CONDITIONS OF EMPLOYMENT SURVEY

Mr Tay Beng Chuan asked the Minister for Manpower (a) if he will elaborate on the survey on staff leave and welfare benefits conducted recently by his Ministry in respect of the small percentage of private sector establishments which offer stock option schemes to their employees; and (b) whether his Ministry will encourage the private sector to adopt employee stock option schemes as a recruitment tool to attract more and better manpower resources.

Dr Lee Boon Yang: The Conditions of Employment Survey, which was conducted in June last year, covered about 3,000 private sector establishments with at least 25 employees each. The purpose of this survey was to examine the extent to which companies used various benefits to attract, retain and motivate employees. The Survey found that about 5.2% of private sector establishments offered Employees Stock Option Scheme (ESOP) to their employees. The percentage ranged from 18% among firms in financial services to only 0.5% in construction. These were mainly extended to senior management in the companies.

ESOP gives employees the right to buy equities in their companies at a predetermined price in the future. It is practised by companies to attract, retain and motivate employees, particularly among the key executives to improve the performance of their companies, and consequently the price of their stocks. It has gained popularity among high-tech start-up companies which use it as a form of pay or reward at a time when they are making little or no profit. Some MNCs in Singapore also offer ESOP to their employees. In recent years, ESOP has also been adopted by public-listed companies in Singapore although it is mainly confined to senior management personnel.

While the Government supports companies in the private sector to introduce ESOP to attract, retain and motivate their staff, it is for the individual companies to decide whether such scheme is suitable.