HEAD S - MINISTRY OF MANPOWER

Head S – Ministry of Manpower

Raising productivity

Mdm Halimah Yacob: Sir, I beg to move,

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

Sir, last year, when the recession hit Singapore, tripartite partners worked tirelessly together to help companies cut costs and save jobs. Tripartism is our unique advantage and has helped us to quickly overcome the crisis even as other countries are still mired in deep conflicts over labour issues. Our excellent tripartite efforts are recognised even by the International Labour Organisation (ILO). Recently, a senior ILO official who visited Singapore described our relationship as the Rolls-Royce of tripartism, which the ILO has been sharing and intends to share further with other countries.

We must never take our tripartism for granted. We must ensure that every generation of leaders on the side of the Government, unions and employers understand this unique tripartite advantage that we have and continue to nurture and develop it. Indeed, tripartism has helped us overcome many past crises and ensured a smooth transition of our economy from a labour intensive to a skills intensive one, and now to an innovation and productivity driven one.

Sir, productivity is not a welcome word among overseas unions because of fear of job losses, pay cuts and overloading of workers. But, in Singapore, we have been pushing it for decades smoothly because of the greater trust and confidence among us and because productivity growth has benefited both companies and workers. Sir, Deputy Prime Minister Teo has explained about the role of the new National Productivity and Continuing Education and Training (CET) Council and how it intends to drive efforts to push productivity. I am greatly excited over the plan to build a first-class CET system. I would like to ask the Minister what are his plans to build such a system, what policy structures and mindset changes will be put in place, what are the measurables and deliverables, what are the timeframes for progress can we expect to see.

Mdm Halimah Yacob: In developing the CET system, we must put a greater focus on our low-wage and older workers. Structural unemployment is not a thing of the past. It is still very much alive as we have a few hundred thousand workers with little education. I urge the Minister to look into schemes that will make it easier for low-wage workers to upgrade their skills to earn better wages as they continue to face many barriers in training. What plan does the Ministry of Manpower (MOM) have to improve their literacy skills, help them cope with the potential loss of income while attending training and persuade employers to take responsibility for the training of the low-wage workers?

But job training alone is not sufficient. We also need stronger efforts to push for job redesign, job recreation or upgrading jobs so that workers can add greater value and earn higher incomes which is even more critical now and should be the key focus of the CET. At the same time, I urge MOM to encourage workers to take greater ownership over their own training. The Workfare Training Support (WTS) scheme is a good move but making it dependent on companies sending their low-wage workers for training is too restrictive, especially for our contract workers who work for very short periods. I would like to seek a clarification from the Minister whether the WTS can be paid directly to workers so that their training is truly portable and worker-centric.

A superior CET system also requires first-class training institute with high calibre trainers that can provide quality training. Our training quality varies considerably depending on the institution. There are also many small players in the training field who do not have the means to upgrade themselves and this affect their quality. We should also partner world-class global training institutes so that we can shorten our learning curve and benefit from their experience. I would like to hear from the Minister on his plans to upgrade the industry to support a first-class CET system.

Madam, to succeed in our efforts, we must have people at all levels with the knowledge, skills and capabilities to drive innovation and productivity. Managers have to take the leadership and empower and motivate workers to give of their best. As I had mentioned during the Budget debate, incompetent managers who use unethical or intimidating tactics to raise productivity will do more harm than good. I would like to ask the Minister what plans are there under the CET system to train our workers, supervisors and managers on productivity.

Madam, higher productivity is not an end in itself but merely a means towards a better life. It is therefore important that we keep faith with workers so that they can see the link between their efforts to push productivity and wage growth. If this linkage is not evident, workers will see it as benefiting only companies and have little incentive to support it. I urge the Ministry to promote implementation of gain sharing schemes among our companies. Such schemes should be transparent, have clear objectives, agreed KPIs and

provide how the profits or savings will be distributed. It could also form part of the annual NWC guidelines.

4.30 pm

Our efforts on productivity can be derailed if we do not address the foreign workers challenge which goes beyond the levy. MOM has done a good job in taking enforcement against errant employers but I urge the Ministry to do more. Despite the increase in the levy, companies can still employ foreign workers cheaply by paying them lower salaries or making them work very long hours or during their rest days or public holidays without paying overtime. So even with the higher levy, it is cheaper for them to employ foreign workers. We need stronger enforcement of our labour laws to prevent exploitation and abuse of foreign workers by unscrupulous employers. We also need more stringent laws against errant employment agencies who continue to bring in foreign workers on false promises of jobs that do not exist or use phantom workers to benefit from a higher dependency ceiling. Such employment agencies give the industry a bad name and create a poor image for Singapore.

Are there any plans to tighten the laws on employment agencies so that we can have a more progressive and responsible industry with high standards? Are there also plans for stronger enforcement action against errant employers?

In my view, with our strong tripartism and very active labour market policies, we should have no problems in ratifying International Labour Conventions 144 on Tripartite Consultation and 122 on Employment Policies. I would like to seek the Minister's response on this.

In conclusion, Madam, I look forward to the establishment of our CET system. I feel that this is the most meaningful and tangible way of improving the lives of our workers in a sustainable manner so that they can continue to build up their skills, hold better jobs and enjoy higher wages.

Tripartism

Mr Seng Han Thong: Madam, we have weathered many crises: in 1985 – recession; 1997 – Asian financial crisis; 2001 – dot.com bust; 9/11 – terrorist attack; 2003 – SARS outbreak, and to the current global economic downturn. In all these crises, tripartism has played an important role in tackling the critical issues which affect our economy. This unique brand of tripartism also ensures our social and economic progress. It is also through this tripartite platform that the labour movement airs our workers' concern and work together with the Government and management to raise the effective retirement age and ensure more older workers are re-employed, among others.

All these years, the tripartite partners have also taken the initiative to launch job recreation skills training and upgrading, and promotion of fair employment practices. In this aspect, may I ask the Minister what are the measures to strengthen and institutionalise this strong tripartite cooperation?

Skills Programme for Upgrading and Resilience (SPUR) Plus

Dr Ahmad Mohd Magad: Many small and medium enterprises (SMEs) in the manufacturing industries face challenges in sending their workers for training and skills upgrading. Apart from cost issues, employers face time and resource constraints and find it difficult to send workers for training during the day as there is a constant need for them to utilise their manpower resources.

For the employees, many face challenges in attending training programmes after a long day at work. To help overcome this hurdle, could the Government facilitate this by considering the provision of mobile training centres that can be stationed close to flatted factories. This would encourage more employers in this sector to send their workers for training and skills upgrading. Their workers can walk a short distance from the flatted factories to the mobile training centre instead of having to travel long distances after work, as flatted factories can sometimes be situated in less accessible parts of the country.

In addition, having these mobile training centres close to their workplace would help workers save on transportation cost.

The Chairman: Mr Heng Chee How, you may take both cuts together.

SPUR and productivity improvement

The Minister of State, Prime Minister's Office (Mr Heng Chee How): Madam, the Skills Programme for Upgrading and Resilience (SPUR) was introduced at the onset of the global recession. It started on 1st December 2008. And this programme has helped many companies and workers upgrade their skills and capabilities while tiding through the recession. We know the reality and the value of this programme from the union movement – it made a lot of real difference on the ground for the companies and sectors that were badly hit.

Now, as the Singapore economy emerges from the recession into a period of recovery and as the labour market tightens following the absorption of excess capacity, I have two questions to put to the Ministry of Manpower (MOM). First, would the SPUR programme be continued beyond its two-year announced lifespan that ends in November this year? If it is to be extended, how can it then be repositioned as a booster for the productivity drive?

In my view, it is very important that we do so and send the right signals clearly to companies and workers. Whether we are speaking of innovation or of enhancing the skills of workers so that they are able to work more productively with better technology in upgraded jobs, we cannot escape the fact that continued training and development would be a pre-requisite for sustained improvement and success. We must reassure companies and workers that the Government's commitment to the strongest possible support for training and development of workers will not weaken in the recovery nor will it just be about building better physical infrastructure. The continuation of the SPUR programme, or whatever name the successor programme might be called, will be a strong and specific manifestation of that commitment.

Secondly, with the economic recovery, we have read media reports that participation under SPUR has declined, as companies and workers price working, fulfilling orders or working and earning overtime above going for training. We should take this seriously. The supply of training, whether building more schools and providing the courses, supply does not equal the demand for training. And if companies and workers' appetite for training is weakened or distracted in the recovery, then capability building will be hampered and the pace of productivity improvement will be impeded.

I therefore ask MOM whether and how will the terms of SPUR be enhanced so that companies and workers would continue to be attracted to training even in non-recessionary times.

Productivity consultants

Madam, with the drive towards sustained higher productivity, many more companies are expected to get help with their productivity plans because not all companies will have the internal know-how of doing so. Will this lead to a shortage of consultants who are capable of providing such services?

It is important that there be a sufficient pool of such expertise so that the pace of productivity initiatives will not be constrained by such a bottleneck. It is also important to have an adequate pool of such expertise so that the resources poured into such initiatives will yield real results and not be wasted through sheer busyness or misguided through a flurry of rank-seeking activities on the part of unqualified entities and persons offering so-called "consultancy".

These consultants would also need to keep current with advancing knowledge and best practices internationally. What plans are there to ensure that such a bottleneck would not form to the detriment of productivity improvement efforts? What steps will be taken that such capabilities continually sustain and nurture so that the endless journey of productivity enhancement will not lose steam due to jadedness or a disconnection from international knowledge, ideas and best practices?

Productivity

Mr Charles Chong: Madam, levies on foreign workers will be increased quite significantly over the next few years in order to encourage productivity growth. Much scope for productivity improvements is envisaged in the construction industry where productivity levels are low.

I recall, as a member of the previous National Productivity Council from 1988 to 1993 and the National Productivity Board from 1990 to 1996, the many higher level deliberations and campaigns that were conducted to improve productivity, including that of the construction industry. What was then known as the Construction Industry Development Board, it set up a taskforce which issued a report in 1992, specifically considering how Singapore's construction productivity could be raised. Even at that time, there was a conscious effort to reduce our dependency on foreign workers by raising productivity. In 1999, another high level committee launched Construction 21, with more recommendations to raise productivity in the construction industry. However, productivity in that industry continued to decline between 2% and 4% from 1995 to 1999. Even after implementation of Construction 21, productivity growth averaged a meagre 0.7%.

Despite whatever productivity improvements or job redesign we are able to achieve, I think that there will always be a need for workers to carry out jobs that Singaporeans find less attractive. Even if we use the most innovative methods and work more productively every year, there may never be enough Singaporeans to replace the thousands of foreign workers who currently accomplish tasks that Singaporeans seem to avoid.

Under such a situation, raising foreign worker levies across the board and consequently driving up labour cost in the hope that the market will then react by raising productivity may not have the desired outcomes. We had, in the past, tried to drive productivity growth and attract high value-added industries by raising the cost of labour through significant National Wages Council (NWC) wage increase recommendations year after year. However, it did not achieve the desired results, and instead it led to many businesses becoming less competitive and contributed to the 1985/1986 recession.

We should learn from our past experiences in order to avoid repeating past mistakes. Could the Minister tell us what measures his Ministry would be taking that would be very much different from our previous efforts to tackle the old problem of raising productivity? What measures will be taken to change the mindset of Singaporeans towards jobs that are currently considered less attractive, such as those in construction, ship repairing and cleansing industries?

Continuing Education and Training (CET) system

Mr Zainudin Nordin: Madam, when we launched our 10-year Continuing Education and Training (CET) Masterplan in 2008, we sent a clear signal that the training of adult workers is one of Singapore Government's top priorities. The aim is to upskill the Singapore workforce for future landscape and sharpen their competitive advantage.

The education and the CET system form a life-long learning programme to help workers add value to every Singaporean's career, develop their niche areas, capitalise on new growth opportunities and remain relevant. CET is accessible and affordable across the workforce demographics. And more recently, it was announced that the Government would invest in developing two new CET campuses, and also grow the training capacity to meet the future needs.

As we enter 2010, can the Minister update the progress of our CET system? As our economy restructures and moves towards more knowledge-based activities, it is evident that the less educated and less skilled workers are finding it increasingly difficult to find new jobs. Despite the Government's intervention, Singapore's structured unemployment problem seems to have not abated.

As the economy recovers from recession, this leads to my next question on the effectiveness and the responsiveness of the CET in tackling the job skills mismatch and the structured unemployment issues. We have made changes in the retraining programme to get workers into new growth sectors, such as the Integrated Resorts, hospitality and healthcare. What are the acceptance and recognition levels from the industry of the Workforce Skills Qualification (WSQ) and the Employability Skills System (ESS) certification? Are our own Government, Ministries and agencies employing workers based on skills? Can MOM share its strategy to enhance the image of skills-based profession and the large potential of career progression for skills-based professionals?

Contract and part-time workers

Mr Low Thia Khiang (Hougang): Madam, as at June 2009, there were 87,400 resident employees on short-term contracts of less than three months and 156,200 residents on part-time employment. About half of these employees are in the older age group and a majority of them have lower educational qualification with a gross monthly income of below $1,000.

I am of the view that the number under this category of employees would increase over time, because companies want flexible manpower and being able to respond faster to changing demand and cost variation as business environment changes. Secondly, as our society matures with an increased number of ageing employees, more people may prefer such mode of employment as seniors may not want to work full time.

Contract and part-time workers may not necessarily be low wage and low productivity. Some studies have shown that part-time workers can be as productive as full-time workers and companies employing part-timers do not necessary suffer low productivity. I understand that in Netherlands, a relatively large share of the workforce works part time, achieves high labour productivity. Hence, I believe that there is much room for improvement in productivity and income of our contract and part-time workers.

Madam, given the current educational profile of the employees in this group, a targeted approach is needed to improve the productivity and income. The ESC proposes to introduce a broad-based incentive scheme to encourage employers to send their workers for training and develop structured programmes to train and place low-wage workers in better jobs. I would like to know what are the detailed mechanisms and new initiatives to work in line with ESC's recommendations and to raise the productivity of this group of workers.

Next, with the likely trend of short-term contract and part-time workers to increase in the future, I would like to know whether the Ministry of Manpower (MOM) will develop a strategy to include such employees in the productivity upgrading process.

4.45 pm

CET innovation

Mrs Josephine Teo (Bishan-Toa Payoh): Mdm Susila is a 48-year old widow living in Toa Payoh, she has three school-going children, her husband died two years ago after a bout of illness. Her HDB flat is gone and she now rents a room from a landlord. She earns $800 to $900 per month working in two jobs. One of her sons has behavioural problems and requires counselling. She is barely making ends meet and, frankly speaking, her home situation is quite difficult. So, for low-wage workers like Mdm Susila, CET is an alien concept – it is too big a word – and training to upgrade her skills to improve her job potential is really very far from her mind.

Madam, I would like to raise the concern that traditional methods of delivering our continuing education and training may not work for all low-wage workers and their SME employers. I think that, perhaps, the Ministry of Manpower should consider besides the tax incentives that we have put in place, whether through the Workforce Development Agency (WDA) we should seriously consider expanding some of the new methods of training delivery that have already been pioneered and piloted. Examples include the on-site bite-sized training concepts and also we could introduce ideas like using mobile buses at housing estates and industrial estates to make it easier for these workers to access to training. The other idea I suggest is that MOM consider that we might have to use vernacular languages to outreach and expand the course offerings so that they, perhaps, could be available in mother tongues too. And we may need to find ways to fund these kinds of programmes more generously. In some of the cases, I think even community support networks might need to be put in place.

The Chairman: Dr Ahmad Magad.

Dr Ahmad Mohd Magad: I am not speaking, Madam.

CET qualifications

Ms Sylvia Lim: Madam, as someone who has been deeply involved in adult training for more than a decade, I strongly support providing more upgrading pathways for our adults who may not have had the luxury of a full-time education when they were younger.

Deputy Prime Minister Teo Chee Hean announced last week that the Government would look into providing stronger linkages and clarity between our academic and skills qualifications. This was to provide upward mobility for workers and give employers greater clarity on how different qualifications relate to one another. It was also announced that the Government would be studying models from other countries. I would like to seek the following clarifications: First, has the Government identified any countries to be studied so far? For instance, is the Government considering a comprehensive system like the Australian qualification framework to link school-based vocational and higher educational qualifications? Second, regarding the new National Producitivity and CE Council, it was announced that it will comprise private sector businesses, unionists, and Ministers and Ministers of State. Since the Council would also be overseeing the development of the new CE system, should there not be representation also from the educational institutions? And, finally, is there an approximate timeline for the Government to roll out the new CET system?

Productivity, innovation and CET

Ms Denise Phua Lay Peng (Jalan Besar): Madam, I wish to put on record the good work of the Manpower Minister in chairing the Inter-Ministry Committee on the concerns in residential areas with a high density of foreign workers. The Committee's collaboration with grassroots leaders in deploying uniformed patrols, for instance, has received very good feedback from the ground.

There are three areas that I seek to draw the Ministry of Manpower's attention to.

One is the plea in my Budget speech for Government's leniency in foreign workers levy and staff ratio at VWO-operated nursing homes and centres for the disabled adults.

Two, in the area of CEO engagement and role in the overall drive for productivity and innovation in our country.

Madam, in recent surveys by the Boston Consulting Group, two-thirds of the top executives surveyed identified innovation as a top strategic goal. When asked, however, why there is a lack of sustained innovation, the two top reasons quoted were (1) lack of time; and (2) lack of management commitment.

Madam, as early as 20 years ago, gurus like Jim Clemmer have long advocated that staff training is only one of the strategies leading to good culture, service excellence cultures, for instance. In culture changing, Clemmer called for the "Firing of 12 Cylinders" where CEOs and senior managers must take planned efforts in other critical interventions like signaling commitment, listening to internal/external customers, job restructuring/redesigning, setting up systems, reward and recognition, standards and measures. In short, more than worker education and training.

Madam, I urge the Minister to develop specific Learning Roadmaps for the CEOs and their senior managers which appear to be missing in current WDA and e2i efforts. Knowing their learning profiles may be different, I ask the Ministry to conduct a rigorous Learning Needs Analysis for this group and to put up online learning resources on Productivity and Innovation that would enable them to learn anywhere, anytime; in their homes, at the workplace or the airports. Ted.com and www.earthacademics.com are good online learning resources for senior management that can serve as reference. We can blend these with face-to-face networking and sharing forums and this blended approach can be looked into.

Thirdly, Madam, I wish to take the ESC's goal for Inclusive Growth seriously and seek MOM's active role to support a specific category of vulnerable workers in Singapore.

My volunteers and I recently conducted a study of the employment of special-needs staff by Kentucky Fried Chicken (KFC) which has been exemplary in this space. What amazed us was that whilst KFC received a lot of media attention over the years and piece-meal help for the hiring of deaf, physically disabled, visually impaired, intellectually disabled staff; there is little national effort to drill down to the structure, the systems, the processes and the training programmes. In short, what really works beneath the iceberg. If these systems and processes could be codified, customised and communicated; they can be scaled operationally across disability groups and benefit the entire disabled and, perhaps, even relevant able-bodied workers in Singapore.

Madam, it is not sufficient to keep quoting the mini successes here and there, of compassionate disabled-friendly companies like KFC, Starbucks, Holiday Inn, BizLink and Mr Bean.

I ask the Minister to facilitate the setting up of a formal Continual Education and Training Unit for the Disabled that leverage on the excellent work of the current e2i and the upcoming major CET Centres. This vulnerable workforce needs lifelong learning like every other typical worker and PMET in Singapore.

Manpower Minister Gan Kim Yong has left a legacy in the education of special needs students when he was in MOE. The same children he has helped educate are now growing up or grown up. Do not let them become one of the dismal statistics of people adults with disability stay at home.

Let us do the right thing and make a difference to this vulnerable workforce who, like you and I, are sons and daughters of Singapore, not step-children of Singapore.

Loans for continuing education

Mr Hri Kumar Nair: Madam, the Government has frequently hightlighted the importance of continuing education for all Singaporeans to upgrade their skills and increase their productivity and employability. It also provides financial assistance to needy Singapore citizens until junior college or centralise institute level. This is commendable. However, in this day and age, more and more employers demand education levels beyond junior college. Technical qualifications are also critical.

Currently, the Government provides some relief by allowing Singaporeans to use their CPF savings from the Ordinary Account to pay for their children or their own tuition fees. However, only full-time subsidised course at approved educational institutions are included under this scheme. For example, institutions like the BCA conduct many useful, practical courses. However, those who are not employed or are self-employed may not obtain a subsidy or have a sponsor for their course fees. This is particularly so if they wished to switch industries and pick up new skills. If they do not have the means to pay course fees, they must turn to commercial banks, but it is not easy to secure study loans from commercial banks. There are strict eligibility requirements, it only applies to certain designated partner institutions, there are minimum income requirements and some applicants must even furnish guarantors. Furthermore, repayment terms of commercial banks are not rather friendly. In some cases, payment kicks in after draw down, interest rates are high and the repayment period is strict.

Could the Minister look into the possibility of establishing a Government-run student loan programme to help Singaporeans of all ages improve themselves, whether by way of a post-graduate degree or technical diploma? This would be in line with the Government's vision of a learning nation, a social environment that promotes lifelong learning in our people. The downsides are limited, frivolous cases can easily be detected and rejected, and most recipients are likely to pay back their loans. The upsides, however, are unlimited, a better educated and trained Singaporean will be an asset to his employer and the country and will return the investment many times over.

The institution of such a facility will also be a clear message to all Singaporeans of the Government's commitment to lifelong learning and that it is determined to help Singaporeans achieve the highest potential.

Talent hub and career destination

Ms Jessica Tan Soon Neo: Madam, as Singapore continues to drive quality and productivity to support growth, how will Singapore continue to ensure that we remain a choice talent hub and career destination to retain local talent and attract quality foreign talent?

Increasingly, Singapore competes with many other global cities and economies for talent. Can the Minister share on how Singapore will build up our talent base and, more importantly, retain talent? This will apply to both local and foreign talent. How will Singapore differentiate herself as a talent hub and, hence, be an attractive career destination for top local and foreign talent?

The Economic Strategies Committee's Sub-committee on making Singapore a leading global city has proposed three strategies and recommendations on how to achieve this vision. One, establishing Singapore as Asia's most liveable city, developing Singapore into a new Asia's hub for innovation and creative enterprise and making Singapore the best home for talent. These recommendations will require huge efforts and investments. How does the Minister see Singapore moving forward with these strategies to achieve the impact and the vision that has been set up? Can the Minister share on how he sees Singapore as creating a conducive and stimulating environment to attract talent, enabling them to pursue their interests and ambitions? How will Singapore build the clusters and the eco-systems that will be necessary to attract talent and, more importantly, to retain top talent?

Work Permit quota

Mr Ang Mong Seng (Hong Kah): ( In Mandarin ): [For vernacular speech, please refer to Appendix A] This year, the Budget's emphasis is on training workers and improving their skills and productivity. The Ministry of Manpower will gradually raise the foreign worker levy and reduce our dependency on foreigners.

I have a few suggestions. The demand for foreign workers differs from sector to sector. For instance, the construction, maritime and heavy industries have been having difficulties in recruiting Singaporeans and most of their workers, up to 95% , are foreign workers. If we reduce the foreign workers by a large quantum in a very short time, there will be a significant adverse impact on these industries. Hence, the Ministry of Manpower should continue to allow them to employ enough foreign workers to contribute to our economic development.

As for industries whereby Singaporeans can undertake foreigners' work, we can reduce the dependency ratio and reserve the jobs for Singaporeans. When implementing the quota policy on foreign workers, we must make sure that we take into consideration the needs of the various sectors and formulate the right policies. We encourage the employers to also train their foreign workers to improve their productivity, but employers worry that the foreign workers are not able to remain in Singapore after their training. We do not want to become a worker training centre for other countries. Hence, I suggest that, for two-year work permit holders, we extend the work permit validity to four years after they have completed their training so that they can apply what they have learned to their work and the training investment made by the Government and the companies would get a better return.

*Cols. 4173-4174.

Manpower shortage and foreign workers

Mr Teo Siong Seng (Nominated Member): ( In Mandarin ):[For vernacular speech, please refer to Appendix A.] Madam, fellow Members of Parliament, a very good afternoon to everyone. Today, I would like to raise two suggestions concerning manpower shortage and foreign workers. First, we ought to acknowledge the contribution of foreign workers. Second, we hope that the current proportion of foreign workers in the workforce will remain unchanged.

In the past half year or so, members of the public and press forums have been rather unfair to the foreign workers. In the call to raise productivity, foreign workers have either intentionally or unintentionally been regarded as being an unwelcome group and not worthy of being respected. They have left their respective countries of origin, and left behind their families to work in Singapore. It is not difficult to imagine what hardship they must have encountered. Although they are foreign workers, they have rendered valuable contributions to Singapore. Their presence fills a much-needed gap as they have taken up jobs shunned by local workers.

Singapore's birth rate is very low. Unless we can add to the population by having more babies, the manpower shortage will only become more and more severe. According to a survey by the Singapore Chinese Chamber of Commerce and Industry (SCCI), 64% of employers have declared that the key reason of employing foreign workers is that locals are unwilling to take up backbreaking jobs.

Take the renovation industry, for example. Not only do raw materials and debris need to be moved manually , but maintaining a clean environment also needs manual labour. Without foreign workers, the skilled workers would have to do this type of work themselves. This would increase costs, and be very unproductive. The renovation contractor has to consider using technology to resolve this manpower problem. Besides purchasing and installing automation equipment, he also needs to consider the design of the HDB corridors, lifts and car parks. This is not something they could resolve on their own.

Singapore is working hard at creating a leading global city, but if we tighten the foreign workforce, this will have a great impact on industries such as construction and renovation. This would also affect the lifestyle of tens of thousands of Singapore households. In Parliament last week, I was very happy to hear Member Ong Ah Heng speaking up for the foreign workers and employers, stating the plight of the employers. The tripartite mutual understanding and cooperation is Singapore's strength. I hope that the new National Productivity and Continuing Education Council will engage unions and business leaders who understand the grassroots problems and practical situations to work out workable solutions.

Employers are concerned that if the number of low-wage foreign workers is reduced, they would still be unable to recruit local workers for the same work, even if the wages are increased. By then, there would be no one to do the work, productivity would not be increased. We can imagine the consequences.

In the past few years, there has been a rapid growth in the number of foreign workers, and they already constitute one-third of the Singapore workforce. The Government is gradually increasing the foreign worker levy, curbing the growth of foreign workers. We can understand and support this move. However, I also hope that the Government can maintain the current proportion of foreign workers.

Currently, employers are very worried that with the tightening of the manpower policy, companies will encounter difficulties in recruiting foreign workers. If the foreign workers leave, employers fear that their foreign worker quota would also be revoked; they might also face difficulties in extending the work permits of existing workers. I would suggest that the Government allow companies, big or small, to renew or extend the work permits. Employers should be allowed to apply for new workers when the incumbent leave, as long as the quota is maintained.

As for the skilled foreign workers, especially those who have worked in Singapore for a number of years and have become familiar with the Singapore lifestyle and environment, and have performed well, we should encourage them through different incentives or measures to become permanent residents or citizens. This could help us to increase the number of skilled local workers and avoid losing this pool of skilled workers.

We would also like to learn from the experiences of other regions. In May this year, the SCCCI will be organising a business mission to Taiwan to study their SMEs, and their experience in increasing productivity. Thereafter, the Chamber will be organising more of such missions to other countries, to help our members identify new ways of raising productivity. I would like to thank the Government agencies, especially IE Singapore and SPRING Singapore, for supporting such activities.

For a country to grow, we need all kinds of talent. The growth of any enterprise needs to have management, local workers and foreign workers working all together. I am in the shipping line, and fully understand that sailing on the high seas requires the cooperation of not only the captain and the first mate, but also all sailors, working as a team. Only then can this huge vessel of Singapore sail bravely ahead!

*Cols. 4175-4178.

5.00 pm

Foreign workers

Mr Ong Ah Heng: ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Madam, I agree with the Ministry of Manpower's measures to increase foreign worker levy and to help raise companies productivity by employing less foreign workers. However, I would like to raise a matter of great concern to us. The Minister of Finance has cited an example of a local company during his Budget speech to demonstrate how this company, which employs 10 locals, can be affected by the levy increase. According to my own calculations, if the company employs the same people who are all skilled workers, it will end up paying 10% more in terms of levies from 1st July 2010. By the end of 2010, when it comes to the final round of tax adjustment, the company's tax will be increased by 33% or about $10,000 a year. I think to this company this is definitely not a small amount.

Many companies provide basic services to Singaporeans, particularly the HDB dwellers, including running coffeeshops, cleaning foodcourts, ferrying workers and students to work or to school and cleaning the estates. Many such companies have difficulty attracting Singaporeans who are reluctant to do such a job even if the companies are willing to for as much as $1,000 a month. I worry that these companies will have no choice but to pass the increased levy cost to consumers who use these basic services. So who are the end-users? That is our middle- and lower-income Singaporeans. The purpose of increasing the levy is not to increase Singaporeans' living expenses, especially the low-wage Singaporeans. We want to reduce dependency on the foreign workers but we are adding the burden to our low-income Singaporeans.

I would like to ask the Minister if MOM could adopt a flexible system which could mitigate the companies' rising levy cost so as to prevent them from passing the cost on to the consumers.

I am not saying this out of the blue. In my constituency, there are coffeshops which are charging different prices for the coffee, some are selling 80 cents, some selling 85 cents and they say that the cost of sugar has gone up, but some retain the original price of 70 cents. So, now with this increase of foreign worker levy, I think they will pass the cost to the consumers.

*Cols. 4179-4180.

Foreign worker policy

Mrs Josephine Teo: Madam, each time I say something about foreign workers, I seem to get myself into trouble. In August last year, I called on Government to put productivity first and review the foreign worker policy, the news report earned me sharp responses from two Ministers.

Last week, I again spoke on foreign workers. This time is to reject MP Low Thia Khiang's proposal to scrap the foreign worker levy. The newspaper reports said he called me a "pretentious fox riding on the tiger's might". But never mind, something good came out of both episodes. Government has eventually decided to focus on productivity and adjust the foreign worker policy. And on reading reports of MP Low's remarks, many people came forward to express their support for which I am grateful. Sir, I hope I am three times lucky, that something good will come of this cut.

Madam, the foreign worker policy is not just a matter of adjusting levies. To successfully transit to a productivity-driven economy, it is equally important that the productivity levels of our foreign workers are improved as they comprise one-third of our workforce.

One issue that, I think, needs to be seriously looked into is how we define "skills". Just last week, a union leader asked me at a dialogue, "are we so sure that our foreign workers are skilled? We do not mind if they are really skilled workers because it would add value, but some of them are really not that skilled even if they are given the skills levy."

Another person, a veteran of the training industry, told me over dinner that, in fact, there are testers who find ways to be creative and to enable the foreign workers to pass the tests to certify them as "skilled". And my own experience does not give me confidence. Several months ago, in the middle of the night, my domestic helper came running into my room shouting, "M'am, M'am, come! My room is raining!"

So I thought to myself, "What is she talking about?" It was pouring cats and dogs outside but how can it rain indoors? So, I ran to her room and true enough, water was dripping from the false ceiling, creating puddles on the floor! As it happened, the foreign worker employed by the contractor of my neighbour, who had been rebuilding his house and had been called in the day before, because water patches had started to form in the false ceiling. But instead of patching up the cracks with cement or plaster, the poor chap had apparently used masking tape! I really did not know whether to laugh or cry, but although it might have been a funny incident for me, but at the workplace where safety and health are really very important, it might not be so funny.

Sir, I hope that MOM could seriously address the issue of "skills", how to define them for each sector and how to test for these skills at the point of entry. Also, I think we need to put in effort to ensure that there is really no cheating during these tests. Perhaps, MOM would also want to consider how they can reduce the churn of foreign workers, because churn contributes to reduced productivity.

Quality of foreign workers

Ms Jessica Tan Soon Neo: Madam, while we manage the dependency on foreign talent, can the Minister share on the policy changes and programmes that will be in place to ensure quality of our foreign workforce? I believe that the Minister will agree that raising the levy does not necessarily lead to the hiring of quality workforce or talent. Will there be new criteria applied to the different roles and industries on the quality of foreign talent to be hired? Will there be minimum qualifications required for the hiring of foreign talent in the various industries or sectors? With the increase in levy, can the Minister share on how we will optimise the alignment of the workforce to labour demand?

There has been much discussion on the need to raise the productivity of the construction industry. This is not new. Since 1999, with C21 blueprint and the measures taken by MOM and BCA in 2003 to 2005, there have been attempts to address the high reliance of foreign labour, low productivity of the sector as well as to upgrade the industry with policies affecting qualification requirements, dependency ratios and changes to the work permit allocation system. Can the Minister help clarify how he sees the increase in levy this time impacting the construction industry to address the issues more effectively?

In our various dialogues with businesses, the Government Parliamentary Committee (GPC) has received feedback from businesses on the concerns that their business will be impacted by the increase in levy. Their concern is that even with innovation and better work processes, there will be jobs that will continue to face difficulty in attracting Singaporeans to take on these jobs. Construction jobs, jobs in the service and hospitality industry, caregiving and step-down health jobs that require shift work and are physically strenuous are jobs that Singaporeans shun. Coupled with the fact that we have an ageing population, this will imply that there will have to be a continued need to hire foreigners to do these jobs or face the problem of not having sufficient capacity. This will, hence, eventually translate to higher business costs for them without necessarily achieving higher quality or reducing the dependency of foreign labour. In some instances, businesses believe that hiring foreign talent can also help meet critical employment needs, enhance the skills of the workforce and enable companies to compete globally.

Foreign manpower management

Mr Yeo Guat Kwang (Aljunied): Madam, we all agree that foreign manpower is and has been an essential part of Singapore's economic success. However, moving forward, we need to ensure that not only the mix is right but the employers are being fair in the hiring. Since we are looking at improving productivity, we need to improve the efficiency of the workforce, including the foreign workers, and ensure that the right skill sets are in place to meet the requirements of each job.

The proposed levy adjustment is timely. However, as we can see the response from the employers, I would like to urge MOM to ensure that all our employers will take concrete action to increase the productivity of the foreign workers to offset the additional costs instead of thinking of passing the costs to the consumers.

I hope MOM would consider using the additional levy collection to set up Skill Development Fund (SDF) scheme to support employers' training initiatives and efforts to drive productivity for their foreign workers, just like the existing SDF scheme that we have for local workforce.

It is also important that all foreign workers recruited to work here have the job and language competencies. For a foreign worker who is to be a co-worker with a Singaporean, preferably they should have and had to go through the same skill certification or assessment. I would request MOM to consider coming up with a system of checks or regulations to ensure transparency in the area of fair recruitment and employment practices. Perhaps this can be done using Workforce Skills Qualification (WSQ) as a standard of skill assessment for all.

Language skills are also perceived to be lacking among some foreign workers, particularly in the food and beverage service sector. If having basic language competency to communicate clearly with customers is compulsory for local staff, why not for those from overseas?

In the same vein, for the protection of the workers here, I think we should do it for both local and foreign workers. There have been instances of foreign workers having to make salary claims against errant employers. There should be a review of the process with which workers make a claim so that unethical employers do not get away with their misdeeds or to drag out the procedure and the proceedings to the detriment of the workers.

In addition, I would also like to ask and request MOM to consider including "one rest day per week" into the list of Work Permit Conditions under the Foreign Manpower Employment Act.

Next, we need to also review the Employment Agency Act to better protect the interests of both employers and employees who engage the service of the employment agencies. For example, the placement fee cap in the Employment Agency Act for employers and employees is not relevant in today's context. It is also unclear what type of administrative costs and the transfer fee is used to cover. Both placement and transfer fees should be made more transparent. We should include a clause in the Act that requires the employment agencies (EAs) to have a written contract with both the workers and employers respectively, specifying the total agency fees payable and the scope of service that they are providing.

5.15 pm

More flexible use of foreign manpower

Mr Heng Chee How: Madam, in the hotel industry foreign workers are not allowed to be cross-deployed to different jobs even within the same hotel unlike their local counterparts.

In the construction industry, I am told that construction workers are allowed to work at the work sites but are not allowed to help maintain the construction equipment that they use if the maintenance of that equipment is not done at the work site itself.

I can understand that such strict rules pertaining to where and what jobs foreign workers are allowed to be deployed to, are there to safeguard the safety and fair treatment of the foreign workers. We also do not want a situation where employers abuse the foreign workers by indiscriminately using them for all kinds of jobs without due regard for their proper and decent treatment, including rest and safety.

On the other hand, given the need to optimise the use of all segments of the workforce in our drive toward higher productivity and greater competitiveness, this relative lack of flexibility in deployment of foreign workers reduces productivity and actually tends to increase the demand for foreign workers at the margin. I do not think that it is always an "either/or" situation.

I believe that it is possible to look more closely at the rules and see how best to increase the productivity also from the foreign segment of the workforce. This will help create new capacity for the company to undertake more or new business without resorting to increasing foreign headcount immediately.

I suggest that MOM consider allowing hotels to cross-deploy foreign manpower within defined job groups within the same hotel, subject to necessary safeguards. This will ensure that such foreign manpower does not become freely mobile between companies while increasing the flexibility and productivity of their utilisation within the hotel or the company. And if that can be done, then the same concept can be explored in other parts of the economy. It will help us keep to the current ratio of one foreigner to two locals for as long as possible.

The Minister for Manpower (Mr Gan Kim Yong): Madam, allow me to first give an overview of the state of the labour market. 2009 was a challenging year. It began with a sharp contraction in the global economy. Many countries suffered unprecedented job losses. The International Labour Organization (ILO) estimates that over 20 million jobs have been lost since the onset of the economic crisis.

In Singapore, we were affected by the global downturn as well. Thirteen thousand eight hundred jobs were lost in the first two quarters of 2009 and unemployment rate reached 3.4% in September 2009, the highest in five years. Nevertheless, our labour market stayed resilient despite falling external demand and uncertainties in the economic outlook. During the 1997/1998 Asian financial crisis, we lost 42,100 jobs. During the 2001 economic downturn, we lost 79,500 jobs following the dot-com bust and September 11. In 2009 however, a total of 38,800 jobs were created for the whole year due to the recovery of the labour market in the second half, which had more than offset the job losses in the first half. For the first time, Singapore experienced employment growth amidst an economic recession.

For the whole of 2009, there were 22,700 redundancies, significantly lower than previous peaks in 1998 and 2001. The overall unemployment rate eased to 2.1% in December last year, lower than that in many countries. In the US, eg, unemployment rate was 10% in December last year. In the EU, unemployment rate likewise rose to nearly 10% by the end of 2009.

The job market for Singaporeans also remained resilient in 2009:

(1) Local employment rose by 43,000 compared to a net loss of 4,200 in foreign employment.

(2) The quality of jobs held by locals continued to improve. The percentage of locals holding Professional, Managerial, Executive and Technician (PMET) jobs increased from 51% to 52% over the past year.

(3) Wages have remained stable despite the economic downturn. The median monthly income among full-timers rose slightly by 0.5% from $2,590 in June 2008 to $2,600 in June 2009.

While the overall employment rate of the resident population aged 25 to 64 declined from the peak of 77% in 2008 to 75.8% in 2009 due to the economic slowdown, I am encouraged that the employment rate of older residents remained at the record high of 57.2%.

The better-than-expected performance of our labour market can be attributed to the coordinated efforts by our tripartite partners to save jobs, complemented by key initiatives such as the Jobs Credit scheme and Skills Programme for Upgrading and Resilience (SPUR). Since the inception of SPUR in November 2008, 204,000 workers have completed or are undergoing SPUR training at the moment.

We also beefed up our career centres in response to the recession. The career centres at the Community Development Councils (CDCs) and National Trade Union Congress' (NTUC) Employment and Employability Institute (e2i) placed about 47,600 unemployed into jobs from December 2008 to January this year.

Mr Heng Chee How has asked what will happen after SPUR ends in November 2010. My Ministry is reviewing this and will announce the details in due course. But I can assure the House that training will remain affordable. We will retain those programmes that are still relevant beyond the recession, such as programmes that address critical skills needs.

I strongly encourage employers to continue tapping on SPUR and the various Government support to re-skill, up-skill or multi-skill their workers as part of their companies' long-term strategy.

We have managed the downturn well and avoided massive job losses largely because of the collective efforts of the tripartite partners, as pointed out by Mdm Halimah. The close relationship among the Government, employers and unions enabled us to come together and act swiftly to help companies stay viable, cut costs and save jobs during this difficult period. This would not have been possible without the high level of trust, cooperation and shared purpose underpinning this strategic partnership. I agree with Mr Seng Han Tong that we should continue to strengthen this partnership, through formal platforms like the Singapore Tripartism Forum and informal trust-building at all levels – tripartite leaders and rank-and-file members. Indeed, we have come a long way in building strong tripartite cooperation.

Mdm Halimah asked about Convention 144 and 122 of the ILO. We are reviewing them and will consider ratifications in due course after consulting with tripartite partners. But Mdm Halimah would be pleased to know that in the recent General Survey on Employment released by the ILO, Singapore was highlighted as a positive example of how tripartism played an important role in driving long-term initiatives and managing shorter-term priorities such as the economic downturn.

Going into 2010, our economy is projected to grow by 4.5% to 6.5%. In tandem with the economic turnaround, hiring sentiments have also improved. We expect the number of jobs created this year to exceed that of last year. There will be jobs available for both rank-and-file workers and PMETs in various sectors of the economy, such as financial services, retail and food and beverage (F&B), biomedical sciences, IT and security.

However, we have to bear in mind that employment growth typically lags recovery. In Singapore, many employers have heeded our call to hold on to excess workers during the downturn. These are the workers that companies are likely to tap on before they start to recruit more workers. With better job prospects, the pool of job seekers may rise as more are encouraged to return to work, including those who have just completed their training. Nevertheless, barring new shocks to the economy, we can expect the labour market to remain stable for the rest of the year.

As the recovery picks up momentum, employers should review whether measures taken during the downturn should be phased out, taking into account the business outlook.

As our economy emerges from the recession, we need to review our economic strategy in response to fundamental changes in the global landscape. We need to make a strategic shift to achieve sustainable and inclusive economic growth through productivity improvement.

Chairman of the National Productivity and Continuing Education Council, Deputy Prime Minister Teo Chee Hean, has outlined key initiatives that the Government will take to accelerate enterprise productivity and raise the capabilities of our entire workforce. Ms Sylvia Lim asked if the Council would include educational professionals. We are still finalising the composition, and the composition will ensure that we have broad representation.

Continuing Education and Training (CET) is the key driver to up-skill the workforce. Since the formation of the Workforce Development Agency (WDA) in 2003 and the launch of the CET Master plan in 2008, we have made significant progress in expanding the training programmes and infrastructure of the national CET system.

We now have a national training framework – the Workforce Skills Qualification (WSQ) system – with different levels that cater to the different training needs of our adult workers. This starts with Employability Skills (ES) that equip workers with basic, portable skills like numeracy, literacy and communications. Workers without basic academic qualifications such as "O" levels can also be assessed for their workplace literacy and numeracy so that they can secure better jobs and pursue further upgrading.

The next level is WSQ vocational skills which establish structured skills progression pathways in key growth industries. These are based on competencies that companies are looking for. For example, in retail, retail associates can enrol in the WSQ Certificate in Retail Operations to improve their sales and service skills, and take up WSQ Advanced Certificate in Retail Supervision when they move on to a supervisory position. They can further enrol in the WSQ Diploma in Retail Management to improve their managerial skills if they are promoted to retail or store manager. WSQ now covers 24 areas such as aerospace, wafer fabrication, security, digital animation, community and social services, and tourism.

Mr Zainudin Nordin has asked about the level of recognition of ES and WSQ qualifications. Although WSQ was launched only in 2003, we have achieved some success. A 2009 WDA survey showed that more than one-third of surveyed companies were aware of either WSQ, ES or both. The Civil Service has been recognising ES since 2007 and includes ES programmes as part of its core training framework. We will continue to build on this, just as how the education system was built up over several decades.

Apart from WSQ programmes, the Government also supports CET courses that fill gaps in the CET landscape and are relevant to industry. These programmes may be conducted by our institutions of higher learning or other training institutions recognised by industry. For example, we fund Nanyang Polytechnic and Ngee Ann Polytechnic's CET diploma courses in nursing and allied health. The Centre for Urban Greenery and Ecology (CUGE) offers professional courses to train certified arborists and horticulturists for the landscape industry. In some instances, what started out as non-WSQ courses eventually became aligned to WSQ.

Apart from training courses, we also introduced various programmes to address specific issues of structural unemployment and skills mismatch, which Mr Zainudin Nordin has raised. For example, we introduced the Place-and-Train programme to better match job seekers with employers, and the Professional Conversion Programme to help PMETs acquire new skills or to make a career switch into growth sectors.

To support the various training programmes that we introduced, we have built up a comprehensive infrastructure for adult learning. Starting at the basic level, we have public and private service providers of non-WSQ courses that are funded by the Skills Development Fund. Next, we have about 450 approved training providers, including in-house training facilities, which provide WSQ courses to cater to industry needs.

In recent years, we established a network of CET centres which go beyond offering WSQ courses to champion national skills standards, develop curriculum, engage the industry to understand their needs and provide career services to workers. We now have nearly 50 CET centres, up from just 19 in 2007. These include our polytechnics, Institute of Technical Education (ITE) and the private sector institutions.

In 2009, three of our CET centres were awarded the status of National CET Institutes (NCIs) in recognition of the high quality of training they provide. NCIs are expected to lead the way in developing innovative methods of adult training, responding to skills gaps and providing a holistic solution to workforce development initiatives in their respective sectors.

5.30 pm

On top of training providers, tripartite partners came together to set up the Employment and Employability Institute (e2i) to help job-seekers and workers assess their employability gaps and upgrade their skills.

The entire CET system was put to a test during the economic downturn. In 2009, more than 200,000 workers were trained under the WSQ system, which is about the same number of workers trained over the previous five years combined.

Mdm Halimah and Mr Zainudin Nordin have asked about our plans to further develop the CET system. The Government will invest $2.5 billion in CET over the next five years. We will reinforce the four key components of our CET system – skills standards, quality of training providers and trainers, career services and physical infrastructure. We will expand our programmes and reach out to help all workers, both rank-and-file and PMETs, to upgrade their capability and pioneer new approaches in CET, so as to create a highly skilled workforce.

Three key principles will underpin our CET system – industry-driven, adult-centric and outcome-based.

CET skills standards and courses will be developed with strong industry input through our Industry Skills and Training Councils. This way, we ensure that our CET system will equip workers with portable and relevant skills that are recognised and valued by their employers.

Our programmes will be learner-centric, with courses that are short, modular and practice-oriented in order to cater to the learning patterns of adult workers. WDA set up the Institute for Adult Learning (IAL) in 2008 to carry out research and build knowledge in adult pedagogy. IAL will also train our adult trainers to raise their quality and professionalism.

CET must also be driven by outcomes. It must make a positive impact on companies and workers. A recent survey by WDA showed that more than 60% of companies reported improvement in work productivity as a result of training. More than 90% of trainees applied the skills they had learnt with better work performance and 45% of trainees took on more or new job responsibilities after the training.

Let me now turn to the key changes to our CET system. First, we want to maximise the skills and potential of every worker – men and women, young and old, rank-and-file and PMETs. We will therefore expand the scope of the CET system to serve a wider range of workers.

PMETs now make up more than half of our resident workforce and their share will continue to grow as the quality of our workforce improves. We need to expand our CET system to cater to them. My Minister of State will elaborate on this later.

The CET system will also need to cater for the 197,000 contract and casual workers in Singapore. Mr Low Thia Khiang has asked how we intend to raise the productivity of this group of workers. My Senior Parliamentary Secretary will elaborate on how we intend to help them. Let me just give an example. The landscape sector has many contract workers. Gardeners used to earn monthly salaries of around $850. Through the Job Re-creation Programme, these gardeners have now enlarged their job roles. Our CET system provides courses such as the WSQ Certificate in Landscape Operations and courses in niche areas such as chainsaw operations. As a result, landscape workers now earn higher gross monthly wages of between $1,000 and $1,300 and enjoy better working conditions. Landscape companies also benefit from lower worker turnover and higher productivity. Contract and casual workers can also benefit from the Workfare Training Scheme (WTS) that the Minister of Finance announced during the Budget Statement. I will elaborate on WTS later.

Second, we will build more pathways and cross linkages between Pre-Employment Training (PET) and CET which Ms Sylvia Lim talked about. We will study other countries' models, which will involve European countries as well, such as Denmark and Finland. They have a very well-developed system and we can learn from them but we must bear in mind that they took decades to come to where they are today. We have started building such bridges by mutually recognising learning achievements from both systems. For example, ITE graduates from seven disciplines such as retail, food and beverage (F&B) and tourism, can seek credit exemption when pursuing a WSQ certification or upgrading to the WSQ Diploma level, and vice versa. This means that ITE graduates will have more choices in pursuing further education and training. They can now choose to enrol in a polytechnic, take up a technical diploma offered by ITE, or enter a CET centre to obtain a WSQ Diploma, depending on the area that they are interested in. Another example is the Diploma in Horticulture and Landscape Architecture from Ngee Ann Polytechnic that has incorporated the WSQ Certificate in Landscape Operations in the programme in collaboration with the Centre for Urban Greenery and Ecology, a CET centre for the landscape industry.

Ms Benjamin Sharmi Santhana Mary, for example, was able to use her NITEC Certificate in Digital Animation to enrol in the Egg Story Digital Arts School. She recently graduated with a WSQ Diploma in Animation and has received many job offers.

In another example, 41-year-old Ms Irene Lim was able to use her WSQ Diploma in Retail Management to successfully apply for the Bachelor in Marketing in SIM University (UniSIM) after failing to do so earlier when she had only 'O' level and partial 'A' level qualifications. Ms Lim has since graduated from UniSIM and is now working as a Manager in charge of product development and sales at Tensai Pte Ltd.

We will build more linkages and pathways so that more people like Ms Sharmi and Ms Lim can benefit.

A third thrust, moving forward, is to enhance the quality of our CET providers and trainers.

Today, we have in place a quality assurance system for WSQ training providers. All training providers conducting WSQ courses must first be accredited by WDA to ensure that they meet the pre-requisite standards.

We will progressively raise the required standards to ensure that the quality of our training providers meets the rising expectations of employers and workers.

To add diversity and further raise the overall standard of our training providers, WDA will bring in best-in-class institutions, in partnership with local CET centres where appropriate. These institutions can complement our local providers by offering training in specialised skills sets and raising the quality bar. Some of them are already here in Singapore. These include DigiPen Institute of Technology for game design, Box Hill Institute for community and social services, and the University of Nevada Las Vegas for tourism and hospitality.

More recently, NTUC's Learning Hub has linked up with the Fashion Institute of Technology at the State University of New York. WDA is also collaborating with Siemens Technik Akademie Berlin, a leader in Mechatronics engineering, to deliver a series of WSQ Mechatronics Systems Certification programmes that will deepen the technical competencies of our workforce in industries such as precision engineering, medical technology and marine. A total of 500 trainees are expected to benefit from this collaboration.

We will also need to raise the quality of CET professionals, especially adult educators. Over the past year, around 1,400 trainers have obtained the WSQ Advanced Certificate in Training and Assessment (ACTA).

Moving forward, we will further our efforts in two areas. First, to cater to the differing needs of CET professionals, we will move beyond ACTA to provide a full range of capability building programmes and an upgrading pathway for CET professionals. IAL will be introducing a suite of courses, including a Diploma in Adult and Continuing Education, to deepen the skills of adult educators in specific areas such as curriculum design and a Masters Degree in Lifelong Learning in collaboration with the University of London.

Second, we will develop deeper expertise among other CET practitioners such as curriculum and assessment developers, assessors and administrators of training providers. By 2011, two more programmes will be added – a Specialist Diploma in Training Management and a Graduate Diploma programme for leaders of CET institutions.

To encourage and support ground-up research projects as well as experiments and pilots of new CET approaches, WDA will launch a $3 million Research and Innovation Fund. This is on top of the $2 million that has already been earmarked for IAL to provide research grants and pursue collaborative research projects. The Fund will support efforts in areas such as curriculum design, training methodology and use of learning technology. Details of the grant scheme will be announced later.

Next, we will make CET even more accessible to workers. We will develop new career services and find new ways of reaching out to workers to encourage them to go for training and facilitate their access to the CET system.

WDA is working on an online integrated database where an individual can view his personal training records and skills pathways. This will make it easier for an individual to search for related WSQ training and find out more about courses that are relevant to his skills pathway. He can also use this system to search for jobs that match his skills and the training he has undergone. The system is scheduled for implementation next year.

Let me assure Mr Hri Kumar that CET will always remain affordable to workers. Today, courses under the CET system are already heavily subsidised by the Government, with up to 90% of course fees subsidised under SPUR.

To bring our CET system to the next level, we will develop two CET campuses by 2013 at Paya Lebar Central and Jurong Lake District. When ready, the two CET campuses will deliver a total of 150,000 training places and train up to 50,000 workers annually. Within each CET campus, we will bring together training providers of related sectors so that they can benefit from resource sharing and the collective expertise of the CET community. As our economy evolves, we can also expect the focus and clusters covered by the campuses to also evolve.

WDA recently signed a Memorandum of Understanding with NTUC's e2i to operate and manage the West campus. WDA itself will operate the East campus. Through this collaboration with NTUC, we hope to make CET even more accessible.

With the CET campuses, workers can go to the same campus to take different courses in related fields. For example, a person working in the hotel industry may want to take courses in service excellence, F&B service and hotel front service so that he can be multi-skilled. Currently, he might have to go to different training providers at different locations. With the setting up of the CET campuses, we will bring together all these training providers under one roof. He can undergo training in all three areas in one location.

Similarly, an employer can customise courses by combining modules from different training providers located in the same CET campus for his employees. This creates greater value and improves productivity in training. Employers can also tap the career services available at the CET campuses to recruit workers.

You can think of the CET campuses like a medical hub, where specialists providing different medical services such as laboratory testing, radiology and specialist doctors like cardiologists, etc, are grouped together under one roof. They work together to provide comprehensive services to their patients. They can also share common services such as operating theatres. Similarly, the CET campuses will have clusters of related training providers working in tandem and tapping on common facilities to provide a holistic learning experience for our adult workers. Like the health screening centres at medical hubs, the career centres at the CET campuses too can provide holistic screening and advice to trainees and employers on what courses are most suitable for them.

I have described so far how CET will form the foundation to make our workers better skilled, and therefore, more productive. Mr Heng Chee How and Ms Denise Phua have asked how we intend to build up productivity knowledge and develop the productivity DNA in our workforce.

First, let me highlight that each enterprise and every worker must take responsibility for developing the productivity DNA in their workplace and proactively improving the productivity in their own areas of responsibility. Nonetheless, we recognise that companies may need some assistance in getting started on improving their productivity. They can leverage on the suite of capability development programmes that SPRING provides. Enterprises can also call upon SPRING's Centres of Innovation for technology consultancy and advice.

At present, there are many business consultants in the private sector, though only some have specific productivity expertise. We anticipate that there will be greater demand for more productivity managers and consultants who can help drive overall productivity efforts at the enterprise level. SPRING has approached the Singapore Productivity Association to launch a revamped Certified Productivity Practitioners Programme in April this year to cater to this need. WDA is also working with the Singapore Manufacturers' Federation to develop a WSQ Certified Productivity and Innovation Manager programme in the second quarter of this year to help enterprises in the manufacturing sector raise productivity and pursue business innovation.

5.45 pm

We will roll out productivity-related skills training programmes for employers and workers. As Ms Denise Phua has pointed out, this should include the Chief Executive Officers (CEOs) with training suited to their needs. We will work with industry partners such as industry associations, training institutions and business consultants to help enterprises understand productivity concepts and implement global best practices. WDA has started discussions with the Singapore Productivity Association, the Logistics Institute Asia Pacific and Georgia University of Technology in this regard.

Ms Denise Phua is right that we need to grow a culture of life-long learning so that workers will be motivated to re-skill themselves throughout the course of their working lives. I am therefore encouraged that more than 85% of WSQ trainees surveyed in 2009 indicated that they would continue to take up WSQ training in future. We will capitalise on this strong interest in CET and work closely with industry, unions, community groups and other Government agencies to sustain the momentum of our CET efforts.

Let me illustrate with a story of how CET has benefited both individuals and companies.

Ms Jasmine Tan is a senior restaurant manager at Yoshinoya who excels in both professional and horizontal skills. Even though Ms Tan has been working in the F&B industry for the past seven years, she is keen to pick up new skills. Ms Tan has undergone Yoshinoya's in-house training programmes and attended a variety of WSQ courses. She is now expanding her horizontal skills by starting on the WSQ Diploma in F&B Management at the University of Nevada, Las Vegas. Ms Tan is not only a keen learner herself – she is also passionate about helping others upgrade too. When Yoshinoya achieved the Certified On-Job-Training Centre status, Ms Tan was appointed as an On-Job-Training Instructor by ITE. She has since helped Yoshinoya grow by training crew members and new managers. For her excellent efforts in providing a holistic customer experience, Ms Tan was recently nominated as a finalist in the inaugural Singapore Experience Awards 2009. Both Yoshinoya and Ms Tan are winners as a result of CET.

Let me now move on to foreign workforce. As part of our efforts towards productivity-driven growth, MOM has announced earlier that we will raise the levy rates and adjust the levy tiers for Work Permit and S Pass holders come 1st July 2010. These changes have three key features. First, we will increase the levy rates for Work Permit and S Pass holders to moderate employers' demand for foreign manpower and to encourage investment in productivity. Second, there will be no change in dependency ratios across all sectors, but we will adjust the levy tiers so that companies with higher dependency on foreign workers will have to pay higher levy rates. I have explained last week how this works. The levy tiers will allow growth companies to continue to have access to foreign workers but encourage employers to improve their productivity and reduce their reliance on foreign workers. Third, we will further differentiate the levy rates between the skilled and unskilled Work Permit holders to encourage companies that need foreign workers to employ better skilled and thereby more productive ones.

The changes will be implemented gradually and in steps between 1st July 2010 and 1st July 2012 to give companies sufficient time to adjust and invest in measures to boost productivity. We will be briefing the industries on the details of the changes. I have circulated a factsheet that summarises the changes to Members for information. I will not go into the details of the changes because they are quite complex. The details should be in the factsheet. Mdm Halimah was concerned about errant employers who may exploit their foreign workers as a result. MOM will monitor and step up enforcement efforts against errant employers.

Mr Ong Ah Heng is concerned that a company's levy bill will increase by a significant proportion as a result of these changes and the company may pass on the costs to consumers. Let me put things in perspective. The levy adjustment to be effected on 1st July this year represents an average of less than half a percent of the overall wage bill. If companies are able to improve their productivity and reduce dependence on foreign workers, the cost impact on them will be lower and, in some cases, companies may have net savings, especially if they tap on the various schemes announced by the Minister for Finance earlier.

As we work to reduce our dependence on foreign workers, it does not mean that Singapore no longer welcomes global talent. Singapore can ill afford to turn its back on talent, local or foreign. We need them to realise and even expand our economic potential and thereby creating good jobs for all Singaporeans. I agree with Ms Jessica Tan that we need to ensure that Singapore continues to be able to compete with other economies to retain local talent and attract global talent. We will continue to deepen our engagement with both local and foreign talent who want to establish and grow their careers in Singapore. Indeed, we have found that some of our foreign talent have not only contributed economically to Singapore, they have also made significant contributions in other ways.

Dr Law Wei Seng, a Malaysian who came to Singapore on an ASEAN scholarship in 1991, is now a Permanent Resident and works as a Consultant at KK Women's and Children's Hospital. Apart from his professional work, he has taken part in a number of medical missions to disaster areas such as the Aceh tsunami area and the earthquake zone in Padang. For his valiant efforts, Dr Law has received two Ministry of Health awards. We are proud to have global talent like Dr Law amongst us.

Local talent are important to us too. MOM has reached out to overseas Singaporeans by tapping upon the global networks created through Contact Singapore's worldwide offices to keep them connected to their homeland. In 2009, Contact Singapore organised about 200 information sharing and networking sessions with overseas Singaporean communities to update them on the latest industry developments and career opportunities available in Singapore.

Mr Steven Ong is one local talent who has returned to Singapore. Most Members will not know Mr Ong but many Members would be familiar with this movie. This movie was what Mr Ong was working on and many other blockbusters. After graduating with a Diploma in Film, Sound and Video from Ngee Ann Polytechnic, Mr Ong moved to the US to work in the visual effects industry. After spending several years abroad, he returned to Singapore in October last year and brought with him many years of experience working on feature films such as Night at the Museum 2 and Spider Man 3. He is now the Lead Digital Artist at Lucasfilm Animation Singapore.

As we seek to attract both local and foreign talent, I agree with Mrs Josephine Teo and Ms Jessica Tan that we need to raise the quality of the foreign workforce. We have already implemented some initiatives to address this. In June last year, we raised the S Pass criteria so that only more qualified, skilled and experienced applicants are eligible. From July 2010, Work Permit holders in the hotel, retail and F&B industries will also have to pass the Service Literacy Test to qualify for the lower levy paid by skilled workers.

Companies could also consider training their foreign workers alongside their local counterparts so that they can all become productive. Although course fee subsidies are not available to foreign workers, companies can still send their foreign workers for training courses and benefit from the Productivity and Innovation Credit and the National Productivity Fund announced by Minister Tharman earlier.

As highlighted by Mr Ang Mong Seng and Mrs Josephine Teo, companies that require foreign workers should also retain better skilled and more experienced foreign workers since they will be able to contribute to greater productivity. Skilled workers can already work in Singapore up to a maximum of 18 years compared to six years for unskilled workers.

Mr Heng Chee How has suggested that MOM allow hotels to cross-deploy foreign workers within defined job groups in the same hotel. We are aware that selected businesses may require workers to multi-task or perform a secondary job function. We have always taken a practical approach on this issue of cross-deployment. While MOM can and does exercise flexibility on a case-by-case basis, we also need to ensure that each foreign worker has a specified and primary job function so that cross-deployment does not inadvertently result in exploitation or fatigue. I am glad Mr Heng understands our concerns. MOM will study this issue further in consultation with the relevant agencies and industries.

Let me end by returning to the challenge of raising productivity and share with the House an example of how a company can constantly reinvent itself to boost its competitiveness and raise its productivity. Since Mr Charles Chong asked about the marine sector and the construction sector, and since MND has already addressed the construction sector, I will use a shipyard as an example. Jurong Shipyard has, over the decades, grown from the traditional ship repairing and ship building business into new markets like rig building. By investing in innovation and productivity, it has successfully developed an innovative rig construction process that allows it to build more than one semi-submersible rig concurrently, thereby improving its productivity.

Jurong Shipyard has also invested in the upgrading of its workforce to complement its innovation efforts. In 2009, it received a total of $100,000 in subsidies through Government schemes such as SPUR. It has made efforts to make the marine sector more attractive – an issue that Mr Charles Chong has raised – by taking part in the Place-and-Train programme to attract workers to make a career switch from other industries to train and become supervisors in the marine sector. To tap on the experience of its older workers, Jurong Shipyard extended the official retirement age for many of its local workers. Its oldest serving employee is 74 years old and it has another 120 employees who are aged 62 and above.

These initiatives that I have just described have worked together to increase Jurong Shipyard's productivity – its value added per employee has almost tripled from $53,900 in 2004 to $150,000 per worker in 2009. Over the past few years, Jurong Shipyard has shared the gains from productivity and cost savings with its employees by giving out an average of 5.5 months of bonuses. Going forward, its parent Sembcorp Marine has set up a Productivity and Innovation Committee with a full-time secretariat to look at productivity improvements in all aspects of its operations. It has also set aside $10 million over the next two years to fund productivity and innovation projects.

Jurong Shipyard has showed us how to make productivity and innovation an integral part of a company's core values. Similarly, we need to mobilise the entire nation to make productivity-driven growth a key priority over the next decade. The journey will be a challenging one but it promises to be a rewarding one. This will require a concerted effort by everyone – workers, unions, Government and employers alike. As Mr Teo Siong Seng said, and I quote, Zhai da hai shang hang xin, bu dan yao kao chuan zhang he lun ji zhang, ye yao kao shui shou, kao da jia qi xin xie li de tuan dui jing shen. (在大海上航行, 不但要靠船长和轮机长, 也要靠水手, 靠大家起心协力的团队精神.)

Each of us has a critical role to play: the Government providing the help and support, enterprises taking the lead in innovation and investing in productivity, workers and unions responding proactively to upskill and reskill the entire workforce. We have weathered the economic downturn together as a team. I am confident that we have the strength and determination to build on this momentum and shift to a higher gear, decisively transforming ourselves into a productivity-driven economy and developing Singapore into a leading global city in Asia.

Retirement age

Mr Ang Mong Seng: ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Our current official retirement age is 62. By 2012, it will be raised to 65. The Government values human resources. Therefore, it encourages employers to continue hiring their older workers to keep them in the workforce. MOM also recommends that employers continue to employ workers over the age of 62 if they are still healthy. If the company is unable to do so, the older employee should be given an one-off employment assistance grant equivalent to three to six months of his salary, capped at $10,000. I want to know the response to this measure, which I think is a very good one. I hope that the implementation of this policy can be brought forward to this year. I also want to know if MOM has any proactive measures to help the older workers.

With people living longer and the excellent healthcare, more and more senior citizens are enjoying good health even when they reach the age of 65. Employers should continue to employ them and let them work as long as they are physically able to. I suggest the Minister to consider abolishing the retirement age completely.

*Cols. 4181-4182

6.00 pm

Wage cut at retirement

Mr Low Thia Khiang: Madam, by 2012, the re-employment legislation will require employers to offer re-employment to workers reaching 62 years of age, up to age 65, and eventually to age 67. However, the re-employment legislation will not replace the Retirement Act of 1999.

The Retirement Act allows an employer to reduce the wages of older employees up to 10% on or at any time after the employee attains 60 years of age. The 10% pay cut at age 60 was recommended by the Tripartite Committee on the Extension of Retirement and the justification then was to address the problem of the seniority-based wage system.

With the Government's call to increase productivity and the progress made in wage restructuring from a seniority-based wage system to a performance-based wage system, I would like to call upon the Government to review the Retirement Act of 1999 by removing the wage reduction option given to employers.

A wage system that moves away from seniority elements and towards job worth and performance is more than adequate to ensure an older worker is paid based on the value of the job and his contribution, instead of his seniority. Given that the performance-based wage system will improve the cost competitiveness and employability of older workers, we should remove the wage reduction anomaly from the Retirement Act as older workers would have been paid market rate in the run-up to age 62.

Moreover, the Tripartite Committee's recommendation that employer's CPF contribution rate for employees aged 60-65 years be reduced from 7.5% to 4% and from 5% to 4% for employees aged above 65 years is sufficient to make re-employment worthwhile for employers.

Madam, any provision in our labour laws to reduce the wages of older workers upon reaching re-employment age will dampen the zeal of an ageing society to continue working beyond retirement age.

Opportunities for older workers

Mr Wee Siew Kim (Ang Mo Kio): Madam, this Budget has seen much emphasis on continuing education. I would like to ask the Minister if he could elaborate on what would be the key differences that would make this new emphasis different from initiatives of the past.

Specifically, as our population ages, continuing employment for older Singaporeans is important, especially as we ride on the back of the success of the wellness programmes, and for many of the older people, is the way to cope with the rising living costs.

Could the Ministry look into more encouragement of cottage industries, so our seniors can continue to contribute economically? Perhaps some aid, training or funding can include entrepreneurial outreach and support for the older 'employable' population who can work from home. For those who do not have any skill, they would need training and help to create things that people will buy. For those who can bake, sew or create crafts, perhaps they will need help with distribution, packaging their work creatively and marketing them so that they will sell. I am sure many of us, at some point, have come across an elderly or a handicapped at a hawker centre or the market corner, selling furry key rings or cute handmade ornaments. I suspect that they may actually be flouting some regulations. The Ministry could consider co-opting self-help bodies and giving them roles in creating opportunities for older workers and making many of these activities legal.

We can promote active ageing to ensure our seniors continue to integrate socially, and remain fit emotionally and mentally, even after one stops working. That is something we need to inculcate in our retirement culture. The sad thing is that most people think that once they stop work, they stop living. In my visits to the nursing homes and other interactions with the elderly and the not so old, like the neighbourhood vegetable and fruit seller, the florist, or the auntie that sells my favourite deep fat fried chicken wings – I have heard the same thing, they all do not want to stop working. They would rather live independently to preserve self-esteem, than to get handouts from the Government. I believe many more opportunities would be made available if we look at ways to rely less on market-based rules for this segment of people. We rather lower their cost of entry and ongoing business costs rather than giving them handouts. While some may question why should the aged work, I would say that let us make the opportunities available to them. Many derive a good sense of well-being by being economically independent and active.

Re-employment of older workers

Mdm Halimah Yacob: Madam, now that we are focusing on higher productivity, older workers are concerned that they will be left out in this new economy. So our re-employment efforts are indeed very important. And I would like to ask the Minister to give us an update on this effort. Could the Minister also indicate when the tripartite guidelines on the re-employment of older workers will be issued and what are the key recommendations?

Madam, I understand that the need to maintain a balance between the interest of employers and older workers in re-employment. But I urge employers to go beyond age and assess them solely on the value that they bring to the job when deciding how much to pay them. Cutting their pay when they reach 60 years and again at 62 without regard to the value that they generate is not only unfair but runs counter to our productivity effort which links reward to performance.

I hope that the Minister could also address concerns over the Employment Assistance Payment (EAP) which some fear could undermine our efforts to employ older workers, especially if it becomes a convenient device for employers to get rid of them. There are obviously benefits in the EAP because it helps those who cannot really be placed for whatever reasons and then the employers are required to pay them a certain amount in order to help them tide over.

The EAP, however, should be the last resort when all efforts to re-employ an older worker fails. In order to compare how different sectors are fairing in their re-employment efforts and to understand better the particular needs and barriers that exist, could MOM also consider publishing regular detailed analysis of the progress made by sector and by company?

The Chairman: Mr Seng Han Thong, you may take both cuts together.

Re-employment of older workers

Mr Seng Han Thong: Madam, last year, efforts by NTUC and the Employment and Employability Institute (e2i), the NTUC re-employment team and unions to help companies put in place structured policies resulted in about 7,000 older workers being re-employed.

The salary range for these re-employed older workers is wide. Some are paid $800 per month, while others like senior technicians earn more than $4,000 per month. We strive to ensure that our older workers get decent pay for their decent jobs. Here, I would like to share an example of older workers at work at the Singapore General Hospital (SGH). They are known as customer service officers. And I see them when I go to SGH for my physiotherapy treatment every week, twice or three times a week. They are dressed in hotel inspired green uniform and they are at the lobbies of the different blocks – Blocks 4, 5, 6 and 7 in SGH. Their duties include greet visitors and patients, assist patients and visitors alight or board their vehicles, arrange wheelchairs for patients. They helped me to arrange for a wheelchair when I first returned to the hospital for the physiotherapy treatment. They also managed the queues for the free shuttle services. On top of that, they controlled traffic. In fact, they are multi-skilled.

Their monthly gross pay is between $1,200 and $1,500, depending on their experience, performance and length of services and not including overtime pay, if any. They are old but they are not slow. They work together with younger foreign workers as a team. I would like to ask the Minister: what are the new measures to encourage companies and organisations to employ older workers and, at the same time, ensure that this group of older workers are part of our productivity movement?

Medisave for self-employed

Madam, all self-employed persons are required to top up their Medisave Account based on their annual declared income. It is also made a pre-condition for the insurance and renewal of their vocational licence, if any. The Minister gave an overview of self-employed persons' participation and contribution to their Medisave Account. Would the Ministry consider new incentive schemes to encourage more self-employed persons to join and benefit from the CPF scheme?

Madam, the current Workfare policy is to make payments to the Medisave Accounts of eligible low-income self-employed persons. Would the Ministry consider making such Workfare payments to the self-employed persons automatically as long as they are making regular monthly contributions on time and in full to their Medisave Account? This would encourage them to fulfil their Medisave liability and ensure the WIS and also get to participate in the Medisave lucky draw.

Improvement to CPF system

Mr Zainudin Nordin: Madam, for over half a century, the CPF programme has provided a secured scheme for Singaporeans to save for retirement and is entrenched as one of our key pillars of our social safety net.

At first, the CPF started as a simple compulsory savings scheme for workers. However, over time, CPF has evolved to become a comprehensive scheme fully funded by contributions from employees and employers, providing a three core elements for financial security, retirement, home ownership and healthcare. The CPF also provides financial protection to CPF members and their families through its insurance scheme.

However, some may argue that the withdrawals for housing have affected their adequacy of CPF balance for financing retirement. The heavy investment in Singapore property may lead to an asset-rich cash-poor phenomenon. As life expectancy and cost of living grow, retirement increases. In addition to the CPF Life, what other measures is MOM looking at to improve the CPF system?

The Parliamentary Secretary to the Minister for Trade and Industry and Acting Minister for Information, Communications and the Arts (Mr Sam Tan Chin Siong): Madam, our CPF's Medisave, MediShield and Medifund are the pillars of Singapore's social security system. The CPF system has been a key instrument to secure Singaporeans' social well-being. Over the years, it has gradually evolved into a system which reflects the societal values such as self-reliant, family support and good work ethics. Singaporeans have now accepted the need to save for their own retirement. And indeed, many have been doing so even before the introduction of the CPF Life.

However, not all Singaporeans can benefit from the CPF Life. Under the current system, only those with more than $40,000 in their Retirement Account are auto included in the CPF Life at the age of 65. So what can be done to help those who are not eligible for the CPF Life to also save enough for their retirement?

I ask this question because I had seen first-hand the consequences of being caught short in this kind of situation, a hand that is too free with money, a family that ignores the future needs and ironically, a life that is too long for a slim savings account. So in my constitutency, I have senior citizens showing me their CPF statements down to the last $50 or $80 and asked me what can they do.

Madam, for this group of people, any change to the CPF scheme now comes too late. But they serve as a cautionary tale for us to get the system right now. I would like MOM to tap on the collective financial wisdom of our top investment minds and ask them to give us the best returns possible. One man with $3,000 in his CPF Account cannot ask for much, but 10,000 or 50,000 such men surely can demand much more. So it is this leverage that I hope to see the MOM roll out in its future policies.

CPF LIFE

Mr Charles Chong: Madam, CPF members aged 55 years and above were able to opt into CPF LIFE from September 2009. Could the Minister give us an update on the number of eligible members who have yet to sign up? Has there been sufficient publicity and explanation given on the three options to those who may benefit from CPF LIFE?

It is also noted that by 2013, members aged 55 years old who have at least $40,000 cash in their Retirement Accounts would automatically be included in CPF LIFE. Would such members be given a choice to opt out or to purchase an annuity instead of being automatically included in CPF LIFE?

Workfare Income Supplement (WIS)

Mr Terry Lee (Nominated Member): Madam, the Workfare Income Supplement (WIS) scheme highlights the importance of helping low-wage workers especially those who are older. It provides incentives for them to find work and stay in work. Statistics show that over five years, from 2003 to 2008, average monthly household income rose 15.4%. That was a great improvement for the lowest income quartile. But this happened after a drop of 15.7% from 1998 to 2003, the preceding five-year period. On the average of 10 years, from 1998 to 2008, monthly household income, in fact, dropped 2.7%. Conversely, average monthly household expenditure rose about 3.5% for the same group during the same 10 years. Therefore, we need to do more for low-wage workers and those more vulnerable.

6.15 pm

I would like to thank the Minister for revising the monthly income criteria upwards by $200 to $1,700. I am sure that this benefits more deserving workers and their families. But the Minister also told us earlier some 30,000 dropped out of the scheme from 2008 to 2009.

Some of the reasons were loss of jobs, training and voluntarily stopping work. While I can appreciate most of them, I cannot quite pinpoint why going for training becomes a reason for dropping out of the scheme. On this note, can the Minister consider further tweaking the criteria to benefit more low-wage workers? One, we can exclude additional allowances and overtime payments from the monthly salary criteria. Such payments are usually not part of the basic salary and may not be permanent. Many low-wage workers feel that this inclusion is unfair as they have to put in extra hours of work. Abuses will happen if we are not prudent.

The second point is to add a new criterion – per capita household income. This is more accurate. It tells us exactly the total earnings of the family and how many members in that household depend on the income. Here we are not considering that some families need more help, due to illness or other deficiencies. I leave that part to other schemes and many other helping hands. But I believe this fine-tuning will help us to be more focused. We have raised 14% in the operating expense for FY 2010, over FY 2009, and increased 8% of the operating budget in the same period for the income security policy programme.

Since the economy is doing better, I hope an increase in the WIS will lead to helping more needy Singaporean families.

WIS and Workfare Training Scheme (WTS)

Mdm Halimah Yacob: Madam, I wish to applaud the Government for introducing the WTS and for raising the WIS income ceiling to $1,700, so that more low-wage workers could benefit. Over the past few years, I have been arguing that overtime and bonus payment should not be included in computing the income ceiling. Doing so unduly penalises the hardworking low-wage worker and is unfair. You could have two low-wage workers working side-by-side but the hardworking low-wage worker who decides to work overtime on his rest days or during public holidays is penalised, whereas the not so hardworking one gets rewarded. This will affect morale and productivity and many of the low-wage workers I have spoken to, particularly in some sectors like the security sector, have urged that we do not include overtime and bonus in determining the ceiling for eligibility to WIS.

I would also like to suggest two other improvements to the WIS. Firstly, consider paying the WIS once every quarter instead of once every six months so that the low-wage workers would not have to wait too long to get their payments. This is because low-wage workers have little buffer or surplus and they really need every cent that they are able to earn or they can get through great schemes such as the WIS.

Secondly, consider shortening the current eligibility period which requires them to work for three months over a six-month period to two months instead, as there are now many more contract workers with very short periods of employment. Such a change that I have proposed will take into account the fact there are now many, many contract workers who work less than three months for certain periods and may have multiple contracts of one month or even for shorter periods. This payment over a shorter period would certainly help them to earn the WIS payment.

Upgrading PMETs

Mr Zainudin Nordin: Madam, the recent economic crisis spiralled Singapore into a recession, which resulted in companies downsizing and laying off workers. To fight for survival, employers in the financial, IT and manufacturing sectors had to let go their professionals, managers, executives and techicians (PMETs) – the people who were once the engine of their growth. Experienced at the CDC, we provided targeted training for the PMETs, including advice on job searches, resume-writing skills and personalised counselling. We observed that the re-employment chances were higher for those who have gone through professional conversion programmes, SPUR courses and training. Many employers are looking for PMETs with horizontal skills, such as sales and project management. Additionally, soft-skills such as teamwork, conflict-management, self-organisation and innovation are great attractions for employers. Can MOM update us on what are the plans for PMET training for the future so that the PMETs can face more challenges if ever there is another recession?

Mr Seng Han Thong: Workers in Singapore, PMETs included, were hit by the latest global economic crisis. For some of the affected PMETs, it is even harder for them to find a new job as compared to rank-and-file workers. We have seen many of the PMETs coming to my MPS for jobs. The main reason, as Mayor Zainudin has mentioned, is that this group of PMETs lack the horizontal skills, like the ability to manage projects, etc. Thus NTUC Learning Hub, together with the continuing education arm of the National University of Singapore, will jointly offer a new course called Business Skills for Engineers. It will equip engineers with the business skills such as marketing, strategic planning and HR management. As MOM continues to build up the continuous education and training system to bring it to all workers, may I ask what is in the pipeline for the upgrading of PMETs?

Skills upgrading and training

Assoc. Prof. Paulin Tay Straughan (Nominated Member): Madam, improved productivity through working smarter is central to the transformation of the Singapore economy. To succeed, we have to have a very good operational definition of what constitutes productive work and to make skills enhancements that facilitates improved productivity accessible to all Singaporeans. How would productivity be measured in service industries where cognitive processes are involved? As we focus on generating more output, will the staff who spends time explaining how to navigate the complexity of an ATM machine to an elderly customer or, say, a teacher who takes time to nurture slower students under her charge, be disadvantaged? We must be careful not to sacrifice quality for quantity. In this quest to focus on developing a productivity-driven economy, we must not lose sight of the quest for a good quality of life in Singapore. Enhancing our economy must be done in tandem with levelling up the quality of life to make Singapore an enduring home. While the Minister has taken pains to highlight that the increase in productivity does not mean working longer hours, that is the concern amongst Singaporeans now. How will we ensure that middle managers, especially naive middle managers, do not equate clocking longer hours to measure commitment and productivity.

Training and skills upgrading will be critical and in this next phase of the transformation of our workforce. In this new workforce that we are striving towards, every Singaporean counts. What incentives will be offered to encourage employers to extend training opportunities to mid-level PMETs who are approaching retirement, to homemakers who want to re-enter the workforce and to recent retirees? Related to this is my concern that opportunities for skills upgrading may be limited to full-time employees. Can the Minister elaborate on how part-time workers can also benefit from this opportunity to level up? I hope to see that we will move towards a model where every Singaporean who wants to work has a role to play.

Of particular significance will be on-the-job training for white-collared professionals as it is critical that we adequately prepare our own graduates and invest in their training, so that they will perform at an optimum level. Productivity can be derived through investment in human resource and infrastructure. The key to success is the buy-in from our workforce. Instead of over-reliance on expensive consultants which may result in alienating our employers from the process of the work day to – may I suggest that we look within and consult the domain experts – our workers who are actually doing the work. Let our workers tell us what they need in order to work smarter and more efficiently.

In the next phase of growth, I believe the key to transforming our economy lies in the way we manage human resource. As we level up on the educational-and-skills level of our labour force, we must empower each and every Singapore worker to be active stakeholder in his or her labour. Will the new national productivity and continuing education council have representation from the ground? How will the council engage workers from the various segments directly?

Finally, I envision that there will be a lot of excitement in the workplace as we rise to the challenges Budget 2010 prescribed. To facilitate greater ownership of the transformation by our labour force, we must recognise that each employee is at the same time – a father, a mother, a son, a daughter. We must respect his or her family time. Will the Minister assure us that wherever possible, training will be conducted within work hours? This will ensure that investment in paid work will not come at a cost to work in the family.

Mr Gan Kim Yong: Madam, even as we strive for sustainable growth through the productivity drive, we must help every worker to benefit from our progress and enjoy financial security when they retire.

One of the more vulnerable segments of our workforce is our older workers. Singapore's population is ageing rapidly. By 2020, just 10 years time, about one in six Singapore residents will be 65 years or older. Life expectancy has improved over the years and will continue to improve. A person retiring at 65 in 2008 can expect to live for another 20 years or more.

Mr Wee Siew Kim asked about our efforts to provide opportunities for older workers. We do so by improving the employability of older workers and by introducing re-employment. Other agencies and self-help groups also offer a range of activities to cater to the social needs of our senior citizens.

The legislation for re-employment will be introduced in 2012. Re-employment allows able older workers to continue contributing to their organisations. It provides flexibility to employers and helps them retain older workers beyond the minimum statutory age of 62 and continue to tap on their experience. A higher employment rate of older workers also benefits our economy as a whole by providing the much needed manpower resources to support our economic growth.

Mr Ang Mong Seng suggested the abolishment of the retirement age to remove limits to employment. I think re-employment is a more flexible approach. Let us focus our efforts on implementing re-employment by 2012.

Mr Low Thia Khiang asked if the Retirement Age Act will be amended to remove the provision for wage adjustment at age 60. As he pointed out, the provision was introduced in 1998 in response to the seniority-based wage system which affects the employability of older workers. It gives companies the flexibility to make necessary adjustments in their workers’ salary, subject to a cap of 10% and taking into account various factors such as performance and experience of the workers. This flexibility should be retained as it helps older workers remain cost competitive and employable, as some companies still practise seniority-based wages.

However, as Mdm Halimah pointed out, employers should not implement the 10% wage cut at 60 automatically. Tripartite partners have been advising companies to exercise flexibility and fairness in adjusting the remuneration package of those reaching 60, taking into account the value of the job and the worker's contribution. Based on a survey by SNEF in 2005, most companies did not make any wage adjustments when their workers turn 60 and only 15% of employers reduced the wages of their workers at age 60.

As part of our efforts to enhance the employability of older workers and encourage re-employment, we will continue to urge employers to move away from seniority-based wage systems and towards performance-based wage structures.

Mdm Halimah asked for an update on the progress made in preparing for the re-employment legislation. The tripartite partners have been working closely over the last two years to help our companies and workers implement re-employment as early as possible.

6.30 pm

The results so far have been encouraging. More than 800 unionised companies have already implemented some form of re-employment policies and practices. According to preliminary findings from a 2009 survey by the Ministry of Manpower (MOM), nearly two-thirds of companies surveyed already allowed their employees to continue working

past age 62. MOM's Labour Force Survey in 2009 also found that the employment rate of older residents aged 55-64 has remained stable at 57.2%, despite the economic downturn. This shows that employers generally value older workers. We agree with Mdm Halimah that it is useful to monitor the progress of re-employment in Singapore. We will consider providing regular updates moving forward.

A set of draft Tripartite Guidelines on Re-employment was released in November last year. Feedback on the Guidelines has been encouraging. Key stakeholders have affirmed their support. There were a few useful and practical suggestions. Some employers said that it was more realistic to start engaging employees on re-employment issues six months before they reach retirement age, rather than 12 months, as originally suggested. Some employers also suggested having greater clarity on the quantum for the Employment Assistance Payment (EAP). Tripartite partners have carefully considered these suggestions and have addressed them in the revised Guidelines.

Mdm Halimah and Mr Ang asked for an update on the EAP. Let me take this opportunity to elaborate further on the proposed EAP that is to be paid to eligible employees when employers are unable to offer re-employment. While employees generally welcomed the concept of the EAP, they were concerned that employers might use it as a convenient way to avoid re-employing their older workers. Employers, on the other hand, expressed concerns about the possible cost implications.

As I had explained in Parliament earlier this year, we expect that the majority of the employers will be able to offer re-employment to eligible employees, given the flexibility re-employment offers. Nonetheless, we recognise that some employers may not be able to do so despite their best efforts. In such situations, employers should provide employment assistance to these employees, including career counselling, training, as well as an EAP.

The EAP should be carefully calibrated so that it neither imposes an undue burden on employers nor becomes an easy alternative to re-employment. Feedback from tripartite partners indicates that three months of salary could be a practical "reference point" for the EAP quantum.

To provide further guidance, the Tripartite Guidelines will stipulate a minimum EAP of $4,500 and a maximum EAP of $10,000. The $4,500 mark is roughly three months of salary for the 25th percentile of workers while the $10,000 mark would cover three months of salary for about two-thirds of our workforce. Employers and employees should exercise flexibility in determining the actual EAP amount, using these levels as references.

The Tripartite Guidelines will be released today. They will set the parameters and norms on how re-employment should be implemented. I strongly urge all employers and employees to adopt the recommendations in the Guidelines so that they can be re-employment ready by 2012.

A key tool companies can tap on for help in becoming re-employment ready is the ADVANTAGE! scheme. Since its introduction in 2005, over 1,300 companies have signed up for the programme. They have committed to recruit nearly 5,400 older workers, retain 21,000 and re-employ almost 9,500 older workers. A total of $33.2 million has been committed so far.

To encourage more companies to become re-employment ready ahead of the 2012 deadline, we will enhance the ADVANTAGE! scheme.

SMEs, in particular, may need more help. We will introduce a Capability Development grant of $10,000 under ADVANTAGE! for SMEs to develop HR systems to implement re-employment. They will first undergo the PREPARE programme by the Association of SMEs (ASME), which will guide them through the implementation of good re-employment practices. They can use the grant to defray some of the implementation costs.

All companies will continue to be eligible for up to $400,000 grants from ADVANTAGE! if they recruit, retain and re-employ older workers. They can also tap on the fund for job redesign initiatives targeted at enhancing the employability and productivity of older workers. Examples include automation as well as industry-sponsored projects like the Security ADVANTAGE! programme. Companies can refer to the case studies on the SNEF web portal for more ideas.

Prof. Paulin Straughan would be happy to note that companies can also use the ADVANTAGE! grant to train their HR managers and older workers, including older PMETs. In addition to job-specific training, employers can also prepare their older workers for re-employment by sending them to the READY programme by the Centre for Seniors (CFS).

To further spearhead job redesign, we will set aside $5 million to fund industry-specific projects. We encourage companies from similar industries to work with their industry associations and partners, like the polytechnics, to use the fund to develop solutions that will enhance productivity across the industry.

In all, we will commit an additional $50 million for the enhanced ADVANTAGE! scheme from April 2010 till the end 2011.

Awareness of re-employment legislation is already high amongst employers. We must now move our outreach programme beyond awareness to readiness.

Some employers are already re-employment ready. Toppan Security Printing is one such example. It has invested in more automation to aid their older workers. It has also organised a workshop to encourage employees aged 55 and above to remain relevant in the workplace. Their employees who have reached the retirement age will have their contracts renewed on a yearly basis, subject to health clearance. Wages of re-employed employees are reasonably adjusted, taking into account their workload and job responsibilities.

Besides the employers, we also need older employees' commitment to re-employment. Mr Kunalan, a 69-year-old coach at NIE, shows that age is not a barrier as long as one has the passion and desire. Not content to retire at age 55, he extended his contract for five years and has continued working since then, way beyond the initial five-year contract term. Mr Kunalan says he wants to continue working as long as he can contribute and share his experience.

To further promote re-employment, and up the readiness of all stakeholders, the tripartite partners will be kicking off a public campaign next month.

Besides preparing for re-employment, the Government has also introduced changes to the CPF over the past few years to improve the retirement adequacy of Singaporeans, including the introduction of CPF LIFE.

In September last year, CPF LIFE was made available for older members aged 55 and above to sign up. About 37,000 members have signed up since, committing a total of $1.7 billion. More than $120 million top-ups were made into members' Retirement Accounts to raise their LIFE monthly income. Of those who signed up, 72% qualified for the L-Bonus and 74% qualified for the V-Bonus. These members will receive a total of $96 million in bonuses from the Government.

Mr Charles Chong asked about those who have yet to sign up. Let me explain that the early introduction of CPF LIFE was in response to public feedback that some older members would like to join LIFE ahead of the mainstream implementation in 2013. However, many older members would have withdrawn a significant portion of their CPF savings when they reach 55 and would have less savings in their CPF. Furthermore, those past their Draw-Down Age would already be receiving payouts under the Minimum Sum Scheme. Some of these older members could also have made other plans for their retirement finances such as buying private annuities. CPF LIFE may not be suitable for all of them.

Hence, I would advise members to consider their individual situation, such as their personal finances, family support available and other factors before deciding whether to opt into LIFE or which LIFE plan to opt into. To give members a sense of how such decisions were made, let me share a few examples.

Members would recall that CPF LIFE offers four plans, allowing members to choose their preferred level of monthly income and bequest. The most popular plans have been the LIFE Plus Plan and the LIFE Balanced Plan, with more than half choosing the former and about a third choosing the latter.

Mr Yesudason surrendered a private annuity plan to join CPF LIFE. He did the sums and found that he would get a higher payout from CPF LIFE because he could benefit from the L-Bonus. He approached CPF Board for advice before selecting the LIFE Balanced Plan which will provide him with a balanced level of payouts and bequest.

Another member, Mdm Lee, chose the LIFE Plus Plan, which provides a higher monthly income but a lower bequest compared to the LIFE Balanced Plan. She did not mind a smaller bequest, as her children are able to support themselves. As Mdm Lee's Retirement Account balance was low, her children topped up her account to increase her LIFE payout and to maximise the L-Bonus entitlement, while taking advantage of the tax relief offered in the process.

Both Mr Yesudason and Mdm Lee had carefully evaluated their financial circumstances before signing up for CPF LIFE. I encourage other older members to do the same, if they have not already done so. To qualify for the L-Bonus, they would need to join CPF LIFE by 31st December this year.

We agree with Mr Chong that public education is important. Since September last year, CPF Board has sent direct mailers to every eligible opt-in member with information on CPF LIFE. The Board has also reached out through various media channels, the CPF website, as well as regular talks and road-shows on CPF LIFE. Members are encouraged to approach the CPF Board for help and advice if necessary.

From 2013 onwards, members turning 55 with at least $40,000 in their Retirement Accounts (RA) will be automatically included into CPF LIFE, together with additional savings in their RA which they may receive between 55 and 65. CPF LIFE will provide them with a lifelong monthly income from age 65 onwards. Members with lower balances can still opt into CPF LIFE. Mr Chong asked about private annuities in lieu of CPF LIFE. The National Longevity Insurance Committee had recommended that members who will receive a pension or annuity with benefits equivalent to CPF LIFE, and is either irrevocable or recoverable by CPF in the event of termination, be exempted from auto-inclusion. Such pension and annuity schemes will need to be approved by the CPF Board.

Mr Sam Tan asked how we are helping members who are not auto-included in CPF LIFE at age 55. Between age 55 and the draw-down age of 65 years old, members' CPF balances typically continue to grow. If a member has $40,000 in his Retirement Account at 55, he would have about $60,000 at 65, due to interest income alone. Members who have lower balances and are not auto-included at 55 may also be able to increase their CPF savings significantly by age 65, especially if they continue to receive CPF contributions from work or refunds from the sale of property. We will therefore also auto-include those with at least $60,000 in their Retirement Account at age 65. This will apply starting from the first auto-inclusion cohort, ie, those who will turn 55 in 2013.

Mr Zainudin Nordin asked what else can be done to improve the CPF system, besides implementing CPF LIFE.

First, we will refine the CPF Investment Scheme (CPFIS). Today, monies in excess of $30,000 in the Special Account can be invested under CPFIS. Given the higher interest rate on the Special Account and the volatility of CPFIS returns, we should take a more conservative approach. Hence, we will raise this threshold to $40,000 with effect from July 2010. This means that members can only invest Special Account monies in excess of $40,000. Existing investments will be unaffected until they are liquidated. This adjustment will affect 2.7% of all CPF members.

Next, we will enhance the Minimum Sum Topping-Up Scheme to further encourage top-ups to family members' CPF accounts.

Some members have given feedback that our top-up rules do not allow payouts to be raised beyond the maximum cohort payout level, and may result in excessively long payout durations.

This is because CPF Board has taken a more prudent approach and used top-ups beyond the cohort's Minimum Sum to extend the payout duration rather than to raise the payout amount. However, some members would prefer to have the benefit of higher monthly payout after making top-ups, rather than stretch their payout durations out beyond a reasonable period.

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We have taken on board their suggestions. From July this year, we will allow members to apply for an upward adjustment in their CPF monthly income provided that their payouts can last at least 20 years from their Draw-Down Age, or at least another five years from the time of application, whichever ends later.

Another aspect of CPF policy which we will fine-tune is how CPF members may distribute their CPF monies following their demise. We have received feedback that some members would like to use their CPF monies to provide for the retirement needs of their dependants. To facilitate this, we will amend the CPF Act to allow members the option of transferring their CPF monies directly to their nominees' CPF accounts when they pass on, rather than to pay their nominees in cash.

In addition, we will be introducing the Special Needs Savings Scheme announced by MCYS yesterday. This scheme will allow parents of children with special needs to stream out the CPF monies they bequeath to their children monthly, rather than as a lump sum. By leveraging on existing CPF infrastructure, we can keep the administrative cost low to benefit parents and encourage them to save for the long-term needs of their children with special needs. Details of the scheme will be announced later.

Mr Seng Han Thong asked for an update on the CPF Medisave contributions by self-employed persons. On average, each self-employed person contributed 12% more to their Medisave in 2009 compared to 2008. This has helped raise the average Medisave balance of self-employed persons to $15,900 as at end 2009, 6% higher than in 2008. The proportion of self-employed persons who have met their Medisave liabilities also increased from 78% in 2004 to 81% last year.

I must stress that it is the personal responsibility of self-employed persons to provide for their healthcare needs by contributing to Medisave. But the Government will help encourage them to do so. Those with low wage can receive the Workfare Income Supplement if they meet their Medisave liabilities. There is even a Medisave Contribution Draw (MCD) where those who make Medisave contributions stand to win cash prizes of up to $5,000.

The Government will continue to work with our tripartite partners and grassroots leaders to reach out to the self-employed, and encourage them to save for their healthcare needs through Medisave contributions.

I will now turn to Workfare, a key programme to help older low-wage workers.

We introduced the Workfare Income Supplement or WIS scheme in 2007 to help older low-wage workers who are more vulnerable to wage stagnation. The WIS scheme rewards work by supplementing the workers' incomes and building up their CPF savings. Since 2007, the Government has given out over $300 million in WIS every year to about 300,000 Singaporeans.

When WIS was introduced, we said that we would review it in three years. The ESC has also recommended that WIS be reviewed as it is an important part of our approach to bring about inclusive growth. My Ministry has completed this review and found that WIS has worked as intended by supplementing low-wage workers' incomes while preserving work ethic through its emphasis on rewarding work. The design of the WIS is fundamentally sound, but it can be strengthened further.

The strong growth in 2007 and early 2008 has enabled the bottom 20% of workers to enjoy real wage growth over the past three years. However, they remain more vulnerable to economic shocks than other income groups. We can do more to help them.

First, we will increase the maximum WIS that a worker can receive. A low-wage worker aged 60 and above can now receive up to $2,800 in WIS, $400 more than before. We will also extend the income ceiling to qualify for WIS from $1,500 to $1,700. The factsheet that I will circulate shortly will provide more details.

Dr Amy Khor, during the debate on the Budget, has asked for more WIS cash payments. I understand her wishes but let me stress that it remains an important objective of WIS to help workers save through their CPF. With the increase in WIS payment quantum, the cash component will correspondingly increase. For example, a worker aged 60 with an income of $1,000 will receive $686 cash currently. With the adjustment, under the enhanced WIS, he will receive $800 in WIS in cash. This is $114 or 17% more in cash.

Mdm Halimah, Dr Khor and Mr Inderjit Singh suggested paying WIS quarterly. Mdm Halimah also suggested shortening the work period criteria. WIS is meant to encourage regular work. Hence, the current criteria of requiring at least three months of work for every six-month period and making two WIS payments a year are more appropriate.

We will, however, adjust how the first payment is made. Currently, we make a provisional payment in the middle of the year based on work done in the first six months. However, once we assess the worker's overall eligibility at the end of the year, he may qualify for lower WIS, or none at all, resulting in a need for us to recover the excess WIS payments. This is not ideal. Henceforth, the first six-month period will be assessed independently from the end-of-year annual assessment. This means that recipients will be able to keep the mid-year WIS payment they receive, regardless of their income in the second half of the year.

Ms Ellen Lee, Dr Khor, Mr Terry Lee and Mdm Halimah asked about adjusting other eligibility criteria so that the WIS can benefit more workers. Mr Lee proposed using per capita household income. As WIS is a broad-based scheme, we have to keep the scheme and the criteria simple. Existing criteria are easy to administer and serve the purpose. There are other schemes available to help those who may have unique family profiles.

Mr Terry Lee and Mdm Halimah suggested excluding overtime pay from WIS eligibility. Basic salary, overtime pay or bonuses are all income that helps support the worker and his family, and should be taken into consideration. We also do not wish to motivate employers to reduce basic pay and increase overtime. WIS is designed such that the sum of a worker's pay and WIS will always increase if a worker earns more. Let me explain with an example. Mr Huat is a 45-year-old pipe fitter. He earns $1,200 a month and will receive $1,283 in total average income, after adding an average WIS of $83 a month. If his salary increased by $200 to $1,400, his average WIS drops to $50 per month, but his total income of $1,450 is still higher than the $1,283 he used to receive.

The enhanced WIS scheme will apply to work done in 2010 onwards. The first payment for work done in the first half of 2010 will be made in September this year. Self-employed persons and informal workers who declare their income for the first half of 2010 and make their Medisave contributions by 31st July can also receive their first WIS payments in September.

Mr Seng asked if WIS can be paid to self-employed persons automatically. Self-employed persons will receive WIS automatically once they declare their income and make the required Medisave contributions.

The enhanced WIS scheme is expected to benefit up to about 400,000 workers. This is higher than the 320,000 expected recipients for 2009. To fund the enhanced scheme, we will increase the budget allocated for WIS to $440 million a year.

As Mr Seng pointed out, we need to ensure that older workers are included in the national productivity drive. For workers, productivity is about raising skills to take on higher value jobs which justify higher wages over time. Therefore, besides encouraging firms to develop productive work processes supplementing workers' income, we must also help older low-wage workers move out of low-wage employment through training and upgrading.

Lower-income workers generally have a lower incidence of training. Of employed residents aged 35 to 64 in 2009, the training participation rate of those earning $1,700 and less was 14%, less than half the rate of 30% for those earning above $1,700. Training incidence also drops as workers age. There is thus a double whammy for the older low-wage workers when the effects of both age and income are combined.

This is due to various obstacles to training such as the lack of confidence, family and work commitments, or the lack of basic literacy and numeracy skills to take up vocational training. The opportunity cost may also be quite high for some low-wage workers who may depend on overtime income or two jobs. Their employers may not be motivated to send them for training in view of the costs involved.

We will make a bigger push to encourage this group of older low-wage workers to upgrade their skills, and to incentivise their employers to send them for training. We will introduce a three-year Workfare Training Scheme, or WTS, to complement WIS. To be eligible, the trainee must be a Singapore citizen aged 35 and above.

WTS will comprise three components. First, to encourage employers to send their older low-wage workers for training, we will provide an Employer Grant to further subsidise employers' net absentee payroll and net course fee outlay. Specifically, if an employer sends his worker who is earning $1,400 and less a month for training, he will receive 95% course fee subsidy and absentee payroll; and 90% for a worker earning between $1,400 and $1,700 a month. This is higher than the usual course fee subsidy of about 80% funding at CET Centres and absentee payroll before SPUR was introduced.

Second, we will introduce the Training Commitment Award (TCA) which will encourage workers to attain a certain level of training. For every two Employability Skills (ES) or Workforce Skills Qualification (WSQ) Statements of Attainments (SOAs) that a WIS recipient obtains within a period of 12 months, he will receive $200. The time requirement of 12 months is meant to encourage regular training. He can also receive an additional $200 TCA when he has completed enough modules for a full WSQ qualification. The total TCA he can receive each year will be capped at $400. Mdm Halimah may wish to note that the TCA goes directly to the employees.

To recognise low-wage workers' recent training efforts, we will allow a one-off recognition of up to two SOAs completed in the 12-month period between 1st July 2009 and 30th June 2010 for the first payout. So there is still time for workers to go for training and meet the requirement before 30th June 2010. WIS recipients need not apply for the TCA as it will be assessed and paid out automatically with their WIS.

Apart from the Employer Grant and TCA, we will be introducing a structured training component, Workfare-Skill Up, to further lower barriers to training for low-wage workers who lack the literacy and workplace skills to take on better paying jobs or go for further upgrading.

This programme takes a holistic approach, including customised classes, mentorship, and structured training pathways. Training will be customised to address the needs of low-wage workers who may have difficulties taking time off work or have family commitments. To further lower barriers to training, Skill Up will provide milestone awards of $200 to specially reward low-wage workers for each advancement in literacy level that they attain, as this is typically an area of greater difficulty for them. In addition, to help offset the various costs associated with training, training allowances will also be provided. After training, e2i, CDC career centres and CET Centres will help to place the trainees into better jobs.

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Low-skilled, low-wage workers have benefited from similar structured training arrangements in the past. Mdm Zarina is one of them. She only had Primary 2 education and was unable to find permanent employment. Upon seeking employment assistance from the CDCs last year, she took up the WSQ F&B Certificate. Owing to her work ethic and positive attitude, she eventually secured a permanent position with Dunkin' Donuts which pays $1,000 a month. She also completed her literacy training. In total, she received about $2,400 in course fee subsidies and training allowances. Workfare-Skill Up is introduced to formalise these structured training programmes so that more workers like Mdm Zarina can benefit.

Employers and workers, including contract and casual workers, which Mdm Halimah was concerned about, can both receive significant benefits under WTS. Let us take as an example, a 60-year-old worker, Mr Yeo, who earns $1,000 per month and is a WIS recipient. His employer decides to send him for a WSQ Certificate course which takes 48 hours. If the cost of the two modules is $2,000, his employer will enjoy 95% course fee subsidies of $1,900, as well as absentee payroll of about $240, a total benefit of $2,140 for the employer. If Mr Yeo obtains two SOAs and the full WSQ certification within a year, he will receive a total of $400 in Training Commitment Award (TCA). Under the enhanced WIS scheme, Mr Yeo himself will also receive $2,800 in WIS per year. In total, Mr Yeo will receive $3,200 this year. With better skills and qualifications, he will be able to move on to larger job scopes which can justify higher wages over time.

Several MPs like Mdm Halimah, Mr Low Thia Khiang, Dr Amy Khor (during her speech in the Budget Statement debate), Assoc. Prof. Straughan and Mr Nordin have asked how various types of workers, such as self-sponsored, self-employed, casual and contract workers, can benefit from WTS. They can benefit from highly subsidised course fees. They can also sign up for Workfare-Skill Up and receive training allowances. In addition, they are eligible for the TCA if they are WIS recipients. Workers who are not sponsored by their employers can also approach the various self-help groups such as MENDAKI, SINDA, CDAC, under the Surrogate Employer Programme to qualify for higher course fee subsidies.

Mr Lee expressed concern that low-wage workers will not know how to apply for such schemes. I would like to assure him that we will be reaching out to low-wage workers through mass media and community events. They can also approach the usual contact points such as CDCs, e2i and CET Centres to sign up for training. We will also be providing a dedicated toll-free number, in all four languages, that they can call for more information.

The WTS will be rolled out from 1st July 2010. It will run for three years at an estimated cost of $190 million over the period. We are aiming for a stretch target to benefit an average of 30,000 low-wage workers annually over the three years.

Madam, it will be a significant challenge to shift our economy towards productivity-driven inclusive growth while at the same time addressing the issues of an ageing population. We will need to maximise the skills and potential of every single worker – including those who are older or earning lower wages so that they are not left behind. This will also help build up a sustainable pipeline of skilled workers so that businesses can continue to grow. We must press on with our efforts to enhance the retirement adequacy of Singaporeans by strengthening our CPF system. I am confident that with the strong support from our tripartite partners – NTUC, SNEF, SBF and other stakeholders – we will make good progress on all these important fronts.

PMETs and CET Centres

Mdm Ho Geok Choo (West Coast): Madam, WDA has set up about 50 CET Centres to inculcate the culture of lifelong learning. The Minister for Finance in his speech said that CET Centres should advocate mastery of skills and domain expertise in every trade and profession. To reach such standards that will level up Singapore's HR capabilities, we need to ensure that CET Centres in Singapore will collaborate, leverage and add value to one another.

The CET Centres can end up replicating each other's efforts if they work in isolation and this will not be productive. It is important that we have a system to aggregate both the demand and supply of learners and courseware providers respectively. To be able to spawn excellent CET Centres, we must have CET Centres specialise in their respective domain. For example, both e2i and Human Capital Singapore (HCS) train professionals, managers, executives and technical staff (PMETs). Perhaps e2i could aggregate its PMETs training under HCS which specialises in training PMETs while HCS could refer its PMETs to e2i for placement.

To support continuous training for PMETs, I advocate that MOM fund passion for learning. I propose that MOM set up a skills account for all PMETs parallel to WTS for workers. The skills account holds the key to lifelong learning for PMETs and will lead to sustainable employment for PMETs. This will address obstacles faced by passionate learners whose employers may not be supportive of training, lest they become marketable. In this way, every PMET will take self responsibility and initiative towards mastering skills and knowledge. Learning must begin with self and the skills account will provide the impetus to initiate self learning.

I would like to suggest that this Skills account incorporate SPUR funding and absentee Payroll, and a small percentage of the CPF.

PMETs dispute settlement mechanism

Mdm Halimah Yacob: Madam, PMETs now form about 50% of our workforce. As such, their need for assistance to resolve disputes at the workplace would become increasingly important.

Under our current laws, PMETs who have an employment dispute will have to seek recourse in the court of law which is costly and time consuming. The lack of a system to speedily address workplace grievances also results in poor morale and will have an impact on productivity. It is no longer viable from the perspectives of both employers and the PMETs. Recently, a resident came to see me at my MPS. She was an executive and was abruptly terminated from her services without being given her notice pay. Although she could legally sue her employer, she felt that it was just too costly to do so and really not worth her while as her claim was less than $5,000, but she was clearly very angry and very frustrated at the unfairness.

I am, therefore, heartened that the tripartite partners have come to a consensus on the need for a tripartite mediation channel to resolve the disputes involving PMETs and their employers. I would like to ask the Minister to give an update on this initiative. When will the framework be completed and when does the MOM expect the law to be put in place to provide for this change? Could the Minister also give an update on the number of disputes referred to MOM last year by PMETs and how were they resolved?

The Chairman: Mr Charles Chong, you can take both your cuts together.

Key performance indicators

Mr Charles Chong: Madam, I note on page 158 of the Budget book, under the key performance indicators for the Ministry of Manpower, the following figures that I hope the Minister could provide some clarifications.

Firstly, the number of errant employment agencies (EAs) per 1,000 EAs has shown a marked increase from 46 in 2008 to 109 in 2009. This represents a 137% increase in errant employment agencies. Could the Minister tell us the reason for this spike, and is it a cause for concern? And what measures are being taken to reduce this number?

Madam, the Minister earlier mentioned that 47,600 job applicants were placed from 2008 to January 2010. However, the figures in the Budget book indicate that the job placement rate appears to be in steady decline, from 63% in FY 2007 to 56% in FY 2008 and to only 40% in FY 2009. The job placement rate estimated for 2010 remains at 40%, the lowest level compared to what was achieved over the last three years. Could the Minister tell us why is MOM's estimate for FY 2010 so low when the economy is recovering and despite the estimated 20% increase in the expenditure for WDA for FY 2010?

Thirdly, the total funds disbursed for training show a sharp increase from $128 million in FY 2008 to $335 million in FY 2009, an increase of almost 160%. However, the overall training participation rate appears to have fallen from 32% to 28% over the same period, despite the substantial increase in total funds disbursed for training. Could the Minister tell us how is this increase in training funds in FY 2009 being utilised and has there been effective use of the training funds? Could the Minister also tell us why the overall training participation rate is estimated at only 29% for FY 2010? What measures should be taken to increase this rate?

Finally, the number of foreign workers and foreign domestic worker management problems per 1,000 workers has risen from 3.5% in 2007 to 12.5% in 2008 and 15.6% in 2009. Could the Minister tell us what measures the Ministry has taken to reduce this number in 2010?

Workplace safety

Madam, the workplace fatality rates have fallen steadily since 2004 from 4.9 fatalities per 100,000 workers in 2004 to 2.9 fatalities per 100,000 workers in 2007. However, since 2007, there appears to be no significant improvement and the figures have stood stagnated between 2.8 and 2.9 fatalities per 100,000 workers. With a workforce of approximately three million workers, this translates into 84 to 87 fatalities per year. Now, surely, this cannot be an acceptable situation for MOM. Could the Minister tell us what measures his Ministry has taken or will be taking to improve workplace safety in order to reduce this figure? And does the Minister consider a zero fatality rate to be unrealistic?

Construction and the marine sectors account for approximately 63% of all workplace fatalities. Could the Minister tell us what measures his Ministry has taken to improve workplace safety in these two sectors? Have the recommendations by the National Crane Safety Taskforce, released in September 2009, been implemented? And could the Minister give us an update on the national industry-led taskforce on safe working at heights and the confined spaces legislation?

Workplace safety and health

Mr Yeo Guat Kwang: Madam, with the recent focus on increasing productivity, let us not overlook another important element, that is, safety. The losses from unsafe practices are, in fact, far more costly than the economic gain. In general, the collaboration of the tripartite partners has been effective in bringing down the workplace accident frequency rate. It has dropped from 2.7 in 1996 to 1.9 in 2008. So, there is a clear improvement. However, I think this is not enough. I hope the Ministry could seriously consider extending the Workplace Safety and Health (WSH) Act to cover all workplaces as soon as possible. I urge the Ministry of Manpower to review the safety training framework for workers to ensure that the workers have full knowledge of the various hazards at work, so that they can prevent themselves suffering from unnecessary accidents.

I request MOM to provide more support and resources, including financial incentives, for WSH education and awareness for all the workers. In addition, MOM should also provide resources and consider establishing a tripartite WSH resource centre to help the respective sectors to upgrade their risk assessments and manage their capabilities.

Madam, can I go on to my next cut?

The Chairman: Yes.

Portable medical benefit

Mr Yeo Guat Kwang: Madam, I am very pleased that the portable medical benefits scheme (PMBS) is now in place. However, with the drive towards longer employment and the implementation of the Re-employment Act soon, there is an urgent need to address the issue of adequate medical coverage for all employees. However, many of our employers are still sticking to the group hospitalisation and surgical (H&S) plan. But being a company-based scheme, this is not able to meet the long-term needs of all our workers given its non-portability, age limit and limit in the benefits coverage. Yearly renewals are also not guaranteed for the companies, whereby premiums and terms are subject to the claims experience. Such a company-based H&S scheme also reduces the employability of older workers. Employers would be disinclined to actually employ or retain the older workers and accept the full burden of their medical expenses since they are more likely to incur higher medical expenses than their younger counterparts.

With the successful revamp of the MediShield as a national scheme, which is more robust, I hope all the employers should really consider replacing such a group H&S medical insurance plan with a MediShield-based PMBS, such as the NTUC Income Enhanced Incomeshield plan.

The public sector employers should also consider promoting such an enhanced medical coverage scheme because the current Medisave-cum-Subsidised Outpatient (MSO) scheme only provides public sector employees an additional 1% Medisave contribution in lieu of the inpatient subsidy. The challenge is that most of them may not be aware of the need for greater personal responsibility in ensuring personal and proper coverage through a better and portable medical insurance plan.

The Chairman: Order. It is 7.15 pm.

Thereupon Mdm Deputy Speaker left the Chair of the Committee and took the Chair of the House.