FUNDING FOR SKILLS DEVELOPMENT FUND

Mr Chuang Shaw Peng asked the Minister for Trade and Industry whether his Ministry has plans to secure more funding for the Skills Development Fund.

BG George Yong-Boon Yeo: Currently, employers contribute to SDF at 1% of the monthly remuneration of workers drawing salary of $1,000 or less a month. In FY98, the SDF collected some $20.4 million in such levies. Despite the economic slowdown, the SDF supported a record 564,375 training places in FY98, which is a 6% increase from the previous year. This translates to one training place for every three persons in the workforce, compared to only one training place for every ten persons in FY86. With the increased level of training activity, the total grant commitment has risen to $88.4 million in FY98, exceeding collections significantly.

Although there is no danger of immediate depletion of SDF funds, the current rate of disbursement versus collection is clearly not sustainable.

The present salary cut-off of $1,000 was raised from the previous ceiling of $750 in April 1995. In the 1995 Budget Debate, the Minister for Finance had given notice that the Skills Development Levy would be further adjusted over time to ensure that the SDF has adequate funds to help upgrade Singapore's workforce for the 21st Century.

My Ministry is currently studying how this adjustment can be made, taking into account the state of the economy. We will not want to make any increases to the levy until the economy has fully recovered.