Committee of Supply Speech (Part 1) by Dr Ng Eng Hen, Minister for Manpower and Second Minister for Defence, 04 March 2008, 2:25 PM, Parliament
Dr Ng Eng Hen, Minister for Manpower and Second Minister for Defence, Parliament
Investing in Our Workers, Investing in Our Future
(I) SINGAPOREANS BENEFITED FROM ECONOMIC GROWTH AND JOBS
2007 has been a very good year for Singapore's economy and our labour market. At last year's COS, I told members that MOM had projected 450,000 new jobs over the next five years. But in just over one year, the economy added 236,600P jobs, more than half of that anticipated for the 5-year period. This is a phenomenal growth rate of 9.5%P, more typical of a developing economy than a developed one. Most importantly, Singaporeans have benefited from this buoyant labour market:
- 92,100P (39%) of the jobs created last year went to locals.
- Indeed, more locals are now employed than ever before, in absolute numbers and as a proportion of the working-age population. In 2007, 1.6 million locals aged 25-64 were working – translating to a record-high employment rate of 76.5%.
- We are now at full employment. As at Dec 07, our overall and resident unemployment rates, at 1.6%P and 2.3%P respectively are at their lowest levels in a decade.
2. Wages have also gone up. Last year, the median monthly income for locals in full-time employment rose by 7.7% to $2,330; or 5.5% after adjusting for inflation. Lower income workers have also benefited – the bottom 20% of workers saw their average real income rise by 2.1%. Singapore citizens in this group would have received even more with Workfare Bonus of up to 13% of their incomes, as well as other one-off Government surplus sharing schemes.
3. My Ministry recently released an occasional paper which looked at the employment of Singapore citizens and Permanent Residents (PRs). In 2006, PRs constituted 13.9% of all locals employed, with Singapore citizens constituting the majority. Citizens are indeed benefiting from economic growth and are getting good jobs – more are employed compared to three years ago, and almost two-thirds of this increase in employment are in PMET jobs.
(a) Singapore is Unique in Strong GDP and Job Growth
4. Will economic growth and job creation continue in the coming year? There are uncertainties but at present, we continue to maintain a GDP forecast of 4% to 6% growth for this year. We should have continued employment growth for the year ahead, though it will likely be lower than the record gains chalked up last year, which was a phenomenal year. The bulk of the new jobs will be in the services sector, especially the tourism-related industries which are driven by strong tourist traffic and various big-scale events slated during the year. There will be sufficient jobs for locals, including new entrants into the labour market.
5. What explains the ability of our economy to create jobs? Is this something to be taken for granted? Do other developed economies perform similarly? In fact, Singapore is unique. This chart shows how Singapore fares amongst other countries in terms of GDP growth and employment growth between 2001 and 2006. The vertical axis depicts GDP growth; the horizontal axis shows employment growth. The red bubble depicts Singapore. The developing countries – Malaysia and China are represented by the orange bubbles; while those in blue are the advanced economies such as UK, US, Hong Kong, Japan. In 2001 and 2002, we were hit by a recession and were recovering from it – GDP growth was low and employment growth was negative. In subsequent years as the economy recovered, employment also began to grow strongly. While employment growth in other countries was clustered around 3% or lower, Singapore achieved strong employment and GDP growth, as depicted by the red bubble moving towards the top right quadrant. No other advanced economy has managed what we have witnessed in our economy1.
(b) The "Secret" Of Our Job Growth
Foreign manpower to augment local workforce
6. Why have our labour market policies succeeded despite being a small nation with limited manpower? Put simply, we have created good-paying jobs for Singaporeans through growth because we allowed businesses access to foreign workers to meet their manpower needs. This was the exact point raised in a recent article in the Economist which argued that migrants supplemented shrinking local workforces as ours is. Similarly, the Chairman of the US Council of Economic Advisers, Prof Edward Lazear, concluded in a review of economic research that immigrants not only helped fuel economic growth in the US, but also had an overall positive effect on the income of local workers.
7. If we had relied on our limited manpower supply, growth would be slower and fewer jobs would be created. This is the experience in other countries that tend to close their labour markets. Indeed, Singapore was referred to in the Economist as "a developed country that grows at the rate of a developing country". This is a big plus for us.
8. Our policy of using foreign manpower to augment our limited local workforce is a key competitive advantage. But other countries too have realised this successful formula. Australia and the UK recently liberalised their policies to attract foreign talent. Countries that have controlled tightly the admission of lower-skilled foreign workers, such as Canada, and even traditionally closed societies like Korea, have begun to relax their criteria to allow in foreign workers to support businesses' growth. These countries realise that businesses will relocate if they cannot have workers to compete effectively. A result of that would be a slowing economy, fewer jobs created and declining incomes.
9. Is there an appropriate balance between keeping locals employed and admitting the right number of foreign workers to meet economic demands? Some have voiced a more specific concern on the impact of the S pass relaxation on the employment opportunities for locals, especially older PMETs.
10. In fact, augmenting our local workforce with foreign manpower has actually increased job opportunities for Singaporeans and locals, even for PMETs. Local diploma-holders and graduates have continued to benefit from the strong labour market. The unemployment rate amongst local polytechnic diploma-holders has fallen from 5.6% in June 2004, before the introduction of the S Pass, to 3.4% in June 2007 after the introduction of the S Pass. Last year, we saw a 47% increase in the number of job vacancies requiring at least a diploma qualification. New polytechnic graduates are also doing well, with about 90% of those entering the labour market securing employment within six months of graduation. Their average starting salary has risen by 12% over that in 2004 to $1,810 in 2007.
11. So contrary to the fear that allowing foreign manpower in might push locals out, the reverse has happened, where more locals have been employed? The reason is that in today's borderless global economy, businesses move to places where capital, ideas and labour are readily available. This is the virtuous cycle we need to keep in – to match business plans to manpower availability and concentrate talent here to maximise innovation, entrepreneurial skills and capacity. This explains why Singapore's economic and labour market policies are working for our local workforce.
Enhancing our workforce productivity
12. But by no means does this mean we can stop and rest on our laurels. In 2007, we were ranked as the most competitive labour market in the World Competitiveness Yearbook, and we will work extra hard to keep the pole position. We must continue to introduce measures which will help us keep our competitive edge. The productivity and value-add of our workers will be increasingly important going forward.
13. In 2007, our overall labour productivity actually fell by 0.9%, compared to the gains of 1.5% and 2.8% in 2006 and 2005 respectively. Our National Wages Council should bear this in mind during their deliberations later this year.
14. How can we boost our productivity levels further? Mrs Josephine Teo had suggested linking foreign worker access to industry upgrading and re-development efforts. Another suggestion is to make employers demonstrate that they have put in sufficient effort to recruit Singaporeans before they are allowed to recruit foreigners. It would be both ineffective and counter-productive to tie foreign worker quotas to specific outcomes. Doing so would restrict the growth potential of companies, especially in this tight labour market, and in turn reduce job opportunities for locals. We have to stay competitive and relevant. Rather we should maintain and refine where necessary our present foreign manpower policies so that companies can capitalise quickly on opportunities to expand, and thereby create even more jobs.
15. Nevertheless, I agree that we need to look ahead and ask what else needs to be done to remain relevant and competitive. To stay ahead, we must focus on increasing skill levels, productivity and value-add. We can achieve this through three efforts:
16. First, re-create jobs. Spearheaded by the NTUC, the Job Re-creation Programme (JRP) has succeeded in enhancing the productivity and value of jobs, especially in sectors like Security and Landscaping. Last year, through JRP, over 15,000 jobs were re-created. NTUC and WDA will press on with their efforts in the coming year.
17. Second, get companies to upgrade. This year's Budget provides new incentives to encourage companies to invest in technology and innovation to enhance productivity.
18. Third, develop a first-class Continuing Education and Training (CET) system to help our workforce stay ahead. This is the key challenge, if we want to keep our competitive edge.
(II) INVESTING IN OUR WORKERS, INVESTING IN OUR FUTURE
19. PM had announced the CET Masterplan during the opening of the Employability and Employment Institute (e2i). This marks a significant milestone in the development of CET in Singapore and signals the training of adult workers as one of Government's top priorities.
(a) Development of CET
20. We will significantly expand our CET infrastructure to support adults in skills upgrading throughout their working lives and improve the skills profile of our workforce.
Industry-driven and accessible
21. The CET system must however be different from our school system in two ways. First, it needs to be more industry-driven to give workers relevant skills that employers value and that they can use immediately on their job. Second, CET has to be adult-friendly. We should improve access through affordability and reducing unnecessary academic pre-requisites. Adults learn differently – shorter, more practice-oriented courses may be required.
22. We don't have to re-invent the wheel. Well-established adult training systems in many parts of the developed world – UK, Canada, Australia, Germany and Scandinavia – provide us with many good learning points and best practices that we can draw from.
Foundation has been laid
23. We have learnt from them and incorporated some ideas. Over the last few years, we have made good progress in developing our CET system. Today, we have the Workforce Skills Qualification (WSQ) system which covers all major industries. 145,000 workers have attained WSQ certification over the 3 years that the system has been in place.
24. We also have a cadre of competent training providers delivering modules of WSQ courses. At the higher tier are 19 CET Centres, with a capacity to train 22,000 workers a year for various industries.
(b) Vision: A World-Class CET System for a Top-Quality Workforce
25. With these systems in place, it is now an appropriate time to ramp up and move on to the next phase in developing our adult training system with our CET Masterplan.
26. The Masterplan aims to prepare Singaporean workers to remain competitive in the future. We should not be stuck in today's mindsets based on today's mindsets and present concerns. Instead we must set the preconditions now to succeed for the future. And we should do it now, while we are ahead.
27. The future will be different – for one, our workforce will be different. In 2020 – nearly 60% of our resident workforce will have at least a diploma qualification, compared to 36% today and 22% just 10 years ago2. About 43% of new entrants into the workforce are likely to have degrees.
28. The shape and structure of our economy will change in tandem. This is harder to project but generally industries will move up the value-add and innovation chain and will require workers with higher skills.
29. Singapore is not alone in recognising the need to gear up for the future. Other countries are not standing still and are also investing in adult training to enhance the quality of their workforce. The UK launched a major review of its further education system last year to improve its skills profile. It is setting up new National Skills Academies, introducing new diplomas and apprenticeships, and developing new qualification frameworks.
30. We cannot afford to lag behind and play catch up. We need to stay ahead by continually investing in our people, so that each generation of Singaporeans will be better skilled and better able to seize the opportunities that lie ahead of them.
(c) Exciting Opportunities Abound
31. To successfully implement the CET Masterplan, we are matching our resolve with more resources with a top-up of $800 million in the Lifelong Learning Endowment Fund (LLEF) this year, bringing it to $3 billion. We will eventually top-up the LLEF to $5 billion.
32. The CET Masterplan will present exciting opportunities and inject greater diversity into our CET landscape.
33. What will the CET Masterplan mean for employers, vulnerable groups and the economically inactive? These are important points which I will address by outlining the key strategic thrusts of our Masterplan.
Building bridges between the CET and school education systems
34. First, we will better integrate PET and CET. WSQ and Employability Skills System (ESS) standards are already widely accepted by the industry in lieu of formal academic qualifications. But we will create more bridges between the CET and school systems. To illustrate, a worker who has a polytechnic diploma or Nitec qualification can take up a WSQ course; conversely, someone with a WSQ Certificate should also be able to cross over to the school system to earn a polytechnic diploma or even a degree in the future. MOM and MOE will be looking into establishing stronger linkages between our CET and formal education systems.
First-class training providers
35. Next, we will establish more CET Centres to deliver quality training for adult learners. By 2010, we will increase the annual training capacity from 22,000 workers today to 80,000 by adding 10 more new CET Centres in growth sectors and expanding the existing Centres. Some of these Centres will involve our polytechnics and ITE. The training expertise of the private sector and NTUC will also be harnessed. Let me cite some examples to give a better flavour of things to come.
36. Take the pharmaceutical industry as an example in the manufacturing sector. Talks are underway between public sector agencies, polytechinics, NUS and key pharmaceutical companies such as GlaxoSmithKline to set up a Singapore Academy of GxP Excellence (SAGE) that will facilitate the discovery of new technologies in developing and manufacturing pharmaceuticals, biologics and medical devices. The centre will offer WSQ courses in Pharmaceutical and Biologics that can potentially articulate to Bachelor and Masters programmes in NUS.
37. The fast-growing Aviation industry also has something to look forward to. The Air Transport Training College, Singapore Polytechnic and ITE will work together to train more technicians for maintenance, repair and overhaul. A technician undergoing the Aerospace WSQ CET training can become operationally competent in just 4 months, and progress to become a Certifying Technician after accumulating one or two years of work experience.
38. In the services sector, we will see growth in areas such as private banking, asset management and "high-trust" services such as accountancy, legal and other professional businesses. To support this growth momentum, 5 CET Centres specialising in areas such as risk management, wealth management and insurance have been established, the result of a collaborative effort between WDA, the Monetary Authority of Singapore (MAS) and the Institute of Banking & Finance (IBF).
39. In Tourism and Hospitality, ITE is studying the use of existing campuses to consolidate all of its hospitality-related CET offerings. This translates to about 2,500 training places a year in hospitality-related professions such as restaurant and F&B managers, concierges and guest relations officers. This and other CET Centres will help to raise the service standards of the sector.
40. These developments will strengthen our adult training infrastructure. There will be a multitude of CET Centres and providers located around the island, close to workers. For each industry, a few CET Centres will serve as standard bearers for adult training, complemented with several smaller training providers accredited under WSQ, and many in-house providers which recruit, train and develop their workers based on WSQ standards.
41. In addition, we will promote peaks of excellence by according the best CET Centres the status of National CET Institutes and will invest more resources in them. These will be the best-in-class institutes, with excellent programme quality, training methods and delivery of outcomes. The first few Centres to be accorded the status of National CET Institutes will be announced later this year.
42. Training adults is very different from teaching students. Adults bear a higher opportunity cost to training, as training means sacrificing earnings, leisure or family time. Training must therefore be efficient, focussed, and immediately applicable to work. We will set up an Institute for Adult Learning to do research and development and help build up our capabilities in adult training methods.
CET is for all
43. Our vision is to allow all workers access to adult training – whether to prepare for new jobs, switch careers or to acquire new skills. Workers should find something relevant amongst the exciting training opportunities within our dynamic CET landscape; including PMETs.
Tripartite outreach to workers
44. We can build the systems and training institutes, but to be more effective, we will need the human touch and for all tripartite stakeholders to increase our outreach. Workers and job seekers sometimes lack the confidence to go for training or to take up a new job. Having effective access points is thus just as important. We will need our tripartite partners and our community partners – employers, unions, the CDCs and self-help groups – to be active stakeholders in the CET Masterplan.
45. Over time, MOM and WDA will work with the CDCs on elevating the job centres into career centres, so that beyond the capability to place unemployed into jobs, they can also help employed workers with advice on acquiring better skills and finding better jobs. This will strengthen the CDCs' efforts in improving the lives of their residents.
(d) Reaping the Benefits of CET
46. I do not want to underestimate the challenge in building a first class CET system. It will take time and effort of Government, unions, employers and workers themselves. But the fact that many Singaporeans will benefit in life-changing ways will motivate us for the longer term. Let me illustrate through real life stories from different walks of life. Their stories should keep our spirits and energy high.
47. The first example illustrates how CET has helped a retrenched worker make good. For the past 22 years, Mr Poh Kian Hock, now 43, was a warehouse supervisor in an electronics manufacturing company. After getting retrenched late last year, he sought help from NTUC, and was referred to take up training at the NTUC Learning Hub. There, he earned a WSQ Certificate in Generic Manufacturing Skills which has helped him secure a new job in a different industry. This month, he will start work again, this time as a store supervisor in A&G International Holdings, a petroleum company, drawing a salary double of that in his previous job.
48. The second example is about a white-collar executive making a career switch to seize new opportunities. 43-year-old Mr Andry Lie used to be an entrepreneur and owned a trading and consultancy firm. He enrolled with the University of Nevada Las Vegas (UNLV) in the WSQ Diploma Programme in Tourism, specialising in MICE and Events. Mr Lie has just graduated from the programme and is currently working as an intern with Meeting Professionals International (MPI).
49. The third example is a young and employable polytechnic graduate using CET to find his niche. Mr Effandi bin Mohamed, 27, holds a diploma in IT. He used to be a videographer, but resigned and enrolled in a WSQ Specialist Programme in 3D Animation and Visual Effects. Upon his graduation last year, he was selected by a UK-based firm, Double Negative, to further his skills in a one-year attachment in London. This is the firm responsible for the visual effects in the Harry Potter series of movies. So we may have a chance to see Effandi's work soon.
50. Finally, even PMETs who already have degrees or diplomas may need CET to acquire specific skills relevant for their jobs. Ms Thereis Choo, 24, is an NParks scholar and has a first class honours in Botany. Part of her job in the Botanic Gardens requires her to inspect trees. So to do her job better, she took a 3-day course in professional tree climbing at the Centre for Urban Greenery and Ecology – using ropes, a harness and a pulley system. She even won the tree climbing competition at last year's Green Thumb, an annual event organised by NParks, and is now a champion tree climber!
51. These stories carry a few important messages.
52. First, CET provides opportunities for workers to switch to growth industries, as in the case of Mr Poh Kian Hock. With CET, workers can upgrade, secure better jobs and get better pay.
53. Second, as economic competition becomes more intense and product cycles shorten, mid-career switches will be more common. CET will help workers make those switches, as in the case of Mr Andry Lie.
54. Third, the relevance of any qualification can gradually expire over time. Every worker must therefore sharpen his skills to maintain relevancy and do his work better, whether he is like Mr Effandi who learnt digital animation to find his niche, or Ms Thereis Choo who learnt professional tree climbing to do her work more efficiently.
(e) Conclusion
55. Ultimately, we want to build a CET system that creates opportunities, offering many pathways for workers to play to their strengths, and fulfil their potential and aspirations. It will empower workers to take charge of their own careers, and make the best out of the opportunities Singapore offers. There will be thousands of workers that will follow the examples I cited today – taking charge of their development and continually upgrading themselves because the CET system is accessible, affordable and adds value to their careers.
56. With the support of tripartite and community partners, we can build a first-class CET system – a key economic and social institution that sharpens the skills of our workers, undergirds our competitiveness and creates new opportunities for our people to have better careers and better lives.
1 Refers to IMF advanced economies. Comparison was also done with China, Malaysia and Philippines.
2 Today, the typical (median) resident worker is one with a secondary qualification. But in 2020, he is one with a diploma qualification.
Factsheet on Continuing Education & Training Masterplan
Mr Andry Lie
Mr Effandi Bin Mohamed
Mr Poh Kian Hock
Ms Thereis Choo