UNEMPLOYMENT SITUATION

Mr Noris Ong Chin Guan asked the Minister for Manpower if he will give (i) an update of the current unemployment situation and the outlook ahead and (ii) an evaluation of the accessibility and effectiveness of the current career development and retraining programmes in raising labour productivity and in helping Singaporeans who have been retrenched and those likely to be displaced due to the continuing economic slowdown and spate of mergers and acquisitions.

Mr Noris Ong Chin Guan asked the Minister for Manpower, given the current economic climate, will his Ministry consider encouraging local employers to give priority to employing Singaporeans who can perform equivalent jobs, including our healthy elderly, rather than to resort to engaging foreign employees too readily.

The Minister for Manpower (Dr Lee Boon Yang): Mr Deputy Speaker, Sir, with your permission, may I take Question Nos. 6 and 7 together, because they are in some way related?

Mr Deputy Speaker: Yes.

Dr Lee Boon Yang: Sir, the seasonally adjusted unemployment rate in March 2001 was 2.4%. This was lower than the 2.9% in December 2000. However, the improvement in unemployment is expected to be short-lived as the economic slowdown has triggered a sharp increase in retrenchments and a drop in job vacancies. The number of workers retrenched rose sharply to 3,248 in the first quarter of this year from the quarterly average of 1,900 registered in the last three quarters of 2000. Retrenchment in the second quarter is expected to be higher, based on notifications by companies to my Ministry in recent months. At the same time, job vacancies fell significantly from 26,182 in March 2000 to 19,755 in March this year. Vacancy rate, ie, the number of vacancies, expressed as a percentage of total manpower demand, also fell from 2.7% in March 2000 to 1.9% in March this year.

Sir, the seasonally adjusted job vacancies to unemployed persons ratio fell to 0.76 (ie, there are only 76 job openings for every 100 job seekers) in March of this year from a higher level of 1.14 in September 2000. Today, there are simply fewer jobs than there are job seekers. Also, the entry of this year's cohort of tertiary graduates into the labour market around this time is likely to aggravate the labour market situation. They are going to find it a little bit harder to find the jobs that they want.

While the labour market is softening, jobs are still being created. There are still unfilled vacancies in the job market, especially in the services sector. My Ministry has expanded existing employment assistance and training programmes, and will also initiate new programmes to fill these vacancies. Let me give two examples.

Sir, to help the lower skilled workers raise their skill level, the Ministry has been working with NTUC to extend the reach of the Skills Redevelopment Programme (SRP). Last year, some 20,000 workers were trained under the SRP. This was about 40% higher than the figure achieved in 1999. Mr Ong asked about the effectiveness of such programmes. In a survey conducted last year, 70% of employers reported that workers who underwent the Skills Redevelopment Programme training had become more productive in their jobs, while 80% indicated that their workers had become more employable. 70% of workers felt more confident of handling more complex job responsibilities and seeking re-employment after the SRP training. Among the unemployed workers who underwent SRP training, three out of four managed to find a new job within three to six months after training.

In July last year, my Ministry also set up a career centre, CareerLink@mom, to provide Singaporeans with better access to employment and training opportunities. We receive about 1,600 visits each month. More than two-thirds of the visitors who had responded to the centre's first three quarterly surveys indicated that they were better informed about job choices and training opportunities after using the services at the centre. Among those who were actively looking for a job, more than 20% had found employment within three months, some through the centre's assistance, and others through their own efforts.

Sir, in the coming months, more employers and workers will be affected by the economic downturn as well as the restructuring which is taking place in some sectors. We will help affected employers and workers.

Firstly, we will work with the NTUC, the Productivity and Standards Board, and other organisations to train even more workers. This will not only enhance the employability and capabilities of workers, but will also enable employers to seize opportunities when the economy recovers. We will deepen and broaden existing initiatives, including the SRP and the Strategic Manpower Conversion Programme (SMCP), and also introduce new programmes. Just last month, for example, we launched the National IT Literacy Training Programme to help workers acquire basic computer and Internet skills which will enhance their employment prospects. Where appropriate, we will provide additional incentives to make training more affordable to employers and employees or to those who are unemployed during these difficult times.

Secondly, we will encourage more companies not to downsize too quickly but to try alternatives to retrenchments. Affected companies can put their workers on voluntary pay-cut, shorter work-weeks or make use of the SRP to send redundant workers for full-time skills upgrading.

We recognise, however, that some companies would have no choice but to retrench workers. If necessary, we will organise job fairs and other employment facilitation events as we had done two years ago in 1998, during the economic crisis.

It will be harder for older and less educated retrenched workers to find new jobs, especially in totally new sectors or industries. To help them make the transition, we are considering a traineeship programme to help older workers. The idea is to help employers to recruit such retrenched workers to ease the transition to a new industry sector and work environment.

In the final analysis, the success of our efforts will also depend on the willingness of unemployed workers to upgrade their skills and to adapt to a more difficult job market.

With regard to his other question, let me explain that our foreign manpower policy is to maintain a controlled and revolving pool of unskilled foreign workers while facilitating the recruitment of global talents and professionals. Hence, for unskilled foreign workers on work permits, we have control mechanisms, such as the foreign worker levy and dependency ceiling, to ensure that employers do not become over-reliant on foreign workers at the expense of local workers.

However, even in an economic downturn, as my colleague, the Minister for Trade and Industry, had already touched upon, we cannot totally deny employers access to foreign workers or require them to fill vacancies with only local workers. This is because there are companies with genuine needs for foreign workers to perform jobs that locals do not have the skills for, or jobs which many local workers are not prepared to do. Direct intervention beyond the broad controls will only result in hardship for these companies. This could prompt them to relocate to neighbouring countries where it is easier to recruit workers at much lower wages. As a consequence, instead of saving jobs for Singaporeans, we will end up losing more jobs.

In the case of highly skilled workers, we should not prevent employers from recruiting the global talents that they need. Even as we ride the downturn, we must bear in mind that the availability of skilled workers will be the key to future success in competition. Talents will be critical for our long-term viability. If we make it difficult for companies to meet their skilled manpower needs, our attractiveness as an open business-friendly location will diminish. Closing the door to global talents now will send a wrong signal to the people whom we are trying to attract, and it will do us harm in the long term.

We will help local workers with upgrading and skills conversion programmes which I have mentioned earlier on in my reply to the hon. Member's first question. These programmes will be broadened and enhanced to help, in particular, the older workers. The best way to help in a downturn is to arm our people with the skills which they will need to remain employable in a changing job market.

Mr Thomas Thomas (Nominated Member): Sir, can I ask the Minister to tell us what is the success rate in persuading employers to look at alternatives to retrenchments, particularly the use of a flexible wage system?

Dr Lee Boon Yang: Sir, I think employers are quite amenable to this suggestion. We have teams that go out to talk to employers who come to us and tell us that they have difficulty and they may have to lay off workers. I understand that, at least in the unionised sector, there are already about 30,000 workers who are on such alternative-to-retrenchment programmes, either voluntary pay-cut or shorter work-week or some other form of adjustment, including sending workers who are due for retrenchment or who are facing retrenchment to full-time Skills Redevelopment Programmes.

In general, I would say that employers are cooperative and they will try to help wherever possible. But, as I have said in my answer, there will always be those companies which are facing such enormous difficulties that they have no recourse but to let people go. We will step in to help those workers who are released to find alternative jobs. But it also means that these retrenched workers have to be more realistic and they have to be prepared to take on jobs in different sectors. They may be required to take on jobs which they have not done before. It is here where we will step in to help them to acquire the new skills that they need to do those jobs.

Mr Hawazi Daipi: Sir, in the new economy, in the face of restructuring and relocation of companies to other countries, these could be people who may find great difficulties in getting a job, for one reason or another. There could be people who would be deemed as unemployable. Who are they? What is the current estimated number of people who could be considered as unemployable? Do we expect the number to increase as a result of this downturn and what would the Ministry do to help these workers to get alternative jobs?

Dr Lee Boon Yang: Sir, I agree with the Member that as the economy restructures and also with this cyclical downturn, we may see more and more workers having difficulty finding re-employment when they lose their jobs. One main reason would be that these workers may not have the skills that are required for the new jobs. Very often, it is the older workers who face this problem, ie, workers with low education, perhaps in their late 40s, who have this difficulty of finding an alternative job. Even if the economy slows down to the lower end of the estimate of about half percent for the whole year, we do not expect the retrenchment figure to exceed the number that we have experienced in 1998 when about 29,000 workers were retrenched. As to the number of workers who are at risk, I think it will be much less than in 1998. We expect our whole year retrenchment to be around 20,000, which is already much more than what it was last year, at 11,600.

As to what we can do to help this group of workers, we should not think of them as totally unemployable. They may have greater difficulty looking for jobs, but I believe that even the lower educated older worker can make a contribution provided the worker himself is willing to also make an effort. As I have explained earlier on, we have many programmes that can help him to acquire a skill to take on a job in a different sector. He may not have the ability to upgrade his skills in the sector that he has been working in, for instance, in the electronics industry, where we are seeing the majority of the retrenchments taking place. He may not have the ability to upgrade his skills to do the job in the new type of manufacturing industry where he would require sophisticated computer skills to operate very sophisticated production equipment. But, certainly, he or she can be trained for a job in the services sector. And today, we still have quite a number of vacancies in the services sector.

As I mentioned some weeks ago, in one exercise that we carried out, we managed to find employers who could offer us 400 vacancies. So workers who are retrenched from the manufacturing sector need not be deemed unemployable. They have temporarily lost their jobs. We can help them to acquire a skill to move into the services sector. We hope that they would take up this offer and come forward. We will help to retrain them so that they can take on this job and minimise the trauma or difficulties that the family would face with prolonged unemployment.

Mr Chiam See Tong: Sir, has the Government spent money to train foreign workers or to upgrade their skills in preference to local workers?

Dr Lee Boon Yang: Sir, most of our investment in skills upgrading and training goes to the local workers. The priority in all our retraining programmes is for local workers. I have said this many times before in this Chamber that we encourage our employers to recruit foreign workers who are already capable of doing the job, rather than to bring unskilled foreign workers to Singapore and send them for training. After all, they have such a wide choice here. We always have millions of unemployed people outside who are looking for jobs. As an employer, they should go out there to look for persons who already possess the set of skills that they need and bring them here, rather than to bring in totally unskilled workers and put them through our training programmes.

I will give the Member an example. Sir, today, if they bring in an unskilled foreign construction worker, they have to pay a monthly levy of about $470. That is to discourage the contractor from bringing in an unskilled worker and sending him to our Building and Construction Authority's training school for training. If they bring in a skilled worker, we only charge a levy of $30. So, they should go out there, look for skilled construction workers, recruit them and save over $400 per worker. Do not clutter up our training centres with foreign workers.

Mr Low Thia Khiang (Hougang): Two supplementary questions, Sir. What service sector is the Minister referring to when he says that older, unskilled or lower skilled workers can be deployed? Secondly, would this sector provide the same kind of pay benefits or a lower pay, resulting in a lower income for these workers? I would also like to know specifically what are the measures that the Ministry is taking to help this group of workers to switch to another service sector.

Dr Lee Boon Yang: Sir, the Member asked what are the service sectors where there are still jobs available. I could give him some examples. For instance, the retail industry, hotels, food and beverage, food services and food production and manufacturing. We found 400 jobs which are available within these sectors that I have mentioned. He asked whether the pay is much lower than in the manufacturing sector. The good news is that, in many instances, the pay is almost the same as in the manufacturing sector. In some cases, in fact, the pay is actually higher than in the manufacturing sector. It is a viable alternative for the out-of-work Singaporeans to make an attempt to take on such jobs.

His third point was: what are we doing to help workers, particularly older workers, to retrain for these jobs? I mentioned in my answer to the question from Mr Ong that we are considering a programme where we will help companies to recruit these workers, that is, we will give them financial incentives to recruit these older workers and put them through a proper training programme. If you are an employer, and you are prepared to take in this group of older retrenched workers, we will help you. We will provide you with financial support for a period of time while you are training the workers. But you must come to us and say that you have a proper training programme so that you do not abuse the system. If you are prepared to put in the effort to train the older workers, we are prepared to give you some financial assistance over a period of time so that the older workers will find it easier to acquire a skill and to adjust to the new working environment and, hopefully, settle down in the new jobs.

Mr Low Thia Khiang: Could the Minister clarify further what sort of financial scheme he is offering to the employers?

Dr Lee Boon Yang: Sir, I emphasised in my response that we are considering this programme. The details will probably be announced, together with what the Minister for Trade and Industry has said, later on this month. It is part of the package of assistance.

Mr Iswaran: Sir, generally, Singaporeans accept the need for foreign manpower at the lower skilled level and also selective use of foreign manpower at the top end. But many seem to have the impression that for the middle tier - technical jobs that polytechnic graduates and so on will be eligible for - there is an excessive reliance by employers on cheaper, foreign alternatives in that sphere. Could the Minister elaborate whether that is borne out by the facts and, more importantly, whether there is any measure in place to ensure that such excessive reliance is prevented?

Dr Lee Boon Yang: Sir, of course, during difficult times, Singaporeans who face the competition will feel this natural reaction against foreigners who are competing with them in their area, especially those in the middle level or in the technical jobs. But the reality is that companies that recruit middle-level technical staff very often do have difficulties finding sufficient local employees to fill their vacancies or to meet their demands. Let me give you an example. We have several petrochemical companies in Jurong Island. They offer very attractive jobs. But for a long time, these companies have not been able to find a sufficient number of Singaporeans who are willing to take on the jobs that they have on offer. The job comes with a 12-hour shift pattern and is in a fairly remote location and it is a fairly demanding job. Very few Singaporeans are prepared to take on this job. Should we insist that they take Singaporeans only and delay their operations until they fill up the posts over time with Singaporeans who are prepared to do it? Or should we expect them to increase the pay to a point where they can overcome the Singaporeans' reluctance to take on these rather difficult jobs? If we do so, we are liable to make these industries uncompetitive where they are located. We might lose the whole industry completely, which means we will lose even more value-added to the economy.

Our problem is to find a balance and we have to leave it to the employers to make this decision about who in fact can make bigger and more valuable contributions to help the company to remain competitive. But, overall, we do have some guidelines and controls to ensure that employers just do not bring in foreigners purely on the basis of lower salaries without regard to their ability to contribute. So when we process applications for employment pass, we do look at the qualifications and work experiences of these people to ensure that they are in fact reasonably suitable for the particular job in mind.

Mr Yeo Guat Kwang (Cheng San): Besides MOM's employment service, can the Minister tell us whether there are any other organisations where all these unemployed people can turn to for assistance for new jobs? Can the Minister also confirm that the Skills Redevelopment Programme is in fact only applicable to Singaporeans?

Dr Lee Boon Yang: Sir, there are of course many other private sector employment agencies apart from my Ministry's CareerLink. NTUC also offers their union members employment assistance when they need their help in this manner. In so far as SRP is concerned, I do believe that the benefits that we offer under SRP are largely for Singaporeans.

Mr Gerard Ee: Sir, may I ask the Minister whether the programmes that have been introduced include modules to help workers adjust to the psychological and emotional impact on their lives and the changes that they are facing, such as losing their jobs?

Dr Lee Boon Yang: Sir, 1,600 people visit our CareerLink@mom Centre, which is located in the Ministry's headquarters. At CareerLink@mom, in fact, we do offer such counselling service to those who are in need. We do help them. In fact, we even go to the extent of offering individual counselling, apart from group seminars, on seeking alternative jobs and looking for training opportunities. So we do provide some individual counselling for particularly difficult cases to examine their career background and then to help them plan training programmes so that they can take on alternative jobs. We do help where we can.

Mr Chiam See Tong: Sir, my question is similar to what Mr Yeo just asked, whether skills training is only confined to Singaporeans. I have got feedback that foreign workers have been sent by private companies to courses which are subsidised by the Government. Can the Minister comment, please?

Dr Lee Boon Yang: Sir, may I suggest that the Member write to me about the particulars of this case? Let me look into it and see what are the circumstances where such training had been extended.