Speech at Ministry of Manpower Workplan Seminar

Mr Gan Kim Yong, Minister for Manpower, Orchid Country Club

Brother John De Payva, President of NTUC

Brother Bob Tan, Vice President of SNEF,

Our Partners from the public, private and people sectors,

Colleagues from the MOM family,

Ladies and Gentlemen,

Good afternoon

Introduction

2009 was a challenging and significant year for MOM and for Singapore as a whole, as can be seen from the opening video. However, with the strong support of our partners and the collective efforts of every MOMer, we were able to help employers and workers manage the downturn and allow Singapore to emerge stronger and more resilient from the recession.

2. The labour market rebounded quickly in the second half of last year, offsetting the job losses experienced in the first half. Overall, unemployment rate improved significantly from a seasonally adjusted 3.4% in September 2009 to 2.1% in December. I thank all our partners and colleagues for your strong support and dedicated efforts in the past year.

MOM’s role in driving productivity

3. Moving forward, the year ahead will be a critical one as we reposition our economy and embark on the next phase of development and growth. There will be new challenges but also opportunities for Singapore and Singaporeans. As the economy picks up and the labour market tightens, companies will not be able to continue to grow simply by employing more workers. The 2009 Graduate Employment Survey showed that more than 92% of the fresh graduates from the three local universities found jobs within six months of graduation, compared to 91% in the previous year. We will also need to moderate the inflow of foreign workers to reduce our dependence on them for growth. The strategy for Singapore in the next decade is therefore to shift towards innovation, productivity and skills as key drivers of growth. Only by doing so can we achieve a growth that is sustainable and inclusive, leading to improvements in the quality of life for Singaporeans.

4. We will have to continually find innovative ways to do business, create value by developing higher quality products and services, expand into new markets that offer greater opportunities, and change the way we carry out our tasks so that we can be more efficient and respond faster to the changing environment. This way, we can grow the economic pie in a sustainable way, so as to have more to be shared between companies and workers.

5. It is easy to understand that investing more in capital equipment, product development and IT can bring about productivity improvements. What is less well appreciated is how quality manpower, good management and progressive workplace practices will also have a critical role to play on improving productivity.

a) A quality workforce allows a company to quickly adopt new technologies and gain an advantage over its competitors. To always stay one step ahead of competition, companies will need to constantly move up the value chain, and this often involves new products or new technologies that will require workers with higher skills and knowledge. For example, companies in the Medical Technology industry need workers with inter-disciplinary skills in medical and infocomm technology to develop innovative solutions to streamline and automate the production processes. Therefore, a learning workforce that is highly adaptable and continuously acquires new skills will be an invaluable asset to the company.

b) Good management practices are a key driver of productivity too. In 2007, a research study¹ was conducted on the management practices of over 4,000 medium-sized manufacturing companies in the United States, European and Asian countries. It was found that a single point improvement on a 5-point scale in the quality of management, increased output by the same amount as increasing the labour force by 25%, or increasing capital by 65%². Good management can also result in higher employee engagement that leads to lower turnover, higher productivity and more innovation³.

c) Progressive workplace practices also boost productivity. For example, more companies globally are experimenting with ways to create greater worker engagement and commitment through job rotations, multi-skilling, flexi-time, better ergonomics, performance-linked pay and profit and gain sharing. This is something that we can study to see how we can improve workplace practices in Singapore to enhance worker engagement and raise productivity.
Supporting national efforts to raise productivity

6. MOM plays a critical role in the transformation of our economy. In the year ahead, we will be focusing our efforts on supporting the national drive to raise productivity and to foster a productive workforce and workplaces in Singapore. MOM is also working with MTI to support the work of the newly established National Productivity and Continuing Education Council (NPCEC).

7. How do we develop a more productive workforce? First, MOM will need to focus on helping our workforce raise their productivity through Continuing Education and Training, or CET. CET has always been a key thrust in MOM. Over the last 5 years, we have built a strong foundation of CET infrastructure, which has helped cushion the impact of the recent recession by getting workers to go for training and upgrading. We will continue to build up and strengthen our CET landscape so that workers will have more opportunities to improve themselves and raise their productivity.

8. As announced earlier, the Government will invest $2.5 billion over the next five years to build up a comprehensive first-class CET system. MOM will work with WDA to expand the scope of our CET system to serve a wider range of workers. In particular, we will need to build up our capacity for PMETs given that they now make up more than half of our local workforce. Training for rank and file workers will remain important, but PMETs too will need to upgrade themselves constantly to stay relevant and contribute to productivity improvements.

9. We must also ensure that the CET programmes are delivered effectively. Therefore, we must continue to enhance the quality of our CET providers and the competency of our trainers. This month, WDA’s Institute for Adult Learning has started a new Diploma Programme in Adult and Continuing Education. The course will help deepen the capability of our curriculum developers, trainers, assessors and other CET professionals. It will form part of a capability building pathway that we are putting in place for CET professionals, ranging from formalised certificates to Masters level courses, as well as short professional development programmes.

10. We will also strengthen the framework of skills qualifications. In the past, the skill level of the workforce is largely measured by academic qualifications. Since the introduction of the Workforce Skills Qualification (WSQ) system in 2005, we have made significant progress in establishing a new skills framework. Today, we have 24 WSQ frameworks. The recognition rate of WSQ among employers has increased from 23% in 2008 to 36% in 2009. According to a survey conducted by WDA, both employers and workers have affirmed that WSQ training contributes to increased productivity and work performance. This is a strong indication of the relevance of WSQ training.

11. Today, I am pleased to share with you that WSQ will be included in the Singapore Standard Educational Classification (SSEC)⁴ as a qualification achievement from this year onwards. This signifies the recognition of WSQ as a national credential, just like those awarded by our post-secondary educational institutions. WSQ's inclusion will present a more accurate profile of the quality of our workforce. This is a significant milestone as it signals employer recognition as well as opens up more career pathways and opportunities for workers.

12. Second, we recognise that Small and Medium Enterprises (SMEs) may need greater assistance in getting started on the transition into productivity and innovation driven growth. Yet, SMEs play an important part in our national productivity drive, employing nearly six out of every ten workers⁵ in Singapore. We will develop a more targeted programme to help the SMEs raise productivity. WDA will work with SPRING to help them raise their knowledge and capabilities through productivity training programmes that take into account circumstances and challenges faced by the SMEs. These programmes will equip their supervisors and workers with the knowledge and tools they need to improve productivity at their workplaces. However, the management must take charge of productivity outcomes utlimately. We will also provide training programmes, customised workshops and diagnostic tools to help SME CEOs and managers to implement productivity measures in their enterprises.

13. SMEs may have greater funding constraints for training programmes. I have therefore asked WDA to look into how we can provide higher funding support for SMEs to take up the upcoming productivity-related courses. More details will be announced next month.

14. To reach out to SMEs, we will have to work with SPRING and the various industry associations, such as the Association of Small and Medium Enterprises (ASME), as well as the various Enterprise Development Centres (EDCs), to leverage on their network and resources. These associations and EDCs play an important role, given their intimate knowledge of the industry and their close connection with the SMEs in the industry. Together, we can develop sector specific initiatives that will benefit SMEs across the entire sector. For example, we could work with industry associations to improve supply chain efficiency in the whole sector by leveraging on better InfoComm Technology (ICT) solutions.

15. Third, we have to pay special attention to low-wage and older workers to help them raise their skills and take on higher value jobs over time. This way, they can also benefit from the overall productivity improvements and we can then achieve inclusive growth. As announced last month, MOM has enhanced the Workfare Income Supplement (WIS) Scheme and will introduce a new Workfare Training Scheme (WTS). The enhancements to the WIS will help to supplement workers’ incomes and also further build up their CPF savings. The new WTS serves to complement the WIS by encouraging low-wage workers to upgrade their skills and to incentivise their employers to send them for training. We will roll out the WTS on 1 July 2010. MOM will work with our partners such as WDA and NTUC’s e2i as well as grassroot leaders to reach out to low-wage workers and encourage them to apply for WTS so that they can benefit from training.

16. Fourth, as we moderate the inflow of foreign workers, we must at the same time step up our enforcement efforts against errant employers and foreign workers that violate our laws. We will also enhance the regulatory framework for employment agents. MOS Lee Yi Shyan will be overseeing this effort.

17. Lastly, we must continue to strengthen our tripartite partnership and leverage on our partners to drive productivity. Strong tripartite collaboration had helped us weather the downturn; and this close relationship between employers, unions and the Government is now crucial in helping us run faster in our journey to improve productivity. MOM will work closely with NTUC through the Cheaper, Better, Faster (CBF) movement to spread the productivity message by reaching out directly to employers and workers, and provide them with assistance and support on the ground to implement productivity improvements at the enterprise level.

Raising productivity through better workplace practices

18. As we raise the productivity of our workforce, we will also build productive workplaces through the promotion of safe and progressive workplace policies and practices. A safer workplace is also a more productive one. In 2009, a total of 664,000 man-days were lost to workplace incidents, about 3% higher than that in the previous year. Ensuring a safe workplace will reduce production stoppages, as well as the need to replace injured staff and retrain new ones. It will increase staff motivation and satisfaction.

19. Next year, we will be extending the Workplace Safety and Health Act (WSHA) to all workplaces. An estimated 1.4 million workers across 16 industry sectors, accounting for close to half of the workforce, will benefit from the change. MOM will work closely with the WSH Council to prepare the stakeholders on their responsibilities under the WSHA and what they need to do to meet the challenges.

20. Similarly, companies that implement progressive workplace practices will be able to better utilise their manpower resources and get the most out of their investments. For example, if companies are able to offer flexible work arrangements, or restructure work processes and redesign jobs to allow more jobs to be done from home, they will be able to tap on a wider pool of workers such as women or older workers to join their workforce.

21. MOM will be introducing the re-employment law by 2012 to provide greater flexibility for employers to retain older workers and continue to tap on their experience beyond the minimum statutory age of 62. In the year ahead, we will be drafting the re-employment law in close consultation with our tripartite partners. We will also work closely with them to step up our promotional and outreach efforts to help employers and workers be re-employment ready. For example, just last week, NTUC has launched a re-employment guidebook to help employers, unions and workers better understand the Tripartite Guidelines on Re-employment of Older Employees and the practical issues associated with re-employment. I encourage employers and employees to make use of the guidebook and implement re-employment policies and practices before the legislation comes into effect in 2012. Together with the CPF Life we have introduced, we will help encourage re-employment.

22. To encourage companies to adopt more flexible work arrangements, we will be working closely with our tripartite partners through the Tripartite Committee on Work-life Harmony, chaired by SPS Hawazi Daipi. One particular area of interest is to help companies leverage on Singapore’s increased InfoComm capacity to identify more jobs to be done from home. This will allow businesses to better manage their manpower resources and reduce costs such as office rental. It will also provide more opportunities for our women or older workers who need more flexibility to join the workforce.

23. Finally, as we prepare our workforce and workplaces for the next phase of Singapore’s development, MOM itself must also continually strive to be more innovative in our processes and system. This will allow us to be more productive in the way we work and to better serve our customers as one-MOM.

24. I have asked PS to review our internal processes and systems to see how we can further facilitate multi-departmental collaboration so that we can work together as one-MOM to further improve and support the national drive in the areas of productivity, innovation, CET and customer service.

25. In addition, MOM will be setting up a One-stop Customer Service Centre at Bendemeer Road by 2012. The new centre will consolidate MOM’s services for issues relating to foreign manpower, labour relations and workplaces, as well as occupational safety and health which are currently located at three different locations. The WSH Council will also be located there. We will adopt a customer-centric and innovative approach in the design of the new centre and its work processes so that we can be more productive and effective in the way we work.

Conclusion

26. Colleagues, friends and partners, I have shared with you key components of MOM’s workplan for the upcoming year. These are challenging and ambitious plans and MOM cannot do alone. We must continue to strengthen the strong relationship we have with our tripartite partners as well as other agencies and working partners. These relationships are built on a high level of trust, cooperation and a shared purpose of building a productive workforce and great workplaces for Singapore.

27. The task of shaping the future workforce and workplaces for Singapore is a challenging and exciting one. I look forward to your continued commitment and support in this drive towards sustainable and inclusive growth, and to prepare our employers and employees for the manpower challenges and opportunities in the years ahead.

28. Thank you.

Factsheet on New Bendemeer Centre

¹ Comprising researchers from McKinsey, Stanford and the London School of Economics

² Bloom, Dorgan, Dowdy and Van Reenen (2007), Management Practice and Productivity: Why they matter.

³ Towers Perrin ISR (2006), The ISR Employee Engagement Report; Gallup Organisation (2006), 'Engagement predicts earnings per share.'

⁴ The SSEC is the national standard for classifying educational programmes and qualifications. It is overseen by the Department of Statistics (DOS), our national authority on statistical standards.

⁵ Based on estimates from DOS 2007 (latest available)