RETRENCHMENT SITUATION AND MEASURES TAKEN BY TRIPARTITE PANEL ON RETRENCHED WORKERS

The following Question stood in the name of Mrs Yu-Foo Yee Shoon -

Mrs Yu-Foo Yee Shoon: To ask the Minister for Manpower if he will give an update on the retrenchment situation and the measures that the Tripartite Panel on Retrenched Workers will take to deal with this issue and to help workers find alternative employment.

Mr Yeo Guat Kwang (Cheng San): Question No. 13, Sir.

The Minister of State for Manpower (Encik Othman bin Haron Eusofe) (for the Minister for Manpower): Mr Speaker, Sir, in the first quarter of 1998, a total of 7,131 workers were retrenched. This is the highest quarterly figure ever recorded since retrenchment data was first compiled in 1983. The majority of the retrenched workers were from the manufacturing sector, mainly the electronics, electrical, and petroleum and chemical products industries. Survey findings show that 63% of the local workers retrenched in the fourth quarter of 1997 were re-employed by March 1998. This was significantly lower than the 72% re-employment rate of those who were retrenched in the previous two quarters. Retrenched workers with higher education and skills generally enjoyed better re-employment prospects as compared to those with lower education and skills. The Ministry will continue to monitor the retrenchment situation closely.

The increase in number of workers being retrenched is not unexpected. In fact, in anticipation of this, my Ministry had in late February set up a Tripartite Panel on Retrenched Workers to prepare for this eventuality.

The Panel comprises representatives from the Ministry of Manpower (MOM), EDB, PSB, NTUC, and the Singapore National Employers' Federation (SNEF). I am pleased to inform the House that the Panel has completed its deliberations and has submitted its recommendations. As announced during a press briefing on 26th June 1998, my Ministry has accepted the Panel's recommendations and will implement them with effect from 1st July 1998. Sir, let me highlight the key recommendations of the Panel.

Sir, to minimise retrenchment, the Panel recommended that a Retrenchment Advisory Programme involving MOM, EDB, PSB, NTUC, and SNEF be implemented. Under the Advisory Service Programme, companies with excess manpower and are contemplating retrenchment would be encouraged to provide advance information to any of these agencies so that appropriate advice on the various alternatives to retrenchment could be given. These alternatives include the implementation of shorter workweek and temporary lay-off, making use of the flexible wage system to reduce cost and avoid retrenchment, as well as sending of their workers for subsidized training through the Skills Redevelopment Programme (SRP) during the lull period.

Under the Retrenchment Advisory Programme, companies with surplus manpower can approach any of the participating agency which they are most comfortable in dealing with, so that they could be better informed of the alternatives to retrenchment, including the training grants available under the SRP.

The Tripartite Panel has also recommended that an Employment Assistance Programme be implemented to assist retrenched workers seeking re-employment as soon as possible. The Programme consists of an integrated job placement system to enable various agencies (MOM, EDB, SNEF, NTUC, and companies) to pool job vacancies into the job bank of the Ministry's Employment Service Department so that the Department would be in a better position to assist retrenched workers secure re-employment expeditiously.

Sir, to help retrenched workers secure alternative employment and at the same time enhance their employability, low-skilled retrenched workers will be offered appropriate training under SRP for higher value-added jobs. This will enhance the employability of such workers and make them less vulnerable to future retrenchments. To better assist retrenched workers in securing re-employment, companies are therefore urged to notify the Employment Service Department of their job vacancies.

In addition, the Panel has also recommended that information on alternatives to retrenchment and how employers could carry out retrenchment responsibly be made available to companies. For workers affected by retrenchment, they would need to be advised on how they could secure re-employment expeditiously and cope with the situation. For this purpose, the Ministry has produced two pamphlets for distribution: one targeting at companies and the other at retrenched workers.

Sir, the implementation of the Committee's recommendation will result in more effective employment assistance to retrenched workers. Further, low skilled retrenched workers will be given the opportunity under the SRP to take up higher skilled jobs and this will enhance their employability.

Mr Jeyaretnam: Mr Speaker, Sir, may I seek an answer from the Minister of State to two questions that I have been attempting to ask and my Party has asked. Firstly, would the Minister tell us in what form the monitoring of retrenchment of workers is done or how does it take place? And secondly, will the Minister tell us whether his Ministry is aware of the practice of some companies to retrench Singapore workers and take on foreign workers at much lower wages?

Encik Othman bin Haron Eusofe: Sir, the first question is on how retrenchments take place.

Mr Jeyaretnam: How do you monitor the retrenchment situation?

Encik Othman bin Haron Eusofe: As I have mentioned earlier in my reply, we have set up this Committee. This Committee will give advisory notice to the employers to approach the various agencies which they are comfortable with in dealing with details of retrenchments that are being proposed, particularly when they have excess workers. And we would expect that these companies would then approach any of the agencies which I have mentioned, whether it is MOM, EDB, SNEF, NTUC, and let them know what excess workers they have and what are their plans, whether there are retrenchments, and we will provide them assistance. At the same time, companies sometimes give notice either to the unions under the Collective Agreement when they propose to undertake retrenchments or they approach the Ministry of Manpower to seek advice when they have excess workers and how they want to proceed to deal with them. This is how we continue to monitor the situation on retrenchments.

Sir, on the second question, I think the retrenchments have been fairly even and usually retrenchment exercises are done in proportion to the existing workforce. That means, the retrenchment is reflective of the proportion of foreign workers and local workers. So I do not think there is any attempt to replace one category with another. But let me also say this, Sir. Employers cannot be expected to just lay off foreign workers first as most companies need Singaporeans as well as foreign workers to remain competitive. The key issue is really whether our companies continue to be competitive. Because if they are competitive, particularly under the current situation, they will be able to do well. And if they do well, they create more employment. In this case, when they do that, they will be able to attract more workers into their companies. So I think there is no special case of retrenchment of locals in order to recruit foreign workers. I think they have retrenched according to the proportion of the nationalities in the workforce.

Dr Lily Neo (Kreta Ayer-Tanglin): Will the Minister of State publicise the availability of the various training grants to the public so as to facilitate people to upgrade themselves?

Encik Othman bin Haron Eusofe: Yes, we will definitely publicise the availability of training grants. In fact, as I mentioned in my reply, we have prepared two pamphlets. One pamphlet is for retrenched workers and it is called "I am retrenched: What can I do?" This pamphlet contains information on the various training assistance and re-employment assistance programmes that are available to retrenched workers.

Mr Jeyaretnam: I do not know whether the Minister fully understood my question. I understood him to say that retrenchment will be in proportion to the quota. That is not my question. My question is simply this. Is the Ministry aware that Singapore workers are being got rid of and, in their place, foreign workers are being taken in? It is not a question that they do not need them. They need the workers, but they are replacing Singapore workers with foreign workers.

Encik Othman bin Haron Eusofe: As I replied earlier, firstly, as far as we have monitored the situation, retrenchment is according to the proportion of foreign workers, which is reflective of the composition of the workforce. Secondly, there are dependency ceilings in the companies, in so far as the number of foreign workers that they can employ. So long as they do not breach the dependency ceiling, the problem does not arise.

Mr Goh Choon Kang (Marine Parade): Mr Speaker, Sir, can the Minister of State give an assurance to the House that non-unionised workers and unionised workers who are retrenched will be given the same kind of assistance by the Ministry?

Encik Othman bin Haron Eusofe: Yes, certainly. For non-unionised workers, if they have problems, they can approach the Ministry's Employment Service Department. At the same time, the pamphlets, which are being produced for retrenched workers, apply to both the unionised as well as the non-unionised workers.

Mr Chiam See Tong: Sir, can I get a clarification from the Minister of State? He says that the retrenchment of workers will be in proportion to the nationalities of the workforce. But not long ago in this House, I heard that the retrenchment of workers depends on the skills of the workers. Supposing there are a Singaporean worker and a foreign worker. If the foreign worker is more skilful, the Singapore worker will be retrenched first. Is that not the position?

Encik Othman bin Haron Eusofe: First, let me clarify. What I said was that retrenchment has been done in proportion to the nationalities of the workers in the workforce. But coming to a more specific situation, when you have a retrenchment in a company, the company then decides, within the dependency ceiling and the proportion of the foreign workforce which they have, who should go first. And I think the key point is that we want the companies to continue to be competitive. If they want to be competitive, they require good and skilled workers and in such a situation, they will want to maintain workers who have good skills and work attitudes and, therefore, they will decide which of the two workers should go. On a specific case, the company will decide who they want to retain and who should go. In that case, the position is that they would want to retain the good workers regardless of their nationality.

Mr Chiam See Tong: Can I get a further clarification? You are talking about a specific instance. But in a case, say, a factory which produces chips and it has a whole batch of foreign workers whose skills are very good, will this whole batch of workers be retained and an equivalent number of Singaporeans be retrenched?

Encik Othman bin Haron Eusofe: Firstly, the company will have to watch what is the dependency ceiling, ie, how many foreign workers in proportion to local workers. So it has to keep this dependency ceiling and there is this safeguard. It cannot have all its workers who are all foreigners because it will then break the dependency ceiling. So it depends on what is the approval that has been given for it to recruit foreign workers.

Dr Tan Boon Wan (Ang Mo Kio): Sir, I would like to ask the Minister whether he can tell us how many companies or workers are now on short work week or temporary lay-off as a result of the financial crisis.

Encik Othman bin Haron Eusofe: Mr Speaker, Sir, I do not have the information as of now. If he files a question I will provide him the answer.

Mr Hawazi Daipi: Sir, does the retrenchment figure that we have learned include workers in all types of companies or companies of different sizes or only companies of certain sizes?

Encik Othman bin Haron Eusofe: These are figures which have been reported to us. There may be companies with few workers which may not have reported to us. But, generally, this is quite a comprehensive figure.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, may I ask the Minister of State whether the dependency ratio he mentioned is always in favour of the Singaporean workers? In other words, if a company were to retrench one Singaporean worker and, by the dependency ratio, it may have to retrench three or four foreign workers.

Encik Othman bin Haron Eusofe: It depends, because some companies have foreign workers who are below the dependency ceiling. So although the dependency ceiling in some cases are 40% - for the services sector it is 25% - but they may have more Singapore workers than foreign workers.

Mr Lim Swee Say (Tanjong Pagar): Sir, I would like to seek two points of clarification. On this issue of a company retrenching Singaporean workers and replacing them with cheaper foreign workers, am I right to say that, firstly, if a company were to retrench workers and, immediately following that, were to replace them with workers, whether foreign workers or Singaporean workers, to do the same job, then this will violate the understanding of retrenchment and that the NTUC can actually bring up the case to the Ministry of Manpower and it will actually investigate into these cases?

I also like to seek clarification from the Minister that, according to a previous survey conducted by economic agencies, such as EDB, it was established that, having taken into consideration the foreign worker levy and the cost of housing in Singapore, the foreign workers, on the average, will actually cost 20% more than the Singaporean workers. One reason why companies are going for more foreign workers is not because foreign workers on the whole are cheaper but rather because of the shortage of Singaporean workers. I would appreciate the Minister's confirmation on these two points.

Encik Othman bin Haron Eusofe: I can certainly confirm the two points. If there are cases where NTUC feels that the companies are unfair, it can always report the situation to the Ministry of Manpower. And I have mentioned earlier, under the Advisory Programme, companies will discuss with us what they intend to do when they have excess manpower. So once these recommendations are implemented, I think the situation that the Member has described in the first part of his question will not arise. On the second point about the cost of workers, I agree that, with the various charges and cost of housing, it may well be more expensive for companies to recruit foreign workers.

Mr Jeyaretnam: May I ask the Minister of State a final question and that is this: Are we to understand that so long as the company has room for more foreign workers, that is, when they have not filled their quota, then the Ministry turns a blind eye to them dismissing Singapore workers and replacing them with foreign workers?

Encik Othman bin Haron Eusofe: If they are within the dependency ratio, they can always recruit foreign workers. But under the Advisory Programme for employers that we are going to implement, we will discuss with them the excess manpower, if they have, at the point of retrenchment and to advise them to go for other measures other than retrenchment. So the answer to the question is that we want to make sure that our companies are competitive and, if they are to be competitive, there must be certain flexibility given to the companies.

Mr Chiam See Tong: Sir, I would like the Minister of State to clarify the clarification that has been given to Mr Lim. Can I have a clarification that the situation, spoken by Mr Lim, is in fact in the case where there are insufficient workers? What we are talking now is that there are more than enough workers. So the situation of employing foreign workers who are more expensive does not apply.

Encik Othman bin Haron Eusofe: I think some companies still need foreign workers.

Mr Chiam See Tong: Even when it is not competitive?

Encik Othman bin Haron Eusofe: It is a question of the skills of the workers. If the workers are skilful, then it is relative, and it is the quality of the workers that they want. And if they do not have this type of workers in Singapore, they may need foreign workers although they may be more expensive.

Mr Chiam See Tong: We are talking about a case of retrenchment. In other words, there are more than enough workers. There are not enough jobs to go round. This is the situation we are talking about. Therefore, the situation that Mr Lim stated does not apply, because he said that there are not enough workers and you have to pay 20% more to house these foreign workers. But our situation now is different. Am I right? So his situation does not apply.

Encik Othman bin Haron Eusofe: In fact, under the SRP, we are trying to get Singapore workers to be trained. So those workers who are retrenched, they go under the SRP programme. Some of the workers will then be employed by these companies. There are examples where certain companies, like International Video Products, have retrenched workers and some of them went under the SRP, and they were able to work in wafer fab plants, and so on. But there may be situations, I think we are really talking about hypothetical cases, where they could not get these workers and they may still need skilled workers and therefore they will continue to recruit. But with these skilled workers, the plant is able to operate and it becomes competitive. This in turn creates more jobs for Singapore workers.

Mr Lim Swee Say: Sir, may I also follow up with the clarification from Mr Chiam See Tong? I would like to seek further clarification from the Minister of State. On this issue of retrenching workers, is it right to say that some companies are not able to focus on retrenching foreign workers for at least two reasons? Firstly, it is the skills. As the Minister of State mentioned, because there are foreign workers who possess the skill which the local workers do not have. Secondly, is it right to say that many companies find that Singaporean workers are not prepared to work in a 12-hour shift and, as a result, the third shift, ie, the midnight shift, has to depend a lot on foreign workers? Even at a time like this, they have no choice but to continue to retrench workers through a combination of Singaporean workers and foreign workers.

Encik Othman bin Haron Eusofe: Yes, I can certainly confirm that.

Mr Seng Han Thong (Ang Mo Kio): Sir, can I ask the Minister of State whether the dependency ratio can be adjusted downwards so that we can take in more Singaporeans now that more Singaporeans are willing to perform that kind of job at a lower wage level?

Encik Othman bin Haron Eusofe: For the time being, I do not think we need to do that. In companies where the dependency ratio is high, these are basically construction companies, Singapore workers do not want that job anyway. So you will still need to allow for a high dependency ratio, particularly, in industries where Singapore workers are reluctant to work in. So it may not really change the situation. 1.30 pm

Mr Speaker: Order. End of Question time.

[Pursuant to Standing Order No. 21(3), Written Answers to Question Nos. 15-16, 18-19, 21-24, 26, 28-30 and 32-33 on the Order Paper are reproduced in the section, "Oral Answers to Questions Not Reached" (Cols. 335 - 348). Question Nos. 14, 17, 20, 25, 27, 31 and 34-38 have been postponed to the sitting of Parliament on 30th June 1998.]