HEAD S - MINISTRY OF MANPOWER

Head S - Ministry of Manpower

The Chairman: Head S - Ministry of Manpower. Dr Magad.

Manpower Challenges

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Sir, I beg to move,

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

Sir, the employment scene in Singapore was exceptionally rosy in 2007, with employment levels reaching an unprecedented high and unemployment levels reaching a record low. The favourable job market condition boosted by a booming economic growth in 2007 saw more Singaporeans getting jobs. A recent report from MOM showed that Singaporeans have benefited from the job boom with more taking up PMET jobs and less of them taking up lower-paid jobs. I would like to ask the Minister for data on the types of jobs foreigners hold and the breakdown of the associated statistics. Could the Minister also provide a comparison of salaries for Singapore workers and foreigners at the different levels?

While more Singaporeans are getting employment, more new jobs appear to be taken up by foreigners, ie, six out of 10 jobs in 2006. MOM has said that this is due to insufficient number of Singaporean workers available for the vacancies. Sir, I feel that it is our responsibility to maximise the chances for Singaporeans to benefit from new jobs, especially promising new sectors. What plans does MOM have to train and retrain Singaporeans such that high value jobs and new job opportunities in new industries favour Singaporeans than foreigners? One thing MOM and WDA can do is to increase efforts in identifying sectors with high job demand and subsequently advise local workers in the

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areas they need to consider to undertake reskilling efforts. This is specially relevant to workers above 40 who continue to struggle in getting appropriate jobs in spite of the rosy job market, as portrayed by Radha Basu in today's Straits Times.

Sir, employers in some sectors, such as manufacturing, construction and cleaning, continue to say that we need to employ more foreign workers on grounds that there are not enough Singaporeans to work in these sectors. This may not be the case for all employers as those in other sectors may not face the same image issue with Singaporean workers. For these employers, I would like to suggest that they be made to prove to demonstrate that they have put in sufficient effort to recruit Singaporeans before they are given additional quota to recruit foreigners. At the same time, I believe more needs to be done to build resilience in Singaporean workers. Even with job redesign, there are still Singaporeans who shun such jobs

due to reasons like long working hours in the service sector, and embarrassment for doing cleaning jobs. Some older Singaporeans have shown resilience and taken up jobs in the cleaning sector but are outperformed by younger, eager and more efficient foreign workers. Other employers in the service sector have lamented on the attitude of some fair-weathered local workers who quit all too easily when the going gets tough, when the hours get long, or when there is a better job offer.

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): 5.00 pm

Moving forward, the economic situation for 2008 may not be as cheery as 2007, with an economic slowdown already apparent in the United States and a recession looming. Due to the growth of China and India, Asian economies,

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including Singapore, may be spared from a big bump but will nevertheless still feel some impact of the US recession.

Sir, at what point is the balance struck between creating enough and high quality jobs for Singaporeans and continuing to leave the floodgates open to foreigners in meeting the needs of employers during times of growth? Should there be another economic slowdown, will the foreign workers remain as a buffer that cushions the impact of retrenchments for local workers, as was the case in the last recession?

Labour Market Update

Mdm Halimah Yacob (Jurong): Sir, I would like to ask the Minister for an update on the labour market outlook for this year. How many jobs will be created, in which sector, what kind of jobs, how many jobs will be created for Singaporeans and how many for foreigners? And what is the projected employment and unemployment rate? Could the Minister also give an assessment on the employment market for older workers and back-to-work women?

Last year, the job market was very good with many jobs created. But even then, these two groups of workers have found it difficult to find jobs. This is the trend that MOM will have to observe very closely, as it indicates that even when job creation is strong, there will be groups who will struggle to find work. I would like to ask the Minister what more can be done to assist them. What is the impact of a flexible foreign worker policy on their employability? How has it affected employer's willingness to redesign jobs or change workplace practices to suit the needs of older workers and back-to-work women?

Sir, I would also like to ask the Minister to give us an update on the

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situation of the S-Pass holders. The quota for the S-Pass has been increasing very significantly from 5% barely a few years ago to 25% today. Are there any safeguards to make sure that Singaporeans are not replaced by these younger, better educated S-Pass holders? If the labour market weakens this year, would our retrenched older PMETs be affected if they have to compete with these S-Pass holders? Is the scheme too attractive and flexible as S-Pass holders will only have to be paid $1,800 and there is no limit on the employment period?

Employment Rate

Mr Teo Ser Luck: Our real GDP growth in 2007 was 7.7%. It was a year that turned our forecasted budget deficit of $0.7 billion to $6.4 billion and our unemployment rate was about 1.6% in the last quarter and we estimated about 2.1% for the whole year with this growth. But, then, the US impact will be felt. I also agree that we may just catch a cold but not the flu. But still it is a cold, which means that the economy will somehow be weakened. So how would this affect the employment rate? What is the forecasted unemployment rate with this new growth because we have adjusted our economic growth from 4.5%- 6.5% to 4%-6%? Would we see challenges ahead for employment opportunities?

Productivity of Workforce

Dr Lim Wee Kiak: Sir, this morning while driving to work, I encountered a similar situation which I described in last year's COS. Two foreign workers were engaged to hold traffic signs of STOP/GO on a stretch of road works. I am not sure if it is due to a lack of innovation or it is because of cheap foreign labour that resulted in the employers using cheap foreign labour performing that type of task. The situation has not improved as compared to last year.

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I would like to highlight that according to MTI Economic Survey 2007 , overall labour productivity fell by 0.9%. In the fourth quarter last year, it fell by an even faster rate of 3.7%. Productivity in business continued to fall, posting a 5% decline. And productivity in manufacturing sector declined by 3.2%. I would like to ask MOM why is our labour productivity declining? What are the main factors? With the declining productivity, what is driving our economic growth?

Also, I would like to ask the Minister to comment on the wage increases of our labour force. Is it sustainable in view of the declining productivity? Have we overpriced ourselves and are we in danger of overpricing or pricing ourselves out of the global market? What is MOM's strategy in dealing with the declining productivity? And I have just received this lovely chart showing the economic expansion and job creation. If we superimpose productivity, I just wonder where is the dot?

Job Opportunities

Mr Hri Kumar Nair: Sir, our employment rate is down to its lowest in the decade. For the whole year of 2007, overall unemployment rate averaged 2.1%, down significantly from 2.7% in 2006 and 3.1% in 2005. The strong economy led to another record breaking year for employment creation in 2007. Total employment creation in the whole of 2007 was 236,600, fast surpassing 176,000 in 2006. This is a very healthy growth. Both locals and foreigners benefited from the strong job creation. Local employment grew by 92,100 in 2007 and this is the third successive year of increase. Foreign employment also rose to a new high of 144,500 in 2007.

Sir, these are all impressive figures. Yet, there are Singaporeans who have not

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benefited from the boom. We have seen them in our meet-the-people sessions. Their tales and woes are strikingly similar. Some say they are finding it hard to find a job because of their age. What is of concern is that they are only in their 40s. Some have ailments which restrict the kind of work they can do, and some are single parents with children or sick parents to attend to and are unable to juggle their family and work responsibilities.

Sir, I appreciate that the Ministry cannot solve all these problems. But I have some difficulty understanding why some residents who are fit have difficulty of changing jobs, be it through the CDC or other Government job matching agency or have to wait some time to find work. Yet, at the same time, we see foreigners doing jobs which we Singaporeans can do.

Sir, there is another group of Singaporeans which need assistance, and these are so-called employed Singaporeans but who are very lowly paid. I have encountered residents who work part time, earning about $500 a month and who say that they cannot find full-time positions. Yet, I was once informed by an owner of a well-known restaurant that she had difficulty hiring dishwashers, although she was willing to pay over $1,000 a month with CPF. This situation, Sir, was confirmed by a contact of mine who is in the business of sourcing for foreign workers. And among the positions he has been asked to fill are dishwashers, paying about $1,200 a month, retail service staff which pays between $1,200-$1,500 a month and even Class 4 drivers, paying between $1,400-$1,800 a month.

I would like to ask the Minister therefore whether our job matching systems are comprehensive enough to know what jobs are available in the market so that we can swiftly and effectively match Singaporeans who need work or who need a better paying job. Are

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we also ensuring that employers have made reasonable attempts to recruit Singaporeans before we approve work permits for foreigners to do these jobs? Are we also doing enough to encourage Singaporeans in low paying or part-time work to upgrade themselves? The schemes and incentives may be there but do Singaporeans know the how and where.

Foreign Workers

Mrs Josephine Teo: Sir, under the National Rural Employment Guarantee Act which the Indian Parliament passed in 2005, anyone who wants will be given 100 days of manual labour in the countryside for a minimum day wage of 60 rupees. We do not have such a policy in Singapore. Though Singapore has very low unemployment and high employment rates, there are Singaporeans who still have difficulty getting jobs and keeping their jobs, especially the older and low wage workers? Therefore, one is sometimes tempted to ask whether Singapore should also have a minimum wage or job guaranteed programme. In thinking about this question, I found an interesting observation about the Indian job guaranteed programme in a book written by Edward Luce, the Financial Times Bureau Chief in Washington DC who was based in Delhi from 2001 and 2005. Here is what he said about the kind of work that is guaranteed:

"The work is almost entirely physical consisting of the type of manual labour India's poor has been requisitioned to do for thousands of years, filling in potholes, digging landfills, manning river embankments and clearing irrigation channels. The quality of the work is not the priority. All of it could be done more efficiently and to a higher standard with modern machines. Unskilled and hungry labourers cannot build good roads with their bare hands."

Luce said that "the policy prompts no investment in upgrading the skills of the

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people it is designed to help and it is thus unlikely to create lasting employment for the rural poor".

While the Singapore situation is not quite comparable to that of India, but Luce's observation reaffirmed my conviction that we must avoid populist but questionable measures like a job guaranteed programme on minimum wages. Instead, we must persevere in the painstaking and unglamorous task of skills upgrading and job recreation. In this regard, we have made some progress. Our achievements include the Skills Redevelopment Programme which has helped more than 300,000 workers reskill and remain relevant and the Job Recreation Programme which has helped to transform the jobs of about 30,000 workers, helping them earn better wages. MOM is also to be commended for putting in place a CET Masterplan.

My question is whether these efforts are enough. Specifically, I have argued during the Budget debate that there is an unintended consequence from the easy access to foreign workers in that they could undermine the upgrading efforts. Let me share an example from the cleaning industry. We have a strong supporter of the Job Recreation Programme. To implement the JR Programme, seven senior staff from cleaning supervisors to the Managing Director himself are involved. Their workers will go through over 2,000 man hours of training, costing some $36,000. Eight workers will be trained for supervisory positions, another 20 will have their job scopes expanded. So besides routine cleaning, they will also undertake maintenance work such as unclogging choked pipes. With the job expansion, the workers can earn more.

The company will buy equipment that are easier for older workers to operate, costing some $78,000. The company also

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employs foreign workers. But because of its upgrading efforts, it is expected that by the end of the year, 67 of its workers will be re-employed on reaching the legal requirement age. But it takes tremendous commitment and companies wonder why they should continue trying. In sharp contrast, some of its competitors do not make any attempt at improving job worth so that they are also attractive to Singaporeans. Their message to Singaporeans is, take it or leave it, because they can always hire a foreign worker to replace him. At the same time, service buyers have an indifferent attitude as long as the contract prices are driven down.

This is why I believe we should refine our approach in managing foreign workers' quota to provide greater incentive to upgrade jobs or at least not to allow it to become an impediment. If foreign workers help businesses to moderate costs, then the result should be improved productivity levels. While it may be difficult and inefficient to control quotas at the company level, based on the productivity data, should we try to link the quotas to productivity levels of industry sectors? If we have limited foreign worker quotas, do we allocate them to sectors with declining productivity or those with improving productivity? If foreign workers help businesses to cut short opportunities while the local workforce is being ramped up, then should the quota be time limited? For example, in the hospitality sector where there is a manpower crunch until the supply of trained service staff comes on stream. It makes sense to give the industry a breathing space of two to three years and to enable the players to capture the business opportunities. But the quotas cannot go on forever. If it is clear that the quotas will be phased out or reduced over time, it will provide added incentives for the employers to think seriously of how they will fill the jobs vacated by the

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temporary supply of foreign workers. This will help to prevent over-dependence on foreign manpower and encourage continuous upgrading.

Sir, let us not offer Singaporeans a false hope that a job guaranteed programme or minimum wage will solve the problems of low-wage casual and contract workers. But let us hold out the hope that we will refine our policies so that businesses do not take the easy way out of continuous investments in skills upgrading and job recreation. In this way, we would provide a more sustainable basis for the continued presence of foreign workers and also enable Singaporeans at all levels to move ahead as one.

Mr Ang Mong Seng: ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Sir, Singapore faces a tight labour market. In order to boost growth and development, we need to bring in more foreign workers, especially in the construction, maritime and labour industries. These foreign workers have contributed substantially to our economic growth. Among the mega projects in the pipeline are the Integrated Resort, Sports Hub and other major construction projects. Thus, more foreign workers are needed in the construction sector, and the majority of these foreign workers are from China.

However, over the past few years, many major cities in China are also developing numerous large scale construction projects, and so the construction industry is experiencing a boom, thus they need construction workers and professionals to support their domestic demand. At the same time, India and the Middle-East are developing extensively with the rapidly growing construction sector. This has undoubtedly attracted many foreign workers and technicians. As a result, this has caused higher labour costs, particularly foreign engineers,

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foreign construction workers and related professionals. There is also a shortage for these skilled workers.

Therefore, I would like to ask whether the Ministry will review its current policy so that we can attract more foreign talents to join the Singapore construction industry.

Besides the construction sector, other industries such as food and beverage, sales, cleaning, etc, are also facing labour shortage. I feel that these jobs can be taken up by our local workers. In this regard, I would like to ask the Ministry whether we have any policy to attract foreign talents to supplement the local construction sector and, at the same time, ensure that there are enough job opportunities for Singaporeans.

*Cols. 2045-2046

Continuing Education and Training

Dr Ahmad Mohd Magad: Sir, the Prime Minister recently announced a 10-year Masterplan for Continuing Education and Training. I first support the push for more workers to be trained and retrained so that they can keep pace with the economic changes.

However, measurement yardsticks for the programme were not detailed. I would like to know what the main key performance indicators of this Masterplan are. How would the Ministry assess the success of this Masterplan? I hope the number of workers going for training will not be the sole indicator of success.

I have received feedback from many residents on training courses which were said not to have been effective in helping them secure jobs or widen their job search prospects. Some were also unhappy with the quality of training programmes. I would like to ask if MOM or the WDA would consider implementing a trainers' recognition scheme to ensure that the

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training programmes conducted are effective and also of high quality. I believe how well a programme is conducted is to a very large extent also dependent on the quality of the trainer.

I would like to know how the CET will reach out to structurally unemployed workers as well. Also, will the CET adequately address the issue of making older workers more employable and drawing more women back to the workplace?

Mr Seng Han Thong (Yio Chu Kang): Sir, the top-up of Lifelong Learning Endowment Fund by $800 million this year will enable more adult workers to be trained for better paid jobs. The challenge remains at making sure that Continuing Education and Training for adults will equip them with real capabilities that will enhance their competitiveness.

The key word here is "competitiveness". We need to upgrade the quality of our workforce in terms of knowledge, skills, attitude and habits that will translate into higher productivity and better quality outputs for our economy. This way, our workers will be able to reap the fruits of CET.

Through the CET, we have seen many Singaporean workers gainfully employed and our unemployment rate is in fact now one of the lowest in the world. I think it is timely for us to review how effective is our CET programme in enhancing the competitiveness of Singaporean workers and how can we do it better in the future.

So there are three pillars of the CET infrastructure:

(1) The Workforce Skills Qualifications (WSQ) system. WDA has rolled out many WSQ frameworks over the years. What are the problems faced during implementation? Do the employers find it useful and, if yes, in what areas and why? Can

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WSQ sustain its stay in the frontiers of industry developments so that it will deliver WSQ certified workers that the industries require now and in the future?

(2) The Employability Skills System (ESS). Do employers find the generic courses under ESS useful? Do employers prefer workers with ESS qualifications? Do the workers think that ESS qualifications help them find jobs? This information is important because it will allow us to assess the effectiveness of ESS and adopt a more targeted approach to improve the system, so that it can better help fellow workers to enhance their competitiveness.

(3) The CET institutions. The capability of the training institutes to deliver good quality and well trained workers is the key concern here. However, at the ground, we know that it will be easier to convince both the employers and the workers to go for training courses if it can translate into real value for both the workers and the business. The key here is to identify and develop courses that will address the current and future needs of each industry.

Sir, thus, we need to build our CET infrastructure that will help our economy to improve its productivity and the quality of its outputs, in terms of goods and services. To do so, it must be based on the depth and knowledge on the various business value chains of different industries and their future trends of developments.

Mdm Ho Geok Choo: Sir, in line with the objective of CET for all levels of the workforce and in view of the new SDF levy payable for PMETs, what plans does the Ministry have for the training and upgrading of the PMETs? Are these changes going to encourage employers to send PMETs for further training?

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Employers may be reluctant to send staff for further training and, if so, what measures can the Ministry suggest to persuade employers to provide executive staff, in particular, with training opportunity?

The second point, Sir, is the Prime Minister, at the launch of the CET Masterplan, has said that no matter how much money is pumped into this programme, for it to work, employers and employees alike still need to change their mindsets. Does the Ministry have any specific ideas as to how this can be achieved?

Lastly, since one of CET's tasks is also to offer a way to enable those who have missed out on academic pursuits to have a second chance to level up, I urge MOM to be nurturing and to grant subsidies to those students in such pursuits in private institutions, especially those run by credible and established setups. We have been around running these academic programmes in the last 20-30 years. Examples of these setups are MDIS and Singapore Human Resources Institute.

Improving Service Culture

Mr Liang Eng Hwa (Holland-Bukit Timah): Sir, in his National Day Rally speech in 2005, Prime Minister Lee highlighted the need for a mindset change to improve our service culture. He mentioned that all three parties - companies, service staff and customers - have a role to play to improve service. It was a timely reminder.

The services sector will increasingly be an even bigger value adding contributor to our economy. With the completion of major tourism-related developments and more international events coming to Singapore, we can expect more Singaporeans to make their livelihood in the area of providing service. More full and part-time service workers will be

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needed for positions such as guest relations, retailing, tour guides and waiters to give consumers a positive experience.

We are truly seeing a significant "experienced" economy emerging in Singapore. But do we have the headcount to meet the growth in this sector? Recent reports in the Straits Times suggested that the numbers are not enough to fill the new openings and labour crunch is only going to get worse. Equally important are also our service culture and service software. Are we geared to give consumers and tourists a memorable experience? While we do have good examples of excellent service standards such as SIA and Changi Airport, many of us have also encountered poor service in our various areas of day-to-day life. I will not cite them here today.

Although customer service very much comes under the purview of private business management, the Government can and should play a part at the national level to improve our service culture. During the SARS crisis in 2003, Hong Kong tourism took a severe hit. In a bid to win back visitors, the Hong Kong government came up with a number of initiatives, one of which was to get top star, Andy Lau, to spread the message of good service standard through a TV campaign, and his light-hearted tagline in Cantonese, "Why should we tolerate poor service standard in these days and age?" It became a catch phrase in Hong Kong. Most Hong Kongers bought the serious message behind it. Whether it has anything to do with the campaign, most visitors to Hong Kong now agree that the level of service in Hong Kong has improved and is a far cry from 10 years ago. Back then, shop assistants were known to grumble at shoppers who did not buy.

According to the 2007 World Ranking of Service Standards by the World

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Economic Forum, Hong Kong ranked 7th and was ahead of Singapore, who has improved to 15th. Last year, the Manpower Minister mentioned about equipping Singaporeans with the service DNA so that we can offer a total positive experience to our consumers. Can the Minister share with us how the Government intends to go that extra mile to improve our service culture? Is there a national effort involving the various agencies?

One area we need to do more is also to raise the image and professionalism of our service staff. A friend of mine who used to work in one of the top hotels in Singapore related this incident to me where one of his local service staff was not willing to serve a guest at a particular table in the hotel restaurant because the guest at that table happened to be her friend. She felt embarrassed having to wait on someone she knew. We need to raise the status and the type of work of our service staff. The companies, service staff and customers all have a fair share of mindset change to make. Companies like Disney do this very well. They call their frontline staff cast members, rather than cashiers or waiters. They institute a lot of pride in their staff and of course they are also well remunerated.

Sir, I believe the Government can play a catalytic role in the mindset change and further improve our service culture.

The Minister for Manpower (Dr Ng Eng Hen): Sir, first, let me thank Members for their comments, many of which strike at the heart of our labour market policy, which includes allowing foreign workers to work here. Many good suggestions and many comments. I take it that at the heart of all these questions is the central theme. It is everything we do, in terms of our labour market policy, helping Singaporeans, and that is the gist of what we should address and ask ourselves, because this is a good time to review

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them. And I would quickly say that the heart of our labour market policy, which includes allowing companies to use foreign workers, is to benefit Singapore and Singaporeans. If it were not so, we will not do it.

We are replying from a position of a good year. Last year, as Members observed, was indeed a very good one. Many of you will remember that at the last Committee of Supply, I told Members that MOM had projected 450,000 new jobs for the next five years. It was a somewhat realistic projection, but in over just one year, the economy added 237,000 jobs, more than half in one year what we anticipated for five years. It is a phenomenal growth rate of 9.5%, more typical of a developing economy than a developed one. But beyond the numbers, beyond this phenomenal growth rate for the labour market for our workforce, most importantly, Singaporeans have benefited from this buoyant labour market.

Members were aware and they themselves cited the figures of 92,000 jobs created last year went to locals. Usually, it is only 30,000 jobs because our supply is limited. Indeed, more locals are now employed than ever before in absolute numbers and as a proportion of working age population. So last year, 1.6 million locals aged 25 to 64 were working and this is an all time high of 77%, which puts us almost right there in the top league of nations. We are now essentially at full employment. Our overall and resident unemployment rates are 1.6% and 2.3% respectively.

Wages have also gone up. So it is not just numbers. Last year, the median monthly income for locals in full-time employment rose by 7.7% to $2,330, or about 5.5%, after adjusting for inflation. Lower income workers have also benefited - the bottom 20%. They saw

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their average real income rise by 2%. Singapore citizens in this group would have received more with Workfare Bonus, which is up to 13% of their incomes as well as other one-off Government surplus sharing schemes. So the income that they receive if they are working would have been more than just the wages.

My Ministry recently released an occasional paper which looked at the employment of Singapore citizens and PRs. In 2006, PRs constituted about 14% of all locals employed. So it is 14% PRs, 86% citizens. And citizens too are indeed benefiting from the economic growth and are getting good jobs - more are employed compared to three years ago when almost two-thirds of this increase in employment are in professional, managerial, executive and technical jobs.

Mdm Halimah Yacob and Mr Teo Ser Luck asked, "will this continue?" It is a very good question. There are uncertainties but, at present, we continue to maintain a GDP forecast of 4% to 6% for this year. We should have continued employment growth for the year ahead. But I think it will likely be lower than the record gains chalked up last year, which was a phenomenal year. It is hard to believe that our economy can generate almost a 10% growth in the workforce, which is unheard of. The bulk of the new jobs will be in the services sector, especially the tourism-related industries which are driven by strong tourist traffic, and we have a number of big scale events later during the year. I think there will be sufficient jobs for locals, including new entrants into the labour market.

5.30 pm

Many Members of Parliament have recognised that we have done well last year. We trotted out the figures. But as equal as it is to understand how we did,

I think we should also ask ourselves why is it we succeeded. If we miss those points,

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we are likely to make a wrong turn, change the policies that are working for us and find ourselves actually arguing against what we want. If we look at other countries, eg, France, Germany, some of the Scandinavian countries and even the countries around us, they have employed different policies but they have not delivered on their promises or wishes. What explains our ability to create jobs? Is this something to be taken for granted? Do other developed economies perform similarly? Members of this House will agree with me these are essential questions because, if we answer them, then we have the secret of our success. In fact, Singapore is unique.

I have distributed a chart which is across sequence but let me show you a dynamic chart. Before I play it, if Members could look at the screens, this basically is a dynamic chart from 2001 to 2006. Singapore would be one bubble but you have other countries there which include Malaysia, China, UK, US, Hong Kong and Japan. I want Members to see the effects, over time, of how Singapore did. We will play the chart now.

If Members will note, in 2001 and 2002, there was a recession. GDP growth went up but, after 2003, Singapore jumped and leapt ahead. High GDP growth, high employment growth, far exceeding other countries, not experienced by any country with a similar GDP. We will play that once again because it was hard to catch, but the vertical axis is the GDP growth, the horizontal axis is the employment growth. So, if we could play that again, it would be useful. 2001/02, recession. But after the policies and economic growth started, look how Singapore jumped ahead and moved far to the right as an outlier unparalleled by any other country.

I think we should not take this for granted. We are not trying to say that we are good. What we are trying to say is,

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what have we done right? No other advanced economy has managed what we witnessed in our economy.

Why have our labour market policy succeeded despite being a small nation with limited manpower? Put simply, we have created good-paying jobs for Singaporeans through growth because we allowed businesses access to foreign workers to meet their manpower needs. This was the exact point raised in a recent article in The Economist which argued that migrants supplemented shrinking local workforces, as ours is. Similarly, the Chairman of the US Council of Economic Advisers, Prof Edward Lazear, concluded in a review that immigrants not only help fuel economic growth in the US but also had a positive effect on the income of local workers. If we had relied on our limited local manpower supply, growth would be slower and fewer jobs would be created. This is the experience in other countries. Look around us - France, Germany, even Indonesia. In other countries, they tend to close their labour markets. Indeed, Singapore was referred to in The Economist as “a developed country that grows at the rate of a developing country”. This is a big plus for us. It explains to us why we have been able to deliver jobs to Singaporeans.

But other countries are also wising up. They, too, realise that there is a secret in this formula. Australia and the UK recently liberalised their policies to attract foreign talent. Countries that have controlled tightly the admission of lower-skilled foreign workers, such as Canada, and even traditionally closed societies like Korea, have begun to relax their criteria to allow in foreign workers to support businesses’ growth. Is there an appropriate balance, as suggested by Dr Ahmad Magad, between keeping locals employed and admitting the right number of foreign workers or, as Mdm Halimah Yacob asked, in terms of the S-Pass relaxation? I think there is. Yes, indeed,

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this is not an unfettered free-for-all. We want to calibrate it using quotas, levies and various qualifications and, as Mdm Halimah Yacob mentioned, the S-Pass.

But I want to point out that augmenting our local workforce with foreign manpower has actually increased job opportunities for Singaporeans and locals, even for those of a higher grade which Mdm Halimah Yacob asked for, ie, professional managers, executives and technicians (PMETs). Our diploma-holders and graduates have continued to benefit from the strong labour market. I will give Members a few figures. The unemployment rate amongst polytechnic diploma-holders fell from 5.6% in 2004, before the introduction of the S-Pass, to 3.4% in June 2007, after the introduction of the S-Pass. Last year, we saw an almost 50% increase in the number of job vacancies requiring at least a diploma qualification. When we asked the polytechnics, they told us they are doing well. 90% of new polytechnic graduates entering the labour market had a job within six months of graduation. Their average starting salary has also gone up by 12% over that in 2004, and last year it was at $1,810.

So, contrary to the fear that allowing foreign manpower in Singapore might push locals out, the reverse has happened. We have created more jobs for Singaporeans, good-paying jobs, wages have gone up. Why is this so? A very simple reason is that in this borderless world, businesses will move to places where there are capital, ideas and labour. If we restrict their access to capital, ideas and labour, they will just move out, as other countries have found out. So, we do not protect our local workers here by keeping others out. We actually do them a disservice. This has happened in France, Germany and almost every country that adopts a closed-door policy, whether it is

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to capital, ideas or labour. They are, in this new world, fungible to some degree.

But by no means does this mean that we can stop and rest on our laurels. In 2007, we were ranked as the most competitive labour market in the World Competitiveness Yearbook, and we will have to work extra hard to keep that pole position. As mentioned by Dr Teo and Dr Lim Wee Kiak, the productivity and value-add of our workers will be increasingly important, going forward. I cannot promise Dr Lim Wee Kiak when his two foreign workers will stop switching signs. At least, they are switching them correctly at this point of time. We will work with them and try to improve their productivity. Dr Lim is right. In 2007, our labour productivity actually fell by 0.9%, compared to the gains that we had in 2006 and 2005, which were about 1.5% to 3% respectively where productivity went up. So, our National Wages Council will have to bear this in mind during their deliberations this year. Why did they go down? Because employment growth went up and wages, including local wages, went up. So, bear that in mind.

How can we boost our productivity levels further? Mrs Josephine Teo suggested linking foreign worker access to industry upgrading and re-development efforts. Dr Ahmad Magad suggested that let us make employers sweat a bit. The basic theory of both of them is to make them sweat a bit so that they will increase their productivity or try harder to get local workers. Other countries have tried what Dr Ahmad Magad suggested. Do you know what they do? They published three times in a well-respected paper and that is the equivalent of looking for local workers, then they employ others. We make it stringent. We set a quota, you cannot bust this quota, and we set a levy. It is simple, it works and creates jobs for Singaporeans. But the main point is this. We have to continue to see how we can stay relevant and

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competitive and even, despite our relative ease of access to labour, we need to focus on skills and productivity to stay ahead. I do not think we can do it by restricting and making the labour market more rigid. It has not worked. It is counter-productive. Doing so would tie and restrict the growth of companies, because companies need to be nimble and get their manpower supply. Rather, from time to time, we have to maintain and refine our foreign worker policy so that companies can capitalise quickly on opportunities and grow and create jobs.

But this issue of productivity is a central one. There are three things that we need to do:

First, re-create jobs, as NTUC is doing and spearheading, and we have seen the successes they had in the security and landscaping sectors. Last year, 15,000 jobs were re-created. They will press on, we will assist them, the WDA and the other agencies.

Second, get companies to upgrade. This year's Budget provides new incentives to encourage companies to invest in technology and innovation to enhance productivity.

Third, develop a first-class Continuing Education and Training (CET) system to help our workforce stay ahead. I agree with Members that this is the key challenge, if we want to keep our competitive edge.

Members rightly pointed out, the PM had announced the CET Masterplan during the opening of the Employability and Employment Institute (e2i). This marks a significant milestone in the development of CET in Singapore and signals the training of adult workers as one of Government’s top priorities.

But as Dr Ahmad Magad and Mr Seng Han Thong mentioned, we need to be careful and clever in crafting our CET. We

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cannot treat it like our school system. They must be different. They are different in two ways.

First, it needs to be more industry-driven because workers will go for training if the skills are relevant, if they value the new skills they get, if they can get a new job and higher pay.

Second, CET has to be adult-friendly. We should improve access through affordability and reduce unnecessary academic pre-requisites. Adults learn differently. I am not sure whether Members have noticed it, but the way we read the newspapers has changed through the years. I am sure we are reading more of the headlines and less of the fine print, and I think that is a one-way directional trend. So, courses have to be shorter, more practice-oriented. Attention spans are shorter, so it has to be less academic.

We do not have to re-invent the wheel. There are well-established adult training systems in many parts of the developed world – UK, Canada, Australia, Germany and Scandinavia. We are promiscuous when it comes to good ideas. We will borrow where it suits us.

We have learnt from them and implemented some ideas. Over the last few years, we have made good progress. Mr Seng Han Thong asked about the Workforce Skills Qualification (WSQ) system, how it is doing. Not bad. It used to be that advertisements only said three or five GCE O-levels. Now, there is a new line - "WSQ and ESS accepted too". And I think that is currency. That is worth it, because it shows people that if I get it, in lieu of my academic qualifications, I can show them this. I think that is useful. 145,000 workers have attained WSQ certification over the three years.

We also have a cadre of competent training providers, something that Dr Ahmad Magad talked about. If we do not

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have good training providers, we would not have a good system. At the higher tier are 19 CET Centres, with a capacity to train about 22,000 workers a year.

With these systems in place, it is now an appropriate time to ramp up and move up to the next phase in developing our adult training system with our CET Masterplan.

The Masterplan aims to prepare Singaporean workers to remain competitive in the future. We should not be stuck in today’s mindsets based on today’s scenarios and present concerns. That would be the least productive thing that we can do. Instead, we must set preconditions now to succeed for the future. And we should do it now, while we are ahead.

What will the future be? The future will be very different. Let me give two examples.

(1) Our workforce. In 2020, nearly 60% of our resident workforce will have at least a diploma qualification. Just think about that. Six out of 10 will have at least a diploma. Now, it is only about 36%. It was 22% 10 years ago. And 40-odd percent or even half of new entrants into the workforce are likely to have degrees. Is our CET structure today compatible with our workforce of tomorrow? I think not.

The shape and structure of our economy will change in tandem. It is harder to project what our economy will be but, generally, industries will have to move up the value-add and innovation chain, and will certainly require workers with higher skills.

We are not alone in recognising that this future is coming upon us. The UK recently launched a major review of its

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future education system. Last year, they did it to improve its skills profile. And it is setting up new National Skills Academies, which introduce new diplomas and apprenticeships, and developing new qualification frameworks.

As a small country, we cannot afford to lag behind and play catch-up. We need to stay ahead, and the way to do that is by continually investing in our people, so that each generation of Singaporeans will be better skilled and better able to seize the opportunities that lie ahead.

5.45 pm

To successfully implement the CET Masterplan, we are matching our resolve with more resources with a top-up of $800 million in the Lifelong Learning Endowment Fund (LLEF). This fund is now $3 billion. We will eventually top it up to $5 billion.

I thank many Members who have voiced their support for CET - Dr Ahmad Magad, Mr Heng Chee How and Mr Zainudin Nordin during the Budget debate, Mr Seng Han Thong, Mdm Ho Geok Choo and Mr Yeo Guat Kwang. They have also raised questions and challenges which I think are relevant. They asked: what are the key success factors? What will the CET Masterplan mean for employers and vulnerable groups - those who are unemployed, structurally vulnerable? And I think these are important points. Let me address them just briefly with three key strategic thrusts of our Masterplan.

First, we will better integrate our school systems, Pre-Employment Training (PET) and CET. Mr Seng Han Thong said that the WSQ and Employability Skills System (ESS) standards are now accepted by industry, but we will create more bridges. To illustrate, a worker who has a polytechnic diploma or a Nitec qualification from ITE can take up a WSQ course and vice versa, and someone with

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a WSQ Certificate should also be able to cross over to a diploma and even a degree in the future. MOM and MOE will be looking into establishing stronger linkages between the CET and formal education systems. It will give assurance to our workers that what they get is valuable.

Next, as Dr Ahmad Magad said, we need to establish more CET Centres to deliver quality training for adult learners. By 2010, we will increase the annual training capacity four-fold from the current about 20,000 today to 80,000 by adding 10 more CET Centres in growth sectors and expanding the existing Centres. So 10 more new CET Centres. Some of these Centres will involve our polytechnics and ITEs. The training expertise of the private sector and NTUC will also be harnessed. Let me cite for you some things that are coming onstream to give you a better flavour.

Take the pharmaceutical industry as an example in the manufacturing sector. Talks are underway between public sector agencies, NUS and key pharmaceutical companies, such as GlaxoSmithKline to set up a Singapore Academy of GxP (Pharma) Excellence (SAGE). This will facilitate the discovery of new technologies in manufacturing and developing pharmaceuticals, biologics and medical devices. So the centre will offer WSQ courses in pharmaceutical and biologics that can potentially articulate to Bachelor and Masters programmes in NUS.

The fast-growing aviation industry also has something to look forward to. The Air Transport Training College, Singapore Polytechnic and ITE will work together to train more technicians for maintenance, repair and overhaul. So, now a technician undergoing this Aerospace WSQ course can become operationally competent in four months, and progress to a Certifying Technician after accumulating one or two years of work experience. It is much

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truncated and there is a progression pathway.

In the services sector, we will see growth in areas like private banking, asset management and “high-trust” services such as accountancy, legal and other professional businesses. To support this growth, you have five CET Centres specialising in areas such as risk management, wealth management and insurance. This is a collaborative effort between WDA, the Monetary Authority of Singapore (MAS) and the Institute of Banking and Finance (IBF).

In tourism and hospitality, an area close to Member Liang Eng Hwa's heart, ITE is studying the use of existing campuses to consolidate all of its hospitality-related CET offerings. This translates to about 2,500 training places a year in hospitality-related professions, such as restaurant and F&B managers, concierges and guest relations officers. This will raise the service standards of the sector, as Mr Liang has asked for.

These developments will strengthen our adult training infrastructure. So the landscape will be a number of CET Centres and providers around the island, industry specific, so that a few workers can go to it and, within each industry, a few Centres will serve as standard bearers, with accredited WSQ trainers based on fixed standards.

In addition, we want to promote peaks of excellence by according the best CET Centres the status of National CET Institutes and will invest more in their resources. They will be the best-in-class institutes, with excellent programmes and qualities, training methods and delivery of outcomes. The first few National CET Institutes will be announced later this year.

We need to have quality and training effectiveness, as Dr Ahmad Magad has

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said. Some Members have said that we may not know how to do certain things, I agree with them. I think that we need to learn how to teach adults because we never had a long history of learning how to teach adults. So we will set up an Institute for Adult Learning to do research and development and help build up our capabilities in adult training methods.

Our vision is to allow all workers access to adult training - whether it is to prepare for new jobs, switch careers or acquire new skills. And they must find the training relevant and exciting within our dynamic CET landscape, including PMETs, which is a point raised by Mdm Ho Geok Choo.

We can build the systems and training institutes but to be more effective, we will need the human touch. As noted by others, sometimes, the workers lack the confidence to go for training or take up a new job. So we will work with our tripartite partners and our community partners – employers, unions, the CDCs and self-help groups.

Over time, MOM and WDA will work with the CDCs on elevating their job centres into career centres so that, beyond the capability to place unemployed into jobs, they can also help employed workers with advice on acquiring better skills and finding better jobs and better pay. I think this will strengthen the CDCs’ efforts in improving the lives of their residents.

Let me also say to Members that I fully understand the challenge in building the CET system. I do not underestimate the challenge. It will take time and effort from all of us - Government, unions, employers and workers themselves. But the fact that many Singaporeans will benefit in life-changing ways should motivate us for the longer term, and this

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will take time. I want to illustrate quickly through real life stories because, finally, this is what is all about - helping Singaporeans. And these stories should keep our spirits and energy high.

First example is Mr Poh Kian Hock - he is 43 years old, he was a warehouse supervisor in an electronics manufacturing company, he got retrenched last year. He sought help from NTUC, and was referred to take up training at the NTUC Learning Hub. He earned a WSQ Certificate in Generic Manufacturing Skills. This month, he will start work again, as a store supervisor in A&G International Holdings, a petroleum company, drawing a salary double of that in his previous job.

Then there is Mr Andry Lie, who is an entrepreneur but he decided he wanted to be involved with MICE, not real running mice, but the acronym for Meetings, Incentives, Conventions and Exhibitions. So he took a WSQ Diploma Programme in the University of Nevada Las Vegas. He graduated from the programme recently and is working as an intern with Meeting Professionals International (MPI).

Mr Effandi bin Mohamed, 27, holds a Diploma in IT. He used to be a videographer. I did not know that there was such a post called videographer. I thought all of us are amateur videographers, and I suppose he took videos. But he resigned and enrolled in a WSQ Specialist Programme in 3D Animation and Visual Effects. He graduated last year and was selected by a UK-based firm, Double Negative - I think it must become positive if it were double negative - to further his skills in a one-year attachment in London. Double Negative is the firm responsible for the visual effects in the Harry Potter series of movies. So I hope we have a chance to see Effandi’s work soon.

Finally, not all courses need to be so long. Why am I showing you a girl

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climbing a tree? This is because Ms Thereis Choo is an NParks scholar. She has actually got a first class in Botany. Part of her job was to inspect trees. So to do her job better, she took a three-day course in professional tree climbing. I never knew there was such a course, and you could charge for it. She took a three-day professional course at the Centre for Urban Greenery and Ecology. They use ropes, harness and pulley system. She even won the tree climbing competition at last year’s Green Thumb, an annual event organised by NParks, and is now a champion tree climber!

These stories carry a few important messages:

First , hope - that workers can upgrade, secure better jobs and get better pay.

Second, assurance - that we cannot promise Singaporeans that there will always be blue skies, that the economy will be like last year and that there will be no disruption. In fact, even for mid-career executives, there may be disruption but a well established CET system will give assurance that they can make career switches as Andry Lie did.

Third, offers progress - that every worker can sharpen his skills, maintain relevant and do his work better, whether he is like Mr Effandi or Ms Thereis Choo who learned professional tree climbing to do her work more effectively.

Ultimately, we want to build a CET system that creates opportunities, offering many pathways for workers to play to their strengths and fulfil their potential and aspirations. It will empower workers to take charge of their own careers, and make the best out of the opportunities Singapore offers. There will be thousands of workers that will follow the examples I cited today - they will take charge of their own lives because our CET system is

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accessible, affordable and adds value to their careers.

This is our vision, and with the support of tripartite and community partners, we can build a first-class CET system which will be a key economic and social institution that keeps us ahead and keeps our economy thriving and creating jobs.

The Chairman: Mdm Ho Geok Choo is not present. Ms Sylvia Lim.

CPF LIFE

Ms Sylvia Lim: Sir, CPF LIFE has sought to address some of the objections to the original compulsory annuity proposal. Its stated aim is to help Singaporeans' CPF savings last a lifetime. While we await further elaborations on the details, some of its features raised concerns.

The first concern is its lack of universal coverage. The catchment group has narrowed from the original plan to include most CPF members below 50, to only those with at least $40,000 in their Minimum Sum balances. 25% of active CPF members will not be covered due to insufficient balances. As mentioned earlier by other Members, including Prof. Kalyani Mehta, the ironic outcome is that those who are more likely to end up as the aged poor are not covered, which includes the lower income, those with unstable employment and those without families to depend on. What is the Government's plan for their old age security?

Second, according to the Committee's report, one of CPF LIFE's aims is "to provide a steady income for life". The question is: how steady is it, considering interest rate fluctuations? Last year, the Government decided to unfix interest rates on the Special Medisave and Retirement Account (or SMRA) from 4% to fluctuate with a long-term bond yield

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rate. Now, the base rate on all CPF monies is 2.5%, with an additional 1% interest on the first $60,000. If the interest rates on SMRA should fall to this level, the projections of monthly payments shown by the Committee in the Annexes to their report will not apply as they based their assumptions on interest rates being between 4.5% and 5.5%.

In the MOM website, it is stated that "for the entire duration of the policy, payout amounts can change, depending on the actual CPF interest rates and underlying mortality experience. For instance, a 0.5 percentage point difference in interest rate assumption will lead to a change in payouts by about 10%". For those with lower Minimum Sums, the monthly payments under CPF LIFE, at 4% interest with additional 1% on the first $60,000, are estimated to be between $300 and $500. Downward fluctuations in interest rates could bring their payouts to below subsistence level. This outcome is highly undesirable. How will these members be protected?

Third, there is still wide concern about inflation risk and the fact that CPF LIFE payments are not inflation-indexed. This could seriously erode purchasing power. The Committee discussed this but decided against it. With most people probably opting for the default scheme of Refund 80, the premium would be deducted at age 55 and only payable 25 years later. We will be locking away significant sums for 25 years of investment. Is it not possible to use the investment returns to provide some protection against inflation?

Mr Siew Kum Hong (Nominated Member): Sir, MOM has accepted the recommendations of the National Longevity Insurance Committee which has addressed many of the criticisms levied against the original Longevity Insurance Scheme.

I would therefore ask the

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Minister to clarify why the Ministry had proposed the Longevity Insurance Scheme in its original form without the public consultation undertaken by the committee.

6.00 pm

In any case, it remains unclear what would be done for those who do not qualify for CPF LIFE. This includes the self-employed and casual workers who do not contribute to CPF and female homemakers. Sir, the CPF has assumed a central role in how we deliver help to less fortunate Singaporeans and there have been laudable efforts to get the self-employed and casual workers onto CPF. But those who are unable to contribute to CPF for whatever reason now face a double-whammy. Firstly, they do not get Workfare Income Supplement payments. Secondly, unless they top-up their CPF, and many, if not most, will be unable to do so, then they do not get the L-Bonus either. Indeed, giving the L-Bonus only to those with some CPF but not those with any almost seems perverse.

So what do we do about those who fall outside CPF LIFE? Many will be homemakers who look after their families instead of working. Incentives to encourage CPF top-ups for them are well and good but would not solve the problem.

When this House debated the CPF changes last September, I noted that those changes did not address the fundamental issue of Singaporeans without meaningful CPF balances in the first place. I do not think that the Government has articulated an adequate response to this question. CPF LIFE certainly does not address that at all.

Last year, I also noted that the compulsory nature of the Longevity Insurance Scheme represented and I quote: "an unprecedented inroad into

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members' ownership rights over their CPF funds". It is fundamentally different from the Medisave and Special Accounts, because the funds in those accounts remain the member's, and the member is not compelled to spend them on anything.

This is a fundamental sea change in the nature of CPF members' rights over their balances that merits a thorough debate on the nature of CPF membership. Unfortunately, we have not had one. The committee's response to feedback on the scheme being compulsory was a bald statement that this was necessary, "To avoid deficiencies created through adverse selection and opt-outs". That is true. But it represents an implicit value judgment placing the interest of the community over those of the individual. This interference with members' property rights has not been justified.

I appreciate both the pros and cons of making CPF LIFE mandatory. It is probably impossible to satisfy everyone but, perhaps, if the Government introduces measures targeting those who do not qualify for CPF LIFE to clearly show that even as Singaporeans bear the primary responsibility of taking care of themselves, the Government recognises the needs of those who fall short, then the compulsory nature of CPF LIFE might become more palatable to Singaporeans.

CPF Employer Contribution Rate for 50-55 Years Age Group

Assoc. Prof. Kalyani K Mehta (Nominated Member): Sir, today I want to focus on the categorisation of employees' age in the CPF framework and the implications of the employers' contribution rate pegged to it.

According to the CPF Annual Report 2006, Annex A, the employer's and employee's contributions rate were the same for working adults up to age 55 years. For example, in 1999, the

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employer's contribution rate was 10% and employee's contribution rate was 20% for the categories of 35 years all the way to 55 years. Similarly, in 2004, the employer's contribution rate was 13%, employee's contribution rate was 20% for all the age groups mentioned.

A critical change took place in January 2005 in the age categorisation scheme. The below 35 years age group and the above 35 to 45 age group were retained. However, after that, five-year intervals were introduced, namely, above 45 to 50 years, above 50 to 55 and above 55 to 60 years.

For the first time in 2005, the employer's contribution rate for the age group 50 to 55 years was reduced by two percentage points. In 2006, the difference was four percentage points, as compared to the 45 to 50 years age category.

In 2007, the four percentage point difference was retained. It was rationalised that the reduction in employer's contribution rate for the 50 to 55 years age group was needed in order to help them to remain in the workforce and be employable. I can understand that from 2001 to 2004, the economy was not doing well and the Government may have taken this policy decision to help older workers.

In the CPF Annual Report 2005, the number of active workers in the age group 50 to 55 was 322,000, in 2006 it was 337,000. As it is evident, there was a small improvement but nothing very significant. It is my contention that reduction of the employer's contribution rate after age 55 years is acceptable, as it is also the CPF withdrawal age.

But the reduction of the employer's contribution rate for the age group 50 to 55 years is ageist discrimination, as it gives the signal that this age group is not as productive as the 45 to 50 years age

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group. More importantly, it goes against Article 12 of the Singapore Constitution as it discriminates against Singapore citizens on the basis of age.

For example, a person who is 51 years old is usually doing the same job as somebody who is 48 years old but is paid less overall. From the lifespan perspective, Members of the House would agree that the period 50 to 55 years is a time when the middle age economic squeeze is felt most.

These days, couples tend to tie the knot later, perhaps around 30 years. And their parents at the age of 50 would still be having economic responsibilities for his growing children who could be in junior college, National Service, polytechnic or university. It is also at this time period that the grandparents tend to fall ill and the sandwich generation is facing economic pressure from younger and older family members. Inflation, of course, is a compounding factor.

Hence, my view is that this policy is also anti-family and discourages fertility as it impresses on the next generation the struggles of the parents in making ends meet. The total fertility rate is only 1.26 today but we need a fertility rate of 2.15 for a stable population. In NUS, when I teach the subject of social gerontology, I will discuss policies in class. This is raised by my fourth year students. On the one hand, national policies encourage older workers to continue working for as long as possible but, on the other hand, the CPF contribution rates from employers devalue the older workers through reduction of the employer's CPF rate. Younger generations can identify the negative signals sent to society and to employers by this policy.

To uproot ageism in society, it is incumbent on the Government to lead by

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example through our consistent policies. In view of recent policy changes with the appointment of Mr Lim Boon Heng as Minister-in-charge of ageing issues - he is present here - the establishment of the Council for Third Age or C3A, the Silver Industry Committee and other prospective changes such as CPF LIFE, I think the Ministry of Manpower should review the need to continue this formula. The inconsistency in policy rhetoric and actual policy decisions is clear to educated baby boomers of today. The reinstatement of employer's contribution rate would impact on the CPF nestegg of individuals of this age band and an immediate positive outcome would be that more Singaporeans would be able to qualify for CPF LIFE scheme in 2013.

In conclusion, I want to ask the Minister for Manpower to give me valid reasons, and give the House valid reasons, for continuing with this current policy. Is there any empirical evidence that the reduction of employer's contribution rate has actually led to more employability of older workers. On the other hand ---

The Chairman: Order. Prof. Mehta, can you wind-up. One more sentence.

Assoc. Prof. Kalyani K Mehta: If the Ministry is planning to revise the policy, when will that take place? Let me emphasise that this suggestion will not cost the Government any extra expenditure.

Active CPF Members Turning 55

Mr Seng Han Thong: The percentage of workers turning 55 and unable to join the CPF LIFE has been estimated to be around 70% to 80%. We need to bring in as many as possible the remaining 20% to 30%. Many of them are either self-employed or casual or low wage workers.

To achieve this, company-based self-employed and association-based self-

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employed like taxi drivers, hawker assistants, newspaper vendors, insurance agents and housing agents need to come into the CPF system. The challenge here is how to help them to have a better job and better pay, and instil in them the habit of saving. Besides, they need to top-up from time to time, either on their own or by their family members, so as to have sufficient savings for their Medisave account and attain the Minimum Sum.

It is an uphill task. However, the labour movement, together with the CPF Board and the relevant company associations, should work closely together to make it happen. And on top of this, we should also create greater awareness among the employed and self-employed on the CPF LIFE, so that our workers understand the concept of income for life.

Sir, the CPF LIFE scheme is a good scheme. May I declare my interest? I am a Member of the National Longevity Insurance Committee. Unlike what Mr Siew said, we consulted widely - the grassroots leaders, union leaders, experts and industry players. As a result of the consultation, we offered 12 options to cater for different needs of Singaporeans. However, it looks like the more options we offer, the more confusion it has caused among Singaporeans. As many Singaporeans will end up in the default Refund 80 plan, may I suggest to the Minister that we name it the Standard Package and drop the words Refund 80. For Refund 80, many thought that if they do not make any decision, Refund 80 means that they will get the payout only from 80. That is wrong. In fact, whatever package they choose, it will start from 65.

So the challenge for the CPF Board is to explain to the public in a very easy-to-understand and simple way without mentioning any of the 12 options. Another question is this. For Members

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turning 55, some have asked, "Can the CPF Board allow those who do not want the additional 1% interest on their first $20,000 in the Ordinary Account, to invest on their own in the hope to get returns?"

Mr Siew Kum Hong: Sir, just a point of clarification. I think the Member mentioned that I said that the Committee did not consult widely. I said that the Ministry did not consult widely, not the Committee.

Using CPF For Self Part-time Education

Er Lee Bee Wah: Sir, maintaining economic growth for the longer term is going to be a challenging task, more so, when we depend on our working adults to continue working, making learning their lifelong journey. Rising inflation and rising educational cost will invariably mean having to prioritise between basic needs and education.

Take the case of a young married couple, the cost of raising a family will invariably make lifelong education a luxury they may not be able to afford. While thousands of students are attending night classes, there are many more who are missing out because of the reasons I have just stated. Even among those taking part-time courses, many are unable to pursue their studies beyond the diploma stage because a degree will cost them quite a substantial sum.

Money in CPF accounts, if allowed to be used for recognised part-time degree courses will be helpful. If share investment, which has inherent risks, is allowed, then surely there is greater merit for CPF money to be used for continuing education. We constantly hear the Government extolling the importance of lifelong learning, yet the CPF policy is denying the account holders the opportunity to do so. It has been argued that CPF is for one's retirement and

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healthcare. Then, my point is that it would be even more appropriate to invest in education which will further strengthen one's ability to earn more and this will translate into even more savings for retirement through higher salary and by remaining employable for many more years.

The Chairman: Order. The Government Whip has informed me that he wishes to move a motion to take the proceedings on the Estimates for FY08/09 beyond 7:00 pm.

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