By MP for Aljunied GRC, Pritam Singh
[Delivered in Parliament on 4 Mar 2015]
Madam Speaker,
A major theme of this year’s Budget revolves around preparing Singapore and Singaporeans for the future. The two aspects of the Budget that are the focus of my speech are SkillsFuture and more briefly, the inclusion of Temasek in the Net Investment Returns (NIR) framework. On both fronts, the government has considerable experience to call upon and Singapore is not starting from a zero base. First, SkillsFuture.
Skills upgrading before SkillsFuture
As a national philosophy, upgrading of skills and lifelong learning are not a new phenomenon. Almost 35 years ago, then Prime Minister Lee Kuan Yew announced at the 1979 National Day Rally that a Skills Development Fund would set up compelling employers to pay a percentage of wages in to Skills Development Fund as recommended by the National Wages Council. A month later, Finance Minister Hon Sui Sen informed parliament that the introduction of the Skills Development Levy was a necessary intervention as the Singapore economy had to be upgraded and restructured promptly, for Singapore to move up economic value chain.
The Skills Development Levy Act of 1979 legislated skills upgrading primarily at low-level workers, but also included mid-level workers and managers too, with some, especially those involved in technology work sent overseas for training by the early 1980s. Since the Skills Development Levy was introduced in 1979, an entire ecosystem of training and skills upgrading has been part of the governance firmament in Singapore.
Lifelong learning since 2000
Lifelong Learning is also not new phenomenon. The Lifelong Learning Endowment Fund was first announced by then Prime Minister Goh Chok Tong in the year 2000 to promote and support lifelong learning in Singapore and to provide assistance and opportunities for Singaporeans to meet the needs of a knowledge-based economy and cope with the threat of structural unemployment. Last year, during Budget 2014, it was announced that the fund would be topped up by $500m bringing the fund size up to a total of $4.6b.
A decade later by 2010, the National Productivity Fund (NPF) was launched with a $1b injection. This year’s budget will also see another injection of $1.5b into the fund.
Over the years, the Workforce Skills Qualifications (WSQ) framework, a key component of the Continuing Education and Traning (CET) system allowed Singaporeans to improve their qualifications in various industries from certificate up to diploma level, and even graduate diplomas for certain industries. In industries where there has been an acute of shortage of skilled professionals, the Workforce Development Agency (WDA) has even introduced scholarships at the post-graduate level, thus providing opportunities for professionals who wish to upgrade themselves further. There are currently 34 WSQ frameworks covering the manufacturing and services sectors such as Precision Engineering, Aerospace, Retail, Hospitality, Community and Social Services, Financial Services, Infocomm and Logistics, some of which have also been identified under SkillsFuture initiatives, in particular Earn and Learn.
When the Skills Development Levy Act was amended in 2008 to cover all employees including those earning more than $2000 a month, in a functional way, the seeds were sown for SkillsFuture with the Skills Development Levy acting as the primary tool to better support the CET system supporting all workers, regardless of age, skill or education level, to upgrade and seize new opportunities as they progressed in their careers.
SkillsFuture – What makes it different from earlier schemes?
The long tail of experience surrounding retraining and lifelong learning makes it important for the Government to identify why and how SkillsFuture is different. How will it mark a critical shift away from the existing skills upgrading framework and what shifts in thinking among Singaporeans will be required for it to work? To this end, the identification of the starting point of the journey – in schools and the provision of career counsellors, commonplace in many Western countries like the US and Canada – is a good place to start. However, the challenge to convince hearts and minds, especially those of parents in an Asian society fixated on grades and a tuition culture will not be easy. To this end, I hope career counsellors in school work together with parents to identify the strengths and interests of students, with parents also playing their part in motivating children to aim for excellence, regardless of the paths they choose.
Even employers will need to imbibe a new mindset and to accept that skills upgrading is a fact of life. Employees are more likely to stay on in a firm if the firm also shows a readiness to upgrade itself too, and attempt to adopt work new processes. For example, appreciating the importance of work-life balance in the Singapore of today and tomorrow where the reality dual-income households can leave precious little time to raise young children and look after our elderly, to say nothing of pursuing other interests such as community volunteerism or the onset of a medical issue for a family member.
Born from the UK Leitch Review: SkillsFuture Credit
A new feature of our skills upgrading system is the creation of SkillsFuture Credit, which provides learning credits for all Singaporeans above 25 years of age, supported by regular top-ups. The SkillsFuture Credit largely mirrors the proposal made in the UK-government commissioned 2004 independent review by Lord Sandy Leitch to maximize the economic growth, skills and social justice by 2020. The Leitch Review of Skills proposed the establishment of a learner accounts as a centrepiece of what it called “adult vocational further education”. In fact, the “Earn and Learn” work-study program under SkillsFuture is also conceptually similar to the Leitch Review’s “Train to Gain” program with a focus on apprenticeships.
In fact, the creation of a SkillsFuture Credit along the lines of the UK model was also proposed in this house in 2010. However, the Government’s reply then was and I quote, “[i]nternational studies show that by providing a training account with monetary value may still not be the best and most effective way of motivating individuals to take up courses. What we have today in our system is a CET infrastructure that comprises a large number of training courses that individuals can go forward and sign up.” In view of this stated position of the Government five years ago, how does the Government envisage the provision of the SkillsFuture Credit as being enough of an incentive to motivate Singaporeans to take up courses to improve themselves?
In recommending the learner accounts, the Leitch Report noted that for about 20% of those who did not pursue upgrading in the UK, lack of funding was not a reason. In fact, high course fees, lack of childcare support and transport were some of the potential issues that workers had to take into account when deciding whether to upgrade their skills. In response, the UK government has sought to provide some basic courses for free, in addition to extending study loans repayable only after a worker exceeded a certain salary. It has also made an allowance for a support fund to provide assistance for costs such as childcare, transport, books, equipment that can mitigate the impact of financial problems workers face as they upgrade their skills. While some of these gaps are specific to the situation in the UK, in addition to applicability in the Singapore context or otherwise, there are nonetheless lessons for Singapore, and the Government should regularly review and identify reasons Singaporean workers may be hesitant to upgrade their skills, as it looks to make SkillsFuture a success.
Making SkillsFuture a Success
Madam Speaker, the SkillsFuture Council will have its hands full, as SkillsFuture cannot represent upgrading for the sake of upgrading. Minister mentioned in his speech that a key challenge of SkillsFuture is to help uplift the SMEs, and involve them in this process of skills development.
In the UK, a parliamentary Innovation, Universities,
To this end, as SkillsFuture gets off the ground, it may be worthwhile for the Government to track the qualification and certification outcomes of SkillsFuture initiatives, especially for our SMEs, as to assess how the scheme has been effective in achieving the desired productivity increases and economic outcomes so as to better track the real value of the SkillsFuture initiatives for various industries.
Improving Productivity with SkillsFuture
The formation of the SkillsFuture Council has resulted in the devolution of CET oversight from the National Productivity and Continuing Education Council (NPCEC) to the SkillsFuture Council. With NPCEC renamed as the National Productivity Council (NPC) also headed by the Finance Minister, greater synergies and coordination between both councils can be expected. This administrative change should be a lot more significant that a mere change of nomenclature. This point is worthy of some reflection considering the large amounts of public funds that will be devoted to SkillsFuture. For example, $250 million dollars was set aside from the National Productivity Fund to improve productivity for the construction industry in 2010. Five years later, in view of the productivity numbers, there is some legitimate doubt as to how effective these huge investments have been. Once again, going forward, the provision of an institutionalised, dedicated and regular review framework can be helpful to arrest efforts and correct a course of action that does not appear to be engendering favourable results. This would be more critical over time as the reality of less fiscal room for manoeuvre becomes a reality, if it has not already.
Finally, some practical skills and qualifications are not learnt through skills upgrading, but in the course of National Service too where specific skills or credits can be relevant in the private sector. Repair and maintenance certification and operating of heavy machinery and vehicles and leadership skills are part of a lifelong learning skills framework and these can give our NSmen a leg up at certain workplaces. I understand a similar recommendation was also made by the Committee to Strengthen National Service, and I hope that skills and qualifications earned during the course of NS are constantly reviewed and incorporated into the SkillsFuture framework as far as practically possible.
Temasek’s inclusion in NIR
Madam Speaker, the increased spending on human capital for the future must mean increased Government expenditure. For this reason, amongst others, Minister has announced the inclusion of the expected investment returns of Temasek in the NIR framework. The move of our reserves held by MAS and GIC from to the NIR framework from Net Investment Income (NII) framework was the subject of an extensive Constitutional Amendment Bill debate in 2008. Then, Minister established that as Temasek was expected to make higher returns and was not encumbered from investing in high-risk assets, it would be difficult to project Temasek’s future earnings. Minister has stated in his 2015 Budget speech that Temasek’s equity-only portfolio will continue to be more volatile and subject to more pronounced investment cycles than the MAS and GIC portfolios. For this reason, a brief primer from Minister on the expected long-term expected real returns from Temasek’s inclusion in the NIR framework and its methodology would be appreciated. In reply to NCMP Gerald Giam’s parliamentary question in 2014, Minister stated that for FY2009 to FY2013 the government took in about 47% of the NIR, and that the NIRC has been able to supplement the Budget by $7 billion to $8 billion annually. I would like to enquire from the Minister, based on current projections, how much would subsequent Budgets be supplemented by with Temasek’s inclusion in the NIR framework?
Conclusion
In conclusion Madam Speaker, Minister spoke at the 2014 Budget debate about changing social norms, in three broad areas, at the workplace, in professional competencies and to change habits for the better. This was not hard policy per se, but related to important softer aspects which can be the critical factor that make the difference between a how successful or unsuccessful a policy is. SkillsFuture, requires social norms and attitudes towards education to change. A deep mind-set shift towards lifelong education must truly be a goal for all Singaporeans. With human capital as our only natural resource, a more forgiving attitude must be exercised towards people who may not have succeeded at the first instance either in an exam or at some other important career cross-junction. Equally important, the opportunity for skills upgrading and a second chance should be one every Singaporean must grab with both hands. SkillsFuture must be positioned as a key feature of the Singapore system. A large part of the continuing economic prosperity of Singapore should also serve as a report card for SkillsFuture. My recommendation to track the expenditure and to constantly review the implementation of SkillsFuture notwithstanding, I support the initiative and encourage Singaporeans to draw up, review and update their own skills upgrading and career objectives, and to tap on the initiatives will be rolled out under SkillsFuture.
Thank you.