framework is within the radar of the Government's economic restructuring framework with the view of increasing productivity to improve the overall economic performance of Singapore.

BG [NS] Tan Chuan-Jin: I would like to thank Mr Low for the question. I would agree that that is one area that we are looking at. Fixing the wage levels to qualify for Employment Pass is critical. For example, like I explained, we raised the Employment Pass entry level to $3,000. Part of that whole change in framework is not just at the entry level but at different ages. The issue the Member raised about whether it is a loophole, whether we can then have cheap engineers coming in and therefore depressing the wages: that is something that we will counter through these adjustments. Over time, we will not be averse to increasing those levels. For example, if we find that our graduates' entry level pay is increasing, we will take corresponding steps to raise the entry level for the Employment Pass as well. The loopholes can also be exploited by employers who then jack up or claim that they are paying the S Pass or the Work Permit holder a certain level of pay to qualify for Employment Pass because it is not subject to the same kind of criteria, and then after that claw back from a different source. That is why we talked earlier on about tightening the whole pass framework so that these abuses will not take place. The measures will be punitive so that companies will be deterred.

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The Chairman: Final clarification, Mr Low.

Mr Low Thia Khiang: Sir, besides the qualifications and wage level criteria for the Employment Pass, would the Ministry consider putting in place something like a dependency ratio or a ceiling for certain sectors of the economy or certain companies, for Employment Pass applications?

BG [NS] Tan Chuan-Jin: In terms of whether we want to implement DRCs for the Employment Pass holders, I would say that as we move the entry level pay higher – for example, previously this level was lower than $3,000 – but as we move it up, what it means is that some of the jobs that previously were drawing $3,000 or those in the range of $3,200, $3,300, $3,500, if one day we were to raise it to $3,500, it would mean that some of those jobs that today are deemed as Employment Pass holders, would then be subject to the S Pass regulations which will be subject to DRCs. At the lower end, as I have said, that is something we will track very carefully based on the wages that we expect Singaporeans to be earning at the entry level when they graduate. We will then use it as a basis to gauge. If that is required to be increased, we will increase that. What effectively that means over time, if we were to increase it from $3,000 to, say, $3,500, what it would mean would be those who previously were employed as Employment Pass holders up to that level, will now become equivalent to the S Pass criteria and that will be subject to those regulations. But at the moment, we do not envisage ourselves using the DRC across the board for the Employment Pass levels.

I would like to emphasise also that for this segment of the population, the Employment Pass does bring in workers with certain skill-sets, that both supplement and complement our workforce. We feel it is quite critical because it brings in good companies because it provides a very diverse, competitive workforce. This attracts not only foreign companies here, but also keep our own good local companies here. By doing that, they generate jobs for Singaporeans. These companies are, by nature of being prepared to pay that level of wages, productive companies. This is important for us because if we are not careful, exactly as the concerns that the Member has raised, we could end up losing competitiveness and have companies exiting.

It is important for us to be mindful. Operating costs in Singapore are not cheap. However, companies choose to come here, and they come here because of the infrastructure, they come here because we have an open, diverse, competitive workforce. It still makes sense, despite the costs, to be here. When they are here, they generate jobs for us. It does not take much for companies to re-evaluate and go somewhere else. Which is why in the whole calibration of the Work Pass framework, the Employment Pass framework, it is very critical to get it right. We need to make sure that the steps that need to be taken ought to be done. For us, whether at the Work Permit level or the Employment Pass level, productivity is one big area that we need to emphasise. In summary, I would say that in terms of moving into the DRC for the Employment Pass holders, we think that that is not something very wise to do at the moment.

The Chairman: Ms Denis Phua, keep it short.

Ms Denise Phua Lay Peng (Moulmein-Kallang): I would like to seek clarifications. First, Sir, I would like the Minister of State to clarify how much investments have been made in training in the workforce since the last recession. Two, would MOM consider investing in sharper instruments to evaluate the effectiveness of these trainings other than the perceived learning that workers get, for example, where workers say they find the training useful? Those of us with experience in training are familiar with many instruments that measure learning at knowledge level, skills level and impact on business. I would like to seek clarification if MOM would invest more in that.

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Finally, would MOM take stronger leadership in the CET (Continuing Education and Training) for the disabled workforce, just as MOE has played a very active role in recent years in educating people with special needs? I think it would be a waste if these good efforts are not followed through when the disabled persons grow up to become members of the workforce in Singapore.

BG [NS] Tan Chuan-Jin: Mr Chairman, I will take the second question first. With regard to this, I think MCYS will be addressing some of these concerns during their COS. I think from MOM's perspective, we will be open to discuss further in terms of the leadership we could take. Certainly, it is an area that we feel we should support. Presently, we feel that the subject matter experts should drive this and then WDA can step in to see how we can resource it and to recognise some of these qualifications. We will be happy to explore further as to what reasonably we could do.

With regard to the first question, I do not have the specific numbers with me now. Certainly, CET is something that we place a lot of emphasis on and we continue to put in good money to make sure that we train our people. But the point is, like I mentioned earlier, it is important to know what are our returns on investment, not just purely for monetary analysis, but to find out whether our workers are really benefiting. Are the wages increasing and so on?

From surveys, we do see that wages have increased. The numbers may not be as large as perhaps we would like them to be. But I thought the data on the feedback from the trainees were very telling: that many of them want to go back and get more of this training. A lot of them feel more competent, more capable in terms of what they are doing and I think that is important.

But the question is, can we have a much more specific measure, a system of measure in terms of the returns on this investment? I think it is something that we are continuing to look at. It is very difficult to find something that can measure that. I suspect it is a combination of both feedback and raw data in terms of how workers themselves perform. We also recognise that there is also a lag time because sometimes even while you have finished your training, it does not necessarily translate to immediate wage increases. It may take some time. It also depends on the industry that they are going back to. But this is an area that I myself, and those within MOM are asking ourselves: we are doing all this for training, sounds good, feedback is good, but are we really extracting the maximum benefits from it? That is something that we will continue to work on.

Ms Jessica Tan Soon Neo: I would like to ask the Minister of State on the point that he has just made whether one of the ways he would consider measuring the impact of CET is by measuring the impact of the retraining on wage levels of those people who have received training, and not in the short term but in the long term. Those would be easy measures.

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BG [NS] Tan Chuan-Jin: Yes, those are the things that we are tracking. Whether those are sufficient to give us adequate analyses on the returns is something that we will continue to examine. We will also continue to see if there are better measures. We will also track how the workers are faring when they go back to the workforce. We would also be quite happy to have suggestions for other measures. What we are very mindful of is that we have come quite a long way in encouraging companies to send their workers for training. We do not want to make it overly cumbersome such that we deter companies from sending their workers for training. If companies feel that there are too many things to fulfil and if they are expected to then follow up to tell us if they are paying their workers more, that might scare off companies.

6.45 pm

The Chairman: We have had almost 45 minutes of clarifications. Could I now ask the hon Member, Mr Zainudin Nordin, if he would like to withdraw the amendment?

Mr Zainudin Nordin: Sir, we have had a long debate on the Ministry of Manpower. Allow me to thank the Deputy Prime Minister and the Minister for Manpower, Minister of State Tan and Senior Parliamentary Secretary Hawazi for the comprehensive response to the inputs from Members. I am heartened to note that Singaporeans and our people continue to be the focus of MOM's efforts and policy. If we continue along this route, Sir, I am confident that Singaporean workers of all ages, background and gender will benefit greatly from the growth of the Singapore economy. Please continue to be caring and be Singaporean worker-centric. With that, Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $932,997,900 for Head S ordered to stand part of the Main Estimates.

The sum of $30,640,900 for Head S ordered to stand part of the Development Estimates.