FOREIGN WORKER DEPENDENCY RATIO

FOREIGN WORKER DEPENDENCY RATIO:

(Post-Crisis Review): Column: 356

9.

Ms Ellen Lee:

Ms Ellen Lee asked the Minister for Manpower in light of the better than expected economic results in the first quarter of 2010, whether his Ministry will be re-examining and adjusting the foreign worker dependency ratios which were tweaked in view of the recession last year.

Ms Ellen Lee asked the Minister for Manpower whether the reduction and rejection of 'S' pass and work permit applications have adversely affected those industries that are dependent on foreign manpower.

The Minister for Manpower (Mr Gan Kim Yong): Sir, with your permission, I will take Question Nos 9 and 10 together.

Mr Speaker: Okay.

Mr Gan Kim Yong: Our strategy in dealing with the recession was to help businesses stay afloat and retain the capabilities as well as to help workers keep their jobs and upgrade their skills. We did this by leveraging on the strong support from our Tripartite Partners and through the Resilience Package as well as SPUR. The strategy has proven to be effective. We have kept unemployment low and helped the economy to rebound strongly. This year, we expect the economy to grow between 7% and 9%.

However, going forward, we need to make a decisive shift towards innovation and productivity rather than to rely on labour force growth to drive economic growth. For this reason, we will raise the foreign worker levy to moderate companies’ dependence and reliance on foreign manpower and encourage them to invest in productivity. To give companies time to adjust, these increases will be implemented in gradual steps starting from 1st July this year. We have not adjusted the overall dependency ratios. The current dependency ratios are carefully calibrated to strike a balance between moderating demand for foreign workers and allowing growth companies room to expand. There is, therefore, no need to tweak the overall dependency ratios for now.

As part of our efforts to improve productivity, we need to raise the skills

Column: 357

criteria of our foreign workforce. For example, we recalibrated the S Pass criteria last year so that only the more experienced and qualified applicants would be eligible. During my Ministry’s COS debate earlier this year, I announced that there will be greater differentiation in levy rates between skilled and unskilled work permit holders to encourage companies to hire the better skilled ones. The criteria for skilled work permit holders have also been refined. In addition, MOM has stepped up enforcement to prevent circumvention of our foreign manpower regulatory framework.

Now that the economy is recovering strongly, we can expect the labour market to tighten. I urge companies, especially those which are highly dependent on foreign workers, to act now to improve productivity rather than continue to rely on low-cost, low-skilled labour inputs. Many initiatives were announced in Budget 2010 to help companies streamline their business processes, improve their products and services, explore new markets, and upgrade the skills of their workforce. Companies should take full advantage of these initiatives to invest early in productivity-enhancing measures and develop a competitive advantage to achieve sustainable growth in the long term.

Ms Ellen Lee (Sembawang): Sir, I thank the Minister for the replies. But, even though Minister said that there was no tweaking of the dependency ratios, at the weekly MPS sessions, we are seeing more people coming forward to say that they have increasingly much more difficulty hiring foreign workers and that renewals were not permitted at first application and even after appeals. So I would like to know from the Minister, whether there are any interim measures that would be introduced to help these industries, especially those in the service industry, cope with the sudden loss of manpower,

Column: 358

especially when we say that theoretically we are going to rely on innovation and productivity to improve the work processes. These things take time and effort, because you must first have a group of people who are willing to go through the training and retraining before you could even talk about innovation and productivity.

Mr Gan Kim Yong: The effort to drive productivity is an urgent one. We have seen productivity decline over the last few years. In fact, during the recession in 2009, productivity took a further dive. So it is important for us to send the right message to our companies, to take advantage of the various schemes we have put in place to invest in productivity. From the Ministry of Manpower's point of view, we will provide the necessary training as well as consultancy services to our various schemes, through SPRING and so on, to help companies adjust. There will be companies which face manpower pressure, partly because they might have lost Singaporean or local workers, and as a result, their available quota might have been reduced, because they have fewer local workers now.

There may be companies who are applying for foreign workers, but their candidates do not satisfy our criteria because, as I have said, we have improved and stepped up the skills criteria for foreign workers. It is important for these employers to look for better quality candidates when they apply for work permits or S passes. For specific cases, Members can refer them to me and I will look into them to see whether there are reasons that they were rejected. I would use my best endeavour to explain what the reasons are and see whether we can help companies adjust to this new paradigm of driving economic growth through productivity and innovation, rather than through labour force expansion.