FOREIGN WORKERS

Ms Olivia Lum Ooi Lin asked the Minister for Manpower whether his Ministry will consider lowering the foreign worker levy and raising the quota of foreign workers in value-added or highly specialised industries where SMEs are facing difficulties in attracting skilled local workers to fill vacancies in their operations.

Ms Olivia Lum Ooi Lin asked the Minister for Manpower whether the Ministry will consider allowing the employment of foreign workers from non-traditional sources for the textile industry or other industries with high export activities.

The Minister for Manpower (Dr Lee Boon Yang): Mr Speaker, Sir, may I have your permission to take Question Nos. 12 and 13 together as they are both related to the same subject?

Mr Speaker: Yes.

Dr Lee Boon Yang: Thank you. Mr Speaker, Sir, our unemployment rate rose to 4.8% in September 2002, the last quarter. This was the highest level for the past 15 years. Sir, unemployment is projected to rise to as high as 5.5% by the end of this year. Our economic and employment outlook for the next six months is rather uncertain. It is therefore critical for the Government to strike a judicious balance between meeting businesses' needs for low-wage foreign workers and helping unemployed Singaporeans to find jobs.

Sir, the foreign worker levy was already lowered on 1st January 1999. The reduction was $70 for the skilled foreign workers and $90 for the unskilled foreign workers in the manufacturing and services sectors. The reduced levies will remain in force until December 2002. The current lower-tier levy of $30 is already a very big concession to help employers keep costs down. The outcome of my Ministry's review on the foreign worker levy will be announced in early December before the current moratorium expires.

Sir, our key challenge now is to re-deploy the unemployed and the retrenched workers to industries where there are opportunities for gainful employment. It is therefore unwise and not in the interest of Singapore to raise the dependency ceiling or to allow more non-traditional sources workers into our labour market at this juncture.

We should focus on retraining and re-orientating displaced workers for current and imminent job vacancies. For employers, the present slack labour market offers good opportunities to recruit local workers so as to meet their manpower needs and to enable them to recruit additional work permit holders under the current dependency ceiling.

Mdm Halimah Yacob (Jurong): Sir, in view of the fact that we have a very high unemployment rate now of 4.8%, I would like to ask the Minister what mechanism is in place right now in the Ministry before approving any work permit applications, to ensure that the employers actually exhaust all possibilities in recruiting local employees who are Singaporean workers first? I feel that there could be a possibility that there could be abuse, in the sense that employers look to foreign workers as an easy alternative, instead of exhausting all avenues and possibilities, in terms of trying to redesign work, or in terms of trying to retrain workers before resorting to foreign workers.

Dr Lee Boon Yang: Mr Speaker, Sir, we now have two contrary views or opinions on this situation. I just like to remind hon. Members that what I said was that we should strike a judicious balance. We should not shift from one end of the spectrum to the other end. The Member's proposal that we apply labour market test, in other words, we make sure that the employer has conducted proper recruitment exercise and has offered similar jobs to Singaporeans and these offers were turned down, before we approve the work permit application. This is one possibility. Some countries do implement labour market test. But in our context, if we introduce labour market test, we would increase the rigidity in our labour market and I think that is not good for us because, on the one hand, while we have rising unemployment, on the other hand, many of our industries are still actually quite dependent on some percentages of lower-wage foreign workers to maintain their competitiveness. Our companies have to survive in the global market and if we force them to employ higher-wage workers, then we might seriously cripple their ability to compete.

So, while unemployment has gone up, we should not swing too far towards trying to protect displaced Singaporeans. What we should do, as I have said, is to help them, equip them with the skills so that they can take on the new jobs that are available, and also encourage employers to give them an opportunity. So as I said earlier on that in the light of our slack labour market, it is an opportunity for employers to recruit more Singaporeans. And, if they have more Singaporeans then they can recruit more work permit holders under our present dependency ceiling.

I would like to elaborate that this is a serious invitation to employers because the Government has offered through the People for Jobs Traineeship Programme, a wage subsidy for up to six months or a limit of 50% of the first six months' salary, up to $2,000 a month, for employers to recruit Singaporean workers aged 40 and above. If you do so, we give you this wage subsidy, and on top of it you can recruit another foreign worker in the manufacturing sector under the dependency ceiling of 50%. So it is a win-win situation. You recruit a Singaporean and you get an additional foreign worker. Overall, it averages downwards your wage cost. So I would urge employers to take advantage of this scheme to reach out to the unemployed Singaporeans to give them a chance, to help them to make this adjustment, rather than to just look towards getting more foreign workers, getting more non-traditional source workers, or to ask Government to further lower the levy. At $30, the levy is almost practically nothing. It is already such a generous concession. How much lower can we go? Cancel the levy completely? I think that would be most unreasonable, and I think that could be very disruptive to our own resident labour market.

Dr Mohamad Maliki Bin Osman: Mr Speaker, given that Government has been doing all these things to make sure that Singaporeans are trained and available to be employed, what is the problem faced by SMEs that they have all these difficulties attracting local workers? Has MOM done anything to study what are the problems that SMEs are facing because we have all these schemes in place? Is there any kind of help that has been given to the SMEs to understand all these schemes and for them to actually utilise what is already made available?

Dr Lee Boon Yang: Mr Speaker, Sir, I think the problem that we are facing today is a problem that we have discussed before, that of a mismatch in expectation, both in terms of wages and in terms of working conditions, and also a mismatch in the skills that are required by the SMEs and the skills that the displaced workers have with them. That is why our overall strategy towards addressing rising unemployment is to offer workers, or those who are unemployed, more opportunities for skills upgrading, and at the same time, to raise their awareness that economic restructuring is going on. Old jobs that they have lost are unlikely to come back and new jobs would require new skill-set, which they must make an effort to acquire, and in order to fit into these new jobs they may have to start lower down the ladder from where they were before, because they have now moved to a new industry, doing a different kind of work. So there are quite a lot of adjustments that are needed, both on the part of the worker, the person looking for a job, and also on the part of the employers.

We are also helping companies, particularly SMEs, to look into how they can restructure their business operations. One thing that the employers need to do is to look into how to improve the productivity of the jobs. If he has a job, if the job can be re-engineered into a more productive job, then he could obviously offer a higher salary to the worker and still remain competitive. If he continues to do business in the old way, in an unproductive manner, then his wages would be constrained by his low level of productivity and he will not be able to offer wages that can attract more Singaporeans to take up this job. One thing that employers have to do is to take a hard look at their business operation and, if possible, restructure their business so that they can offer more value-added and more productive jobs to job seekers. 1.30 pm

Mr Speaker: Order. End of Question time.

[Pursuant to Standing Order No. 21(3), Written Answers to Question Nos. 17, 19 and 21 on the Order Paper are produced in the section, Oral Answers to Questions not Reached" (Cols. 1653-1656). Question Nos. 14-16, 18, 20 and 22 have been postponed to the sitting of Parliament on 26th November 2002.]