EASY ACCESS TO FOREIGN LABOUR IN SERVICE INDUSTRIES

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EASY ACCESS TO FOREIGN LABOUR IN SERVICE INDUSTRIES: 2.

Ms Sylvia Lim asked the Acting Minister for Manpower whether easy access to foreign labour in service industries is counterproductive to encouraging employers to upgrade the skills of Singaporeans and undermines Government retraining efforts in service industries.

The Acting Minister for Manpower (Mr Gan Kim Yong): Sir, Singapore has limited local manpower. Foreign manpower has helped to augment our local workforce and enabled our economy to grow beyond our own indigenous workforce alone can support. Nevertheless, access to foreign labour is regulated. This is done through the dependency ratio as well as through the foreign worker levy. In services, for example, the dependency ratio is 50% with the foreign worker levy up to $450 for unskilled workers.

The presence of foreign workers does not hamper the training of our workers. Based on a survey released by MOM last year, the level of employer-supported training has been rising from 2002 to 2006, a period when foreign employment also grew. In 2006, 72% of private sector establishments provided structured training to their employees, a substantial increase from the 52% in 2002.

As I mentioned in yesterday's reply, the Government has invested heavily in Continuing Education and Training (or CET) programmes to help our local workers to upgrade their skills so that they can take on better jobs. Under the

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CET Masterplan, we have started by investing an additional $800 million into the Lifelong Learning Endowment Fund this year to ramp up our efforts significantly by expanding the number of good-quality training places in growth sectors. In 2007, the total number of persons who received training under the Workforce Skills Qualification (WSQ) system was 68,000, more than double the 31,000 persons trained in 2006. More specifically, 21,000 persons were trained in the services sector in areas such as food and beverage, tourism, retail and finance.

Ms Sylvia Lim (Non-Constituency Member): Sir, two supplementary questions. In MOM's recent annual report on wages released in 2008, it was reported that there was wage stagnation for the lowest income earners for the last 10 years and the economists attribute the presence of foreign workers as a downward pressure on residents' wages. Does the Minister agree with this assessment or that there is a cause-effect in this relationship?

Secondly, in the Institute of Policy Studies Conference in 2007, economists noted that relaxed policies on foreign workers and the immigration have created a new economy where the lower wage workers are losing out. It was stated that large scale import of unskilled labour has its pros and cons and that we should do a detailed study on the cause and benefits of such policies. Is the Government indeed commissioning an independent study into this question? If so, could we have some details? And if not, why not?

Mr Gan Kim Yong: Sir, let me explain. Wages of a job depends on several factors. Firstly, it depends on the value of the job, the skills involved, the knowledge content of the job, and it also depends on the productivity of respective workers, the affordability of a company to pay and the performance of the company. It also

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depends on the supply and demand of workers in the particular industry.

For services, let me give an example, since this question was on services. In 2007, total wages went up by 5.9% in the overall economy, and services sector wages went up by 6.5%. And services sector is a sector with a growing number of foreign workers in 2007, and therefore the hypothesis that foreign workers depress wages is a very simplistic conclusion which may not be true.

Secondly, I would also like to share that there were certain segments in our employment market where these sectors tend to have more older people and these sectors include the labourers, cleaners as well as contract workers. And these older workers, in the past, had not been working. If you look at the employment rate of older workers, aged 55 to 64, the employment rate has improved significantly. Over the last three years, it went up by nine over percentage points to 56% last year.

With this increase of supply of older workers who generally have a lower education level and lower skill sets, they tend to take on jobs that are easier to do and have lower entry barrier. As a result, the salary would generally be lower. We hope that we will be able to help these new workers to progress and upgrade. We do that through a number of measures. First, we try to engage these workers and reach out to them. We want to, first, encourage them to work. Therefore we want to provide a relatively easy entry point for these workers to come in and

we give them the minimum skills so that they can start working and earn a decent income. After that, we want to find ways to reach out to them, to give them training and upgrading so that they can upgrade to a better job and earn better income. We also go through job redesign, to help redesign these jobs in the lower wage area – one example is

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the cleaning industry and another is the security industry – to enhance the values of these jobs. As I mentioned, wages also depend on the value of the job. And through enhancement and job redesign, we hope that the jobs would be able to pay better.

Finally, even for these lower wage workers, as my Senior Parliamentary Secretary mentioned just now, we also provide Workfare Income Supplement to help them improve their overall takings to support their family income. We have looked at the wage structure of our employment landscape. We think that it is more important for us to focus on training and upgrading. A very important question is, how can we improve our training and upgrading? Continue to press on with our CET, to equip our workers with skills, so that they can continually upgrade themselves and improve their income.

Mdm Ho Geok Choo: Mr Speaker, Sir, I would like to ask the Minister whether he could update the House on the status of the Train and Place and Place and Train, in particular, with respect to the perception of employers that to recruit our own locals may actually end up in a loss of productive time because of the fact that once the local recruits have entered the workforce, they would have to be sent for training and therefore there is this tendency amongst the employers to go for the foreign workforce.

Mr Gan Kim Yong: Sir, in the jobs that require skills, even for foreign workers when they arrive, they will still need to take time to be familiar with the environment. So this does not put our local workers at a disadvantage. In fact, local workers would have gone through some basic training that we provide through WDA and our various programmes. So I think it is important for us to continue to emphasise our Place and Train as well as many other programmes.

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One example that I would like to share is something that we have just recently launched. It is called the Step-Out Programme. This is targeted at women at home who have not been working or who have stopped work for some time. They may not be familiar with the working environment, or they may lack some confidence. So going through this programme will help build their confidence and be familiar with the working environment so that they also will be aware of opportunities available. And by doing so, we help to place them into jobs.

Mr Speaker: Ms Lim, last question.

Ms Sylvia Lim: Sir, the Minister has not answered my second question which was about the call by the economists at the IPS Conference for a detailed study to be done on the pros and cons of our current foreign worker policies, and my question was whether the Government is doing one or considering to do one and, if so, can we have some details. If not, why not?

Mr Gan Kim Yong: Sir, I beg your pardon. I forgot about the second question. In fact, the Government has always been monitoring the effect of foreign workers on our overall employment market. We want to make sure that these foreign workers, while adding flexibility to our labour market, will not create problems for our local employees. As we can see, over the last few years, during the recession period, there was a significant reduction in the number of foreign workers and that is in response to the economic cycles. And during the same period, we also see the impact on local employment. Although the local employment has also come down, the extent is much smaller than the impact on foreign workers. So to answer Ms Lim's question specifically, there is no need to do an independent study. In fact,

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the Ministry is monitoring and studying the issue continuously because this is something that we need to respond and react quickly when the market changes. It is something that we will continue to monitor.