HEAD S - MINISTRY OF MANPOWER

Head S - Ministry of Manpower

The Chairman: Head S - Ministry of Manpower. Mr Seng Han Thong. Eight minutes.

Manpower Challenges

Mr Seng Han Thong (Yio Chu Kang): Sir, I beg to move,

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

Sir, MOM's vision is to develop a great workforce and a great workplace in Singapore. In my view, MOM needs to focus on the manpower challenges in the three following strategic areas:

(1) Getting more older Singaporeans employed;

(2) Encouraging more low-wage workers to be on CPF; and

(3) Attracting foreign talents to complement local talent.

Sir, in the last months, we have heard one piece of good news after another. We have seen a lower unemployment rate, more Singaporeans being employed, and more females joining the workforce. However, to have a great workforce and a great workplace, our tripartite partners need to do more. Let me elaborate.

Getting more older Singaporeans employed. Although more older Singaporeans have been employed, we need to raise the employment rate of those aged 55 to 64. This is important, as our ageing population will contribute as the most significant change in Singapore's demography over the next 15 to 20 years. Besides creating more job opportunities for this group, we need to make the workplace friendlier for them, too. The Tripartite Committee on Employability of Older Workers has examined the issues on a sectoral basis, and has been facilitating the implementation of its recommendations in these sectors. But it is employers who can do much to help older Singaporeans feel that they are still wanted and can continue to contribute to the workforce, although it may be in a different capacity.

Sir, let me cite Old Chang Kee as the best practice in this aspect, and I will speak on this in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Sir, I would like to cite Old Chang Kee as a good example of best practices. In a report published by Lianhe Wanbao a few days ago, Old Chang Kee has a total staff strength of 400 workers and 88% of them are above 45 years old. Out of this figure, 70% of them are above 55 years old. Any idea why this is so? Mr Han Keen Juan, Chairman of Old Chang Kee said that without the support from the public, Old Chang Kee would not have been successful today. Hence, like the Chinese saying "取诸社会，用诸社会" ( qu zhu she hui, yong zhu she hui) - meaning that what the organisation has gained from the society, will be reinvested in the society. Therefore, Old Chang Kee decides to employ older workers who have difficulty finding jobs. Mr Han said that the current system has been computerised and, hence, older workers no longer need to carry heavy items, and they are competent enough for the job. Mr Han added that if younger workers cannot cooperate with the older workers, they can resign from the company.

In this regard, Old Chang Kee has set a philosophy of employment "三要一不" ( san yao yi bu) - meaning that they must fulfill three basic criteria, namely: (1) They must be healthy; (2) They must be willing to go all out in their work; and (3) They must understand the importance of cleanliness and hygiene. But there is one exception and, that is, it is acceptable if they do not know English.

• Cols. 3243-3244.

( In English ): Sir, we are happy to note that a Ministerial Committee has been formed and it would look into this issue too. Could the Minister let us know the target set for the next three years and how are we going to incentivise more employers to employ more older Singaporeans?

Last year, the resident employment rate of workers aged 55 to 64 was 53.7%. This means, of the 354,000 resident population aged 55 to 64, 190,000 were unemployed. If the rate can be raised by 2% per year, we will be able to hit 60% in three years, that is, another 20,000 Singaporeans to be employed. Sir, NTUC also plans to engage 100 companies this year to cater to the needs of our older workers. We would like to share these best practices with other companies.

There is currently a tight labour situation in the services, healthcare and shipyard sectors. Therefore, it is even more important for employers to retain their older workers. In fact, Old Chang Kee is really so obvious that it is very pro-older Singaporeans that its name is called Old Chang Kee.

Let me now move on to encouraging more low-wage workers to be on CPF and Medisave. The Workfare Income Supplement Scheme is now a permanent fourth pillar for Singapore's social safety net. This is the best way to encourage low-wage workers to stay employed and be self-reliant. It is a challenge to keep the low-wage workers working and remaining on CPF. About 120,000 workers who received the Workfare Bonus last year were without CPF accounts. Now that Workfare has been made a permanent feature, I hope more workers, mainly the contract workers and the self-employed, will join the CPF scheme with the Medisave component. This will give them better protection in their medical needs. Many, indeed, do not have such a safety net.

Sir, I would like to share with the House another best practice of local business. It is a small food outfit along Rangoon Road. Every morning, at about 3.30 am, 10 to 12 employees turn up for work. They prepare the stock, slice the meat, wash the vegetables, and business opens from 8.00 am and it is brisk until closing time at about 2.00 pm. It has won recognition from many food critics. Politicians, celebrities, ordinary men and women love to go there. Even tourists and foreign dignitaries go there for the experience. One from Hong Kong was unable to go last year because he could only go at a certain hour and the shopowner, in protecting the welfare of the workers, did not want the employees to extend their work hours by a whole shift.

I have visited this shop also and met its owner. All his workers earn less than $1,500. But they are all on CPF, with the Medisave component. They also have their annual leave. In the days before the Lunar New Year till the fourth day of Lunar New Year, he closed shop for 18 days so that all his workers could rest properly, spend time with their families and enjoy the Lunar New Year. I spoke to the owner about Workfare and he said that he will make sure that all his workers benefit from it. He told me that they are all jit kay nan , ie, yi jia ren or family.

So, Sir, there are thousands of such small businesses in Singapore and there are, thus, tens of thousands of such workers. If all employers are as enlightened as this man, the welfare of tens of thousands of Singaporeans will also be improved. So, which is this shop that I am talking about and who is the owner? I believe all of you know. It is none other than Ng Ah Sio Bak Kut Teh and the owner is Mr Ng Ah Sio. His name is "Ah Sio", which means "very little". But his business is surely big, and he definitely has a very big heart for his workers.

Sir, let me next refer to a suggestion made by the Straits Times journalist Ms Chua Lee Hoong. She suggested that the CPF Board work with Singapore Pools to come up with some scheme that would encourage low-income workers to save in their CPF accounts, particularly into their Medisave component. I remember when I first joined the workforce in the 1970s and what the POSB did to encourage savings. For a saving of an average of $500 during a qualifying period of three months, the customer was given a lucky draw number without cost. There were two qualifying periods a year and, for each one, there were 20 prizes of $500 each, a big deal in those days. We all looked forward to the chances to win that extra $500 and saved very hard.

I am not a lucky man. I have never won a lucky draw although I saved very much during that period to get married. But as a result of this POSB savers' lucky draw scheme, I have formed the good habit of thrift, and ---

The Chairman: Mr Seng, please make your point.

Mr Seng Han Thong: --- from my savings, I have earned interest. May I ask the Minister whether we will implement such a scheme. I believe such an attraction is still relevant and I would like the Minister to see whether we will have such a scheme in place.

The Chairman: I tried to have a big heart, but I cannot give you more time. Mr Yeo Guat Kwang.

Mr Yeo Guat Kwang (Aljunied): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Chairman, Sir, it is unquestionable that structural unemployment will not go away overnight. It remains a key challenge for our workers. All levels of workers, including the blue collar and white collar workers, will be adversely affected. But, most importantly, as what MP Seng Han Thong earlier said, it is important to ensure that workers have a healthy body, and they must be equipped with the necessary skills. Therefore, the various training and development programmes will continue to benefit them. However, I am more concerned with the lowly-educated workers, especially those who did not complete secondary school, who are most likely to be affected. According to survey findings, these workers undergo training for less than one day per year. Therefore, I hope that the Ministry of Manpower will step up efforts to help and protect this vulnerable group of workers, especially the contract workers.

Most importantly, with the growing demands of an ageing population, we will have to improve our medical welfare system to meet their health needs. One commendable effort by the Government is the reformed MediSheld scheme, which has provided better medical coverage for our people. As Singapore's largest employer, the public service has taken the lead to ensure that all workers are at least covered under the MediShield scheme. It also encourages the workers to sign up for other policies, if they need better protection. In this regard, I would like to ask MOM if it has any plans to urge all employers to review their medical welfare schemes so as to ensure that older workers do not lose their jobs and are not discriminated because of their age or higher premiums.

We do understand the need to attract foreign workers and talents for stimulating and sustaining the growth of our economy. But, I would like to ask MOM what are its plans to address two basic areas of concern regarding foreign workers: firstly, their accommodation; and, secondly their medical insurance. The latter is of greater concern now since Government has announced the withdrawal of medical subsidies for foreign workers with effect from 1st October 2007. It is for this reason that we need to pay more attention to their accommodation and medical benefits. At the same time, we are facing a falling fertility rate, ie, we will face a shrinking labour force in 10 years' time. Therefore, I would like to know if MOM has a long-term plan to combat this problem in the next 10 years. And I hope that MOM can attract more Singaporeans to join the services sector, since it offers 75% of total job opportunities available in the market. I hope we do not have to resort to employing foreign workers for the services sector.

• Cols. 3245-3256.

Jobs for Singaporeans

5.45 pm

Mrs Josephine Teo: Sir, the Singapore workforce stood at 2.5 million as at the end of December 2006. 70% were locals, which include citizens and PRs and 30% were foreigners. Looking ahead, what are Singaporean workers concerned about?

First, they want to know who will be the key beneficiaries of the new jobs created. Data from the past is reassuring to some extent. The last three years have all been good for jobs and for locals. In each of those years, between 50,000 and 88,000 new jobs went to Singaporeans. However, as the job creation became stronger, local's share of new jobs created has dropped, from 70% in 2004 to 56% in 2005, and 51% in 2006. Will there come a time when more of the new jobs created are taken up by foreigners than by locals? For example, if out of 10,000 new jobs created, 6,000 to 7,000 were taken up by foreigners, and only 3,000 to 4,000 were taken up by Singaporeans, is that sort of a job creation still meaningful?

I think this is an important question because the new job creation is not without cost to Singapore. Jobs created by companies are often supported by generous tax incentives and so we must ask how Singaporeans benefit from them. This leads me to the second concern of the Singaporean worker.

A tight labour market allows wages to rise. Through such wage increases, workers' livelihoods are improved. Workers, of course, want wages to rise as much and for as long as possible. However, there are two issues. The first issue is that if the wages rise too fast, exceeding that of productivity growth, then we will choke companies' profitability which will in turn reduce investments and slow down the growth. This is how the economy will self-adjust. So if we allow wages to rise at runaway levels, the workers will enjoy momentary wage spikes but this will not be sustainable and we will shoot ourselves in the foot. The question is, therefore, how is the Government going to ensure that wages go up but at a sustainable pace?

Looking ahead, as the labour market tightens and given that new Singaporean entrants to the workforce stay at around 33,000 a year, it can be expected that part of the solution is to increase foreign manpower. The issue is if we can be more selective about which sectors to allow more foreigners in. This is because different sectors will experience different levels of growth and wage pressures. Some sectors are also more appealing to Singaporeans than others with better job potential for Singaporeans and we would like to encourage them to take them up. Can the Ministry shed some light on how the Government will manage the timing and selection of sectors for more foreigners to come in?

Finally, I just like to touch on the unemployment rate. Sir, our resident unemployment rate now stands at 3.6%. This means that about 67,500 Singapore residents say that they would like to work but are unable to find jobs. For many years, resident unemployment hovered around 2.2%, reaching its lowest of 2.2% in 1997. Since then, however, resident unemployment has never dipped below 3.5%. In fact, it reached a high of 5.2% in 2003. We used to say that the 2.2% unemployment is frictional unemployment, ie, it just captures people moving between jobs.

Sir, I would like to ask the Minister if these figures suggest that structural unemployment has worsened over time and, if that is the case, I would also like the Minister to help us understand what steps are being taken to prevent this from worsening.

Professionals, Managers, Executives and Technicians (PMETs)

Dr Lim Wee Kiak: Mr Chairman, Sir, like hon. Member, Mrs Josephine Teo, I was just wondering why, despite the tightening of the labour market, the resident unemployment rate held steady at 3.6% since June 2006. It is estimated that 69,600 residents were unemployed in December 2006. Based on MOM's labour market report for third quarter 2006, 9,157 workers were retrenched and out of these, 46% belonged to this category called PMETs (Professionals, Managers, Executives as well as Technicians).

It is heartening for Members in this House to learn from the Senior Parliamentary Secretary, MOM, Mr Hawazi Daipi, last month in his reply to one of the Questions that 83% of PMETs were re-employed nine months after retrenchment. During last night's block visit, I met one of them who was re-employed. He is a resident who is about 45 years old and he used to work as a manager in a small company, earning a near five-digit salary a month until he was retrenched. As he is in his mid-40s, he tried very hard to find a job. But, unfortunately, employment opportunities for him were quite limited, as he was explaining to me. He was unemployed for nearly a year. Finally, he gave up and became a taxi driver. So now, he is driving a taxi and he is taking back just slightly more than $1,000 a month.

On the ground, we suspect that many of the PMETs are just like the resident that I met last night - they were under-employed and their pay is usually a fraction of what they used to get. As MPs, we do see them at our MPS requesting for additional help in finding employment and short-term assistance.

Although there are numerous schemes targeting at helping PMETs available, I hope to see a more proactive approach by the Ministry to help the PMETs secure meaningful full employment. Many are simply under-employed.

The two integrated resorts are expected to generate up to 30,000 jobs for our economy. I would like to know what percentage of these jobs belongs to the PMET category. How is the Ministry helping our PMETs to secure those jobs?

I would also like to propose that the Ministry set up a direct agency to oversee and to ensure that the majority of these 30,000 jobs, especially the PMETs category, are to be given to Singaporeans and PRs.

Ms Denise Phua Lay Peng: Sir, many middle-aged, mid-level executives and managers have lost their jobs due to right-sizing, outsourcing, mergers and acquisitions, and so forth. They are often mentally and professionally unprepared, did not see the storm coming while they were busy buried in their daily work.

One resident of mine was a 50-year-old ex-ITE teacher whose skills became irrelevant. His way of getting another job is to write in a letter or two each week. He was very frustrated, saw me several times and I had to offer him career counselling at my MPS. Another resident, a middle-manager in his 40s with general marketing skills, ended up as a relief teacher although he has no passion for teaching. He told me his other alternative was, like what Dr Lim Wee Kiak was saying, to become a taxi driver.

Sir, the root causes of these older PMETs' predicament have to do with their skills, attitude and knowledge in career search and career management. Sir, I urge MOM to provide easy access to career management education for the older PMETs at typical job clearing houses at CDCs, community clubs, and so forth.

In the corporate sector, progressive firms offer solid career development frameworks and effective tools, so individuals can learn how to take joint responsibility and not depend only on their bosses for managing their careers, to adopt the right attitude and skill-sets in advance. This way, they can be empowered to work for as long as they wish to. I ask MOM to consider adopting this best practice.

Ms Jessica Tan Soon Neo (East Coast): Sir, PMETs form 47% of the resident workforce in Singapore in June 2006. This is a sizeable proportion of our workforce, reflecting on the ageing population. There is also a higher share of the resident workforce ageing and above 40 years of age, in fact, 52% versus 40% a decade ago.

The good news is that new jobs taken by resident workforce are higher value-add. More than eight out of 10 new jobs gained by residents in 1996 to 2006 belonged to PMETs, especially in the services sector. Although these are positive trends of PMETs with the growth of the economy, we must be cognisant that this group is also one of the more vulnerable groups with globalisation especially PMETs that are 40 years and above, as my hon. colleagues have also mentioned in their speeches.

As the recent Asian crisis has shown, PMETs were the hard hit ones with retrenchment and unemployment changes and many had to make career changes and transitions were not easy. Another trend is that of contract work. Increasingly, we are seeing term contract employment being more prevalent and 12% of resident employees were engaged on contract terms in 2006. Although these include lower, casual and lower-skilled jobs, local contract workers with at least one year tenure are actually the mostly highly skilled PMETs. With contract terms, there is also the concern of job security, especially amongst older workers.

As mentioned in this House recently, although MOM does track duration of unemployment for PMETs, there is, however, no tracking of whether PMETs are worse off or better off when they do find employment and how long they stay in the new roles or careers.

Sir, with PMETs forming a large and growing proportion of local employee population, should not MOM put in more resources to understand the trends of employment and changes this group faces? Can the Minister share with the House if there are plans to do so? And, with this, it will then make it possible to understand and then provide the right level of support for PMETs. Although PMETs are skilled and are more able to compete for opportunities that globalisation presents, paradoxically, they also face greater competition from low-cost labour markets. Career transitions are not always that straightforward for the knowledge worker as there may be some retraining required to take advantage of opportunities in relevant but different industry sectors.

If this is not managed, it will lead to frustration and anxieties of this group. In fact, I had one MPS case last night. I really saw the level of frustration this PMET was going through. And this could affect social cohesion and integration of foreign talent in Singapore as they may be seen as cannibalising the opportunities in this segment. Although this may or may not be the case, the perception is there, if the PMETs are worse off with career changes and if they are unemployed to make transitions into industry sectors where employment opportunities exist.

Sir, if I could make a suggestion, I would like to propose that there be an appropriate body or group, for example, the WDA, to focus on supporting PMETs and understanding market opportunities, and, where appropriate, help match relevant organisations to these job opportunities. There should be more coordinated support given to PMETs in areas like training, retraining and career and industry changes. More really needs to and can be done to support PMETs stay relevant and employed.

Structural Unemployment

Mr Low Thia Khiang (Hougang): Sir, although the job market was at its peak in 2006, with 173,300 new jobs created and unemployment rate down to 3.6%, there are still 69,000 jobless, based on a Straits Times' report.

Economic growth results in job creation, but if people are not equipped with the skill set to take up such jobs, they will still be affected. On the other hand, I am concerned that the current boom in the economy could be hiding the ongoing problem of structural unemployment. Buoyed by economic growth and high demand, companies in all sectors are expanding and hiring workers, including the lower skilled ones.

When these workers take on such jobs, they are likely to be less willing to subsequently try out new growth industries, especially when pay cuts and extensive training could be involved. If these workers do not get upgraded, they may lose their existing jobs during another economic downturn. I am aware that MOM has employed a number of initiatives, such as the Job Recreation Programme and the ADVANTAGE! scheme to combat structural unemployment.

With regard to the Job Recreation Programme, how many jobs were created under this programme last year? Once a job is created, are there measures in place to track the success of this scheme? For instance, how long do workers stay in the jobs created for them? What are MOM's future plans and targets for the scheme?

As for the ADVANTAGE! scheme, it was reported in the Straits Times that approximately, 300 firms are currently supported by WDA. These firms are committed to hiring about 2,000 older workers and re-employing about 3,500 workers, approaching or above the retirement age of 62. I would like to know whether this position is confined to low-pay jobs with longer working hours. A statistical profile of older workers by MOM released in February this year reported that 68% of older workers, 50 years and above, were employed in low-skilled jobs. Amongst full-timers, older workers tend to work longer hours, compared to those who were younger. After contributing the prime of their lives to building Singapore, are we going to leave them to the fate of the market simply because their skills are much less appreciated in our knowledge-based economy?

Sir, the challenge of structural unemployment is much more than just a simple mismatch problem. All employment is not created equally and offering the same level of income. The structural problem is particularly complicated on the basis of quality and adequacy of incomes of available employment opportunities. What is MOM's assessment of the situation of structural unemployment in Singapore? Does it foresee the phenomenon as a transitional process in changing economic circumstances due to the effect of globalisation, or is that going to be a permanent feature of the globalised economy? If the reason is the latter, then what is MOM's long-term strategy to mitigate the issues?

6.00 pm

Mr Chairman: Mr Seng Han Thong is not moving. Dr Lim Wee Kiak.

Foreign Workers

Dr Lim Wee Kiak: Sir, last weekend, as I drove through a two-way road that was closed on one lane because of some public works, the contractor deployed two foreign workers to guide traffic, one at each end. Each worker held a stop-and-go sign. The traffic was smooth. As I passed through the construction area, there were three foreign workers doing some digging. When I returned after a few hours to the same stretch of road, I saw the same workers holding the sign and the other three workers still working.

Sir, I am sure that most Members of this House had a similar experience when they drove their cars and passed through a road undergoing repairs. The deployment of two foreign workers just to direct traffic is such a waste of manpower. I am sure the contractor could have easily collaborated with one of our ITEs or polytechnics and develop an electronic system that could be used to guide traffic, thus saving on the wages of two foreign workers whose duty is to use the stop-and-go sign to guide traffic the whole day.

I presume that the cost of engaging two foreign workers is so much lower than the cost of developing such a system. There may be no incentive at all for the contractor to innovate as cheap foreign workers are easily available. I am very concerned that our industry may become too reliant and too dependent on cheap foreign workers, and it may hamper the industry's drive for innovation and to increase productivity.

Sir, a few months ago, I met a retired SAF officer at Temasek Club. He recounted to me that over the last 10 years when he was with the SAF, they used to have exercises in Australia. At his HQ, they employed a contractor to attend to the grounds. He said that 10 years ago, the contractor used to have five persons with him to carry out the work which took about two days. As it progressed, and in the last year before he retired, the same contractor came alone and he drove a bigger vehicle with a lot of new equipment, and he completed the work in just two hours.

I can see that there is a lot of improvement. Somehow, they are able to leverage on technology and equipment and increase productivity. Perhaps in that situation, if the contractor was given the same amount of cheap foreign labour, he would probably have used the same workers over and over again for the last 10 years, and would not have innovated.

Hence, I would like to ask the Minister what measures the Ministry has in place to wean the industry off the addiction to cheap foreign labour and to promote innovation and increase productivity.

Ms Cham Hui Fong (Nominated Member): Sir, this year's Budget emphasises on growing the pie with more spending on building capabilities and training of our people. The bigger economy will certainly create more and better jobs, and therefore we will need more workers.

While we acknowledge the fact that we need to embrace the top talents and skilled foreign workers in order to compete successfully for value creation jobs in Singapore, we have also become overly dependent on the unskilled foreign workers. This has resulted in low-value, low-paying jobs and resulting in waste at the bottom. Sir, we need to intensify our efforts to re-create some of these low-value jobs into better-paying ones in order to help reclaim these jobs for our people. There may also be job opportunities for our older people as well. Hence, may I ask the Minister to share with us some information on the job creation in the various sub-sectors for the local and foreign manpower over the last three years, and the manpower mix projection over the next three years? I hope we can intensify our efforts in job re-creation and the factors dominated by the foreign workers, other than construction, to create more job opportunities for our local workers.

Next, Intelligent Nation 2015 will create probably another 80,000 jobs in the next 10 years, and Manufacturing 2018 will create another 20,000 per year. May I also ask the Minister to share with us his plan to see that our local workers will have a fair share, if not the lion's share, of these job opportunities?

The Minister for Manpower (Dr Ng Eng Hen): Sir, let me thank Members for their comments and questions that will allow the Ministry to focus on certain issues. There have been a number of issues raised by various Members. I will address in this reply the manpower challenges and the job prospects. I will leave it to the Minister of State Gan Kim Yong to talk about older workers and the ADVANTAGE scheme which Mr Low Thia Khiang asked about. I will address the issue of CPF and lower-wage workers tomorrow.

Sir, as Members have commented, the job creation over last year has been quite dramatic. It is gratifying. Let me just spew out the figures. As Members pointed out, 173,300 jobs were added, of which about 88,000 went to locals. We have a total workforce, as Mrs Josephine Teo pointed out, of nearly 2.5 million - the largest ever. A record 76% of working-age Singaporeans were in employment. The working-age is 25 to 64 because, basically, people are starting work later. Average overall unemployment is down to 2.7%, with almost 24,000 fewer unemployed compared to 2003. Average monthly real earnings up by 2.2% to about $3,500 last year compared to the year before.

What do these numbers tell us? Simply, that Singapore and Singaporeans are among the winners in this age of globalisation. We have succeeded because we opened ourselves to world trade and trends. Instead of resisting change, we have reshaped our economic landscape quickly, and put ourselves in positions of advantage to better capture opportunities. In other words, our positive results were not serendipitous or by chance. It was active measures that put ourselves in a position to be able to capture opportunities when they came.

We have been rewarded for having a harmonious industrial climate and a flexible labour market, because we are able to respond quickly to the fast-changing demands of a dynamic economy. We have put Singapore on the map to attract global talent, a point made by Mr Gautam in the debate on the Budget speech. We have created jobs for Singaporeans. Our workers are productive and adaptable, earning good wages that are justified by their skills and productivity. We have chosen this path rather than stick to the self-defeating and unsustainable protectionist policies. Sir, we must continue with these right policies that have brought us growth and jobs.

Members have asked whether Singaporeans have benefited. Above all, it is Singaporeans who have benefited from these policies, as it should be, with more jobs with higher pay. The demand for manpower is now well above what we can supply locally, and I will give some figures. For example, last year, nine out of 10 of our fresh polytechnic graduates found jobs within six months after graduation. Some have jobs waiting for them even before they have graduated. Average monthly gross salaries of these fresh polytechnic graduates have risen by about 3.1%, compared to the preceding cohort. It is now $1,700, the average monthly gross salary of a fresh polytechnic graduate last year.

Hudson, the HR consultancy, has reported that employment expectations are rising, particularly in healthcare, life sciences, banking and professional services, and Infocomm. Mrs Teo and Ms Cham Hui Fong have asked for some sectors. I will give examples of the growth sectors. To better attract talent, companies are having to increase remuneration packages of new hires at the managerial level. From this particular consultancy - Hudson - 58% of companies said that they had to increase salaries by more than 10%. Kelly Services, another HR consultancy, reports current salaries of accountants at $4,000-$6,500. So, if you are under paying your accountants, please beware. Somebody else will poach them. A distribution manager in logistics could draw $4,500-$6,000. Sales managers can get a salary of $5,000-$7,000. A regional business development director in pharmaceuticals could earn $13,000-$15,000 a month.

Many other sectors also need more workers. 15,000 new jobs in the marine sector are expected in 2007, of which 3,000 are higher-skilled roles for engineers, technicians and foremen. Dr Lim Wee Kiak asked what proportion is for PMETs. Are these good jobs that are coming onstream? At least for the marine sector, they are higher-skilled roles for engineers, technicians and foremen, which are jobs well suited for Singaporeans.

The process technology sector - this is the sector that supports our petrochemical and pharmaceutical sectors - will require 10,000 additional supervisory jobs over the next three years. Likewise, between now and 2010, the infocomm industry - a point asked by Ms Cham - expects 10,000 new jobs in IT, telecommunications, networks and digital media. In the tourism industry, the two Integrated Resorts will each create about 30,000 jobs economy-wide when fully operational.

From software engineers to process engineers, retail supervisors to manufacturing supervisors, systems analysts to financial analysts, more job opportunities will be available. All in all, we can expect more than 450,000 jobs to be created over the next five years, if the economy grows by 4.5% to 6.5% each year as projected.

Members have asked the most salient question. How do we ensure that Singaporeans, above all, benefit from this growth? MOM will work with our tripartite partners to ensure that Singaporeans can make full use of these opportunities, and this was a point that Mr Seng Han Thong raised. I agree completely with him. How do we do this? We will do it in three ways. First, we will spend more on training. I agree with Mr Low that this is the time to ramp up training, not scale down when the economy does well. We will spend more on training to equip our workers to make the most of the future.

Secondly, we will strengthen initiatives to help specific groups of workers. Even as we improve, not all groups of workers are moving along in tandem. There are some groups that find difficulty. So we have a targeted approach. We will grow at the same time and focus on these aspects.

Thirdly, we must ensure that even as we do all these to help our workers keep up, we must not lose the opportunities that present themselves. Otherwise, businesses will go elsewhere. If we do not help businesses meet their manpower needs, we will lose the opportunities.

Let me elaborate on these three aspects. The Life-long Learning Endowment Fund will be topped up by $100 million this year to $2.2 billion. Together with the Skills Development Fund, WDA would have at its disposal more resources to help workers reskill or upskill, as Mr Low pointed out. In the medium term, the Government will triple annual expenditure of Life-long Learning to $500 million.

With more resources, WDA will be able to help more people like Mr Mohamed Yunos s/o Fakir Mohamed. Yunos used to work as a cleaner, but he was excited about the retail sector. Yunos is 38 years old. He joined the new Ikea store in Tampines as junior sales assistant. Before starting in this new job, he attended the Retail Workforce Skills Qualification (WSQ) training. It helped him understand customer needs and brushed up on his communication skills. Yunos has been in his new job for six months, and he is learning and growing.

It is examples like these that bring home the point that our programmes are working; they are reaching down to groups that need help. So we will step up our efforts to establish a national qualification system based on the WSQ framework and employability skills system (ESS). We will build more quality institutions to deliver high-quality training. Because it is only through high-quality institutions that will allow Singaporeans to have portable qualifications, which take into account their previous work experience. And when they pursue further training, they have the assurance that their skills obtained will be recognised by their next employer. We cannot guarantee that retrenchments would not occur - a point raised by Dr Lim Wee Kiak. Even as the economy grows, there were about 10,000 retrenchments. That is the nature of this globalised world. Product cycles are short. There is a quick turnaround. Obsolescence is quick. Workers need to be retrenched but you have to get them new jobs and train them.

We will progressively cover more sectors through our WSQ framework. Last year, 32,000 received WSQ and ESS Statements of Attainment. While the numbers are encouraging, we will do more.

Let me now touch on specific initiatives for groups of workers who face specific challenges, which Members have mentioned. Mr Low mentioned older workers. Mr Yeo Guat Kwang and Mrs Josephine Teo also talked about the structurally unemployed, including those whom we call contract workers.

Let me first say that the situation has improved. One of the lessons learnt is that a rising tide does indeed lift all boats, including the ones who are structurally unemployed, or at risk or vulnerable workers. In other words, somehow, the labour market absorbs these people who were deemed less employable. The long-term unemployed - which is a proxy, if you are unemployed for more than 25 weeks - is now 0.8% of the resident labour force, which is about 15,000 residents. From 2001 to 2004,

it rose to as high as 1.5%, so almost double that. I need to put that 0.8% into context. All societies, as the economy is developed and becomes higher value add, will have a layer which they find it hard to keep up. Our structural unemployment rate or long-term unemployment rate is actually substantially better compared to many developed countries. For example, in the US, it is 1%; in Germany, it is 6.7%; in France, it is 5.8%. So much of Europe has got much higher rates of about five to ten times what we have. That is no excuse for us to let up our efforts but I want to give Members a sense of the perspective that as we move up, there will be a group that will find it hard to catch up and we must spend more efforts. But let us not be discouraged by that number.

WDA and the self-help groups developed a new CareerLink Plus Programme in August last year - self-help groups like Mendaki, CDAC, SINDA and other groups - specifically for the long-term unemployed. I think that is the right way to do this - through community help groups which have a better reach to this group, and the programme offers counselling services to better prepare this group for the changing demands of the job market. Together, they helped about 540 cases and placed more than 200 individuals. Not a large number to crow about but it is a start, and I want them to ramp up this programme.

Another way we can help this group is through the Job Re-Creation Programme (JRP), a point raised by Mr Low Thia Khiang and Ms Cham Hui Fong. The JRP identifies jobs, upscales them, re-creates them to increase the pay and productivity. Members have asked for some numbers. Last year, it re-created about 12,000 jobs and placed over 7,000 workers. Of this, more importantly, 50% were mature workers and 54% were lower skilled. To tap on the good opportunities in the labour market for Singaporeans, we will expand the JRP. This is the right time to do it. It is going to increase from 23 to 27 sectors to include banking and finance, call centre, manufacturing as well as the electronics and spa industry, on top of the existing ones such as retail, tourism and F&B.

Members have touched on PMETs (Professionals, Managers, Executives and Technicians) in this Budget Debate - Dr Lim Wee Kiak, Ms Denise Phua, Ms Jessica Tan, Mr Zaqy Mohamad and Mrs Josephine Teo. Sir, let me turn my attention to this. They are quite right. We do need coordinated support. We need to make sure that our programmes are coherent, and they know where to go. But I want to sound a word of caution. It does get more difficult. I want to be realistic.

For the low-wage workers, we have instituted Workfare systemic measures. As we move up the spectrum, it becomes a bit more difficult because the PMET is his best value. He finally is the one that needs to be convinced because he is a professional, well-educated and well-qualified. Some of them, as Members have rightly pointed out, are over-qualified. As our economy restructures, the first thing that I would tell Members is that more, rather than fewer, PMET openings will be in the job market. I think that is a source of comfort, but let me give Members some numbers.

Last year, the PMET-type of jobs made up 37% of job openings and, indeed, we expect this trend to increase because we are moving up the value chain. Out of the 450,000 jobs which I have mentioned will come onstream, and we project in the next five years, over half, 50% to 60%, will be PMET job openings. Consistent with these statistics, many industry sectors have indicated that they will indeed need more PMETs in jobs such as software engineers, electronic engineers, budgeting and financial accounting managers as well as nurses, to name a few. Many of these jobs will need to be filled by people who transit from one sector to another because you cannot stop sectors from downsizing or upsizing. We do not have the ability. No government has the ability to try to control it in such a way that you really know what to do because you cannot be ahead of the curve, and you can only respond sometimes. WDA indeed does help them and we placed about 3,800 PMETs to available jobs, but I think we need to think of better strategies.

Dr Lim Wee Kiak asked: what will the IRs do for PMETs? Indeed, each IR is expected to hire over 1,000 PMETs in jobs such as customer service executives, management executives, retail and sales managers and restaurant services managers. While the job openings may be there, it may be in sectors different from what the people were used to. Recruitment for the IRs will be in phases and the bulk of the jobs are expected to be filled in 2009. WDA is already working with the two IRs to identify the skills and training programmes needed, in order to upskill locals, as well as for opportunities in the larger tourism sector. But I am also happy to tell Members that other institutions are involved.

WDA is tying up with At-sunrice and SHATEC and the University of Nevada, Las Vegas to train MICE executives. These are not "mice"; these are, as you know, meetings, incentive, conventions and exhibitions. But we have also local institutions that are coming onstream. Temasek Polytechnic is offering new diplomas in culinary and catering management, and leisure and resort management. Singapore Polytechnic has a new tourism and resort management diploma. The University of Nevada, Las Vegas has set up an overseas campus here, offering a Bachelor of Science degree in Hotel Administration as well as the Executive Masters' in Hospitality Administration.

Dr Lim Wee Kiak asked if many of the retrenched PMETs who found a job ended up with lower-paying jobs. In our system, the market determines the value of the job. It is difficult for Government or, indeed, any agency to say, well, since your previous job was this, you should be paid this in the next job. All of us know that it is unrealistic, nobody will quite listen to us and, if we try to do it, we would fail. Individuals, especially the PMETs themselves, will have to prove their own worth and increase their value. What is more critical is to help displaced PMETs upgrade, refresh their skills and find new sectors that they can expand their choices and make full use of the opportunities and, over time, as their value increases, they can look forward to higher salaries.

To help PMETs, Members have asked that we be proactive, and I am happy to announce that WDA will launch a new programme. It is called the Professionals Conversion Programme (PCP). PCP will cost the Government $20 million over the next two years and it will enable 1,000 PMETs to start new careers in growth sectors. It is modelled very much after our previous programmes where we will help convert professionals to nurses. This PCP will cover new and growing sectors such as finance, marine, aerospace and tourism, including F&B, infocomm technology and creative industries, because these are the expanding sectors. So we will help PMETs transit to these new sectors.

I mentioned earlier that the projected manpower demand over the next five years is over 450,000 jobs. The already tight labour market will get even tighter. Up to a point, as Mrs Josephine Teo mentioned, this is good because wages will rise. But if costs go up too fast, as she rightly pointed out, ahead of productivity or if businesses cannot meet their manpower needs, then we become less competitive and could lose opportunities for future growth.

Mrs Teo also rightly pointed out that every year, we only have about 33,000 locals. That is the size of our supply. And because of our ageing population and falling birth rates, it will actually decline. Post-2010, the growth rate will actually drop. I have circulated the charts to show that the employment rates of working age males are already as high as that in other developed countries. We are among the highest in the world for those number of working. Now, I need to explain "employment rate". This is a figure which is the ultimate in employment statistics. It just measures the number of physical bodies you have and how many in that pool is working. This is not like unemployment rate. Because to be unemployed, you must be looking for work, and if you are not looking for work, then you cannot be unemployed. But the employment rate does not care whether you are looking for work or not. It just asks a question: do you exist, first; and if you exist, how many of those who are existing are working? So it is the absolute measurement, if you like. It is nearly 90%. We are among the highest in the world, on par with Japan but ahead of many OECD countries. I have also circulated a chart on employment rates for women, just to complete the picture. It is much better for cohorts of younger women, but it could be improved for cohorts of older women.

We are literally running out of physical bodies to fill up new jobs that are coming onstream. 450,000 divided by five is about 90,000 new jobs, but we have only a supply of 33,000 and we have reached maximum. We will have to persuade existing workers to work longer. Fewer older women are working, so we may have to expand efforts and encourage them to come back to the workforce. But these efforts, as Members recognise, will take time. Depending on our local workforce alone will constrain our growth potential. Therefore, we will have to judiciously use foreign manpower to supplement our local workforce to meet demand. "We do not intend to shoot ourselves in the foot", a quote that Mrs Teo used. So to maintain our economic momentum, MOM will be making certain adjustments to help businesses meet their increasing needs for manpower.

In doing so, I also want to address concerns of Members of this House and the public that there must be a balance in allowing foreign workers here, so that Singaporeans will ultimately benefit as the economic pie grows. I will, therefore, not increase foreign worker quotas. The quotas will stay. The only exceptions to this are for the construction and process sectors which have a large demand for manpower. Mrs Teo asked us to be selective. This is one selective way. Except for the construction and process sectors, the quotas for all other industries will stay the same but within the existing cap, certain rules will be relaxed to help businesses source for and retain experienced foreign workers.

First, I will raise the 'S' Pass quota. To help meet the industry demand for skilled foreign workers, we will allow companies greater access to 'S' Pass holders. The 'S' Pass holders will be increased to 15% from the present 10%. But the additional 5% will come from the companies' existing work permit quota. So, the quota is not raised, and if you want more 'S' Passes, you take it from your work permit quota and you can bring more 'S' Passes in. In other words, they can recruit more 'S' Passes, but the total proportion of work permit and 'S' Pass holders remains the same. This will take effect from 1st June 2007.

Second, I will extend the maximum employment period for work permit holders. Currently, skilled and unskilled work permit holders can be employed for a maximum of 15 years and four years respectively. To help employers retain their work permit holders longer in a tight labour market, MOM will extend the maximum employment period for skilled and unskilled work permit holders to 18 and six years respectively, ie, a three and two years' extension basically. This will take effect from 1st April 2007.

Third, certain aspects relating to the construction sector. Dr Lim Wee Kiak's example, notwithstanding, this is the sector that is really under pressure to build. I think we need to be easier on them. They have problems with sand and granite and I do not want workers to be another thing to be on their mind. The Building and Construction Authority has projected that this sector's annual output will rise to between $14 billion to $17 billion for the next few years, up from the average of about $12 billion in the past three years, so almost a 14% rise. Naturally, this will increase the demand for construction manpower and BCA estimates that we will need another 40,000 to 50,000 foreign workers over the next two to three years. So to ease the manpower pressure, we will adopt the following measures from 1st April 2007:

(i) The sectoral dependency ratio will be increased from 1:4 to 1:5;

(ii) We have intended to increase their productivity by cutting their Man Year Entitlement (MYE) for each project by 5%. We have decided to hold back this reduction and just allow them to use the existing Man Year Entitlement formula. We do want our projects to be finished on time; and

(iii) Currently, the MYE is also waived for construction workers who have worked for any employer for at least six years. I will shorten this to four years. This will increase the pool to about 73,000 workers who will not require a Man Year Entitlement.

Next, on the process industry. This is a sector that deals with petrochemicals related to building the plants and other aspects. The process industry is poised for a major boom up to 2010 due to the robust growth in Asia's energy markets and China's increasing demand for petrochemicals. To harness this growth, from 1st April 2007, we will increase the dependency ratio to 1:5 from the current 1:4, and we will also allow contractors to cross-deploy their workers.

We will monitor the effectiveness of these changes and make further adjustments, if necessary, as warranted by the employment conditions.

While changing or relaxing some of these measures, I want to reassure Members that we have taken their potential concerns into account.

Dr Lim Wee Kiak asked how we can increase the productivity of construction workers. I, too, want it to increase and BCA, I understand, is working together with MND to build a core of localised skilled workers in key construction trades. BCA is also working with industry to enhance their construction productivity to adopt more buildable designs and innovative construction methods. We will try to reduce our reliance on foreign workers but, in the meantime, let us relax the rules a bit and let them build what we need to build and then, in tandem, try to increase their productivity.

6.30 pm

Indeed, we have to calibrate the foreign manpower controls. But we need to be mindful that globalisation is a two-way street. Just as we have taken, in Singapore, business opportunities away from others because we are more competitive and responsive, we should remind ourselves that others can steal the march from us too. From 2001 to 2006, about 240,000 jobs created were taken up by locals, and about 85,000 jobs went to foreigners. Put it in another way, for every one foreign worker we judiciously allowed in, nearly three jobs were created for locals. If we choked off growth and employment creation, if we controlled it too tightly, we would drive investments to competing locations. Because, ultimately, Singapore companies must compete globally. So ensuring that companies have met their manpower needs, both foreigner and local, will translate into greater opportunities and benefits for Singapore and Singaporeans.

Mr Yeo Guat Kwang asked how MOM, even as we liberalise, can strengthen the framework to protect the well-being of foreign workers and to guard against potential abuse by arrogant employers. In tandem with these measures, we will tighten up. The Employment of Foreign Workers Act will be amended to stiffen penalties for selected offences and introduce new offences. The powers of MOM's Employment Inspectors will also be strengthened so that they can effectively enforce the laws. In other words, we are changing some aspects of the Employment of Foreign Workers Act. We will also link work permit approvals to foreign worker housing. Moving forward, MOM will require employers, at the point of application of work permits, to provide information to where they intend to house their foreign workers. It is a reasonable request. You want to bring them in, where do you intend to house them? MOM will not approve the applications if the accommodations do not meet specified conditions. We will announce the implementation details at a later day.

Mr Yeo Guat Kwang asked for an update on the medical insurance. We are tying up with insurers to see for those who need to, how they can buy into this insurance. Many employers already have medical insurance for their foreign workers. But those who need it will have a plan which they can buy into.

We will also review the Workmen's Compensation Act to ensure that it continues to safeguard the interests of injured workers, both local and foreign, while at the same time deter and hold accountable irresponsible and errant employers or workers. MOM will examine the Act's coverage, compensation formula and the compensation levels. We also plan to enhance MOM's enforcement powers to ensure that workers receive their due compensation promptly while at the same time protect the interests of workers or employers for fraudulent claims.

Mr Yeo has asked for an update on the portable medical benefits scheme. My Minister of State will elaborate on this.

The various policies and initiatives that I have covered will support growth and enhance opportunities for all. A strong and dynamic economy requires an equally resilient and dynamic workforce - one that embraces opportunities, adapts quickly to changing realities; one that is open and welcoming to talent from abroad, drawing strengths from within and outside Singapore. If we close ourselves to chance, if we close ourselves to opportunities, then we shrink. We are poised to move up the ranks of developed nations if we hold steadfast together with these policies that have gotten us here and allow us to sail ahead on the crest of globalisation. I say to Singaporeans that we can face the future with confidence and optimism, with an abundance of job opportunities ahead. But they must scale up to make the most of these opportunities because new jobs that are coming will be of higher value-add in the new sectors.

'S' Passes

Mdm Halimah Yacob: Sir, I do not know whether my cut on the 'S' Passes is auspicious or inauspicious. But, indeed, I am taken by surprise by the Minister's announcement that the 'S' Passes will now be increased from 5% in 2004, just introduced 2 1/2 years ago, to 15%. I must say that the 'S' Passes have, to some extent, caused some concern among Singaporeans and will continue to cause more concerns now that it has been increased to 15%. Let me explain why.

First, unlike the work permit holders, there are no restrictions on the source countries for 'S' Pass holders as employers can draw them from any part of the world. Second, unlike the 'P' Pass holders, that means, the Professional Pass holders, they are considered executives and are required to be paid higher. The minimum pay for a 'S' Pass holder is only $1,800. Hence, the 'S' Pass is a hybrid. It enjoys the best of both worlds. It is cheaper than the Professional Pass holders, in terms of salary, and it is very flexible, in terms of the source of countries, unlike the work permit holder. This makes them very attractive to employers, leading to the concern that they will displace our diploma and university graduates.

Of particular concern would also be the PMETs who are already facing difficulties securing employment, especially the older ones. I think we heard from the hon. Members of this House before me about their concerns over PMETs and the Minister has already addressed some points. Although employment rate is high and unemployment rate is low, there are segments of our population who still find it difficult to find jobs. The rationale for our foreign worker policy, including the 'S' Pass, is to augment the local workforce and not to replace them. I would like to ask the Minister to monitor the situation closely to ensure that cheaper 'S' Pass holders will not displace our university and polytechnic graduates. Can the Minister also give details on the number of 'S' Pass holders employed, and in which sectors?