HEAD S - MINISTRY OF MANPOWER

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Head S - Ministry of Manpower

The Chairman: Head S - Ministry of Manpower. Amendment No. (1), Mr Yeo Guat Kwang.

Manpower Challenges

Mr Yeo Guat Kwang: Sir, I beg to move,

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That the total sum to be allocated for Head S of the Main Estimates be reduced by $100.

Sir, after many years of economic growth and full employment, we are facing new challenges of more frequent job changes and structural unemployment associated with restructuring and an ageing population. Since the Asian economic crisis, when the number of workers retrenched was highest ever experienced, our concern is workers' employability. I hope the Ministry of Manpower would place enhancing workers' employability as its key focus, particularly to help the older workers to stay employable.

Sir, our tripartite partnership is built on sound principles and a track record of cooperation and mutual trust. It is a major source of our country's competitive strength. Over the last 20 years, this tripartite partnership has been put to the test on more than one occasion. Each time when we have to take painful measures to restructure our economy, we have pulled through without a major social upheaval. Each partner in this tripartite partnership realises that it is far better to work together, to cooperate than to confront, to pursue win-win outcomes and to work towards the long-term interest of each party. This model of partnership has worked in Singapore because each of the social partners has learned to look beyond its own interests.

[Mdm Deputy Speaker (Mrs Lim Hwee Hua) in the Chair]

4.20 pm

However, in the past one to two years, some workers have lost faith and trust in the management. They feel that some management has been less than open and transparent. When the atmosphere of trust is lacking, industrial relations become difficult. We cannot take our good industrial relations climate

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for granted. Could the Ministry inform the House what were the numbers of worker disputes in the unionised sector and the non-unionised sector respectively, over the last five years?

Madam, changes arising from economic restructuring, including the loss of old jobs and the development of new forms of employment relationships, will be unsettling for all our workers and put our LMR to the test. The business community has to play a much active role to strengthen the tripartite partnership.

The labour movement has made a number of suggestions to the business community. We have requested the management and the "captains of industry" to do the following:

(1) To strengthen communication, listen to the problems and suggestions of the employees and help build an atmosphere of trust within the enterprise;

(2) To create higher value added jobs by investing heavily in workers' training and development, in order to differentiate the company from other competitors;

(3) To give opportunities for employees to develop their skills so that they can do their jobs better and be more employable;

(4) To help create more jobs for Singaporeans and enable older employees to stay employable for as long as possible by redesigning the job processes so that they too can have a chance to be productive;

(5) To make our wages more flexible so that business will respond better to the challenging environment; and

(6) To nurture and develop the relationship at the firm level.

Madam, the Ministry should find ways to encourage the management to do more

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in all these areas. Our unique tripartite teamwork will provide strength as we collectively face the challenges ahead. This partnership, based on trust and respect, must be preserved and built upon.

Finally, with the trend of outsourcing and employment restructure, I would also like to urge the Ministry to review the legislation in our employment benefits to safeguard the interest of contract and part-time workers.

Employment Situation

Dr Ong Seh Hong: Madam, the Singapore economy has registered a modest recovery in year 2003. GDP grew by 1.1% and the outlook for this year looks promising. In view of this recovery, I am happy to note that the total employment grew in the fourth quarter of 2003, following a sustained improvement in the Singapore economy in the second half of the year. According to MOM's statistics, total employment increased by 11,500 in the last quarter of 2003 after registering a slight gain of 900 in the third quarter. However, the number of jobs lost in 2003 was estimated at 17,600, with some 16,300 workers retrenched in the same period. Economic prospects ahead look promising. Can the same be said about the employment situation, given that about 600,000 of our workforce have only secondary 2 educational level or below? Perhaps, some of them may not find meaningful or gainful employment again. Will we face the same situation, as what some call jobless recovery? Will the Manpower Minister please comment and elaborate on his Ministry's plans to create more jobs for Singaporeans?

The Chairman: Dr Maliki and Dr Magad are not here. Mr Low Thia Khiang.

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Jobs for Singaporeans

Mr Low Thia Khiang: Madam, despite the growth forecast for the economy this year, unemployment figures are expected to remain high. The estimates from the Ministry of Manpower showed that, as at December 2003, unemployment among residents was about 5.5% or 96,400. Unless jobs are found in big enough numbers, the resident unemployment may increase every year as more people complete their education in our schools and tertiary institutions and join the workforce. In a paper titled "Employment of Foreigners and Employment for Singaporeans" presented at the "Singapore Perspectives" conference organised by the Institute of Policy Studies in January 2004, it was pointed out that the unemployment we now have is serious and, in some ways, unprecendented. It said:

(a) There is a distinct deterioration of employability of older workers over the last three decades. Although older workers, 40 to 59 years, increase their share among those employed, joblessness among them increases disproportionately, especially during the economic downturn in 1986 to 1988 and post-1997. This means that seniority is now a burden rather than an advantage;

(b) The profile of the unemployed by educational status is now more skewed towards the better educated. In 1974, only 7.4% of the unemployed have post-secondary and higher education. In 2002, this could rise to 35% of the unemployed. Correspondingly, the share of managers, professionals and technicians, among the unemployed, rose from 7.2% in 1974 to 30.3% in 2002; and

(c) Long-term unemployment, that is, being without a job for at least 25 weeks has also shown a distinctive trend towards having older and higher educated workers.

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What I understand from DPM Lee's argument is that the new 'S' Pass will benefit Singaporeans as it would encourage foreign companies to come here if they knew they have the flexibility of having their preferred employees and skilled workers. However, there is also a need for the Government to take action to protect Singaporeans' livelihood for many reasons. For instance, unemployment can trigger off financial crisis for families, resulting in a need to depend on welfare assistance. They also have less to contribute towards domestic consumption which is bad for our economy. Even if we cannot train or retrain suitable Singaporeans immediately to do the jobs held by foreigners at the middle level before granting 'S' Pass, should the companies be made at least to show that they have plans to increase employment of Singaporeans in the medium term? Since we now have a higher proportion of our unemployed having post-secondary education or higher, these persons appear to be possible candidates to fill jobs at the middle level.

According to the MOM's website, the 'S' Pass will be issued to foreigners for two years initially and renewable by another three years. Thus, these jobs are effectively blocked off from Singaporeans for a number of years once 'S' Pass is issued. This effect could be seriously weighed against whether Singaporeans can be trained, retrained in a shorter time to fill these vacancies and how 'S' Pass renewal should be considered. We also do not have any assurance that the 5% cap of the 'S' Pass will not be increased in future. Indeed, a warning sign is already seen in DPM Lee's Budget wrap-up speech. He welcomed the suggestion to have flexibility for different sectors which means some sectors would have a much higher percentage of 'S' Pass holders in due course.

Madam, the Government cannot run away from its responsibility to make the

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Singapore economy conducive for Singaporeans to find work or business opportunities. If Singaporeans cannot find a reasonable livelihood here, there is no right to label Singaporeans as stayers and quitters.

Mdm Halimah Yacob: Madam, the economy is growing and things seem to be improving. But when you talk to Singaporeans, there are mixed feelings, as many are still worried about their jobs, including those who are still employed. Many are also concerned about outsourcing and the proliferation of contract work. There is a certain sense of instability and vulnerability. The most affected are older workers and those who are less skilled. Many feel that they are somewhat at the mercy of employers who can make choice picking from foreign workers who are younger and cheaper. It does not help that there are still a significant number of employers not within the unionised fold who retrenched without paying any retrenchment benefits to their workers.

Madam, while I agree that building a wall around our workers and adopting protectionist policies will not help, I would like to ask the Minister what more can be done to ensure that Singaporeans continue to feel that they are important stakeholders in this society and are not left out. In my view, we must continue to focus on helping the less skilled Singaporeans upgrade and remain employed. At the same time, we must guard against training fatigue, as workers do complain that even after undergoing training, some

still cannot find jobs. I would, therefore, like to ask the Minister how effective is our Place-and-Train scheme and also how effective is the Work Assistance Programme (WAP).

4.30 pm

Madam, even if we are able to create many high value-added jobs, we know

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that, for quite a significant number of Singaporeans, structural unemployment will remain a reality. Today, all Singaporeans are competing in a global labour market, and the better-skilled stand a better chance compared to the unskilled. In order to remain competitive and employable, our workers have accepted many adjustments, some of which are painful. But to the credit of our unions and workers, there was no loss of a single man-hour or man-day last year due to strike or industrial stoppage, which is something which no country in the world is able to achieve. A Towers Perrin survey last year of 10 Asian countries in the manufacturing sector, for instance, shows that the pay of manufacturing workers in Singapore has gone up by only 1% over the last two years, compared to an average of 20% for the rest of Asia. So, workers have done their part, and they hope to see the results.

I would like to ask the Minister whether he can give us an update on the job situation, how serious is the structural unemployment problem in Singapore, and whether, in his view, the current programmes are sufficient to address them. What are the overall manpower projections to ensure that demand meets supply, and what more can be done to ensure that workers can be channelled in a systematic way to the sectors where jobs are available?

Mr Heng Chee How: Madam, yesterday's release of strong February export figures adds confidence that the Singapore economy is en route to recovery. This is certainly to be welcomed, and I am sure that many Singaporeans, especially the unemployed ones, will look forward to this recovery and hope that the threat of retrenchment will recede while the prospect of employment will improve.

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But I want to sound a note of caution here. We cannot assume that economic recovery, even when it is really sustained, will automatically solve all employment challenges for Singaporeans. According to statistics available on the MOM's website, the resident long-term unemployment rate, defined as a proportion of the labour force who have been unemployed for at least 25 weeks, has climbed steadily from 0.4% or about 5,700 in 1997, to 1.4% or 25,100 persons in 2003. Yes, part of this increase in the long-term unemployed can be accounted for by cyclical reasons, namely, the difficult demand conditions faced by the economy over the past five years. But I think there are also structural reasons behind the increase. Fast changing technology, the consequent demand for better-skilled manpower and the overall transformation of the economy towards knowledge-based and higher-value work have come together to render re-employment for some displaced workers very difficult. The threat of growing structural unemployment is therefore real, and will not go away simply because our economy is picking up.

I also note that the percentages of workers in temporary employment and part-time work have risen from 1.7% and 3.3% respectively in 1997 to 4% and 5.7% respectively in 2003. Although these figures are still low compared to those in some advanced economies, it still reflects an underlying trend and structural shift in the make-up of our workforce, as companies move towards maintaining a smaller core of employees, and pursuing flexibility through outsourcing and employing supplementary manpower on a needs basis.

This trend implies that even as hiring picks up with the economic recovery, the kinds of jobs that Singaporeans seeking work will find will be different from the ones that have been restructured away.

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The terms and conditions of such work will also be different from the traditional full-time permanent jobs. There will be implications on how then to help Singaporeans holding such jobs meet their long-term basic needs in retirement, training and healthcare.

The third observation that I would like to make is that, according to the Labour Market Report 2003: "For the second consecutive year, professionals, managers, executives and technicians (PMET) ..." among them, 16.7 were retrenched per 1,000 of such personnel employed, and this group "... overtook production and related workers ... to post the highest incidence of retrenchment. The PMETs accounted for the largest group of locals retrenched in 2003 compared to all other groups." Beyond cyclical resons, I believe this result points to the underlying trend of delayering. Again, I do not think that this trend will disappear or be reversed when the economy picks up.

Madam, in the light of these structural shifts, I believe that even as the economy recovers and the need for suitably-skilled manpower grows, we may yet encounter sticky unemployment of perhaps 3% or 4% of the workforce. Getting back to the 2% level of unemployment that Singaporeans have become accustomed to in the years prior to 1997 will be a challenge.

I would therefore like to ask the Minister what plans would his Ministry have to maximise the employment and re-employment opportunities for Singaporeans in this recovering economy. I would also like to ask the Minister how his Ministry intends to tackle the structural shifts that I noted earlier, and thereby secure more good jobs for Singaporeans.

Dr Tan Boon Wan: Madam, in recent years, jobs have become a major concern of Singaporeans, and this issue has

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occupied this House. With the improved economy, people are now generally more hopeful. However, as my fellow colleagues have represented, the less educated, skilled and also the older workers - those past 40 years old - do not share this optimism. The former want to know where the jobs are going to come from when the new jobs are becoming more high-tech and skilled, while the jobs they used to do are leaving for China, India and elsewhere. For the older workers, they said that employers continue to be averse to their age. What plans does the Minister have to ameliorate their concerns and fear? What are they going to do to earn a living?

Shortage of Workers

Mr Ahmad Khalis Bin Abdul Ghani (Hong Kah): There have been reports that there are many job opportunities not taken up by Singaporeans, such as those in our shipyards and in the nursing industry. Employers simply attribute this to job seekers not being willing to work in difficult conditions. But job seekers say that they do not have the required qualifications or training even to apply, and those who apply without the necessary qualifications get rejected. So, there seems to be a mismatch between the kind of employees that employers in these fields seek and the qualifications or skills that the current unemployed possess. May I ask the Minister what efforts have been made to study and address this mismatch?

Many of the unemployed, I am told, are willing to undergo training to gain skills, so as to qualify for the vacancies, but they cannot afford to pay for training while they are being unemployed. May I ask what efforts have been made to understand the training needs, in particular the choice of skills and the cost of training of these unemployed persons? Are there efforts being made to close the

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gap between the qualifications of our unemployed with the needs of vacant employment? I understand that, to meet the needs of industries, employers do resort to employing foreigners. But would the Minister not agree with me that in the long term, especially when it comes to employment where the salaries by themselves do not put Singapore off, like in the nursing and shiprepairing or shipbuilding industries, it is better to close this gap again between the lack of training and qualification of the present unemployed with the vacancies available?

The Acting Minister for Manpower (Dr Ng Eng Hen): Madam, let me thank Members for their questions. Members have asked what our current manpower situation is, what the job market will be like, and which groups will find it harder to stay employable. They have also asked what the Government can do, and what more can be done to help them. Mdm Halimah echoed those words. Mr Yeo Guat Kwang said the situation is unsettling. Mdm Halimah said her constituents were worried and felt vulnerable. Dr Tan Boon Wan said the older workers did not share the optimism. I understand their concerns and I know that they are echoing the words of their constituents, and I will try to do my best to answer their queries. Before I go on to specific schemes, I would like to update Members on the larger aspects, so that they can see the greater context in which our strategies are now placed. Some Members have asked for updates on the current manpower situation, so let me begin there.

Updates on Employment

MOM has already released figures for 2003, but let me summarise. First of all, we appear to have turned the corner. There was a stark difference between the first and second halves of last year.

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While we lost 30,000 jobs in the first half, we gained about 17,000 in the second half, and most of that, about 12,000 jobs, in the last quarter. The same trend was reflected in retrenchments. Similarly, the ratio of job vacancies to job seekers went up from about 0.18 in September 2003 to 0.3 in December 2003, not a huge jump but we are grateful for it.

With an expected GDP growth of 3.5% to 5.5% this year, the labour market is set to improve and more jobs will be created. But these jobs will need to "soak up" the existing unemployed pool as well as those economically inactive persons who choose to enter the labour market as employment conditions improve. MOM estimates that unemployment could fall to around 4% to 4.5% by the end of the year. The industries where jobs are likely to grow in the near term are in education, healthcare and social services. The retail and wholesale sectors are also expected to add jobs. For manufacturing, direct job creation will increase, but at a much slower rate compared to the service industries. But there will be jobs created in the electronics, biomedical and chemical sectors, transport engineering and general manufacturing engineering industries.

Long-term Challenges Persist

So, while it appears that we have turned the corner, I think it would be useful now, especially now, to take stock and look at the overall picture. We certainly do not want to be complacent and relaxed, but instead press on. And I agree with Members that we need to address long-term structural issues. On manpower issues, DPM Lee said that the last five or six years were wrenching, and had more changes than even the preceding 20-odd years. From 1997 to 2002, the impact of the Asian financial crisis, September 11, SARS and the Bali

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bombing may have abated, but long-term structural changes for jobs for Singaporeans will persist for the next decade, and many Members have alluded to that - Dr Ong Seh Hong and Mr Heng Chee How. While we have some breathing space and nerves are not so frayed, let me address these issues pointedly.

"Protection" versus Flexibility

Of all the manpower issues that surfaced in the last few months and the last two years that my cohort of Members of Parliament came into this House and were faced with, the one that had the most significant impact on how we protect jobs and livelihoods for Singaporeans was a fundamentally important question. And during those turbulent times, some form of protection or other had been asked in a variety of ways, whether it was in legislation to promote hiring or making it more difficult to retrench Singaporeans, special rights for anti-discrimination of the elderly, minorities, parents, part-time workers - like some of you have mentioned today. Others have asked for more predictable and assured terms in wages and benefits or working hours, so that workers' remuneration was better protected. And, of course, we have the perennial requests, as we have this afternoon, to restrict access to foreign workers, so that Singaporeans are favoured for these jobs.

Members of the House, we are not alone in asking for these seeming forms of protection. Indeed, all over the world, this is an issue which countries are grappling with. US presidential candidate, Senator John Kerry, wants to get tough on companies which outsource operations outside the US. The Dutch government recently decided that local employers must make sure that no Dutch person is available for a job before attempting to recruit workers from the 10 new Central and Eastern European countries joining the

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European Union. In the meantime, of course, businesses are concerned with competition and costs. They are deciding if they can survive and stay, or uproot, or change industries.

4.45 pm

How can we help Singaporeans get jobs and earn a livelihood? Mr Low Thia Khiang said this is the Government's responsibility, otherwise, we have no moral right to start the stayers-and-quitters debate. I agree fully with him. I accept that it is the Government's responsibility to do this. And if by introducing laws that make it harder for companies to right-size, keep wages up, and keep foreign workers out can ensure jobs for Singaporeans, then the solutions would be obvious and, in fact, easier to do. We pass the laws, Singaporeans are pleased, and they will find their jobs secure and livelihoods preserved. But will they? Other countries have gone that way and have not succeeded. Indeed, it has worsened unemployment.

I want to show Members some charts, and I have asked the Clerk to circulate them. This is the first chart that I will show. On average, over the period 1997-2001 - and I have particularly chosen the last few years which were difficult years for us - continental European countries, such as France, Germany and Spain, had employment rates of above 10%. I would like to remind Members that they did not suffer SARS, they did not have the Bali bombing, and there was no Asian financial crisis that afflicted them.

This was compared to 4.5% for the US, 5.9% for the UK and 3.0% for Singapore. Why this sharp difference? One answer is the extent to which these countries regulate their labour market. The Anglo-Saxon model of the UK and US, in particular, believes in flexible labour markets. They regulate, as all countries do, on safety and health matters. But

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they allow firms flexibility in right sizing, in hiring and firing. Compared to other countries, they are not overly generous in their statutory leave and benefit provisions, or have overly restrictive working hours.

These flexibilities allow US companies to respond quickly to external changes, to seize new business opportunities and to move out of unprofitable areas. A Business Week article, contributed by a US professor of economics, Russell Roberts, highlights and examines what happened to the manufacturing sector in the US, because US manufacturing only accounts for about 12% of jobs. They have had to go through wrenching times as well. He said that the sector had to shed jobs due to productivity gains or plant relocations. But it freed up workers so that they could move into new industries and new jobs, eg, in telecommunications, software and biotech. New goods and services became available to consumers. The improvements in productivity kept wages, raised the standard of living for all. So despite the churn with retrenchments and re-hiring, unemployment rates, wages and standard of living held and were better than others with rigid labour markets. In other words, this market flexibility which at face value appears harsh, in fact accords more job and income security not only for the more employable but indeed for all.

Some Members have asked about the impact of outsourcing. McKinsey, the global consultancy firm, estimates that every US$1 spent in the US on offshore services generates a total benefit of about US$1.45. What about jobs? Again, the report says that even if two million jobs are outsourced, moved out of the US, this frees up 22 million jobs that the US Bureau of Labour Statistics estimates will be created over the next 10 years. How

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certain these forecasts are, only time will tell. The academics are convinced, including the Presidential advisor, that these spurts of technological discontinuity we see now have had the same effect in the past, and the outcome will be repeated. But I presume, in an election year in the US, workers are doubtful and, even if politicians believe the academics, they would be reluctant to say so.

But what about the supposedly more secure environments in continental European countries which seek to protect workers' jobs with more rigid labour, wage and other benefits? It is spurious protection, as their companies are less able to change in an increasing volatile environment. The result? Job growth slows, and descriptions like "Eurosclerosis" or "arthritic economies" emerge. For years, economists and business leaders have lamented that Germany's restrictive labour laws did little to stem their high unemployment rate of 10%. On average, unemployed people in Germany remain out of work longer than in other countries. The process of job placement is lengthy and complicated. And the unemployment and social security benefits in the systems are expensive solutions that literally tax the system. So, Chancellor Schroder plans to implement a series of reforms to modernise the labour market and to create jobs. All these reforms are part of the Agenda 2010 package of social and economic reforms to boost the economy. They plan to limit the jobless benefits to one year instead of 32 months to free up regulations to enable firms to hire and fire temporary or permanent workers.

Denmark too liberalised the labour market in the early 1990s. They experienced an employment boom and improved their unemployment rate to 6%. Denmark's economy has averaged 2.6% annual growth since 1994. They cut entitlements, including social security transfers, and raised indirect taxes. That

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gave them the ability to shift resources into higher education and research and development. Denmark is the third largest exporter of pharmaceuticals per capita and among the world leaders in biotechnology patents.

Even in USA, this simple fact that more protection does not necessarily afford more job security is being borne out. The California State under the Democrat Governor enacted or expanded half-a-dozen laws dealing with labour market regulations. Especially onerous on businesses were the three laws on: (1) paid six weeks family-leave act; (2) a mandated increase in workers' compensation amounting to more than twice the US national average; and, (3) increasing overtime pay which was mandated for anyone who works more than eight hours a day. This makes it expensive for businesses that operated four 10-hour days or those call centres which operated 12-hour days.

Companies in California responded and since 2001, the state has lost about 300,000 jobs. Even in developing economies, the leaders have realised the same point. In the post-Raj era of India, it was very difficult to hire and fire. In fact, it needed a bureaucracy to administer all those rigidities that were there by fear. But in the early 90s, the Finance Minister, Manmohan Singh began the process of liberalising the system and allowing businesses to respond without the onerous stipulations imposed by government.

As a result of that enlightened move, all countries including Singapore are experiencing this extraordinary rise in the productivity growth of Indian industries. Yes, India was lucky and took advantage of the IT boom and bust. But we should recognise that while India had the educated masses, previously rigid conditions stifled their productivity.

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I have gone into some length on this issue because this is a fundamental point which under-girds the principles upon which we craft our labour policies. All these examples show that excess rigidity, instead of protecting workers, leads to economic stagnation and loss of jobs.

Let us come back to Singapore. In the area of outsourcing, some Members have asked what the impact is. We could lose some jobs overseas because others can do it better or at a lower cost. This is a global phenomenon and there is not much that we can do about it. But we can also benefit from offshoring. In fact, our manufacturing sector first started as MNCs offshored production, design, support and headquarter functions. We were among the first beneficiaries of outsourcing. As more higher valued and higher technology content manufacturing investments came, labour intensive manufacturing then shifted to cheaper locations. That freed up local manpower to go into the growing services sector. If we had blocked that then in 1970s and 1980s, the consequences today would have been devastating, as more workers would lose their jobs.

Meeting competition head-on: the way to growth and jobs

How then do we protect ourselves and jobs for Singaporeans? I come back to the key question - not by shutting out competition, but meeting it head-on. MTI Minister, BG George Yeo mentioned this in his speech. Let me reiterate. We can compete on four aspects:

Firstly, value plus. We can never be cheap but we can moderate the costs to do business here by keeping statutory burdens low and adding value - whether it is CPF, taxes, utilities, land and wages. We need to give companies the flexibility to respond and the wage restructuring efforts that we have been talking about recently should be seen in this light.

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Secondly, systems OK: Excellent systems and infrastructure - whether it is transport, utilities, judicial, banking, education. Words like "dependable", "predictable", "transparent" and "efficient" epitomise the Singapore system. What we now need, of course, is another layer with descriptions like "unexpected", "quirky", "innovative", "creative", "entertaining", "reversed" and, yes, "Surprising" Singapore.

Thirdly, a best workforce - an effective and efficient labour market, highly trained local workers and, I would say, access to foreign workers - not deprivation - is a critical element both to allow diversity in skill base and help businesses average their costs.

Fourthly, many Members have alluded to this - Mr Yeo Guat Kwang, Mr Heng Chee How - a harmonious labour- management environment through tripartite consensus. I fully agree with Mdm Halimah - not a single day lost last year - which was a wrenching year. It is a fourth pillar.

With this strategy, we have created growth in the past and we will continue to do so. Singaporeans need not lose heart.

I want to show a second chart which helps us focus on jobs as a larger factor. I have said that our policies have created more jobs than there are Singaporeans even within the last five difficult years. It is a busy slide but I want you to focus on the top line above the orange bar, which says "Total Jobs". This is the line that our economy creates - the number of jobs that it creates. You will note that it is larger than the line over the blue bar, which is our local workforce. This is as many workers that we have. The number of jobs our economy created is always larger than our local resident workforce. The excess of jobs will continue in the

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long-term. From 2003 backwards - those are facts. From 2003 onwards, they are projections. Some of us might be asking whether our projections are accurate. We have adjusted for the reduced number of jobs that growth brings compared to the past. In other words, when we projected this, each percentage of growth, we factor in less jobs that it brings in because of the higher value add. Yes, globalisation, outsourcing, technological changes can have consequences, but this picture should be representative for the near term - five years. Beyond that, it is hard to say. But for five years, it will serve as a reliable model to plan our strategic efforts. This is, if you like, the battle plan to answer many of the questions - what can Government do?

With an efficient and responsive labour market, and competitive workforce, we are well placed to achieve the medium term growth forecast of 3-5% projected by MTI. And, as the economy grows, new jobs will be created. Looking forward, this gap between how many jobs the economy creates and the number of workers in our workforce will persist. Our workforce grew annually by about 1.8% over the past five years from 1998. From this year onwards, it is expected to grow by 2.5%. There is a reason for this. Many of us remember 1988. I remember well because my dragon daughter was born then. But let me tell you that in terms of demographics, everything else from then went downhill. That was the biggest peak - 50,000 births and the number of births per year after that went down. I think Members remember well the charts. This is a demographic echo. From 1988, in 2013, they will be 25 years old. If we note, our workforce will shrink in terms of rate of growth. It shrinks down to almost half, 1.2% per annum. In other words, beyond 2010, due to lower fertility and our ageing population, our local resident workforce will start shrinking. Today, the gap is largely filled by foreign workers, coming in

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at all levels. We will continue to need them to help our economy meet its manpower needs in future.

Changed Job Landscape

Mdm Halimah Yacob, Mr Heng Chee How and Mr Ahmad Khalis have asked whether we can paint for them the job landscape. While we are confident that the economy will grow and jobs will be created, there is one thing that this Government cannot promise,

and that is, to provide only jobs of the type that are appealing and attractive to Singaporeans. No government can promise this. What types of jobs exist in our economy cannot be mandated by the wishes and wants of Singaporeans or the Government, but by market place realities. As Members have understood and expressed, the job market has fundamentally changed. And even though we have more jobs than Singaporeans, groups of workers are at risk due to structural unemployment. I will talk about this later.

5.00 pm

But even despite growth, unemployment will hover at around 3% to 4%. There is a mismatch of job seekers against the jobs that exist in expectations and skills. If this is not addressed, unemployment will go higher. The Government understands this. It is committed to help Singaporeans stay employable. This is a challenge that involves us all. We will work with NTUC, our social partners, the Mayors of CDCs and Members of this House to overcome this challenge.

What type of Jobs?

**** Members have asked for more information of the job market. Please refer to Chart 3. This Chart, using educational qualifications as a proxy - it is not a perfect proxy - but it will do for purposes of this illustration. Put

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succinctly, as our industries move up the value chain, we will need more specialised skills. The blue bars recognise what are present in our workforce. The orange bars represent the gap between what we have and the number of workers we need with those skills that our economy will need. So, if we take education as a proxy for skills, Members will note that Singapore is going to need more workers with post-secondary qualifications and above - NITEC, polytechnic diplomas, degrees and PhDs.

One of the Members mentioned that we have 500,000 Singapore workers with less than secondary education. He is right. We have another 500,000 workers with secondary education and below. In other words, we have about a million Singaporeans with secondary and below education. And if we look at the number of jobs projected for this group, there is still an excess, but many Singaporeans do not like these jobs either because the pay is too low or the jobs are unappetising. We will try to redesign the jobs. I will address this later.

But if we move up, combining the post-secondary, diploma, degree and post-graduate together, our projections show a job shortage of about 350,000 positions until 2009. The greatest shortage is in the post-secondary, those with diplomas. If you ask the businesses why, they will tell you that Singaporeans have great aspirations. They come out of ITE or the polytechnics, you can hold them two to three years, but they want to go and have degrees, and they do not stay long. So, the greatest shortage is in these positions.

Workers with secondary or less qualifications face the greatest challenge. Mdm Halimah asked, during the Budget debate, why this gap exists for skilled workers, even when we have been increasing the intakes in our polytechnics and universities. There are two reasons

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why modern Singapore has a workforce with 500,000 workers with less than secondary education and another 500,000 with secondary education. I know we have just finished the education debate, but this is my educational pitch. I was listening to Members who were harkening to the good old days of how the system was less stressful and how everybody succeeded - an evaluation seen through rose tinted glasses.

We have the structure today because many left the education system in the 1970s and 80s - some out of economic necessity. But let us face it, many could not succeed in a less efficient and more wasteful education system. The second reason why we have this structure is complacency. We had 8% to 10% of GDP growth from 1987 to 1997. Workers found jobs easily because the labour market was tight and did not upgrade then. They did not see the need to.

While we help our workers upgrade, we must allow companies now to have the skilled workers they need. Therefore, I have decided to introduce the S Pass, but I will speak on this later.

A service economy

As I have said, the majority of jobs will be in the services sector. Manufacturing jobs have dropped from about 30% to about 20% now. Like many developed countries, two-thirds of our jobs are in the services sector. DPM Lee showed this Chart during the Budget debate. It bears reiterating. In the last 10 years, 500,000 jobs were created. The net number of jobs in manufacturing was nil. It was almost predominantly in the services sector.

The services sector will be the main driver of employment, but that does mean

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that we do not need manufacturing, because they generate a lot of indirect impact. Jobs will increase in areas such as hotels and restaurants, in education, healthcare, transport and logistics, communications and media. There are jobs available at all levels. Over the past few years, when you look at our figures, some of the fastest growing occupations in the sector were university lecturers and other education professionals, management consultants and financial analysts on the one hand, and bell boys, cleaners, and security services on the other.

Service skills required

Members have asked what this new job landscape means for workers. Will they have the right skills? The shift from manufacturing to services will have implications on our competitive edge. Very few doubt the technical capability of our workforce. Our workers have consistently ranked well globally in terms of productivity and efficiency, according to the BERI reports. They are efficient, diligent and rational to problem solving, and these have served us well. But my point is, in terms of employment, when we are a service driven economy, we will do less well. What is the reason? One of the reasons is that unlike manufacturing where your supply chain is your production line, your products move past you.

In the services sector, you have to get used to talking to your production line, because the quality of service lies primarily with the person delivering it, as one interacts with the customers and responds to their needs, be it in the retail, finance, consultancy or healthcare sectors. A large component of value-add is from intangibles, such as service edge, performance, ideas and concepts, which is why I think our changes in the education system are correct. This is for pre-employment training.

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What do we do for adults? That is the key question. I want to correct the misimpression that services jobs mean lower skills or lower pay. If I can give a simple example, an engineer who is a CEO in the financial industry is considered to be in the services sector. "Service skills" are best seen as an additional layer on top of technical skills.

Our challenge, therefore, is to maintain the premium for our Singapore workforce by adding skills and mindsets to achieve a thriving services sector. Singapore workers will have to provide customised solutions, handle simultaneous and varied requests. There will be less routine work, and characteristics such as inter-personal relationship, EQ, rapport-building and mentoring will be given emphasis. And this is part of the problem with our HR management systems and employers. Because employers, at the same time, will have to find new ways of measuring workers' productivity given the significant intangibles in the services sector.

The challenge is to build a workforce that drives our reconfigured economy. How do we help workers acquire these new skills that Singapore needs? Which groups will fall through the gap and are vulnerable to be structurally unemployed, because our job landscape has changed? These were questions asked during the Economic Review Committee, and I will take some time later to explain what our strategy is.

Structural Unemployment

Mr Heng Chee How asked what the structural unemployment will be like? Will it rise? From 1993 to 2003 - he rightly pointed out the figure - the resident long-term unemployment rate rose from 0.4% to 1.2%. This is about 22,000 people.

Presently, 60% of our local workforce have secondary or lower education. If we cannot get Singaporeans - in other

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words, 60% out of 1.67 million workforce have secondary or below education - to take up existing jobs or upgrade with the relevant skills to get better jobs, especially the half million without secondary education, then structural unemployment will go higher. The ERC recommended and the Government set up the Singapore Workforce Development Agency (WDA) last September, specifically to help unemployed Singaporeans gain employment, and to upgrade the skills of workers in employment. To do this, we will have to revamp our Adult Continuing Education and Training System. The old system cannot address our needs and help surmount our challenges. Which groups to focus on - some Members, like Dr Tan Boon Wan, have identified the older workers and the less skilled - and how to help them are crucial questions. But I would like to break here to allow Members to field further cuts and I will respond together with the issues on the Workforce Development Agency.

Upgrading of Workforce

Dr Jennifer Lee: Madam, the Acting Minister, in painting the big picture on jobs and where our workforce is going, has actually covered some of the grounds that I was going to ask him to share with us. But, nevertheless, there is a particular focus which I would like to speak on.

Our workforce in Singapore is supplemented by foreigners in three areas - a large number of low and unskilled foreign workers; increasing numbers of highly qualified, highly skilled foreign talent; and now S Pass has been introduced for foreign workers with mid-level skills. I am fully cognisant of the balancing act which the Acting Minister has to perform in allowing in enough foreign manpower to support our industries and companies' growth on the one hand and, on the other, managing local workers' concerns about being

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displaced, as well as all the problems that too large a foreign workforce brings for any society. The top end skilled foreigners are the least problematic. Even Singaporeans who have expressed unhappiness and concern acknowledge the need to beef up our talent pool in this area.

The large numbers of unskilled foreign workers at the other end of the spectrum are another matter. They have been with us for so many years now, to the extent that we have become very dependent on them to do all the work that Singaporeans do not deign to do. But having easy access to cheap foreign labour retards the upgrading of skills and the investment and equipment in technology, which drives improvement in quality and productivity.

MOM has recognised the problem in the construction industry and has been using differential levies to encourage upskilling of construction workers. Has MOM any plans to push for increased productivity and quality in other sectors besides construction, to the extent that jobs in these sectors can justify better wages and so become real options for Singaporeans to fill, and we can break out of being locked into the cycle of low wage, low skilled, low productivity jobs? The easy availability of cheap foreign labour, particularly foreign domestic workers, also retards the development of some services which we are going to need and which are much better solutions for us in the long term.

I know MOM is now working with various companies to establish home cleaning services. And another area that we are going to need a few years down the road will be home care and home help services for the elderly. With easy availability of foreign domestic workers, it becomes very difficult to have a viable commercial proposition to develop this

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kind of services. So, could I ask the Acting Minister to share his strategy and plans with regard to the role of foreign labour in our workforce into the future, and how he will be addressing the challenge of supplying the labour that we currently need without retarding the upgrading that we must have to progress?

The Chairman: Dr Maliki is not here. Mr Arthur Fong.

Workforce Development

Mr Arthur Fong: Madam, with the formation of the WDA last September, another one of the ERC's recommendations has been put into action. Indeed, the WDA has its role cut out for it. The timely formation of the WDA to look at our current unemployment situation with the mission to enhance the employability and competitiveness of our workforce and job seekers cannot come at a better time. In fact, it only took a lightning six months' time lapse from DPM Lee's announcement at last year's Budget for the WDA

to get down to work.

5.15 pm

Madam, there is a concern facing a segment of Singaporean workers today, and I hope that the WDA, in its scope, will address and engage workers to retrain. Almost 30% of our 2.1 million strong workforce is educated at Secondary 2 and below, and the Minister has just talked about that a moment ago. Many of the workers are from the services sector, such as hospitality and transport, and also from the manufacturing sector. These are the most vulnerable groups. There are many Singaporeans with similar profiles who are now already unemployed and those in the manufacturing sector are actually buying time. And we know that the new jobs in the manufacturing sector are on the wane.

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Madam, these are the workers that we need to help most. They are the ones with children to provide for and old folks to care for. I acknowledge, however, that some of these workers do need a mindset change, but some simply cannot be retrained even if they are willing to for various reasons. Some not so hopeful people have remarked that for this group of people, perhaps it is no longer MOM's problem but MCDS' problem. It would be a sad day indeed if that is the case.

My last point is with regard to the S Pass. With the S Pass ruling, foreign workers are expected to augment a segment of the jobs in Singapore, presumably, jobs for which Singaporeans are not trained enough for. I wonder whether the Minister could comment on what problems the WDA will face and that we cannot train sufficient Singaporean workers for these jobs. Is it just complacency that we talk about or is there some other reason? But with a better plan that we were shown just now, I hope that perhaps WDA could, with the aid of maybe an inter-agency or inter-Ministry coordination, focus on future ITE graduates and see how we can perhaps train them to augment and take up such slates. Perhaps the Manpower Employment Planning can take into consideration the potential productivity inputs of our future IT graduates and maybe, in time, the S Pass will be a thing of the past.

I end with a call to the WDA partners in the industry and learning networks to continue their collective and creative efforts as well as committed resources in helping Singaporeans. I also call on WDA to celebrate the little successes and inform Singaporeans of such successes every so often so that it raises its profile early in the agency's life and establish itself as the Singaporean worker's lifeline, and certainly another shining example of the tripartite relationship success.

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Role of Singapore Workforce Development Agency

Mdm Ho Geok Choo: Madam, I would like to raise a matter with regard to the activities of the newly formed Workforce Development Agency (WDA). The mandate of WDA is to champion and enhance workforce development in Singapore . To this end, WDA intends to coordinate national continuing efforts and to manage the development of the workforce development infrastructure. I have three questions for the Minister. First, I would like to ask the Minister to update this House on the progress that WDA has made since its inception. Is there a coherent strategy to effectively and closely monitor the set of skills needed by the industry? And are the retraining and matching programmes on offer sufficiently responsive to both the needs of the industry as well as that of the job seekers? Second, how does WDA engage the industry players and job seekers in this respect? My question has to do with the duplication of some of the activities being undertaken by WDA and that of outside providers.

One observation that has been raised by some quarters is that WDA should confine itself to a minimum regulatory and facilitative function and allow private sector bodies to compete with one another in providing continuing education to job seekers and in matching the skills needed by industries to those of job seekers. Would the Minister kindly comment on this?

Lastly, it is noted that WDA has been on a recruitment drive, perhaps necessitated by their expansion plan and in the process creating jobs for Singaporeans. Can the Minister verify whether the Ministry will be filling some of these positions with some retrenched executives on conversion programmes? To-date, does WDA have any retrenched

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executive on its payroll? I feel that it is important for WDA to take a lead as a role model in engaging some of our retrenched professionals, executives and managers.

Dr Gan See Khem: Madam, the WDA has been formed and entrusted with the role of being a super agency to coordinate the retraining of our workforce and placing them into meaningful employment. WDA has worked this role well in the past years by working with industries that are still able to provide jobs to Singaporeans. These include precision engineering, hospitality, domestic cleaning, healthcare, wafer fabrication and the social service sector.

The response from unemployed Singaporeans to these initiatives of both the place and train and, where necessary, train and place have been promising. However, as Singapore moves away from an economic recession and Singaporeans see that more job opportunities may come their way, will they still respond in the same way to these initiatives? Will Singaporeans become more choosy and how are we going to motivate Singaporeans to look at the long-term needs to upgrade their skills, so that they can fill the job vacancies that will arise as both foreign and Singapore companies start to invest again, given the better economic outlook?

On the part of employers, are they willing to redesign jobs or even enlarge them so that these jobs become more appealing and challenging to Singaporeans? With the introduction of the S Pass, will companies find it more expedient to hire skilled foreign labor rather than invest time and effort to train and place Singaporeans?

WDA is a new agency and its use should bring it more vibrancy and responsiveness to the changes in the

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socio-economic environment. Both labour and employers will be interested to hear from WDA and to further understand the new initiatives and strategies that this new agency has or will develop to further serve the needs for the upgrading of the Singapore workforce.

Employment Assistance

Mr Yeo Guat Kwang: (In Mandarin) : At present, with globalisation, competition is very intense and has become borderless. Those who fail to keep up are beginning to face difficulties and they are falling very hard. In the past, during a downturn, a company would halt production, retrench some workers and run down its inventory. But now it is different. Now, the whole company may be uprooted and relocated to sites where the operation cost is cheaper. Overnight, thousands of jobs could be lost.

More importantly, now with all this international outsourcing and off-shore trend, it is estimated that two million jobs would be created in cheaper locations. Over the next five years, more than two million jobs would be moving to India and China . So, we need to look at how we could seek some new growth areas and also help our workers in advance, so that they can upgrade themselves and take on such new jobs. This trend of globalisation, with further consolidation, liberalisation and technological advancement, there will be displacement of unskilled workers, while need for workers in the higher skilled and higher value-added industries will increase. Many jobs which we have been relying on for many years will disappear, and will never come back again.

So, for the displaced and unemployed, in addition to the provision of short-term financial assistance to tide over their difficult time, I think, most importantly, we have to look into how we could help them to upgrade their skills or to re-skill

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them so that they can find new jobs. We can use the excuse that our workers are choosy. We should do our best to enhance their employability.

I would like to remind all the employers that whenever there is any job vacancy, they should first of all consider the local workers who are looking for jobs. We are people of one nation. We should help our locals first before we bring in the foreigners. At this moment, we should help our local workers, particularly those who are elderly. As the popular Hokkien song goes, "You have to fight, then you can win", and that "If you are feeling down now, it is all right because it is only for a short while. To be successful, 30% depends on luck and 70% depends on yourself." Work hard and do not be downhearted. Never lose the fighting spirit. With the Government behind them, our people should try their best, work hard, keep their jobs, so that their families could be looked after.

Recently, many of our labour MPs decided to divide the various industries among themselves and we would be on a look out for job vacancies for the unemployed. I am looking after the textile industry. With the counselling that we give, we can more effectively match the unemployed to new places of work. I think we should double up our efforts in job guidance and counselling. I do not know whether WDA has any plan to help and prepare the workers to move to the new industries, which have vacancies at the moment.

DPM Lee mentioned that some 250,000 jobs had been created in the service industry over the past five years. I think we should look into how we could prepare and equip our workers to move into the service industry which is now offering the job opportunities.

Older Workers

Ms Irene Ng Phek Hoong (Tampines): Madam, older residents in my

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constituency still continue to see me in my meet-the-people sessions about their problem of finding a job. The older workers keep telling me that the employers are very direct in telling them, "Look, you are above 45, I am sorry, but we just cannot consider you for this job." And this includes higher educated Singaporeans. Understandably, when they were with me, they were often frustrated, some angry, but most were just depressed. Because they just do not see any hope in overcoming this poor prospect, just because they are above 45 which is something they cannot control or change.

I would like to ask the Minister how would he respond to this frustration of older workers who believe that they are being discriminated against. We can tell them about the WDA which I know administers training programmes, grants, and other assistance matters, especially for older workers. But can I ask the Minister how effective has this WDA been in helping older workers specifically, not only in terms of how many people sign up or are being helped, but how effective has WDA been in getting jobs for older workers?

As for the People-for-Jobs-Traineeship programme, I am glad that this has been set up to encourage employers to hire older workers with wage support from the Government. We know the statistics. Last year, 44% of the older workers stayed on with their employers even after the wage support from the Government had ended. And we heard from DPM Lee Hsien Loong last week that the proportion has now gone up to 57%. This is encouraging. But I want to know what happens to the other 43% of the older workers. Did they get thrown back to the jobless pool to sink or swim by themselves? I think there should be a

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deeper study now on why they did not stay on in the first place. Is it because of the employers who did not want them anymore, or were there other reasons? I think we need to do a proper study so that we can track where the problem really is.

With the economic upturn this year, we can expect more job vacancies. We need to identify specific job sectors and grow these jobs, so that they can absorb our ageing workforce. At the same time, it is imperative that more employers give older workers a

chance, and not just pay lip-service to the credo of equal opportunity.

5.30 pm

Madam, in the end, the success of the WAP and PJTP depends on the attitude of employers. Can I ask the Minister, if an older worker claims or has evidence that an employer does not want to hire him because of his age, what recourse does he have besides complaining to his MP, who will then sympathise with him and send him off to MOM or to CDCs for job matching? I would urge the Minister to consider taking a harder line towards employers who, with no good reason, have consistently been discriminating against older workers in their hiring practice.

Going beyond just soft persuasion and the carrot of wage support, if things do not improve for older workers and we continue to see older workers having problems finding jobs, can I ask the Minister to consider seriously setting up an Equal Opportunities Commission, something I have suggested before but which was shot down because it was deemed to result in a rigid labour force? I was just looking at the chart that the Minister showed just now. The unemployment rate for the US and UK is

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relatively low, but they both have an Equal Opportunities Commission and they are both held up as examples of countries with a more flexible workforce. It cannot be that just because we set up an Equal Opportunities Commission, we will have a rigid labour force. Can I ask the Minister to look into its feasibility and see whether it can be used to improve the situation before rejecting it outright? Or else, I fear that we will see a group of angry, frustrated, depressed, older workers coming to see us every week and without having any real or concrete solution to their problems.

The Chairman: Dr Ahmad Magad is not here. Mdm Ho Geok Choo.

Training Model

Mdm Ho Geok Choo: Madam, DPM Lee has informed this House that the WDA will support the workforce in retraining them to remain employable. Can the Minister update on the types of new and higher skilled jobs created for the lower qualified cohort of the workforce? What types of new training programmes and in which sectors would they be launched? When and how can it be made easier for workers to enrol in them? Would WDA, SPRING, NTUC or any Government agency, including the polytechnics, be involved as training providers? Would WDA consider allowing the private and professional sectors to play a role as part of the Government's best sourcing strategy in the delivery of services? Can the Minister also update what types of programmes in which industries are being planned for the professionals, managers and executives? Given that new jobs may not be accessible to all retrenched employees, what measures and assistance programmes are being contemplated to help alleviate the plights of the professionals, managers and executives when many of them, with good experience but above age 50, are left

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without jobs for more than 12 months, a point shared by my hon. colleague Ms Irene Ng? They feel that they have been discriminated against because of their age and not because of their cost, for they are willing to take less.

MOM has successfully pioneered the mindset change Work Skills Training Programme (WSTP) for PMEs, and the effectiveness has shown that four out of 10 of them were able to get employment by understanding and applying the knowledge and skills acquired in the WSTP for the new economy. The newly formed WDA which took over the administration of the WSTP, however, has changed the eligibility criteria. While under MOM, the job seekers and even departing employees could enrol in the WSTP before taking on a new job.

The WDA now recommends that a job seeker can only be enrolled in WSTP if he has been placed in a job. Job seekers and departing employees, unlike in the past, are now not eligible to sign up for the WSTP and funding support, even if the employees are on the verge of losing their jobs. They do not enjoy outplacement assistance programmes. I understand that the WSTP and the financial assistance provided by MOM in the past for companies have been effective and beneficial in building up the resilience of the professionals, managers and executives and have helped the job seekers and companies change their mindset with regard to the drastic changes and labour needs of the new economy, as well as in preparing the PMEs emotionally for the future, since many companies do not provide outplacement services. In view of this, on behalf of the PMEs, I urge the Minister to review the criteria for the WSTP for the jobless PMEs.

Skills Recognition and Training Centre

Mr Low Thia Khiang: Madam, the National Skills Recognition System (NSRS) is the national framework for establishing

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work performance standards, identifying job competencies and certifying skills acquisition. NSRS requires companies to establish organisational procedures for performing work and a system for organisations and their people to benchmark work performance standards and skill acquisition industry-wide. This system helps the organisation to identify the competencies required for carrying out the work, and the training needed by workers to meet the required performance standards.

I think NSRS is a timely initiative implemented by the WDA. It allows our companies to establish work performance standards, identify skills sets needed for the job and, more importantly, to train workers who enter the industry with the requisite skills. Training for workers to achieve work performance standards stipulated by the NSRS is provided by a network of approved training centres (ATC), which conduct approved training programmes. ATCs are located in companies and training institutions. These approved training centres operate through a pool of experienced trainers drawn from industry.

Madam, however, requiring smaller-size industries or trade groups to set up training centres for skills set training can be quite a strain on their finance and resources. I think WDA should consider whether it would be more sensible for these smaller-size industries or trade groups to work together with the ITEs or polytechnics, especially in cases whereby ITE or polytechnics are already offering similar and relevant courses. I think it is a waste of resources in duplicating training programmes similar to ITE's or the polytechnics' just because WDA or SPRING wants NSRS to be of a different function and taking on a different identity. But this is no excuse for duplicating resources.

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Skills Upgrading

Mr Heng Chee How: Madam, I am glad that the Government has decided to augment contributions to the Skills Development Fund (SDF) by raising the Skills Development Levy salary ceiling from $1,500 to $1,800 with effect from 1st January 2004. With the levy rates staying at 1% of the relevant payroll, this will increase the SDF's income by $22 million per year. With more money going into the SDF, more worker training can then be supported. Indeed, the need to raise the income of the SDF came about because of the increased claims on the SDF, which I believe reflects increased training activities on the part of companies making the claims, as well as greater willingness of workers to undergo retraining. This, to me, is actually a good problem to tackle, compared to what it would be if the opposite were to be the case.

Some companies may see the increased salary ceiling as an increased expense. I would urge such companies to instead think of it as an investment provision. Indeed, companies that know how to make full use of the SDF to support their training needs can actually claim more than they individually pay into the Fund. Traditionally, bigger companies have made more use of this source of funding than smaller ones. However, going ahead, I think it will become increasingly important for all companies, regardless of size, to embrace workers' skills training and upgrading fully and regularly. In my earlier cut on jobs for Singaporeans, I spoke of the structural shifts driven by changing technology and competition that compel companies to upgrade or perish. This pressure will only intensify and not recede. So, companies and industry bodies should adjust to the realities and be more proactive in training and retraining.

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When we look at developments during previous upturns from recession, we often hear companies complaining, rather early in those upturns, that they face critical shortages of skilled manpower. They argue that those shortages would then push up wage cost, and sometimes it happens, because companies compete with one another for the limited pool of skilled manpower and poach from one another, thus driving up wage costs. And the next move would be for those companies to raise concerns about cost competitiveness and call for a further relaxation of conditions, to allow them to bring in more foreign manpower. I think all that sounds familiar. This sequence of events may yet repeat itself in this upturn.

But it is not as inevitable as it sounds. Because, if companies and industries can take a broader and longer-term view, and invest in the retraining and upgrading of workforce capability, they will enlarge the pool of local skilled manpower. This enlarged pool will then feed the growing needs for a longer period without exerting immediate wage cost pressure owing to a shortage arising. More Singaporean workers will, in the process, also improve their skills and employability, and more will be able to take on the upgraded jobs. This is surely the more sensible and responsible way to move. It is akin to going to a potluck party where each diner contributes a dish and gets to enjoy the full spread that results. It fails when companies think short-term, mistakenly believing that they can free-load on the training investments made by other companies. When every company thinks that way, then everyone stands to lose. I would like to ask the Minister, what plans and programmes his Ministry has to step up the momentum of skills upgrading of workers in anticipation of growing needs in this recovering economy, and what steps will his Ministry be taking to forestall the negative consequences that free-rider tendencies among companies in this area would bring about.

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The Chairman: Dr Wang Kai Yuen is not here. Mr Nithiah Nandan.

Skills Development Fund

Mr A Nithiah Nandan (Nominated Member): Madam, the type of investments Singapore is able to attract require mostly high skilled workers. This is evident in the type of jobs available in the market. It is an established fact that there is a shortage of skilled workers. The Minister, earlier in his presentation, has indicated that there is a shortage of workers requiring post-secondary education and above. The shortage is about 360,000 jobs. This has resulted in our State having to depend highly on skilled foreign workers. At the same time, retrenched workers face great difficulties to fit into the jobs available due to the lack of skills required. Many speakers, who have spoken earlier on jobs for Singaporeans, have touched on this specific topic and I do not wish to further dwell on it. This state of affairs in the job market will become even more critical in the years ahead, as there would be greater mismatch of skills and jobs available. It is important to address this in a more comprehensive manner, so that more Singaporeans will be able to take up well-paying jobs. I have to emphasise here that to depend solely on employers alone for training is not helpful. Employers will provide training according to their companies' requirements. This would not result in our workers being multi-skilled. The trend of shorter tenure of employment makes it more important for the provision of training facilities that could enhance our workers' employability.

Madam, many of the jobs available now require diplomas. Earlier on, Dr Tan Cheng Bock has mentioned that employers in fact, prefer, polytechnic graduates. That is very true, and we can realise it in the job market when we are trying to help our members. Now workers can go for diploma courses if it comes

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under SRP, which is employer-driven and, normally, employers are not incentivised to send unless they see the necessity. Under the surrogate employer's scheme, workers can go for diploma programmes in a very limited way. Both the current arrangements for diploma programme are unsatisfactory. Here again, I have to state that many of our 'AO' level workers actually face the greatest difficulty because they do not have both skills and higher education. Will the Minister consider allowing workers to go for diploma programmes under the surrogate employer's scheme without any restrictions or limitations? To control wastage in training, some form of co-payment could be implemented.

5.45 pm

Madam, next, I would like to touch on funding for part-time tertiary education. Many of our diploma holder workers would like to

touch on the funding for part-time tertiary education. Many of our diploma holder workers would like to further their education so that they could seize job opportunities in a knowledge-based economy. I am aware that the cost of tertiary education is high and it will not be practical to tap into the funds of SDF wholly. At the same time, it is very costly for workers to go for tertiary education on their own. Those workers who are prepared to pay for their tertiary education may still need some assistance. Will the Minister consider reviewing the SDF scheme, whereby such workers could claim a small proportion, say, up to 10% of the course fee as a subsidy?

Madam, in conclusion, to address the various needs of individual training needs in an ever-changing employment structure, would the Minister seriously consider the introduction of a learning account which has been brought up in the past?

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Dr Ng Eng Hen: Madam, I must say that it was a sense of satisfaction when Members asked the right type of questions that come about from them appreciating with me as I expressed the difficulties in the job landscape. That is a very important starting point. We have moved from making motherhood statements about how we need to provide livelihoods and jobs, to grappling with real problems on the ground because we have understood what the structure of workforce is, the type of work that is coming. So, when Mr Arthur Fong said, let us play up some initial successes, I will try.

MPs have asked how Government can help, and many of them agree, and I take it is unanimous that WDA's role is pivotal. Some Members said that it has got its work cut out for it. Indeed, I want to remind the House what was said about WDA when we moved the Bill last year. Yes, it has been only six months since the WDA was set up. We said that:

"We have spoken much during these past few months about the challenges of globalisation. We will meet these challenges head-on. We cannot rely on artificial barriers to protect our jobs. We must upgrade and give investors an incentive to locate and stay here because of a highly-trained workforce. The establishment of WDA signals Government's strong commitment to help Singaporeans stay employable and maintain our lead with a disciplined and technically competent workforce."

Many would have remembered the words that WDA is pro-Singaporean. "Jobs for Singaporeans" is a mantra. Yes, we pledged that WDA will reach out to all workers, rank-and-file, as well as professionals and executives, employed or looking for jobs.

I welcome this opportunity to give an update, even though it has only been six months. In terms of job placements,

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since September 2003, together with our partners at CDCs and NTUC, we have placed about 12,000 Singaporeans, and these include Professionals, Managers, Executives and Technicians (PMETs) into jobs. But more important than just the numbers, the job placements achieved by our various job centres under the Distributed CareerLink Network have gone up by about 20%. In other words, more Singaporeans are taking up the jobs they were referred for. That reflects that there is a mindset change. And I also say more important, because it indicates that we have put in better capabilities in our job matching systems. What has been put in place specifically?

First of all, since December 2003, we have put up a national job bank. In other words, the various job centres can share information about what jobs there are.

Secondly, we have put in a national job seeker's bank. In other words, they can share information about the people that come to them for their profile and then the little notes that they put on the screen to indicate the peculiarities or the types of industries they want. That has helped.

We have also trained more career counsellors. We have trained officers at various job centres. We have worked with NTUC to train some 200 union leaders and Industrial Relations Officers as job counsellors to help retrenched workers transit to a new job, as well as with the CDCs, and some 100 grassroots leaders of the Pasir Ris-Punggol GRC have been trained as job counsellors to help unemployed residents. We did that because, very early on, we realised that a job counsellor's job is not saying: "You are retrenched, you need a job, here is the job", the two should marry and bliss! It was never that simple, and we quickly recognised that there were specific skills that we required.

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Some Members have said that we should open up training. Yes, I agree that we should open up training. But I want to remind Members of the House that, as in all Ministries, there is a limited budget. So, we have also decided that we also need to be more targeted. We have put in place new Place-and-Train programmes - some Members have asked how effective that is - to re-skill job seekers in the domestic cleaning, precision engineering, wafer fabrication, textile and healthcare sectors.

Let me tell Members why I decided we should do this. When I looked over the past few years of what our budget went in, where the workers were trained, there was no correlation between the numbers of people training in that sector against, what Dr Jennifer Lee said, an increase in productivity or more workers going into that sector. The cleaning sector is a typical example. We have thousands upon thousands being trained as cleaners. You and I know that our cleaning industry has not changed that much. So we decided that we better be targeted, which is Dr Jennifer Lee's point, raise the standard of the industry. It has to be holistic, get the right people in, see which is the growth sector and then move.

We have also done Job Preparation Exercises (JPE) to help people get placed. In other words, instead of the usual job fairs, referrals and saying, "This is a list, go find it", we realised that was not enough. WDA decided to revise its approach and it started with the electronics sector. It started asking employees, "What do you need?" - a sensible question. And then, it developed Job Preparation Exercises to screen, select and match these candidates to these jobs. For instance, employers in the electronics sector said that they needed people with basic literacy skills and those who are not colour blind, because the components have colours. If they are colour blind, when the production lines

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move, they will put things in the wrong place. I am not sure whether my officers are now doing the colour blind charts. I presume they are. I presume that they ask people whether they are colour blind. If they say they are, then they will find them other jobs.

In addition, we put job seekers through mock-up exercises. This is a clean room at the job fairs. This is what they will be exposed to, video-taped, so that they are more prepared. The placement for electronics jobs has more than doubled as a result.

While these are positive aspects - initial successes, as Mr Arthur Fong said - WDA must and will go further than just placing Singaporeans in jobs. I recognise that this is an important initiative, but it is nonetheless reactive and does not fundamentally address the challenges that we all understand and need and say that we need to address.

To help address this structural mismatch, WDA's efforts must be predominantly proactive, pre-emptive, forward-looking, and outcome-focused. In other words, we must also change industries. To accomplish this, as recommended by the Economic Review Committee, we said that our Adult Continuing Education and Training (CET) system must be revamped. The old system is not quite adequate. This is a monumental task. We spend 4% of GDP on pre-employment training. How much do I spend on adult employment training? It is a limited budget.

So, we are seized by this. We will not, as Mr Arthur Fong said, see this as a MCDS problem. This is a MOM problem, but this is work-in-progress. Let me give a few examples to illustrate.

First, targeted sectors. We must develop sector-specific initiatives. First of

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all, we need to go where the jobs are and make Singaporeans ready for them - all the jobs ready for Singaporeans. Mr Ahmad Khalis asked earlier on how we are going to meet the shortages in nursing and shipping. Dr Jennifer Lee also mentioned nursing. So, let me illustrate by using these industries.

On shipping, a NUS study indicated that there are presently about 3,400 vacancies in the maritime industry. I have 90,000 unemployed, whereas there are 3,400 vacancies in the maritime industry. And yet, it is not popular. About 80% of these vacancies in the maritime industry are in the shipbuilding and repair sector.

WDA is currently working with the marine industries. We recognised that simply telling people, "Look, there are jobs in the marine industry, please do", was not enough. So, last year, many of you followed me when I recounted my experience when I went with the Mayors. One particular Mayor was dressed in a yellow dress - there is only one female Mayor anyway - hoisted up for all to behold, but very few takers after that. It was a glorious sight, but somehow did not work, ie, it did not entice people into the shipbuilding industry.

So we decided to look at this problem and perhaps be less ambitious on the lower sector and look at the supervisory sector and to let us be realistic. If we try to get Singaporeans into this sector, it must be well-paying, let us look at the supervisory sector. So, we looked at the current level of supervisors. The supervisors they now have in the shipbuilding industry have worked in the industry for many years - many nationalities, but very few Singaporeans. They tell me that these supervisors are actually managers. What do they manage? They manage different foreign worker populations. They hire sub

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supervisors, ie, for the PRC workers, there is a PRC supervisor, for the Bangladesh workers there is a Bangladesh supervisor, etc, and they just manage. We have to reclaim these industries for Singaporeans.

We need highly trained and experienced supervisors, and it is not poor paying. A supervisor earns $2,500 per month. But I cannot get enough people to do this. We tried career fairs and recruitment drives with limited results. We changed tactics over what we have done. Mr Arthur Fong and Dr Jennifer Lee asked what are the significant initiatives that we have taken. Let me try to give one.

We are now working with the Association of Singapore Marine Industries (ASMI) on joint NexGen, an initiative with a longer timeline, but sensible. And we are working with MOE and MINDEF. Why? Because we have to change mindsets early, even while they are in school. The NexGen scheme will therefore target Normal (Technical) students to give them a better understanding of shipyard work, while they are still impressionable. We can bring them to the shipyards and show them what we have. We will select the NT students, let them go through a customised apprenticeship programme conducted by ITE and the various shipyards. We will also want to bring their parents, as we have to change the parents' mindsets, and familiarise them with the yards. Our generation grew up with the Spyros tragedy. For all I know, that is the mental image that is in the parents' mind. But the shipyards have changed tremendously. I need to change their mindsets.

WDA is also exploring with MINDEF on the possibility of having these selected students serve their National Service with the Republic of Singapore Navy, so that they can pick up valuable hands-on experience in maintaining and repairing ships. Mr Heng Chiang Ngee, President of

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ASMI, is confident that NexGen will succeed in addressing the needs of the marine industry. In other words, if I have lost one generation, I will reclaim the next.

Similarly, WDA and MPA will work together with key players in the maritime industry, because there are also important sectors there, and it suits our purpose to be an international maritime centre, whether it is in ship owning, rig building, repair, maritime finance and insurance, or maritime law. We have been asking people to come into these courses, even at polytechnics.

Since 1987, we handled about 300 scholarships but yet we cannot. Let me explain to you that these are not unattractive scholarships. I asked for figures from my staff. We are so keen to have such workers, so much so that we are willing to fund them the moment they enter polytechnic. Together with MOT, we fund them, we fully pay for their courses in the maritime course and, on top of that, they get an allowance of $5,000 a year. They are bonded, but, in this climate, it is quite good to be bonded after they come out. Even then, I cannot get enough Singaporeans to fill up those scholarships. Only about 70% of local students are in these maritime-related programmes at the polytechnics.

6.00 pm

Many Members mentioned nursing. The Acting Minister for Health, Mr Khaw Boon Wan, has said that they are short of nurses. They need about 1,400 nurses a year to cope with the demand. WDA and MOH will work with our partner agencies to close this mismatch. First, we ramped up the Pre-Employment Training. We have increased our intake from 700 in 2000 to 1,000, ie, 30% in four years. That is quite significant, but still not enough. So what should we do? We can get people to make mid-career changes for those

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who need jobs to change to nursing, such as attracting former nurses back to nursing. Our efforts are working. In our recent healthcare fair, MOM received 6,000 applications for about 650 healthcare positions, many of them in non-nursing positions as well.

Within a one-month application period this year, more than 500 Singaporeans applied for 100 places in nursing conversion programme - these are mid-career ones. The calibre of applicants is very high. I have met some of them - IT professionals, engineers and teachers. I spoke specifically to an architect. They are passion-driven. Nursing would be very interesting for the next few years. They are very perspective. They will go into a ward, and if he is an architect he will start telling you to redesign the hospitals because it is inefficient. But, despite such increases in local recruitment, we still face a considerable shortage. As healthcare services are required by our aging population and as we develop ourselves into a medical hub, we are chronically short of nurses. We cannot get enough. So these are sector-specific initiatives. I am pouring money there, and I am going to take a similar approach in aerospace, creative industry, electronics, hospitality, precision engineering and retail. These are growth sectors.

But I also agree we have to make access simpler and easier for Singaporeans, not only to acquire new skills, but relevant skills. I want to move away from just training. In other words, to convince workers to train, the skills must be worth acquiring. It must be worth something. There must be currency, either currency from the employee's point of view or from the employer's point of view, preferably both. How do we do this? To do this, the skills that one acquires must have uniform currency to cross sectors. WDA will work with industry partners and post-secondary education institutions to set up a National

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Skills Framework. We need to ensure that there is consistency of skills sets so that Module A meets a certain standard across skills. We will start by asking employers: what do you need? We have 500,000 Singaporeans with less than secondary education. The approach is not to help them get "O" levels. I think that would be disastrous, and they do not need to have "O" levels. They need sector-specific skills. I have to ask employers what are their needs, and if I train someone with those skills, what is it worth to them? What is it worth to the employee? We do not need to re-invent the wheel.

We can ride on the present National Skills Recognition System - broaden and deepen it into a National Skills Framework. Under this framework, individual workers will enjoy greater and easier access to training. Why? Because we are going to have modular and flexible programmes, and we want to take into account his prior working experience, what he has done over the last 15 years. It cannot be immaterial or irrelevant. From where his starting point is, how do we shift him to the next position? WDA is piloting this framework in a few sectors. We are starting with retail and healthcare. Both employers and unions have given us positive feedback. So, we will press on. But to do this, I need to raise trainers' standards. We have very good teachers who know how to teach the young ones but we do not have that many teachers who know how to teach adults. Of course, if we set ourselves the standards, then we will understand why we have the problem because sometimes our attention span, at least mine, is quite limited. We need to help trainers and training providers enhance their capabilities to ensure higher standards,

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and I would provide funding to train better adult teachers.

The fourth aspect of the National Skills Framework is that we need to move from paper qualifications to directly usable skills, and for workers to acquire those skills in a shorter time. I do not think it makes sense to tell them, "You do not have the educational qualifications, you will have to take a 2-year part-time course. I will set up the time for you". Two years is a very long time. One such programme we are piloting is called Functional Literacy for Our Workers (FLOW) - I have a specific department in my Ministry that deals with creative acronyms. Before the development of FLOW by WDA, the lowest standard of literacy was Basic Education for Skills Training (BEST). BEST Module 1 was pegged at Primary 3 - very sensible - that was the lowest module. But, even there, you exclude a large group of workers whose literacy level was too low even to cope with BEST Module 1. What are you going to do? So under FLOW, we say, let us customise the contents so that it is directly relevant to the work place context. This is my understanding of it, not my staff. They can disclaim responsibility for me. I call it the "SIA girl" approach. You need to teach the SIA stewardess contextualised literacy, "How are you, Sir? Can I help you?" And, of course, as the joke goes, "Study lor, cannot meh". We need to teach the person contextualised skills for the work. By the end of the course, workers should be able to communicate effectively in their job in simple English. It is a good idea, but will it work?

WDA piloted its first class on FLOW at Baxter Healthcare. Baxter Healthcare has 18 production workers who have been with the company since it was set up 26 years ago. These 18 workers now are aged between 50-60 years. So they were about 25-35 years old when they started

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work there. They have little or no formal education - very low literacy rates. They were working in the last manual production line of the company and needed to upgrade their skills to handle automated line, or risk being redeployed. Some of you may ask why Baxter took so long - never mind, they can answer that question. The upgrading training helps them to identify the name of parts, types of defects and so forth, but in English. WDA worked with Baxter to deliver the FLOW programme for these workers. They ran a module from 1st December last year to 12th March this year. The feedback has been quite positive. This is what the HR manager says, "The FLOW programme has definitely come at the right time, as without basic English literacy it is very difficult for employees to upgrade their skills, eg, technical and IT skills. We believe that this programme is a critical stepping stone for many of our older workers to keep up with the competition in the new economy." We asked the participants: how was it? They were equally positive. They said their confidence was boosted. For once they said, "We can upgrade", because they were able to speak to each other in simple sentences. We are not sure what they said, but they were able to speak to each other and, therefore, they are more receptive to learning English.

To fund all these initiatives I have decided to raise the contributions to the Skills Development Levy (SDL) as announced by DPM. And I thank the many Members for their support and agreed that we should do this. Why did I do this? Let me explain to you how the funding for training is obtained. There are two streams. The first stream is called the Life-Long Learning Fund (LLF). This is Government's commitment, and it put in $1.5 billion as an endowment. The other source is employers' commitment to train Singaporeans. We get it from employers because we believe that it is equally important for employers to be committed

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to train their workers. So the levy is pegged at 1% of remuneration of all workers with a gross monthly salary of $1,500 or less, currently. At the current levy rate of 1%, at the salary ceiling of $1,500, SDF would have been depleted long ago. Therefore, Government further injected $500 million into that fund. I have raised the ceiling from $1,500 to $1,800 with effect from 1st July 2004 . If economic recovery is sustained, we will think of raising it to $2,000 subsequently. This was announced a few years ago, but was held back. Raising the ceiling from $1,500 to $1,800 will cost $22 million per annum. It is not a big sum and it only represents 0.03% of the annual compensation of employees.

Mr Inderjit Singh made the point in the Budget Debate that this would tax SMEs. My rejoinder is that SMEs can also take from this fund. Because we pool this money, employers can apply for their trainees. And the smart ones have. Atlas Vending Pte Ltd is a company that operates and rents out vending machines and jukeboxes since 1980. The group employs about 100 employees. For the last three years, it received $18,000 SDF funding. They were smart. They did not complain. They just took. I urge other SMEs to follow this example. In fact, we have introduced a specific scheme for SMEs. It is called SME Upgrading for Performance (SUPER).

Mdm Ho asked whether more grants can be extended to more training providers and that WDA does not duplicate some of the functions of primary providers. Let me assure her that WDA has its hands full. We promise that we will do the minimum and, in fact, we will not be a training provider. We are not. We do not provide training programmes. We basically use, as Mr Low has correctly pointed out, any provider that meets the criteria and fulfils the goals of our programmes. But I want to see the programmes translated either to

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employability or enhanced employability. Training is provided by our network of approved training centres and we will provide funding at $6-$10 per trainee hour. Employers can set up these in-house NSRS approved training centres and approved assessment centres. Mr Low asked whether the smaller companies can do it because it is hard for them. I understand their problems. We do not restrict ITE from working with them. If ITE feels that they can use them, I would encourage them to. But my sense, for practical reason, is that they should probably come together and approach ITE to have a specific programme. If we are satisfied that it translates to better jobs or longer in the job, we will fund the programme.

Mr Heng Chee How asked about individual training. This was a point echoed by Mr Nithiah Nandan. Government does provide subsidies for individual training. He mentioned surrogate employer programme where we fund 90-100% of the course fees. This programme is administered by NTUC and the five self-help groups who act as surrogate employers for such workers. We have provided $19 million of SDF funding to about 28,000 training places last year. This concept has worked well and I agree with him the funding can be enhanced.

Mr Nithiah Nandan asked whether we can also support polytechnics, ITE training, and even university - a small proportion. I was quite receptive until he used the words "without restriction and limitation". I took extra notice. Well, the first answer is yes, we will. $19 million in 2004 for about 20,000 training places - that will be the restriction and limitation.

Let me now turn to specific groups that Members have asked about. Dr Tan

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Boon Wan, Ms Irene Ng and Mdm Ho Geok Choo asked about lower skilled workers. They are quite right to highlight this group. The bulk of the resident workers of those without or below secondary education are between the ages of 35 and 54. In other words, they have another 10-15 years within the workforce. About four out of 10 of the resident long-term unemployed belong to this group. Members have asked what we can do to specifically help them. What we are doing is to look at the job market. Where are the skills that the jobs which require lower academic qualifications? We have identified these jobs in electronics, precision engineering and sewing operators. Because of our FTA, textile is coming back, as well as front-line jobs in hospitality sectors and cleaning.

Let me focus on cleaning. Many Members are aware of it because they sit on Town Councils as councillors and advisors, and that many of the people cleaning our estates are foreign workers. This is another area we want to reclaim. I am trying to reclaim the shipyards. This is another area I want to reclaim as well. I want to thank Mr Ang Mong Seng, as he has been active in this. It is his passion. Mr Lim Swee Say, once a unionist, always a unionist, has great passion too and I appreciate his support, both in hawker centres, and now in Town Council jobs. We are working with NEA and Mr Ang Mong Seng. "Let us reclaim this territory. We have drawn the battle map. This ground we take". So what do we need to do?

I need to redesign jobs, promote mechanisation so that less skilled workers can take on these better paying jobs. We tried it in Jalan Besar as a pilot - conservancy cleaning. It worked well. What these projects would need is to restructure the contracts - to reward based on performance, higher mechanisation and help to train better

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workers. We will announce the specifics of this scheme later. We think there are significant job opportunities - a few thousand jobs that are available for Singaporeans if we can get the cleaning industry to upgrade. And this is in direct reference to Dr Jennifer Lee's question. How do we change? And she is right. If you reach a tipping point, if you are competitive based on cost and low skills, you are on a slippery slope. We will reclaim it by upgrading industry and training workers.

6.15 pm

We will also assist conceptualised industry programmes in other workplaces. Ms Irene Ng asked specific programmes for older workers. I empathise with her. I see them as well. She said, "What would I say?" I also see many of them and, sometimes, I just listen because I understand their problems, although I must tell you that the situation has improved. In 2003, the redeployment rate within six months after retrenchment for all groups was about 62%. For those 50 and lower, it was about 56%, 6% less. It is not bad. More importantly, it has improved compared to 2001. In 2001, the re-employment rate for this group was 43%. There was a 13% jump. And it proves the point that growth stimulates jobs.

But the numbers also tell us that the People-for-Jobs-Traineeship programme has helped. I know you have heard the figures, but allow me to gloat a little. It is a good programme. We provide basically wage support to allow these workers to prove themselves for six to nine months. Yes, we benefited about 16,000 older workers, 57% stayed beyond the six months of wage support. I will study, as Mrs Irene Ng has suggested, what happened to the other 43%. This glass is a little more than half full, but I will also look at the other portion which is empty.

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Apart from this, we are looking again at sector specific industries that can give jobs for these workers, for example, the textile industry. 77% of the participants of the Place and Train programme are workers above 40 years old. After three weeks of training, which is not very long, they are employed as sewing operators. And I understand that the entire batch is still working on these jobs.

But our move away from the seniority based wage - our wage restructuring efforts - needs to be seen in this light, that it will help hire and re-employ many mature workers. We will also extend our job preparation exercises, as I have mentioned, in the electronics sector. About 30% of job seekers in the electronics sector were 40 years old. And I echo the sentiments of Members of this House who say that employers must change their mindsets. I also want to acknowledge that there are many enlightened employers. For example, in the healthcare sector, both clusters - the National Healthcare Group and SingHealth, this is the age of equal clustering - have been taking in mature workers to make career conversion programmes. Other employers should follow their lead and rid themselves of the unjustified prejudice against mature workers.

Ms Irene Ng asked why not set up an Equal Opportunities Commission. She says that the United States is a beacon of that process. We looked a bit closer at this beacon. In 2001, the Equal Employment Opportunity Commission received 81,000 complaints. 7% of these complaints showed that they had reasonable cause and, finally, after all the hudgy-pudgy, 0.4% or 370 cases resulted in direct suits. The reality on the ground is that it is very hard, and she asked, can you fault the employers. If an employer does not want to hire someone, he can use many reasons. It is very difficult. So,

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the point is not to start a commission. Because after doing all this work, it is just difficult. The key is to give our mature workers intrinsic, inherent, indigenous values. That is their premium and they can go to a number of sectors and get employed.

Mdm Ho Geok Choo and Mr Heng Chee How asked about professionals, managers, executivess and technicians (PMETs). They are quite right. The last three years saw an increase in the incidence of retrenchment in this group, mainly because of the reorganisation and restructuring in the financial and ICT industries. Members have asked what programmes are there to cater specifically for them, as well as for people with higher degrees, as Mr Nithiah Nandan has asked. We have specific programmes, like the skilled manpower conversion programme. We launched it with healthcare. And today, we have 109 Singaporeans undergoing training to be nurses, 19 to be radiographers, another 100 are targeted to start nursing training in July this year.

We have also extended this to the hospitality sector. WDA and the Singapore Tourism Board launched a number of executive development courses, targeted at local executives working in the hotel industry. A new work study programme is also in place to help attract executives into the hotel industry, and this is a diploma programme. We will consider similar programmes in other sectors. We will also help fill PMETs into job vacancies. We helped about 2,000 in the last three months of this year. Yes, we will work with universities and polytechnics to give more information to companies so that they can understand the challenges.

WDA also collaborates with Singapore Professionals' and Executives' Co-operative (SPEC) to establish a talent

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centre. Under this programme, SPEC will outreach to various employers to secure both permanent and contract employment opportunities, specifically for PMETs. We will provide six months of wage support to companies who employ older PMETs.

Madam, some Members have asked about 'S' pass. I propose to defer that because there are further questions down the road.

Ms Irene Ng Phek Hoong: I just want to clarify with the Minister on the wider question about what recourse do jobless Singaporeans have when they claim that employers discriminate against them on account of their age.

Dr Ng Eng Hen: I suppose the more blunt employers will say, "I am not employing you because you are old." But I doubt that many of them do that. They can use a number of reasons and the body language tells it. But my point is that if we think that legislation can solve this by fiat, others have shown that it does not. We will get complaints, yes, that is successful. If we start an equal opportunities commission, we will get complaints from people. But the question is whether we can find adequate resolution, and it does not seem to work. We have a tripartite statement on anti-discrimination. If employees consider it as discrimination and unlawful dismissal, they can come to MOM. But I think the more significant initiative is to imbue workers with real skills, and elderly workers have come on their own. If you talk to these people going into nursing, it is uplifting. I asked a lady, "Why are you doing this?" She spent 15 years as a banking executive. She is going to a nursing course at a starting salary of $1,500, and it is a 1½-2-year course. They are more mature but they have found a spot in their life.

So, I think we want to look at the legislative aspect a bit more carefully

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before we do it, because that is tokenism - you say that you have done it. But I want to spend more effort giving them real value.

The Chairman: Dr Michael Lim is not here. Mr Seng Han Thong.

S Passes

Mr Seng Han Thong: (In Mandarin) : **** Though Government has repeatedly reassured our workers that the introduction of S Pass is to allow companies to employ foreign workers whose skills we lack and this will not result in the influx of foreign workers, the concern of our workers, especially those who are out of job, is understandable.

They are concerned that employers may take advantage of this system and employ more foreign workers, thus taking away their jobs. They are also concerned that these workers may finally settle down and become our citizens.

I urge MOM to follow the S Pass guidelines in issuing the pass, ie, to issue only to foreign skilled workers for the sectors which we are short-handed, like healthcare, infocomm, aerospace and pharmaceutical, but not to the sectors in which we do have our own skilled workers. This is to prevent the abuse of the S Passes.

On the other hand, I would like to urge Singaporeans to have a big heart to welcome these workers. They are here not to take away our jobs but to create more jobs as companies will expand with the inflow of more skilled workers. We should welcome them to settle down here and become our citizens. We are a small country. It is difficult to compete in the global economy if we do not have enough skilled workers.

Why does the Government introduce S Pass at a time when workers are worried

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that foreign workers will take away their jobs? The real reason is that there is a mismatch. There are jobs where there are not enough Singaporeans with the relevant skills to take on. At the same time, there are Singaporeans who are looking for jobs but cannot find enough jobs which they are competent of handling. Thus, we need to introduce S Pass for foreign workers to take up the jobs that Singaporeans do not have the relevant skills. At the same time, the Workforce Development Authority needs to introduce more programmes to re-skill workers who cannot match the jobs available here.

Mdm Halimah Yacob: Madam, the Deputy Prime Minister in his reply during the Budget debate, has given some assurance on the issue of S Passes. However, I still think that it is important for me to register the concern of Singaporeans, as many see this as opening yet another door to foreign talents, when so many doors are already open to them. The point I wish to stress is that Singaporeans are not averse to competing for jobs, so long as the basis is fair and takes into account our context and needs, but they feel that the competition from the S Passes would be unfair.

Let me explain why. Firstly, up to now, there is a limit on the sources from which we draw our foreign talents or foreign workers. They are usually confined to traditional or non-traditional sources. In the case of the non-traditional sources, there are still restrictions as they usually come from India or China . There is greater flexibility for the "P" or professional passes, but they are usually senior level executives earning much higher pay. So it is not a major concern. With the S Passes, however, there will be no limit on resources that we are drawing from for the supply of workers, and they can come from Australia, New Zealand, or

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the Eastern European countries, or anywhere else in the world.

The second point to note as to why Singaporeans are concerned is that the minimum wage of the S Passes is pegged at only $1,800. With the levy of only $50, employers need only pay $1,850. Does this place this category of S Pass workers in direct competition with our universities and polytechnic graduates with two to three years of experience? Although there is a cap of 5%, experience shows that, over time, this gap is not sustainable, as employers will start pressuring for more S Passes as a convenient way out for them. We have seen this happening in the manufacturing and services sectors, both of which started with lower number of foreign workers but which, over time, gets pushed up.

Madam, Singaporeans are also concerned because S Passes will be employed in sectors that provide high value-added jobs, such as the pharmaceutical sector, and sectors where we, Singaporeans, have been told that these are the jobs which are meant for us. The question I would like to ask the Minister is what assurance would be given to Singaporeans, particularly our university and polytechnic graduates, that they will not be displaced by cheaper

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foreign workers in such jobs. Will these S Passes act as a disincentive for Singaporeans to upgrade themselves? What assurance is there that employers will not take the easy way out of employing S Pass workers instead of training their own workers to do these jobs? Is there a system in place in MOM to monitor and prevent abuses by employers?

The Chairman: Order. It is 6.30 pm .

Thereupon Mdm Deputy Speaker left the Chair of the Committee and took the Chair of the House.

Dr Ng Eng Hen: Mdm Deputy Speaker, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2004/2005, and ask leave to sit again tomorrow.

Mdm Deputy Speaker: So be it.