HOUSEHOLD EXPENDITURE SURVEY (Drop in income of bottom 20% of Singaporeans)

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HOUSEHOLD EXPENDITURE SURVEY:

(Drop in income of bottom 20% of Singaporeans): 5.

Dr Lily Neo asked the Minister for Manpower in view of the latest figures on income and expenditure that showed the bottom 20% of the population suffering income drops compared to the rest, is there (a) any plan to address this issue and help this group raise their standards of living; and (b) a need to review the various assistance schemes available.

6.

Ms Irene Ng Phek Hoong asked the Minister for Manpower, in view of the latest Household Expenditure Survey which showed that the real income of the bottom 20% of Singaporeans has fallen, what progress has been made to (a) raise the income of low-wage workers through job re-creation and redesign; and (b) ensure that Singaporeans can continue working for as long as possible, including raising the retirement age.

7.

Assoc. Prof. Ong Soh Khim asked the Minister for Manpower, in view of the latest figures on income and expenditure that showed the bottom 20% of the population suffering income drops compared to the rest, (a) what are the profiles of Singaporeans in the bottom 20% with respect to education level, age, gender, marital status, family size, and those suffering from physical and/or mental disability; (b) what is the percentage of Singaporeans in the next quintile that have incomes about 1-2%

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higher than this bottom 20% quintile; and (c) what are the causes of this drop in income in the bottom 20%.

The Minister for Manpower (Dr Ng Eng Hen): Sir, with your permission, may I take Question Nos. 5, 6 and 7 together as they are related?

Mr Speaker: All right.

Dr Ng Eng Hen: Mr Speaker, Sir, Members have asked for some updates and data since the release of the Household Expenditure Survey and certain related facts of the lowest 20% household income group. Let me give what we have available from a number of sources. Based on the data from the 2002/2003 Household Expenditure Survey conducted by the Singapore Department of Statistics (DOS), the average size of households in the lowest 20% household income group was 3.6 persons and the average age of persons in these households was 34 years. About half of the households were in HDB 3-room or smaller flats, which means that the other half were in 4-room or larger accommodations. Excluding students, about seven in 10 persons in these households had primary and below education level - 70%, and eight in 10 working persons in this group were holding jobs in clerical, service, sales, and production.

The per capita household income for the lowest 20% household income group ranged from $0 to $480. In the next quintile income group, about 5% of the households had per capita household income of between $480 and $500.

Sir, the negative growth in the per capita household income for the lowest 20% income group could be due to a variety of reasons. The Singapore economy was hit by several negative shocks such as the Iraqi war and the

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SARS outbreak during the period when the Household Expenditure Survey was conducted. Remember that is the the 2002/2003 Household Expenditure Survey. In addition, globalisation has led to increasing competition from emerging countries like China and India for lower end jobs, causing wages for such jobs to stagnate. There was also an increasing number of retirees due to our ageing population.

The Government has set up a Ministerial Committee on Low Wage Workers to address the challenges to the employability and income security faced by workers in the bottom 20 income percentiles. The Ministerial Committee will develop and implement a holistic package of policies and measures to help these workers and their families.

As the issues surrounding low wage workers and their families are multi-faceted, the Ministerial Committee will study the profile of these workers and their families to understand the problems they face in employability, and develop targeted solutions to help each group.

We also need to ensure that the solutions are sustainable and holistic. Besides looking into measures for more responsive social assistance to help them tide through difficult times, the Ministerial Committee will also recommend measures to assist them to take up jobs, and for those who are employed, to enhance their earning potential, whether through job re-creation or skills upgrading and retraining.

The Ministerial Committee will also look for ways to help their children stay in school longer, so that they can acquire the academic foundation for further learning and employability.

A Tripartite Committee on Employability of Older Workers is

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currently looking into the broader issues of older workers' employability. This includes having older Singaporeans work longer and raising the effective retirement age. As I have mentioned, raising the legislative retirement age remains our medium term goal. In our system, the age in which the CPF payout starts is linked to our legislative retirement age. Given that the majority of low wage workers are aged 40 and above, the Tripartite Committee's work will complement the work of the Ministerial Committee.

The Ministerial Committee will consult widely with relevant stakeholders and community organisations to better understand the problems faced by low wage workers, and to develop effective ways to help these workers achieve greater self-reliance over the long term.

Dr Lily Neo (Jalan Besar): Mr Speaker, Sir, may I ask the Minister how does he address the concerns of those who have undergone retraining but still cannot find employment or better job opportunities? Will he facilitate better and suitable matching job placement? Will he also make retraining opportunities more attractive in order to encourage more people to go for retraining?

Dr Ng Eng Hen: Sir, we recognise, as the Member has mentioned, that certain workers who go for training find that at the end of the training either they cannot find a job or that the training they received is not recognised by the employer or at his job place. Yes, we can improve it by ensuring that the training he gets has some relevance to his job as well as making sure that the training he goes for is relevant to the next job that he is going to take. That explains why we have shifted some of our strategic concerns. We used to have train-and-place; in other words, we encourage workers to train and after they have acquired the skills, we try and find a job for them. We have moved away

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somewhat from this original strategy to place-and-train. In other words, we want to find you a job. That includes sometimes job preparation exercises. Some Members may have heard of NTUC boot camps where, basically, they bring together certain workers who have been disrupted from their employment. They counsel them in terms of how to go for interviews and other aspects. At the same time, once we have identified a particular job which we think you are suitable for - and this may involve pre-screening interviews and assessments - then we train you for the job. I think this makes the training more realistic and there is also a greater value at the end of their training.

This obviously takes a lot of attention and time because we are dealing with individual cases. But it is our aim and we are building up capability among the various job centres in the CDCs and self-help groups to be able to apply this strategy more effectively.

Assoc. Prof. Ong Soh Khim (Nominated Member): Sir, I have three supplementary questions. The first question is with regard to reskilling. What are the assistance plans that will be provided to those who are too old, illiterate or do not have the intellectual capability or even physically or mentally disabled to be reskilled?

Would the Ministry consider categorising or reserving certain groups of jobs for this group of people?

The second question is this. To put in proper perspective, besides looking at the decrease in the income, does the Ministry look at the increase in the cost of living from 1998 to 2003? How much has this rise in the cost of living actually offset the income increase or income decrease, so that perhaps we should be looking at maybe the bottom 25%, instead of just the bottom 20%?

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Dr Ng Eng Hen: Sir, the Member has asked a number of questions which encompass quite a lot of groups. For the ones with disabilities - they have special needs - we have targeted programmes for them. In a situation where the labour market is soft, sometimes it is difficult. But, nonetheless, we will work with specific employers to see whether there are opportunities for those who are disabled.

On certain groups, what do we do if they are illiterate or do not have language capability. I am not sure what the exact words the MP used, but I think it was inadequate intellectual capability. But let us assume that they can be trained. I think it is important that we can overcome language restrictions. For example, we have done that in a particular plant, and I told the House this past occasion. Say, for example, in Baxter Healthcare, when they were modernising and automating their machinery, a programme was introduced. It is called contextualised literacy - I do not need to teach you the whole breadth of the English language, I just need you to be able to read a few signs and understand how to do it, and that was very effective. It was for a small number, but it helped them understand the English words, to be able to work the automated devices. So, that is an example, and we will continue to expand these programmes.

The Household Expenditure Survey also had good information about expenditure and cost of living. It basically showed that in the bottom 20 percentile, yes, there was a loss in earnings. But it also showed quite clearly that it was with the Government rebate that they ended up still net positive. And I think these were in real terms. So I think the message is, yes, we will have to help them increase their skills and be able to earn more. Yet we have to also admit that it was because of the SC&CC or the

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number of Government financial assistance schemes that they are quite dependent on them, and we have to see how we can better tailor them for some.

Ms Irene Ng Phek Hoong (Tampines): Sir, the Minister mentioned that the bottom 20% includes an increasing number of retirees. And he mentioned looking at raising the retirement age. This will only help those who are yet to retire, and not those who have retired. Can I ask the Minister what are the options for the group that has already retired, and also whether it is timely to look at whether the pension levels for Government pensioners should be increased, given that the cost of living has been rising over the years?

Dr Ng Eng Hen: Sir, this touches on the issue of retirement adequacy for those who are already retired. I understand that MCYS conducts a national survey in terms of focusing on this group. The last one was conducted in 1995. There is currently one on-going. What it did show was that, in terms of what we put aside for CPF retirement, and this is a retirement account, a significant number of retirees, although they own properties, they may be asset-rich and cash-poor. But that survey also showed that about 80% of retirees received income from their children. The majority said that it was adequate for living expenses, which meant that the family support is very important and another pillar which families do help each other out even in their retirement.

But raising the retirement age is still an important goal, both the effective and legislative retirement age, because we will need to help. In other words, if this current cohort can work longer to support their own retirement, then I think the family structure is strengthened. I do not think that they are discrete aspects. I

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think they are interlinked. The Committee will have to look at the number of measures. As I said, there is a tripartite committee on extending employability as an important issue. We will have to see what can be done. But it is very clear that in order for us to save more, we have to work longer. So, the solutions are not difficult, but the implementation and how we can achieve them will need widespread consultation and practical measures to apply.

Mdm Ho Geok Choo (West Coast): I would like to ask the Minister whether the 20% that we are talking about includes the long-term unemployed PMEs. And if it does, what is the number and what kind of assistance are we rendering to this group?

Dr Ng Eng Hen: I do not have specific breakdown, but this was a household expenditure survey. So this survey was based on households. As I have replied, out of the 20%, eight in10 working persons in this 20% of households were holdings jobs in clerical, service, sales and production sectors. I assume 20% were then in PMETs. As to specific measures for PMETs, I think the Member has filed a separate question and I will leave it to that occasion to answer it.

Mdm Cynthia Phua (Aljunied): Mr Speaker, Sir, while the Minister looks at the holistic approach to help these families, can the Minister work with the Ministry of National Development to quickly lessen this basic cost of housing? Because our current policy is that we do not favour downgrading and 50% of these households, as what the Minister has said just now, actually own 4-room flats.

Dr Ng Eng Hen: Just on the specific figure, I said 50% live in 3-room flats or smaller. The converse will be somewhere there, but the specific figure needs to be checked. Yes, it is an issue that the

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Ministerial Committee is looking at. In other words, how do they monetise their assets. I do not think it will be quite right to say that we have an explicit policy to discourage downgrading. I think the Government has many times said that you should right-size your housing. In other words, you should live in houses that you can afford, and we leave it to members to be prudent about.

As to whether we should avail members more avenues to help them monetise their assets, I think that surely must be one of the means in which they can fund their retirement. So, yes, we are looking at that.

Miss Penny Low (Pasir Ris-Punggol): Sir, first, I would like to support Mdm Cynthia Phua's proposal on looking at helping residents to right-size their property. There have been a number who have come to downgrade but they do suffer certain penalties, for lack of a better term. So, perhaps the Ministerial Committee can look into that.

The Minister said that many of them have low educational levels. I notice that many of them are also from broken families and families with perhaps one member or so with criminal records. Some of these people have come to my MPS and said that they have been trying to look for a job to turn over a new leaf. But being in their 40s or even 50s, they find it tremendously difficult to look for a job. So my question is: is there any specific policy targeted at this group of people who might want to turn over a new leaf and yet in that so-called not-so-desirable or difficult age group?

Dr Ng Eng Hen: Sir, what the Member has illustrated through questions is that this is a multi-faceted problem and that is why a number of Ministries are involved. We will ask the various Ministries to look at specific target groups.

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The Member also mentioned that we penalise those who want to downgrade. I do not think that is quite fair. The issue of subsidy has been raised many times in this House, and we do not really penalise them. This is an issue of subsidy. But if they have right-sized in their housing, and the timing in terms of the property market is wrong, then they are just bearing the brunt of market forces. It was neither the intention nor the outcome desired by the Government that they are so-called penalised, and we do not penalise them.

Dr Lily Neo: Mr Speaker, Sir, the Minister did not answer my question earlier on more attractive retraining opportunities, especially with financial assistance. May I also ask the Minister whether he would adopt a more holistic approach in helping the unemployed poor, as they may have other needs besides retraining and job placements, especially those with young families? Will he assign social workers to this group to better cater for their various needs? Does the Minister have any concrete plan of action to address this issue of widening wage gap?

My last question is: is there a group of people, due to age or lower education, who are not suited to the presently available retraining schemes? Therefore, will he look into the creation of new job opportunities, for example, healthcare services as homecarers?

Dr Ng Eng Hen: Sir, let me, first, answer the questions that I can remember. In terms of whether we want to provide more financial assistance for those to go for training, the answer is yes. In fact, I do not think that is the issue. The issue is not really that they cannot afford it, because we do subsidise 90% and so do sometimes employers or other self-help groups. The cost of the training is actually 100%, so that they do not have to bear the cost. On top of that, we have what they call an absentee

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payroll. In other words, you leave your job, you are actually paid in a sense, in lieu of your wages. So you are actually getting something while on training.

The bigger issue, as the Member has pointed out, is relevancy of their training. As I have mentioned, yes, we will scale up. She has mentioned social workers. These are actually case workers to help them find meaningful jobs at the end of it. I think that is important. What about those whom we find do not have the aptitude? Our first focus is to make sure that we will find them a job within the market-place economy. There is an economic worth to the job and which will bring you up. I do not think we quite want to move towards what other countries do. Basically they are inefficient jobs, they are called work jobs. They are not really work; they are jobs created so that people can say that they have work. In one of the trips I attended, it is counter intuitive and counter effective. You just have a hedge and see the maximum number of people you need to trim the hedge, and that is the key performance indicator (KPI). And the more people you have to trim the hedge, then the more success you have. I do not think we want to move towards that. I think each job in the economy should have a market value so that we can continue to be efficient and competitive.

Assoc. Prof. Ong Soh Khim: Sir, just now the Minister said that, excluding students, seven in 10 have primary or below education level. Given that our education is a dominant avenue for social mobility, will the Ministerial Committee consider implementing schemes to help the next generation of these people to break out of the poverty cycle, such as implementing special programmes in the education system?

My next question is: can we have a time-line? When do we expect the

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recommendations from the Ministerial Committee to come about?

Dr Ng Eng Hen: I thank the Member for those very practical questions. Yes, MOE is represented on the Committee. Together with the other agencies (like MCYS), one of the key roles is to break the poverty trap. As the NMP rightly pointed out, we do not want to perpetuate a permanent underclass, and we have to recognise that, and all the facts and surveys showed us that. Because their socio-economic background can disadvantage them and because their children cannot take advantage of the education opportunities. So this is a big area that we are looking at. This will include probably mentoring schemes. I think we want to consult widely. I do not think the Committee wants to go into this thinking that it knows the entire nature of the problems, that it knows all the solutions. We want to consult widely with social workers, with VWOs, to try to understand what the root problems are and see how we can make effective and targeted measures.

From that point of view, I do not really want to rush the Committee for quick and pet answers. I want solutions that are sustainable. But I think more important also for the Committee is to articulate a philosophy of how we are going to respond to

these figures because these are structural challenges. What is Singapore's answer to these problems that other countries have faced for many years, and their solution is welfarism which does not work? What is Singapore's solution? I think that is a more important aspect. So the Committee will come up in due time and in good course, but neither should we rush this process.

Mr Leong Horn Kee: Sir, the Minister in his answer said that one of the reasons for the drop in income of the lowest percentile group is due to the economic

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recession and the Iraqi war. I am surprised to hear that, because this would equally impact the other percentile groups of income earners as well. So if the effect is such that it is going the reverse direction - the lowest percentile group is going downwards and the other percentile groups are still going upwards - then the widening wage gap is even more pronounced and frightening, and more of a concern. So I would like to ask the Minister whether, arising from these factors, the Government should actually consider a more comprehensive review of the entire package of help that we give to our lower income group, not just for the Ministerial Committee to review on employability, but also on other issues like welfare programmes, medical aid programmes, even the rebates as well as the job assistance programmes that we are giving. Are we doing enough to help bring up their income level, rather than seeing them going down?

Dr Ng Eng Hen: Sir, let me just caution that we should not read too much into the particular answer about why. My point was that this was conducted at a time when there was the Iraqi war as well as SARS, and they would have some impact. The Member is quite right that because there was an aberration, we cannot quite find out what the reasons are. But, broadly, what we see, not only from 2002 and 2003, which was across the last seven to 10 years, is that the upper quintile, if you like, the wages were rising and, for the bottom 20%, there were some wage deflationary aspects and somewhat stagnant. This was quite different from the 1991 to 1997 era where the economy did well and all groups rose between 8-10%, in terms of compound annual growth. In terms of relooking everything, we have to look again with some equanimity, this is a particular group where there are certain things that we certainly need to do, but we do not need to re-fix the wheel because it is not broke. I agree with the

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Member that we have to look at certain aspects, and part of our objective is to see how relevant they are assuming, and quite rightly assuming, that the trends that we are seeing are structural.

Mr Steve Chia Kiah Hong: Sir, I believe the key issues are basically jobs, jobs and good jobs. So, basically, I would like to ask the Government and the Ministry what they are doing to increase the number of good paying jobs available to Singaporeans.

Dr Ng Eng Hen: Sir, the answer must be economic growth. You cannot create jobs if there is no market value because then you are just subsidising them. That is not a job. Therefore, we must continue to focus on our fundamentals, make sure that our workers can command the premium and the salaries that we pay them, continue to attract investments and continue to make sure that Singapore is a designation that people want to come. Within the ambit of a market-based economy, I think there are also pockets where we can help Singaporeans find those jobs, be productive in those jobs, and this is the focus of the Job Redesign Programme. But let me go back to the fundamental assertion that it is a growing economy that produces jobs.