Speech at The Second Reading Of The Skills Development Levy (Amendment) Bill 2008
Mr Gan Kim Yong, Acting Minister for Manpower
Mr Speaker, Sir, I beg to move, that the Bill be now read a Second time.
Introduction
2. Sir, we announced during the budget statement this year our intention to restructure the Skills Development Levy (SDL) as part of our strategy to develop a first-class Continuing Education and Training (CET) system in Singapore so that we will be better positioned for the future. This will broaden the base of SDL and strengthen the support for our workers to upgrade their skills throughout their working lives and to take advantage of new job opportunities. This Bill amends the Skills Development Levy (SDL) Act to achieve this.
Proposed change to SDL structure
3. At present, the SDL is levied on employers for workers earning up to $2,000 a month, at a levy rate of 1% of gross remuneration or $2, whichever is higher. We announced in February this year that effective 1 Oct 2008, the SDL will be applied to all employees instead. With the broader base, we will reduce the levy rate from 1% to 0.25% on the first $4,500 of every employee's gross monthly remuneration or $2, whichever is higher.
4. The SDL was introduced in 1979 to encourage employers to upgrade their low-skilled workers. Levy collections were channeled into the Skills Development Fund (SDF), from which employers could apply for reimbursement of the cost of training. Employers can claim up to 80% of the course fees as well as a portion of the employee's salary1 when he goes for training. In the case of employees aged 40 and above holding A-level qualifications or lower, the course fee subsidy is 90%.
5. The levy rate has been progressively lowered from 4% in 1979 to 1% presently, while the monthly salary ceiling has been raised from $750 in 1979 to $2,000 presently, in tandem with rising wages and increasing demand for training reimbursements.
Building a CET System for a Globally Competitive Workforce
6. Sir, the need to invest in our lower-skilled workers and upgrade their skills has not changed – in fact, it has become even more important as industries restructure and move up the value chain. At the same time, with economic restructuring, faster skills obsolescence and shorter job tenures, every worker regardless of educational or skills level, must continually upgrade and update his skills in order to stay relevant and do his work better. Some may need to acquire new skills to change careers and seize emerging opportunities from the new growth industries. Hence, going forward, our CET system will have to cater to workers of all levels. In the last few years, we have already begun to broaden the scope of our CET system to cover not just the lower-skilled workers, but also those with higher qualifications.
7. The Workforce Skills Qualification (WSQ) framework, a key component of our CET system, offers qualifications from the certificate level all the way up to the diploma level, and even graduate diplomas for certain industries. For example, under the Landscape WSQ, there are certificates in landscape operation for technicians and supervisors as well as diplomas in landscape management for managers. The Singapore Workforce Development Agency (WDA) has also recently introduced scholarships for adult workers to obtain a Masters in Landscape Architecture at NUS, thus providing opportunities to aspiring landscape architecture professionals who wish to upgrade further. This is what we mean by “学无止境”.
8. Our CET system is also being progressively broadened to cover more industries. So far, WSQ courses are being offered in industries such as retail, tourism, business administration, interactive media, banking and finance, and supply chain management. Employers and workers can look forward to even more CET offerings in growth areas such as aerospace, precision engineering, process manufacturing, logistics, allied healthcare, and community and social services.
9. Besides addressing the current needs of the economy, we need to also prepare for the future workforce. In 2020, we estimate that nearly 60% of our resident workforce will have at least a diploma qualification, compared to 36% today, and 22% just 10 years ago2. Many new entrants into the workforce will have degrees. This is already showing up in our statistics. In FY2007, 32% of the training places supported by SDF were for employees having at least a diploma qualification, up from just 20% in FY2000. This proportion will grow as more of our workforce become better educated and more highly skilled. It is therefore timely to restructure the SDL and ensure that employers contribute to the SDF for all their employees, so that we can have broad base support for our CET framework and provide training opportunities for all workers.
The CET Masterplan – More Opportunities for All
10. As mentioned in this year's Budget debate, we are on track to building a first-class CET system under the CET Masterplan. Our CET system will be 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. It will cater to all workers from the Rank-and-File to Professionals, Managers, Executives and Technicians (PMETs). The number of training places will be quadrupled from about 60,000 currently to 240,000 in the next few years.
11. To support the CET Masterplan, the Government has topped up the Lifelong Learning Endowment Fund by another $800 million this year, bringing the LLEF to $3 billion currently. We will continue to invest more, by topping up the LLEF eventually to reach $5 billion. These additional resources for the CET demonstrate Government's firm commitment to investing in the future of our workers, our companies and our economy. However, as the Government devotes more resources to CET, it is important that employers also continue to play their part in supporting CET. The SDL institutionalises employers' commitment to the CET.
Impact of the change in SDL structure and benefits to employers and workers
12. Sir, the restructuring of the SDL is to position our workforce for the future. These changes will be broadly revenue neutral. That is why with the restructuring of SDL to cover all workers, we have also lowered the levy rate from 1% to 0.25%. This is a significant cut which we have calibrated so that the total SDL collection will remain approximately the same as under the previous formula.
13. I urge employers to tap on the SDF to send their workers for CET, so that the workers can improve their skills and productivity, thereby enhancing their employability. This will eventually translate into better overall business performance of the companies.
Conclusion
14. Sir, the SDL is an important framework that institutionalises the role of employers in CET and embodies the principle of tripartism with the government, employers and workers each playing their part in CET. With the changes, the SDL will be repositioned to better support the CET system that we are building – one which will help all workers, regardless of age, skill or education level, to upgrade and seize new opportunities as they progress in their careers.
15. Sir, I beg to move.