Committee of Supply Speech by Mr Hawazi Daipi, Senior Parliamentary Secretary for Manpower, 09 March 2015, 5:00 PM, Parliament

Mr Hawazi Daipi, Senior Parliamentary Secretary for Manpower, Parliament

MEASURES TO UPLIFT LOW-WAGE WORKERS

1. Madam Chair, several MPs have raised queries on what the Government can do for low-wage workers. A decade ago, a Ministerial Committee on Low-Wage Workers was set up by the Prime Minister to address some of the key challenges facing our low-wage workers then. This includes slow wage growth and the need to stay relevant in the evolving economy. I thought it would be useful, 10 years on, to share how we have addressed these issues and the new challenges that have arisen, and consider what more that we can do in the years ahead. This would also address Mr. Zainal Sapari’s request for a stock-take on how our policies have helped uplift our low-wage workers.
   
   Addressing Low Wage Growth
2. Since the 2005 Ministerial Committee was set up, the Government has embarked on a number of key initiatives to support low-wage workers. Let me quickly recap some of the things we have done.
3. First, we embarked on efforts to support wages at the lower end. In 2007, we introduced the Workfare Income Supplement (WIS) which supplements the incomes and retirement savings of low-wage workers. Since then, we have expanded the coverage and quantum of the WIS payout on two occasions in 2010 and 2013. Workfare is now a permanent feature of our social security system.
4. Second, we recognised that that there were market failures in certain sectors that was causing wages to stagnate. In some sectors, cheap-sourcing was prevalent and workers had limited bargaining power to improve their wages and employment terms. NTUC had been spearheading the development of a Progressive Wage Model (or PWM), negotiated between employers and unions, as a way of helping low-wage workers bargain for sustainable wage increases by tying these to productivity improvements and skills training.
5. The Government supported this effort and agreed to enforce the PWM in three sectors – cleaning, security and landscaping. We then embarked on a tripartite process of developing a mandatory PWM in these sectors. Since we started on this journey in 2012, the PWM for the cleaning and security sectors have already been announced, and details of the PWM for the landscaping sector is due to be released this year. In the case of the cleaning sector, enforcement has begun under NEA’s new licensing regime for cleaning companies.
6. Third, we raised the full-time equivalent (or FTE) salary threshold for full-time local workers. The FTE salary threshold is used as a basis to calculate the foreign worker quota for the company. Raising the FTE salary threshold has helped to ensure that local workers are employed in a meaningful capacity, and are not just being used in a token fashion to increase foreign worker quotas.
   
   Addressing Lower Skills and Education Levels
7. To help our low-wage workers stay relevant and employable, much of our efforts are tied to equipping them with applicable skills and qualifications. In 2010, we introduced the Workfare Training Support (WTS) Scheme to encourage low-wage workers aged 35 and above to upgrade their skills through training to improve their employability. Over the years we have enhanced its coverage to cover more courses and to provide allowances for self-initiated training. Training take-up rates have been steadily improving. Since the WTS scheme was enhanced in Jul 2013, we have seen encouraging take-up rates, with close to 88,000 low-wage workers benefitting from the WTS scheme as at Dec 2014. We are also looking at how to increase access to training by bringing CET opportunities closer to workers and workplaces. One example is the English@Workplace Programme that provides customised English training at workplaces.
   
   Improving Employment Conditions
8. Since the 2005 Ministerial Committee, another area which we have looked at is the susceptibility of our low-wage workers to poor employment standards. Many low-wage workers may be unaware of their employment rights and CPF entitlements. At the same time, good employment standards are likely to encourage more regular work, and bring more people back into the workforce.
9. This is why we introduced the WorkRight initiative in 2012. We have since scaled up our annual proactive inspections on employment rights ten-fold, from 500 to 5,000 a year. Employers have generally been forthcoming in rectifying non-compliance. Let us take a look at sectors such as cleaning, retail and F&B, where a high proportion of low-wage workers are employed. Today, 9 out of 10 employers in these sectors comply with employment laws, up from 7 out of 10¹. More than 35,000 Singaporeans have benefited as a result. They now enjoy their statutory entitlements such as timely payment of salary, CPF contributions or payment of overtime allowance.
10. Madam Chair, we have made progress in the last decade. Our tight labour market and low unemployment rates, has meant that finding a job is not difficult for our low-wage workers. Wages have also grown. Real* income of full-time employed Singapore Citizens at the 20th percentile grew by 1.5% per annum², between 2009 and 2014. As Minister Tan Chuan-Jin mentioned earlier, we have managed to avoid the wage stagnation that many developed economies have been facing. With the various policies and programmes we have in place, our low-wage workers today are better supported than they were 10 years ago.
11. We should continue to review and refine our existing programmes, as well as identify new solutions to better support low-wage workers.
12. We have received several suggestions and feedback from MPs on how we can do this.
13. Mr Zainal Sapari has called for the Government to review WIS and consider further enhancements to give low-wage workers a better hope for their future. WIS is reviewed regularly, with the last major review in 2013. Our reviews take into account wage and labour force trends, among other considerations, to ensure that the scheme continues to provide meaningful support to the bottom 20 to 30% of working Singaporeans. Beyond WIS, the broader CPF enhancements, such as higher interest rates and higher CPF contributions for older workers would also help the low-wage group boost their retirement savings. We will work closely with our tripartite partners to gather further feedback and suggestions in the lead-up to the next WIS review in 2016.
14. Mr Zainal Sapari has also called for MOM to put in effort to enable a higher annual wage growth for the P20 worker vis-à-vis the median worker in a sustainable way. Our fundamental position is that income growth must be supported at all levels by corresponding productivity growth in the longer-term. Hence, we will continue to focus on policies that contribute to a vibrant economy, improve employment outcomes and sustainably lift wages for all Singaporeans.
15. Mr Gerald Giam and Mr Karthikeyan have asked if the PWM can be extended to more sectors of the economy. In fact, the unions have been working on negotiating PWMs with employers in a variety of sectors including hotel, F&B and retail. However, the approach of making the PWM mandatory through Government regulation should be used sparingly, in sectors where cheap-sourcing is prevalent. I had mentioned last year that the Government has no plans to extend the mandatory PWM to sectors beyond cleaning, security and landscaping and this position has not changed. We should allow the market to determine a suitable trajectory of wages based on productivity improvements over time. Also, low wage workers in all sectors receive a boost to incomes and retirement savings via the Workfare Income Supplement scheme (WIS scheme).
    
    Tripartite Committee for Low-Wage Workers and Inclusive Growth
16. Members have asked about our efforts by tripartite members to raise wages. The concerns and challenges faced by low-wage workers are multi-faceted and require strong tripartite partnerships. We have seen this in action through various platforms, such as the tripartite clusters tasked with developing the PWMs as well as the National Wages Council.
17. Another key platform to bring together the collective energies of tripartite partners to address low-wage worker issues would be the Tripartite Committee for Low-Wage Workers and Inclusive Growth (or “TriCom” in short). Since its formation in 2010, the TriCom has provided valuable inputs to strengthen various Government policies including Workfare and WorkRight.
18. The Low-Wage Worker TriCom has recently commenced its new 2-year term. In the upcoming term, the TriCom will focus on several issues:
    
    a. First, it will look at the challenges of low-wage workers in SMEs which are currently facing multiple manpower challenges and industry competition.
    
    b. Second, it will focus on casual workers to better understand the profile and challenges of these workers. It will then develop measures to move them, where necessary, into more secured jobs with better pay and better working conditions.
    
    c. Third, the TriCom will also recommend productivity and job-redesign measures with a focus on jobs commonly undertaken by low-wage workers. As Mr Zainal Sapari pointed out, there is a need to boost productivity in retail, logistics, and F&B sectors where there are many low-wage Singaporean workers. While there are on-going broader efforts to raise productivity, the TriCom aims to provide specific recommendations on how we can do so for jobs commonly undertaken by low-wage workers. This can yield tangible and meaningful benefits for all stakeholders. Take Baker’s Heaven, a company that produces pastries and cakes for example. The company’s earlier, more manual process of making pastries and cakes was highly labour intensive as employees had to manually cut the dough into the appropriate sizes. At times, staff would have to work over the weekends to complete urgent orders. Tapping on e2i’s Inclusive Growth Programme (or IGP), Baker’s Heaven developed an integrated production line that automated at least 80% of the pastry production process. With this improvement, Baker’s Heaven is now able to produce more pastries and cakes to fulfil bulk and urgent orders as it cut production time by up to 50%. This has also translated to tangible wage increases of up to 10% for employees who went through training to learn how to use the new machines.
    
    d. Lastly, the TriCom will also look into how companies can better adopt best sourcing practices. While mandatory PWMs have helped shift the focus of contracts back to productivity and service quality, more can be done to ensure that service buyers and providers in general move away from headcount-based contracts and contracting based on price alone.
19. Going forward we are also working with NTUC to expand our efforts to reach out to vulnerable low-wage workers, and raise awareness of the avenues of help available. NTUC has set up its first U Care Centre (or the UCC) with funding support from the Government. It is situated at the Devan Nair Institute for Employment and Employability in Jurong East, and currently provides workplace advisory and job referral services for low-wage workers. It also regularly organises employment seminars to increase low-wage workers’ awareness of their employment rights. Going forward, NTUC has plans to reach out to more low-wage workers by increasing access to the services of UCC at the heartlands and this is something that the MOM is highly supportive of.
    
    Ensuring equitable terms for employers of foreign domestic workers
20. I will now address Ms Lina Chiam’s comments on ensuring equitable terms for employers of foreign domestic workers. MOM would like to assure members that we have a robust framework in place to safeguard the interests of both employers and their foreign domestic workers (FDWs in short). Employers must ensure the well-being of their FDWs, such as through providing them with food, accommodation and rest. Similarly, FDWs are required to follow a set of conditions tagged to their work passes, including employment obligations and personal conduct. MOM also regulates employment agencies to ensure that they provide proper services to both employers and workers.
    
    IMPROVING WORKERS’ SAFETY
    
    WSH Overview
21. Madam Chair, let us now turn to another important aspect of MOM’s work which is Workplace Safety and Health (or WSH in short). We started the first half of 2014 with a spate of workplace accidents that resulted in a loss of 34 lives; 21 of which occurred in the first three months. 17 of the 34 fatalities were from the construction industry. In response, MOM and WSH Council implemented a series of short and medium term measures, targeted at the construction industry. I am glad to note that the incidences of fatalities had moderated in the second half of 2014. There was a total of 60 workplace fatalities in 2014, 13 less than the 73 fatalities in 2013. As announced by the Minister, we have achieved our workplace fatality rate target of 1.8 per 100,000 workers four years ahead of the 2018 schedule. This did not happen by chance but is a result of relentless effort to identify problem areas and implement multi-pronged measures to improve WSH standards. I would like to acknowledge the support and hard work by every stakeholder in helping to achieve the workplace fatality rate target. We need to work together to ensure that the performance in 2014 was not a one-time phenomenon. There is also some cause to be concerned. While the number of fatalities has reduced, the number of non-fatal injury cases has increased over the last three years from 10,060 in 2011 to about 13,000 in 2014. We need to continue to press on and do more in order to achieve sustainable improvements in our Workplace Safety and Health performance.
    
    Enhanced Demerit Points System
22. We will therefore see through the series of previously announced measures to enhance workplace safety in the construction sector, which accounted for 45% of workplace fatalities last year. So we will continue put in a lot of resources and attention on the construction sector.
23. Mr Karthikeyan asked if MOM would be enhancing the system to identify errant contractors earlier for timely intervention. I am pleased to share that the review on the Demerit Points System for contractors (in short DPS) has been completed. The aim of the review was to strengthen DPS’s deterrence against errant companies who blatantly flout safety rules. The enhancements were finalised after consultations with the construction industry, including the WSH Council’s Construction and Landscape Committee and the Singapore Contractors Association Limited (SCAL).
24. The enhanced DPS will come in force on 1 July 2015. There are four key changes. First, the DPS will be simplified to a single-stage system where accumulation of demerit points will trigger debarment of foreign workers. Second, the number of demerit points will be calibrated to deter employers from putting their workers at unnecessary risks at work. Three, the validity period of the demerit points will be extended from current 12 months to 18 months to bring about sustained adherence to good WSH practices, and lastly, the demerit points will be accumulated on a company-wide basis and debarment of a contractor’s access to foreign workers will apply to the entire company instead of by contract.
25. We hope the enhanced DPS will help drive companies to put in greater coherent effort to address systemic safety lapses across their worksites.
    
    Adopting an Integrated Approach on Management of Major Hazard Installations
26. Mr Karthikeyan also asked about MOM’s efforts on the management of Major Hazard Installations (or “MHIs” in short). These installations include petroleum refining and manufacturing facilities, chemical processing plants and facilities where large quantities of toxic and flammable substances are stored or used. The likelihood of a major accident for such installations is low due to the stringent workplace safety and health management system in place. Notwithstanding this, their complex operating environment and high concentration of highly hazardous chemicals means that any accident can potentially result in catastrophic consequences. And therefore I am glad that Mr Kathikeyan spoke about this.
27. In Mar 2014, MOM set up an Inter-Agency Taskforce to review and enhance our existing regulatory framework for MHIs to be in line with international best practices. Involving key government agencies such as NEA, SCDF, EDB and JTC, the Taskforce has completed its work and we will be implementing the following changes.
28. First, we are shifting away from the prescriptive one-size-fits-all regulatory approach. Instead, MHI operators will be given greater flexibility to tailor their risk mitigating measures to best suit their needs. Operators will also take on greater responsibilities of their Safety, Health and Environment (SHE in short) by proactively identifying and managing the risks created. For this, we will be adopting a Safety Case regime where MHI operators will need to integrate all their SHE protocols onsite. They will also be required to demonstrate to the regulators that they have managed their risks to as low as reasonably practicable. Feedback from our industry consultations indicate that MHI operators understand the benefits of the Safety Case Regime and are receptive to it. We will continue to work closely with the industry to jointly develop guidelines, including technical guidance, for the Safety Case regime.
29. Next, we will introduce a set of MHI Regulations under the Workplace Safety and Health Act. This is to effect the Safety Case regime and streamline existing SHE regulatory requirements for MHIs. To mitigate potential domino effects in the event of a major accident, MHI operators will be required to share pertinent information on the nature and extent of risks imposed on other installations within the cluster. This will allow neighbouring sites to take these additional risks into account in their risk management processes and emergency response planning. We are targeting to enact the MHI Regulations in first half of 2016 for implementation in 2017.
30. Lastly, a National MHI Regulatory Office (or NMRO in short) will be set up in 2016 to better coordinate Safety Case assessments, inspections and investigations. Led by MOM, the NMRO will also consist of officers from SCDF and NEA and will serve as a single regulatory front for MHIs on SHE matters.
    
    Workplace safety in other sectors
31. Associate Professor Randolph Tan asked about workplace safety in sectors other than construction work sites. We share his concerns and have programmes in place to address safety issues in workplaces such as the retail sectors. I would like to assure Professor Tan that our efforts to improve workplace safety will not be affected by the reduction in the budget for Manpower Development under the Progressive Workplaces Programme. We also agree with Mr Patrick Tay that every employee has a right to a safe and healthy workplace. It was with this principle in mind that the WSH Act was extended to cover all workplaces, since September 2011. We will continue to calibrate our measures to ensure they stay relevant and effective in raising safety standards amidst the dynamic landscape. One key area is through engagement to raise WSH awareness. MOM and WSH Council will continue to roll out engagement initiatives to reach out not only to factories but to all workers in all workplaces. To outreach to these group of workers, flash mob skits on common workplace hazards and good safety practice were put out at heartlands and shopping centres. WSH guidelines and collaterals are also made easily available on WSH Council website to help industries identify and mitigate risks associated with their operations. To raise WSH capability, employers could enrol their workers for training courses on Risk Management to equip them with workplace hazard identification and management skills. The employer can further complement these courses with on-the-job training to contextualise the risks that they face at their workplaces.
32. For workplaces to be truly safe, comprehensive systems to manage WSH would not be enough. All workers must take personal ownership of WSH outcomes and put safety and health as the first priority in all the work they do. Such progressive and pervasive WSH culture needs to be nurtured. The WSH Council is leading efforts to champion a Vision Zero movement which requires a mindset that all injuries and ill health arising from work are preventable, and a belief that zero harm is possible.
    
    Higher Limits for Work Injury Compensation
33. Mr Patrick Tay also spoke about medical and accident insurance coverage for freelancers who were injured at work.
34. The Work Injury Compensation Act (in short WICA) imposes duty on employers to compensate their employees in the event of an injury arising from work. For freelancers, they are not covered under WICA as they are considered to be their own employers. Nonetheless, we encourage self-employed persons to take responsibility for their own well-being and purchase adequate insurance to ensure some financial certainty in the event that they are injured while at work.
35. Moreover, given the diverse nature of freelancers, there cannot be a one-size fits all solution. This is perhaps an area where the industry associations, working together with unions, may be better placed to take the lead. They would be able to identify measures meaningful to the conditions for the specific segment of freelancers they represent. For instance, I am heartened to note that the Association of Independent Producers worked with Media Development Authority (MDA) to establish a code of industry best practices to guide relations between companies and freelancers. The Code currently covers payment terms and contractual agreements and will eventually be expanded to touch on workplace insurance as well. I understand that NTUC’s Freelancers and Self-Employed Unit has plans to embark on other initiatives for different freelance segments.
36. Mr Patrick Tay spoke about the need to review the work injury compensation claim amounts and limits. MOM conducts regular reviews on the compensation limits under the Work Injury Compensation Act (in short WICA) to ensure that its payouts remain calibrated with rising income and healthcare costs.
37. We agree with Mr Karthikeyan that the livelihood of workers can be affected after getting injured at work. Many of them were unable to perform their original task due to injury. We have seen cases of injured workers losing their jobs, especially if the recovery period is protracted. There are also some who were the sole breadwinner of their families. The emotional and physical stress to place food on the table for their families while struggling to recover from their injuries could be overwhelming.
38. We will be reviewing the compensation limits for death and permanent incapacity to be in-line with the rise in nominal median wages since the limits were last revised in 2012.
39. To address the increase in industrial accident medical bills, MOM will also be raising the cap for medical expenses claimable to ensure that WICA continues to fully cover more than 95% of claims where hospitalisation is required. Currently, this coverage is capped at $30,000 per accident or for a period of one year from the accident, whichever is reached first.
40. While it is important that injured workers gets their compensation expeditiously, it is equally if not more important, that injured workers are able to get back to work as soon as possible. In our dealings with injured workers, they often cite fear in losing their job as they may be unable to carry out their work properly due to their injury. This need not be the case for some of the cases if an early intervention programme was put in place to facilitate their rehabilitation and return to work. In 2012, MOM conducted a study to examine the benefits of early Return to Work. As part of the study, Occupational Therapists were engaged to help facilitate and coordinate return to work for a group of employees injured at work. Through this intervention, we managed to help this group of employees to return to work 10 days earlier on average. This reduction in man-days lost also translated to a cost savings for the employers. So quite clearly we found that it is beneficial for employers and employees, and I am sure for the insurance companies too.
41. I am glad to share that some companies recognise benefits of such Return to Work interventions and have been proactive in helping their injured employees get back to work early. 3M Singapore is one such company. 3M’s management views such interventions as an essential part of retaining valuable and skilled employees and provides the necessary support to their line managers to implement them. For their injured employees, these efforts not only aid their recovery but also gave them assurance in terms of job and income security. For instance, when one of their Production Technologists returned after being on more than 3 months of sick leave as a result of a fracture, 3M assessed his condition, worked out a temporary employment plan and assigned him light duties to facilitate his return to work. During this period, the employee continued to draw his original salary. I am pleased to note that not only was the employee able to return to his original work, he was subsequently promoted to the role of a Production Supervisor
42. We want to encourage more employers to implement such Return to Work interventions. As a start, we will be allowing expenditures that facilitate early Return to Work to be claimable as part of WICA medical expenses. Such costs include those incurred in engaging a professional to develop a return to work plan, to assess the work environment and to provide recommendations to employers on how to better accommodate their injured employees. In our preliminary consultation with the General Insurance Association of Singapore, the insurers are generally supportive of this initiative.
43. We will be launching a public consultation on the proposed enhancements to WICA later this month.
    
    CONCLUSION
44. Madam Chair, MOM has made concerted efforts over the years to uplift our low-wage workers while elevating safety standards at work.
45. I would like to end my speech with an example of how our policies, when taken together, can uplift low-wage workers in Singapore in a tangible way. Mr. Kamaruddin Bin Syed Ibrahim, aged 54, is currently working for a cleaning company called AG Maintenance. When he first started out at AG, he was earning a monthly salary of about $1,200. With the support of his employer, he successfully completed the WSQ Certificate in Environment Cleaning that consisted of 8 WSQ training modules in 2013. Because of this, he received the Training Commitment Award of $400 in the same year. The training that he underwent helped Mr. Kamaruddin become more efficient in cleaning vertical surfaces, glass and ceiling. Amongst others, it also taught him the skills required to maintain the cleaning tools and equipment that he uses. Besides upgrading his skills and becoming more productive, Mr Kamaruddin also learnt to work safer. Through one of the training modules, he acquired the skills to identify and manage safety hazards at his workplace.
46. His company, AG, recognising the value-add he was able to bring to his work following his training, increased his salary to $1,600. So, it is quite a substantial increase in his salary, from $1,200 to $1,600. Mr. Kamaruddin also continues to benefit from WIS that supplements his income and retirement savings. His employer, Mr. Bala, shared that sending his employees for training has resulted in him being able to offer his clients better quality cleaning services. Generally, his clients have also commented that they have been satisfied with better trained workers.
47. This is but one example of the many low-wage workers who have been helped by our policies. The improvement we have seen so far will spur us in striving to create a better and safer workplace for everyone.