EMPLOYMENT SITUATION IN SINGAPORE (Update)

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EMPLOYMENT SITUATION IN SINGAPORE:

(Update): 13.

Mr Gan Kim Yong asked the Minister for Manpower (a) whether he will give an update on the employment situation in Singapore ; and (b) what is the progress his Ministry has made in the introduction of the variable wage system.

The Senior Parliamentary Secretary to the Minister for Manpower (Mr Hawazi Daipi) (for the Minister for Manpower): Mr Speaker, Sir, my Ministry recently released the preliminary labour figures for the second quarter of 2004 where we reported an increase of 10,400 jobs. This is the fourth straight quarter of employment growth, bringing a total of 41,000 jobs over a one-year period. Overall, employment is at a 2-year high of 2.16 million. The majority of the employment opportunities during this one-year period are in the services sector with 33,000 jobs. Manufacturing created 17,000 jobs in the same period.

Alongside increasing employment levels, the number of retrenchments has also fallen. Preliminary estimates for thesecond quarter of 2004 saw the number of workers retrenched fall to 1,900, the lowest in 3 1/2 years. Overall, unemployment stands at 4.5% in the second quarter of 2004, for the third consecutive quarter. The rate remained constant despite the entry of fresh graduates into the labour market. Thus, the overall picture is of an improving labour market and unemployment is expected to fall further towards the end of the year.

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Sir, let me now reply to Mr Gan's second question, which is on the progress of the introduction of the variable wage system. Following the release of the recommendations of the Tripartite Taskforce on Wage Restructuring at the National Tripartite Conference on 30th January 2004, my Ministry, in collaboration with the social partners, has actively reached out to companies in various sectors to encourage and assist them to implement wage restructuring.

The Taskforce had earlier formedfour working groups to spearhead the wage restructuring efforts in the electronics, hotels, chemicals and land transport sectors.Commendable progress has been made so far. Many companies in these four sectors have taken steps to restructure their wage systems. Last month, Raffles Hotel successfully concluded their discussion with the union to restructure its wage system. Three more working groups have been formed in the banking, insurance and food manufacturing sectors to drive the implementation of flexible wage system in these sectors. The Banking Working Group released their recommendations on 6th August 2004, just a few days ago.Several major banks, including the UOB Group, have already implemented the flexible wage system based on the recommendation of the Taskforce. Many other banks are likely to follow suit. The othertwo Working Groups - Insurance and Food Manufacturing - are targeted to release their recommendations in September.

Response and feedback from companies have been encouraging, particularly among the larger establishments. Most of them have either implemented or are in the process of implementing at least certain aspects of the Taskforce's recommendations that are suited to their needs.

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To gauge the progress of the implementation, the Ministry has just completed a survey on the extent to which firms have adopted the Taskforce'sthree key recommendations to improve wage flexibility and competitiveness, namely:

(i) introduceor build up Monthly Variable Component;

(ii) enlarge Annual Variable Component and formulate key performance indicators to link the AVC payment closely to company's and/or individual's performance; and

(iii) move away from seniority-based wage system and narrow the salary maximum-minimum ratio to an average of 1.5 or less.

Details of the survey findings will be released shortly.

Mr Gan Kim Yong (Holland-Bukit Panjang): Sir, I would like to ask the Senior Parliamentary Secretary whether he could give a specific update on the progress made by the smaller SMEs in Singapore in this wage restructuring exercise.

Mr Hawazi Daipi: Sir, I would say that, generally, we have made progress with SMEs, but there is a lot of work to be done. Apart from the tripartite partners' efforts to facilitate wage restructuring among companies, including SMEs, the Ministry is organising a seminar for them at the end of September to help them implement the wage restructuring. We will work together with our social partners including the Singapore Business Federation, the Singapore Chinese Chamber of Commerce, the Association of Small and Medium Enterprises as well as the Singapore Manufacturers' Federation. This is important so that they can

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help us rope in the support of the SMEs and to enhance their understanding of what it takes to restructure the wage system.

I do not have the figures now but I would say that we are already reaching out to SMEs in the various sectors.