REPORT ON ECONOMIC DEFENCE SCHEME (Statement by the Minister for Finance)

2.48 p.m.

Mr Speaker: Before we go on to the introduction of Government Bills, is there any Minister wishing to make a statement?

The Minister for Finance (Dr Goh Keng Swee): Mr Speaker, Sir, you may recollect that on the 28th November last year I described to the Assembly, in the course of my Budget Speech, the situation facing the economy of Singapore following upon Indonesia's economic confrontation. I also outlined the measures that the Government proposed to take to offset the adverse effects of economic confrontation. I said that a study was made in July 1963, some months before the trade suspension actually took place, to assess the pos sible effects of an economic blockade of Singapore by Indonesia. Our calculations showed that some 8,200 workers will eventually he laid off in the event that the Indonesian blockade is completely effective. There may be a reduction of the national income by some $208 million or 8.7 per cent of the gross national income.

Just over six months have passed and both Members of this House and the general public outside may be interested to know what damage economic confrontation did actually inflict upon our economy.

Before I go into details, it may be useful if I were to remind the Assembly of the gross exaggeration indulged in by some Members of the Opposition in assessing the losses that we would suffer by way of income and employment. One Member of the House placed an increase in unemployment as high as 20,000. Barisan Sosialis Members in particular predicted with great relish a collapse of the economy which they had gleefully expected. This is, of course, entirely in keeping with their pro-Indonesia anti-Malaysia political line.

May I stress that the estimates which emerged from our researches last July were based on the assumption of a total closure of firms engaged in processing raw materials imported from Indonesia as well as the complete laying-off of ships formerly plying on Indonesian routes? In other words, they were the maximum possible effects, in the event, the worst did not happen. Ships that were temporarily laid-off soon resumed work on new shipping routes to Burma, to Thailand, to ports of Malaysia, in cluding those in Sabah and Sarawak, Hongkong, and other places. The closing down of all processing factories also did not take place. For some months stocks of raw materials were adequate to maintain production and employment, and after that alternative supply lines were opened to enable a number of these firms to continue in business.

In October last year the Department of Economic Defence was established and it put into operation two schemes. The first was to pay laid-off workers a monthly allowance equivalent to two-thirds of their income from employment. The total number of workers who received benefits under this scheme was 4,202 at its maximum. The figure as on 30th May was 2,545, a decline of sonic-thing like 1,700. This substantial reduction was principally due to the large number of workers who have regained employment either in new or existing industries under the Direction of Employment Scheme of the Government or who returned to work when their former employers resumed production.

The total amount of money paid up to 30th May this year was $1,438,830.10. This amount was shared equally between employers and Government.

In the second aspect of the Economic Defence Scheme, Government tried to find work for these laid-off employees. To do this, certain powers were given to the Director of Economic Defence to require specified employers to recruit from these laid-off workers on the register. In February this year, the Direction of Employment Scheme was put into operation, and the present position is as follows.

In addition to the 4,202 workers who have previously mentioned had received these monthly allowances, another 619 were registered for re-employment purposes. These persons did not qualify for the allowances either because they were casual workers not attached to any particular employer or they were not engaged in industries which were totally affected by economic confrontation. Examples of these are the water-front workers engaged in the Roads traffic of the Singapore Harbour.

So in all the Government was faced with the task of finding jobs for 4,821 registered persons, victims of Indonesian confrontation one way or the other. It will be noted that this is substantially less than the estimate of 8,200. The reasons for this I have already discussed.

As on the 30th May this year, a total of 2,740 vacancies were notified to the Director of Economic Defence. All pioneer industries are required to recruit their workers under the scheme, as well as all firms engaging 50 employees or more each. These are the industries which the Advisory Committee established under the Economic Defence (Direction of Employment) Ordinance recommended as suitable for redirection purposes. Public Authorities and Government departments were also required to notify the Director of vacancies in Division IV and daily-rated occupations. Of the total of 2,740 vacancies notified to the Department, pioneer industries form the largest group, offering 1,036 jobs. Government and Statutory Bodies reported 932 jobs. Private firms offered 708 places and the Armed Services 114.

A part of the notified vacancies could not be filled up from the register of the Economic Defence Department because the skill and experience required were not available. Exemptions were, therefore, granted in respect of these vacancies and the Department and firms were authorised to recruit from outside the scheme. The total number of exemptions granted as on 30th May was 1,045. This leaves a total of 1,745 vacancies into which laid-off workers may be absorbed.

Of this number, 878 workers have either been employed or are in the process of being employed, and this leaves 867 vacancies still unfilled and available for posting.

Of the total figure of 4,821 now on the Economic Defence register for employment. 2,177 have already been reemployed or are in the process of being re-employed. Together with unfilled vacancies of 867, we get a total of 3,054 jobs as against 4,821 workers on the register. Therefore, as on 30th May the position was a surplus of workers over jobs in the number of 1,767.

The number of vacancies notified to the Economic Defence Department conies in at the rate of about 700 a month of which 450 to 500 may be suitable for employment of persons on the register. At the rate progress is being made, it will not be very long before all those who could be employed will be absorbed and redirected under the scheme.

I have some observations to make on the implementation of the plan to re-direct laid-off workers. This operation has proved to be more complex than we had expected it to be. It is not sufficient to offer the worker any job anywhere even if he or she is capable of performing such work, and even if the prospective employer is willing to accept the worker. There is the important question of travelling distance, it is no good offering a worker living in Sembawang a job in Jurong if a large slice of his daily pay will be absorbed by travelling to and from work. So even if there are suitable vacancies and suitable workers, it is sometimes not possible to match them together and if the worker refuses for good reason to take on work offered, it is not reasonable to disqualify him from the financial benefits of the Economic Defence Scheme.

Similarly, certain employers are particular about the type of worker they want to engage in. Our textiles mills and the Garment factories insist on engaging young girls and women. Their preference is for those aged between 18 and 21. We have persuaded them to accept women workers up to the age of 25. These employers argue that the type of work requires manual dexterity and a capacity to learn new techniques which are often absent among older women.

Among the laid-off workers there are unfortunately a large number of them. 850 in all, who are more than 50 years old. It is extremely difficult to place them in new employment as most employers want to have younger workers whom they can train and retain in employment for a long time. The problem of the older workers is a difficult one and the (Government is trying to find ways and means of resolving it.

Another difficulty in finding places for laid-off workers is a reluctance of some of these workers to come forward for employment. There are 486 workers or the register who have been approached four times or more and yet have failed to turn up for interview in job registration process. It is regrettable that these workers have made no effort to cooperate with the Economic Defence Scheme in getting alternative employment. If they persist in this attitude, there is no alternative but to strike them off the register once they have received their full payment for the six months. Because of these workers, it is becom ing increasingly difficult to fill vacancies notified by employers. The response rate of workers turning up for interviews has dropped recently to as low as 12 per cent of all persons called up. Members will agree that it is unreason able to keep vacancies over a protracted period and other workers deprived of employment for the benefit of these unco-operative workers on the Defence Scheme.

The final observation I want to make relates to a number of employers who are giving, wittingly or otherwise, a misleading impression of the work of the Department. When they receive applications for work, they reply to the applicants that they cannot offer them work without the permission of the Economic Defence Department. In fact, these employers have no vacancies to offer hut the regrettable impression is created that the Department is obstructing the filling up of vacancies. As I said before, exemptions from the provisions of the Ordinance are freely granted when the type of employment is such that there is no suitable candidate in the register and, in fact, more than a thousand exemptions had so far been granted.

To sum up, the damage inflicted on Singapore's economy by Indonesian confrontation has been much less than I had ever dared to hope. In my Budget Speech last year I said that we should be able to make good the effects of confrontation in two years. As it turned out, this was too pessimistic a forecast. Singapore's economy remains strong, the building boom goes on, and the pace of industrialisation proceeds with undiminished vigour.

In conclusion, I wish to thank all those who have helped to make these measures of Economic Defence as effective and successful as they have been. The leaders of The National Trades Union Congress, the Chambers of Commerce, the Manufacturers Association and the Employers Federation have rendered invaluable service in advising the Government on important issues. The large body of workers and employers involved in this exercise have displayed an exemplary public spirit in carrying out the operations. Last, but by no means least, our thanks are due to the small but dedicated stall of the Economic Defence Department who have carried out new and unfamiliar tasks with skill and energy.

Mr Speaker: May I remind Members that there is no debate on a Ministerial statement? But Members wishing may ask questions.

Mr Chia Thye Poh (Jurong)(In Mandarin): Mr Speaker, the Minister for Finance delivered a statement just now in which lie mentioned that some water-front workers were not qualified for financial aid under the present scheme. Are the Government considering whether these so-called casual workers are not worthy of consideration for financial aid from the Government? Another point I wish to raise ---

Mr Speaker: Please phrase your question in the form of a question. I have just now said that there is no debate. Just ask the Minister the question so that he can answer it. But the Member should no paraphrase his question with a lengthy statement.

Mr Chia Thye Poh: (In Mandarin): `The first question I wish to ask, of the Minister concerned is whether the casual workers on the water-front are being considered for any financial aid to be given by the Government, because their plight is very miserable; and whether the Government is not to be held responsible to look after their interests?

Another question is this. The Minister for Finance has said just now that some workers are not willing to accept jobs offered by the Economic Defence Department. I want to know what kind of wages they would be able to get out of these jobs offered. Why should they finally reject the offer of these jobs?

The third question is this. The Minister for Finance has said that some factories have resumed production after having laid off for some time, or some have changed their form of production. I want to know how many of such factories have turned to other forms of production.

Dr Goh Keng Swee: The first question with regard to the water-front workers, Mr Speaker. Sir. On the Second Reading of the Bill, I explained the position quite clearly. Those who are eligible for this form of assistance are those who have an employer, who draw regular income, and who are on the pay-roll of the employer. The employer pays half and the Government pays half. Water-front workers are casual workers - lighter men, lorry people and so on. They do not have any regular employers and, therefore, it is not possible to include them in the scheme. It is not technically possible. Further, because they do not work for any particular employer, they have no loss of jobs because the handling of Indonesian goods is only one portion of the total cargo handled at the water front. There may well be a decline of income, as indeed has happened in many other businesses, retail business and so on and so forth. But there has not been a total loss of income as has taken place in the case of employees of factories which closed down because no raw materials were coming from Indonesia.

The second question is why workers refused employment when it was offered to them. I do not know whether there was a slip in translation. But I said nothing about workers refusing employment. What I said was this. I had better read the text:

'There were some 486 workers who were asked to turn up at the Ministry of Labour and various other recruiting centres to be offered jobs.'

They were asked no less than four times. And they never turned up at all to consider the jobs that were available to them. Obviously this is not quite playing the game.

The third question is about employers who have changed their line of business. I have no detailed information on this. I do not know whether a person who was formerly milling low-grade Indo nesian rubber could, say, turn over to producing high-grade nylon goods. I think it is very unlikely. Obviously if they go into a completely different line, and if they employ more than 50 workers, they would come within the ambit of the Economic Defence Ordinance. But if the Member has any information on this, I should be very glad to receive it.

Mr Koo Young (Thomson): (In Mandarin): Mr Speaker, we have received complaints from some workers who were adversely affected by the Indonesian economic confrontation. Their complaints boil down to this. They have been mentioned by the Minister for Finance. The Economic Defence Board ---

Mr Speaker: What is the question? As I have said before, could we go on straight to the question? Ask your question and you will have your answer.

Mr Koo Young: (In Mandarin): Mr Speaker, I would like to ask the Minister to be patient because I am dealing with some complaints made by some workers. Without dealing with the complaints. I cannot ask questions.

Dr Goh Keng Swee: On a point of order. If there are any complaints, the Member should first lay them before the Director of Economic Defence. If he is not satisfied, he can always approach me personally or by letter. The Member has got to observe procedure. He can ask questions. He cannot turn this into a debate.

Mr Speaker: Order. The Member should ask his question straightaway.

Mr Koo Young: (In Mandarin): Sonic workers have been offered jobs far away from their place of residence. An example is this: a man living in Jurong has to work in Sembawang. As a result of this, he has to incur heavy transport expenses. So I want to ask the Minister whether there are any plans to pay them some transport al lowances. This is the first question.

The second question is this: some workers have been forced to accept employment which they do not consider suitable because of distance, low wages or some other reason. I wish to ask the Minister whether his attention has been drawn to this matter. Can he give us a detailed report on this matter?

Dr Goh Keng Swee: Mr Speaker, Sir, the subject of transport allowances of employees of private business is not a ministerial responsibility. It is not the business of Government to provide free transport allowances to employees of private firms. But if the Barisan Sosialis have enough funds and they want to do public charity. I am sure that employers will be too delighted to receive the money.

The second question is about forcing the workers to take unsuitable jobs. A worker is not compelled to accept an unsuitable job. If the wages in the new employment are less than the amount he is receiving under economic defence, he has every right to reject it and to continue to receive financial benefit. Even if it is more than his contribution but the cost of transport is such as to make it less, we do not ask him to accept this offer. In fact, the Director of Economic Defence has been most liberal and considerate in listening to the workers' reasons of why they cannot accept this or that job. But, of course, there is a limit. When a suitable job is offered and the transport cost is not high and the worker still refuses to take it, then he is laid off from the scheme.

Mr Ong Lian Teng (Bukit Panjang): (In Mandarin): The Minister for Finance has said that there are some 837 persons who refuse to go to the Labour Department. I wish to ask him why they refuse to go to the Labour Department for consideration of employment.

The next question is: what other remedies is the Government considering to offer such persons who refuse to go to the Labour Department?

Dr Goh Keng Swee: The hon. Member has got his figures wrong. It is not 837 but 486 - quite a big difference! As to why these persons do not go to the Labour Department. I do not know. They never turn up! Maybe the Barisan Sosialis has been urging them not to go and get jobs because they want workers to remain unemployed.

3.18 p.m.