Speech by Mr Teo Ser Luck, Minister of State for Manpower at Committee of Supply 2016

1. Chairman, Minister Lim Swee Say spoke about the structural labour market challenges that we are likely to face. Workforce growth will drop by more than half in the next five years.  There are also other external economic challenges that we have to keep in mind – US’s economic recovery, China’s slowing growth, and security issues around the world. Furthermore, technology has continued to advance such that start-ups are posing threats to traditional businesses. We now hear a lot about disruptive technology.
2. But more importantly, we are facing productivity challenges, just like other countries. Companies, especially the SMEs, will face increasing challenges. That is why SMEs need to review their processes so that they can compete in the global marketplace.  
3. So our policies also need to catch up.  We need to make sure that there is an ecosystem and environment for the SMEs to grow, and help progressive businesses to undergo transformation and change.  And we hope that these companies – especially the SMEs which comprise more than 90% of our registered entities – will continue to build a Singaporean Core in a manpower-lean economy.  Companies will have to learn to survive in this manpower-lean economy, by being lean themselves.
   
   Building Human Capital for Manpower-lean Enterprises and Industries
   
   Lean Enterprise Development (LED) Scheme update
4. Late last year, Minister Lim launched the Lean Enterprise Development (LED) concept, which is both a pro-business and pro-worker concept. In the five years that I’ve been in the Ministry of Trade and Industry, we have seen applications for productivity schemes rise. However, the productivity index has not risen in tandem. This is because the productivity schemes have breadth, but not depth. Companies get the grant, but did not implement comprehensive change to become more manpower-lean.
5. The LED concept will build depth.  It would require firms to look deeply into their processes, and decide what changes have to be made before thinking about the productivity schemes or grants to tap on.
6. So from the concept, we developed a scheme.  Chairman, with your permission, I’ve asked the Clerk to place a handout titled “LED Scheme: Integrated Support” on the Members’ seats during tea-break.
7. LED hopes to achieve four objectives: quality workforce; manpower-lean; developing Singaporean Core; and, when you achieve these three, you are going to be more future-ready.  This will help companies become leaner and more productive.
8. To achieve that, companies have to undergo three phases. First, they have to assess their current situation. Second, they must identify and apply for Government grants, if needed, to implement automation, productivity and process change, job redesign and computerisation, to name a few. Finally, companies will be future-ready.
9. SMEs will need to be supported by Government agencies, policies, as well as schemes, to transit through these three phases. 
10. First, we will assess their proposals and assist them in developing manpower-lean proposals that could actually work, within a two year timeframe. 
11. Second, the LED taskforce can integrate existing Government schemes, so that businesses do not need to worry about which schemes and grants to apply for, as long as they have the intent to be manpower-lean; they need only apply with a quality LED proposal. We will also provide temporary foreign worker flexibility to help companies retain skilled foreigners to impart their skills and knowledge to local apprentices, so that they can take on those jobs and help scale-up the business. 
12. Third, we will hand-hold them through the implementation process. It is not an easy process but it is definitely achievable. Based on the applications that we have received so far, it is quite promising. We want to do more, and we need the partnership of the trade associations and chambers to help us. Thus, we have appointed 10 of them as LED Multipliers¹, which include the Chinese Chamber of Commerce and NTUC u-SME, to guide companies in their LED application process. SMEs do not need to worry about who they can approach, because they can approach any of these 10 LED Multipliers.  
13. So far, the LED Multipliers have held four roadshows, which I have participated in with companies. We are going to continue to build up on this outreach. To date, all 10 Multipliers have plans to engage their members. 
14. We want to support them further, so we are going to link up these 10 LED Multipliers not just with business advisors, but also with dedicated support in the form of business consultants who can give good advice on raising productivity as well as manpower lean strategies and processes.² The LED Multipliers have already guided 26 companies in submitting applications, which we are in the process of reviewing.³ 
15. Since the launch of the scheme, we have received applications from 79 firms⁴ from a broad range of sectors – food and beverage, construction, food manufacturing, ICT and media, professional services, electronics, hotels, logistics, precision engineering, and others. I am also pleased to update that of these, we have approved LED support for 30 firms which have made strong commitments to change.⁵ 
16. Mr Lee Yi Shyan had mentioned the food and beverage sector. In particular, a significant proportion of the total applications came from the F & B sector. There will be a fair bit of transformation in these sectors if more companies come forward.
17. There are also many other companies, more than 200, who applied for other grants and achieved a manpower-lean outcome without needing a transitional workforce.  
18. From the companies’ applications and proposals, we found three commonalities. 
19. First: centralised operations. This means that facilities are shared among groups of companies. For example, companies can come together, take common processes and centralise them to achieve economies of scale and reduce wastage. 
20. Second: automation plans.  Such automation plans combine man with machine to make business processes efficient. It also supports job redesign efforts and reduces manpower wastage. 
21. Third and most importantly: they focus on skill development for Singaporeans, to build a core of expertise needed to sustain business growth. This is aligned to our SkillsFuture vision and mission. 
22. Let me give an example. 14 members of the Indian Restaurant Association (Singapore) (IRAS) have collaborated to form a consortium. They were able to form a Central Processing Unit or shared kitchen that can centralise basic processes such as the preparation of certain ingredients, even though they are competitors. These ingredients would subsequently be delivered to the individual kitchens, to be prepared according to their own recipes. 
23. They also automated⁶ with new machinery and equipment in their central kitchen, as well as in their individual restaurants and kitchens. 
24. Lastly, they skilled up their workers through skills capability development programmes, and as a result, built a sustainable pipeline of local Indian cuisine chefs.⁷  This involves skills transfer and capability development by experienced foreign chefs. Hence we are providing two-year flexibility for the restaurants to retain more S Pass chefs as a transitional workforce, beyond their foreign manpower quota. These chefs are needed to impart skills and knowledge to local trainees, so that the local trainees can take on the critical jobs in future. With a pipeline of skilled Singaporeans ready to do that, these foreign chefs will then be released. 
25. It is not easy to go through such changes. However, we have seen a lot of progress and we want to continue to work with each sector, cluster and even individual companies.
26. So I fully agree with Mr Chong Kee Hiong, Mr Lee Yi Shyan and Mr Thomas Chua, that more should be done to help more businesses to break these barriers and change their mindsets. This is a whole-of-government effort. 
27. MOM will be supporting the Industry Transformation Programmes, by taking a sector-level approach to help develop a skilled Singaporean core, and the LED Scheme will supplement these efforts.
    
    Nurturing Human Capital – From Fair to Progressive Workplaces
28. Whether a firm becomes more manpower-lean also depends on whether it has good HR practices and professionals. With good HR practices and qualified HR professionals, we move into Human Capital development.
29. While HR is about plugging holes and filling a vacancy, Human Capital is about having a more strategic and a longer-term plan. Human Capital is about looking at every single individual not just as a factor of production, but as a capital for investment. Invest in them early, regardless of whether they are mature workers. 
30. As Mr Thomas Chua has pointed out, companies will need to focus more on building and nurturing human capital, investing in identifying each employee’s strengths, and making the best use of differentiated talents. 
31. A good example of a company which has done so is ROHEI Corporation.  The local corporate training SME consultancy advocates “people above process”, and often goes out of its way to nurture and guide employees towards achieving their life goals. When their senior consultants in their 50s expressed interest to master different types of skillsets and practices offered by the business, the company readily supports and guides them to acquire and hone their skills. 
32. This ensures that employees can continue to value-add, even in their golden years. So every person counts; they are both our capital and our assets.
33. Behind every business leader’s ability to develop and execute a winning people-oriented strategy is a forward-looking and competent Human Resource (HR) team. The advancement of the HR profession is therefore a critical enabler of our economic transformation.
34. Thus, we formed the HR Sectoral Tripartite Committee (HRSTC) in September 2015, comprising unions, businesses, Government and institutes of higher learning. They are currently developing a HR Sectoral Manpower Plan (HRSMP). Mr Melvin Yong has asked for an update on its work. Over the last six months, the HRSTC has engaged over 150 stakeholders through 6 engagement sessions. One recurring feedback is the need for HR professionals to evolve, to support businesses by becoming more strategic, thinking for the longer-term, and being able to look at the macro view. They now have to think like a CEO. And employers expect that HR professionals can apply these skills in alignment to organisational goals. They cannot work in isolation – the HR strategy has to be integrated into the company.
35. The committee is also recommending that we develop a pathway because of that requirement. Ms K Thanaletchimi will therefore be pleased to know that one of the initiatives being considered under the HRSMP is the development of a National HR Professional Certification Framework. We are looking at setting up a system to certify HR professionals based on components such as HR competencies, HR work experience, and a professional code of conduct and ethics. Understanding of local employment regulations, guidelines and practices will also be included.
36. On top of being a certification framework, it is a progressive learning ladder. This framework has to provide HR professionals with a comprehensive roadmap to develop their own capabilities. Once HR professionals go through the processes, they will be able to better support businesses and enhance their value to the organisation.
    
    Progressive practices are essential business strategies 
37. The work of the HR professionals has become more demanding, as I have mentioned. Many a time, the expectations from employees is about the work to personal time ratio. As what Ms Jessica Tan has mentioned, “How do you do integrate work and life?” It is not easy. 
38. So, we encourage Flexible Work Arrangements (FWA) in the workplace. It is a very critical component, and a critical success factor for any good company that wants to retain staff, be more dynamic, and also recruit personnel. Ms Jessica Tan is right to highlight that FWAs can help businesses thrive; leverage on technology to do so, and enhance it, for example, by hot-desking, working from home or working from any other place – it’s a flexible workplace. We know that the majority of the global businesses have reported increases in employee productivity and company revenue, as a result of implementing FWAs.⁸   
39. More businesses are recognising these benefits. The proportion of companies offering at least one form of FWA to their employees has increased from 38% in 2011 to 47% in 2014.⁹ But it is a never-ending effort to get more companies on board. 
40. I agree with Ms Jessica Tan and Mr Desmond Choo that more should be done to boost the adoption of FWAs. The Tripartite Advisory on Flexible Work Arrangements – developed with the consensus of tripartite partners¹⁰  – was launched in November 2014 to help employers, supervisors and employees through the journey of implementing FWAs. The Work-Life campaign which concluded in March 2016, helped to reinforce that FWAs can benefit both employers and employees. An online resource portal will also be launched, to provide employers and employees with one-stop access to resources, like workshops, trainers and consultants, toolkits, and guides, related to the adoption of FWAs. Moving forward, we will take a more targeted sectoral approach especially on sectors which may be facing challenges implementing FWAs. Both initiatives have target launch dates in the second half of 2016. More efforts will be launched by the TriCom. 
41. We note that Mr Desmond Choo and Mr Daniel Goh have asked about Work-Life Grant, or WLG, adoption rates. The take up of the WLG is improving, from 287 applicants in 2014 to 549 applications in December 2015.¹¹ In particular, the take up rate of the Developmental Grant, which defrays the cost for companies needing funding to pilot FWAs, is increasing.
42. Mr Desmond Choo asked about the Government’s stance on legislating FWAs. In countries like the United Kingdom and Australia, while the law provides employees with the right to request for such arrangements, employers also have the right to consider these requests and refuse them. Mr Daniel Goh had also suggested a similar arrangement. 
43. We need to carefully study the pros and cons of having such legislation in Singapore, and how we balance between being pro-business and pro-worker. Its success is contingent on conditions such as perceptions of society, employers and co-workers towards FWAs. In other countries, FWAs are usually already prevalent before legislation is introduced. But that should neither stop us from taking a review, nor our efforts to continue to raise awareness and educate on FWAs. Fundamentally, employers and employees need to understand and be committed to a flexible workplace culture, before FWA legislation can be in place.
    
    Conclusion
44. Chairman, we need to help the SMEs, industries, and our workforce to adapt and grow, to achieve better jobs and better careers. The Government has rolled out many different schemes. But what is most important is that there needs to be a shift in mindset. SMEs need to have the spirit of enterprise, to take the leap of faith, to change and to act. The Government can only do so much, and SMEs have to help themselves. Transformation is not easy. But if we put our hearts and minds together, I am sure we can build and ride the fourth wave of economic transformation to future success. Thank you.