Speech at Budget 2020 Debate

Minister for Manpower Mrs Josephine Teo

SAFEGUARDING JOBS AND WAGES

A grassroots leader shared with me how, during a previous downturn, his former employer had rushed to trim its workforce by rolling out a Mutually Agreed Departure, or M-A-D scheme. Employees who signed up received generous payouts.

2        Unexpectedly, less than a year later, business picked up again.  Some of his former employees – the same ones who had received payouts under the MAD scheme – were rehired at their previous salaries and went on to work many more years.  

3        We may laugh at the unfortunate name of the scheme and the apparent short-sightedness of the employer. But when business is down and the bottom nowhere in sight, it must cross the minds of bosses to cut jobs and save costs.

4        Fortunately, most employers have not done that. Last year, despite the uncertain outlook, retrenchments were maintained at 2018 levels.

5        Today, with the Covid-19 outbreak casting a pall, concerns have heightened.  The recent announcements by Deputy Prime Minister Heng Swee Keat therefore provide welcome relief.

6        Of the $4 billion Stabilisation and Support Package, a whopping 60% ($2.4 billion) will go towards the Jobs Support Scheme and enhanced Wage Credit Scheme. All businesses with local employees will benefit.

7        Jobs Support will provide companies an 8% cash grant based on the gross monthly wages of their local employees for three months, subject to a monthly wage cap of $3,600 per employee.  This means that an SME with 10 local employees earning median salaries would get about $8,000 in Jobs Support. Over the next three months, the Government will inject about $1.3 billion to employers and help keep 1.9 million local employees in their jobs.

8        With the greater sense of uncertainty, employers may hold back or even reverse wage increases. Through the enhanced Wage Credit Scheme, the government will co-pay 20% of qualifying wage increases in 2019, and 15% of increase in 2020 if this higher wage is sustained. Effectively, more than four months of the wage increase is borne by the Government over two years. The enhanced Scheme has also raised the qualifying salary from $4,000 to $5,000, with $1.1 billion going to about 90,000 employers, benefitting more than 700,000 local employees.  

9        Why so much emphasis on jobs and wages? 

10      Neighbourhood stores have already noticed a sharp drop in revenues as shoppers cut back spending. When livelihoods are at stake or incomes stagnate, even necessary spending on essentials like healthcare and education may be delayed. Individuals will also have limited capacity to upgrade their skills and stay relevant.

11      Moreover, employers would need time to mobilise and train manpower. When the upturn comes, businesses could easily find themselves short-handed, and unable to respond to opportunities. This will result in the drag on our business community persisting longer than necessary.  The recovery will be slower.

12      Understandably, besides jobs and wage support, businesses that hire foreign workers had hoped for levies to be waived.  MPs like Mr Seah Kian Peng and Mr Arasu asked about it too.  We are waiving levies for employers whose foreign workers are required to serve quarantine, Leave of Absence or Stay-Home Notices when they have a travel history to China.

13      But we have not done so for foreign workers in general because it will not benefit the many employers who only have local employees. At the same time, we have not raised levies either. In fact, levies have remained the same since 2017 for the Construction sector, and 2016 or earlier for other sectors.

14      There are two other important reasons for not waiving levies. First, in supporting businesses, our priority was also to preserve local employment. Second, as much as we want to help businesses, measures to deal with the short-term fallout should not negate longer-term efforts for companies to become less reliant on foreign manpower for growth. Levy waivers or reductions would have run counter to both objectives.

15      In addition, after much careful consideration, we announced forthcoming cuts in the S Pass quotas for Construction, Marine and Process sectors.  But, we will give these sectors a longer period to adjust. Some commentators are troubled by the difficulty of attracting locals to these sectors. Others believe these moves are painful but necessary; they say it is “tough love”.  I thank Ms Sylvia Lim, for example, for supporting it.

16      I should point out that unlike for the Services sector, the quota cuts for the Construction, Marine and Process sectors are at the S Pass levels and not at the work permit levels.  S Pass jobs are skilled jobs which polytechnic graduates, and even ITE upgraders, are able to perform. 

17      Mr Saktiandi Supaat and several MPs asked that flexibility be provided to employers who find it difficult to attract Singaporeans to certain jobs. 

18      Today, employers can already enjoy short-term flexibility in meeting foreign workforce criteria under the Capability Transfer Programme and the Lean Enterprise Development Scheme.  At a structural level too, we recognise the differing appeal of sectors. In the construction sector, out of 100 employees, up to 87 can be foreigners, of which 15 can be S Pass holders, even after the changes kick in by 2023.  A company in the Services sector of the same size, can have up to 35 foreign employees, of which 10 can be S Pass holders starting from January 2021. 

19      Beyond these gradations, we should be realistic.  Which sub-sector or occupation will accept having more restrictions compared to others that have less?  Looking at it from a different lens, which local employees would feel it’s fair that their employers need not worry or try as hard to improve job quality to retain them because of more access to foreigners? Consider the longer term too.  Can we be so sure that foreigners will always accept the work conditions our own people find unappealing, or that they will not find better jobs back home in time to come?

20      For all these reasons, Workforce Singapore and Skillsfuture Singapore have been working closely with agencies like the Building and Construction Authority to help employers reach out to fresh graduates as well as mid-career switchers.  Employers too can help themselves by enhancing job quality and widening the pool of potential recruits.  Mr Kenneth Loo, former President of the Singapore Contractors Association and Executive Director of Straits Construction, acknowledged this point and talked about the need to “…try to make jobs more meaningful and attractive through digitalisation, so that processes can change and the environment will be more palatable to workers”. If I may suggest to Mr Douglas Foo, employers in the manufacturing sector should plan ahead too.  I hope the Singapore Manufacturers’ Federation, of which he is President, will help them do so.

21      These efforts to make jobs more attractive to skilled Singaporeans go hand-in-hand with an overall emphasis on business transformation.  Waiving or cutting levies would blunt the motivation to restructure, improve job quality and become more manpower lean. We would not have seen how industries can rise to the occasion. The hotel industry is an excellent example.

22      One lunar new year, about a decade ago when I was still serving as a labour MP, Prime Minister Lee Hsien Loong visited a leading hotel to thank the workers for sacrificing time with family to give tourists a great guest experience. Sensing an opportunity not to be missed, the hotel’s General Manager literally ambushed PM and gave an extended presentation on the hotels’ manpower woes.  As in many sectors, he cited the unappealing nature of work and asked for “flexibility”.

23      In contrast, my visit to Copthorne King’s Singapore hotel last Friday was a breath of fresh air. Our main purpose had been to understand how the hotel was coping with the sharp fall in occupancy due to the Covid-19 situation. General Manager Kung Teong Wah, however, took delight to also outline the many ways in which work had been redesigned to raise productivity, easier and more satisfying for his employees.

24      For example, housekeepers no longer waste time knocking on doors to figure out which room should be cleaned, and are instead notified through a mobile app. The mobile app is linked to an in-room control unit which also turns off electrical power when guests have left the room, and alerts facilities managers when light bulbs or other amenities need fixing. Bedding was changed so that it takes 20% less time to tidy up each room.  A new vacuuming system has halved the time to get the job done.  Cross-training of staff to handle expanded job roles have led to manpower savings, better wages and increased job satisfaction. Even the cleaner I met, 58-year-old Pari, is happy that the washroom renovations and upgrading of cleaning solutions will help him work more years.

25      As a matter of fact, in the last few years, I have witnessed the resolve and creativity of hoteliers to overcome their manpower constraints. Yotel at Orchard allows guests to check-in themselves easily and get items delivered by a friendly robot.  Andaz Hotel no longer has a team of confectioners in its kitchen. Instead, it keeps customers happy with supplies from Tiong Bahru Bakery and cleverly brands this as part of the heritage experience for guests.  Lyf at Funan replaced the usual laundry services with a hipster corner where guests can chill out while the washing machine does its job.

26      These transformations have not always been easy.  But they also show how important it is for us to stay the course and not give up too easily. Productivity has improved greatly in some sectors, but not fully caught up with the best in the world. 

27      Instead of levy reductions, we have put together a multi-agency support package worth more than $15 million that also involves our tripartite partners, for businesses in the tourism sector to use the down time for more training and transformation. Likewise for other sectors, we should try our best to position ourselves for the future even when the chips are down.  This is exactly why we have focussed on Jobs Support and Wage Credits – so that businesses and their people can continue with operations, and press on with restructuring with help from the Enterprise Transformation Package.

28      At this juncture, allow me to commend the tremendous efforts of the NTUC in support of these aims.  Starting with Secretary-General Brother Ng Chee Meng, labour MPs have outlined specific initiatives like the Company Training Committees and Job Security Council.  MOM, together with MOE, MTI and all the lead agencies for relevant sectors will certainly work closely with unions, in the spirit of SGTogether, to make a success of business transformation for the benefit of all workers.

29      Ms Sylvia Lim asked whether these efforts will be enough and whether unemployment insurance will be needed. This is not a new suggestion.  In fact, we had discussed this in Parliament extensively in May 2017.

30      Countries with unemployment insurance typically have persistently high unemployment. In contrast, Singapore has consistently had full employment. Willingness to pay for unemployment insurance is not the same as most people do not expect to need it and also have other buffers, for example a working spouse or child.  While we keep an open mind on unemployment insurance, we should be also aware of its serious downsides, such as reducing employers’ willingness to pay retrenchment benefits. Studies have also found that unemployment benefits can have the unintended consequence of reducing motivation to find work. 

31      Our current approach of focussing on employment support has shown encouraging results and is more sustainable.  As long as jobs are still being created, a focus on employment support helps both the individuals and businesses. We continue to provide short-term financial relief to the needy. Programmes like Adapt & Grow and SkillsFuture help workers re-skill and seize better opportunities in the longer term. This approach has the full support of unions and employers, which other countries find harder to do.

32      As to the question of using CPF monies to fund reskilling, the key question is whether the lack of training funds is the main barrier to career transitions. Government directly subsidises a very wide range of training programmes, up to 90% in some instances.  To fund the unsubsidised portion of reskilling or self-improvement courses, Singaporeans have access to workplace sponsorships and schemes such as the SkillsFuture Mid-career Enhanced Subsidy and the Workfare Training Support.

33      At present, it does not appear the lack of funds is a barrier. As Ms Lim herself also acknowledged, we are redoubling support to both employers and individuals. Their employers can now access Skillfuture Enterprise Credits up to $10,000, while they themselves have Skillsfuture Credit top-ups. I suggest that we focus on these initiatives instead of putting at risk the retirement savings of our people.  At the same time, focus on issues that matter to mid-career persons which Mr Liang Eng Hwa, Ms Jessica Tan, and several labour MPs talked about.

34      Mr Deputy Speaker, with your permission, I will now say a few words in Mandarin.

35       今年财政预算案中的40亿元“经济稳定与支援配套”，当中的六成拨款将用来保住新加坡员工的饭碗。这证明了政府在经济情况不明朗的时期，协助国人、帮助企业，一齐共度难关的决心。

36    把焦点放在保住国人饭碗以及薪资补贴上，同时帮助企业维持转型的步伐，对我国经济日后的好转与发展，将起着深远的作用。

37    目前经济情况不明朗，一些引进外籍员工以补助本地劳动队伍的企业，或许会问，为什么不削减，甚至是豁免外劳税？事实上，人力部自2016以来，在绝大部分领域都没有调高外劳税。 此外，如果因为新冠病毒疫情，员工须要完成缺席假、居家通知，或者被隔离，雇主也将免交外劳税。

38    我们不广泛地削减或豁免外劳税，主要有两大原因：

39    首先，人无远虑、必有近忧，尽管我们希望能协助公司企业顺利度过眼前经济不明朗的情况，我们也希望公司企业能把握持续性的发展趋势，放眼未来，加强转型的力度，以减少对外籍员工的依赖。

40    其次，我们更必须优先保障的是，新加坡人都能保住饭碗。因此，从长计议，公司企业不得不加快转型的步伐、提高生产力，同时改造一些工作，以吸引新加坡人加入。

41    整体而言，我们采取的措施，必须两者兼顾，短期内减轻成本负担，长期则不忘转型升级的初心。

42    令我感到欣慰的是，也有不少公司打算趁着这个低迷时期，让员工进行培训和技能提升。我认为，这是相当有远见的做法，因为经济情况一旦开始好转，这些公司将会是站在起跑线的最前端，随时能够再次出发、继续打拼，并且必定能把业务，发展得更好。

43      In the meantime, even with all the help provided, I acknowledge that some businesses may still have to manage excess manpower. 

44      Is there a right way of doing it?  Yes, but let me tell you of one wrong way.

45      An employer claimed she was recently told by MOM to lay off employees, much against her wishes. This sounded really odd to me.  It turns out the employer did not tell the full story.

46      In fact, she had decided to shut operations temporarily and told her workers to go on no pay leave until further notice. It is unfortunate if she has to close even with Jobs Support and Wage Credits. But asking workers to bear the uncertainty of waiting for her business to re-start makes matters worse. For those workers without savings, they will need other jobs to pay their bills! It is one thing to ask if her employees would like to volunteer for no pay leave; it is quite another to force it upon them.

47      As the employer had stopped paying salaries, it would also not have been fair to expect her foreign workers to stay in Singapore with limited means of supporting themselves. Instead of seeking levy waivers, MOM advised her that it would be more appropriate to repatriate the foreign workers responsibly, and to reapply for work permits in future when business picks up.

48      In fact, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment recommends other options besides no-pay leave and layoffs. This could include redeployment to other work areas, shorter work weeks, job sharing or adjustments to certain wage components. These options would at least maintain most, if not all of the workers’ past incomes.

49      For employers with excess foreign workers, the Singapore Business Federation will also administer a temporary scheme to help the workers be transferred to employers with manpower shortages.  This will help employers whose PRC workers have not gotten approval to return to Singapore, and also cannot hire new PRC workers because we have suspended approvals.

50 I am heartened to see that businesses are paying attention.  In their own ways, they are responding to these challenging times in the spirit of SGTogether.

51      Some are asking their workers to clear their annual leave or time-off. Others are exploring shorter work-weeks while sending their workers for skills upgrading. NTUC Health Co-operative shared with me that this virus situation has sparked a viral interest amongst workers in leveraging technology for alternative work arrangements. Almost overnight, even mature workers who were struggling to pick up digital tools had found ways to hang out and engage in discussions virtually!

52      Kudos to the companies that are proactively considering such sensible measures – not just to cut costs, but to save jobs as well!  

53      Next week, I will say more about support for self-employed persons, and how we can tackle medium-term challenges though the Skillsfuture Mid-career Support Package and the Senior Worker Support Package. This is our commitment to Singaporeans in their 40s and 50s – that they too, can have an extended runway; and that everyone, at every stage of life, will get the fair chance they deserve to grow and progress at work. After all, #everyworkermatters!

54      Mr Speaker, I support the Budget. Thank you.