Ministry of Manpower Committee of Supply 2019 – Cuts by WP MPs and NCMPs

(Delivered on 5 Mar 2019)

Job-Skills Mismatch – Daniel Goh

Chairman, in the last few years we have heard this phrase “jobs-skills mismatch” being used to explain the discrepancies between the share of job seekers and job openings in the labour market. We have also heard this phrase being used to frame retraining and reskilling policies and nudge workers to reskill. As Industry 4.0 looms and new cyber-physical systems threaten to replace workers, the phrase has taken on a greater sense of anxiety.

I am not suggesting that job-skills mismatch does not exist and that the phrase is being misused. My concern is that, without proper study, the concept becomes a presumption rather than fact, an ideology rather than a truth. The consequences will be very negative. Our reskilling programmes will miss their mark. Our workers will waste their time going down blind alleys. Our employers will waste resources seeking unreal matches. The government will not be spending effectively.

There has been one instructive study of jobs-skills mismatch by economists at the Ministry of Trade and Industry last November. The study used data from the job search platform and looked at the link between seven types of mismatches and job application outcomes.

Education, salary expectation and experience mismatch do not appear to be significant. This means that our workers are not overeducated, demanding of high pay and lack experience. Rather, generic skills mismatch and non-generic skills mismatch mattered, with the latter mattering three times more. Both combined provided for about 5.8% increase in the probability of an unsuccessful application.

There are a few things that we can learn from the study.

First, employers seem to be more concerned about specific skills than generic skills. This is a concern as employers should not be looking for narrowly specific skills. Our workers are already encouraged to be flexible to reskill.

Second, the MCF platform may be inadvertently promoting non-generic skills mismatches by allowing for fine-grained skills-based job searches.

One interesting finding of the study is that the persistence of workers in applying for jobs and the greater the activity of employers on the MCF platform improve application outcomes. The conclusion may well be that, at this juncture, the government should do less in applying technological solutions, and focus on nudging workers and employers to do more to close the gap between jobs and skills.

Underemployment – Sylvia Lim

Underemployment basically refers to situations where a person is working but below capacity. According to the International Conference of Labour Statisticians, measuring underemployment is necessary for better policy making, as it would improve the analysis of employment problems and contribute towards formulating and evaluating policies to promote full, productive and freely chosen employment. In a 2017 survey on Underemployment by the Ong Teng Cheong Institute, it was found that underemployed persons tend to face many challenges such as low morale, insecurity about their job and income, and difficulties in meeting daily expenses.

While we are responding to job disruption by engaging in economic transformation and re-skilling workers, it would be wishful thinking to expect that displaced workers would find work in new industries in a seamless manner and without any discontinuity in income and benefits. To this end, it would be most useful to know how well the professional conversion programmes such as Adapt and Grow did in terms of matching jobseekers with new jobs of comparable pay, or the extent of the pay cuts taken. Further, I understand that Adapt and Grow consists of two sub-schemes: Place and Train, where an employer has been found for the jobseeker, and Attach and Train, where training is done before an employer is found. For this latter group under Attach and Train, what was the success rate for placements?

It is good to note that MOM is tracking underemployment. Currently, MOM presents underemployment based solely on time i.e. those working part-time when they wished to work additional hours. While this is an internationally-accepted indicator, the International Labour Organisation has, over the years, highlighted the multi-faceted nature of underemployment that cannot be captured by time alone. For instance, in 1998, it passed a resolution stating that that there was a need to revise the existing standards on the measurement of underemployment and to broaden the scope to include also inadequate employment situations. Inadequate employment situations cover all those in employment who want to change their current work situation, for reasons such as inadequate use and mismatch of occupational skills; inadequate income; working excessive hours or in unstable jobs. Broadly speaking, inadequate employment could be skills-related, income-related, or working excessive hours.

To this end, the Ong Teng Cheong Institute survey mentioned earlier recognised that underemployment was too complex to be measured by a single factor alone e.g. time. The survey came up with a matrix of 3 factors to identify a group of persons who were considered “severely underemployed” viz. university graduates working full-time who were earning less than $2,000 per month. The OTC Institute suggested that it would be reasonable for the government to target policies towards groups of severely underemployed persons. In view of all these, can MOM update the House on its tracking of, and policy towards, underemployment?

Jobs for Singaporeans – Pritam Singh

Chairman, according to the third report of the Estimates Committee of Parliament released in October last year, 18 out of the 23 industries under the Industry Transformation Roadmaps would see manpower growth up to 2030 while the remainder are not envisaged to experience any manpower growth up to 2030 – these include food services, retail, and real estate amongst others, while others sectors such as construction do not have any manpower targets as their manpower needs are seasonal and based on cyclical factors.

At a recent pre-budget dialogue with the Institute of Chartered Accountants, some panelists stated they only had a vague idea of how SMEs stand to benefit from the Industry Transformation Roadmaps. Apart from the Special Employment Credit, going forward, what are the Government’s plans to prompt, support and encourage Singapore companies to accelerate the transformation of their  business and HR processes  to hire Singaporeans above the age of 65, provide higher salaries to attract Singaporeans employees, or successfully hire women, men or older workers who prefer part-time work as a result of needing time to look after children or dependents. How do the ITMs support these objectives and can they play a more facilitative role in this regard than is currently the case, particularly for smaller SMEs that may find it more challenging to take advantage of the ITM format to fulfil larger national objectives of creating a strong and united Singapore.

CPF for Self-Employed Persons – Chen Show Mao

Sir, self-employed persons account for around one in ten of working residents and, with the rise of the gig economy, may well increase significantly in the future.

The Ministry has indicated it is working on implementing the tripartite working group’s recommendation of a contribute-as-you-earn model for Medisave, whereby contribution to the self-employed worker’s Medisave account of CPF is made as and when a service fee is earned.  I compliment the Ministry on its efforts. Could the Ministry also look into more ways to encourage gig workers to make further voluntary contributions to other accounts of their CPF by providing them with strong incentives to do so?

There is substantial evidence from public policy efforts that positive actions can be induced through non-compulsory incentive mechanisms. For instance, could a “default” be established where CPF deductions (beyond Medisave) initially match those of regular-economy workers with the same job profile, but being nonbinding, would permit opting into a lower amount? Alternatively, could gig workers receive information in their CPF statements about typical contributions by regular-economy workers in comparable employment circumstances, to encourage them to follow the “social norm”?

Self-employed persons typically face short-term cash flow needs, which may trump their longer-term economic interest in saving for future retirement. Could the Ministry look into offering incentives for self-employed persons who voluntarily contribute to their Ordinary, Special or Retirement accounts of CPF, including favorable tax treatment when they do so?

Remove Retirement Age – Daniel Goh

Chairman, life expectancy has risen from 76 years in 1995 to 83 years in 2017. If the retirement age remains stuck at 62 years, Singaporeans who wish to continue working will be forced into early retirement for over two decades.

Would the government consider removing the artificial expiry dates for productive senior workers, namely the current retirement and reemployment ages of 62 and 67 years? Removing the retirement age not only removes the first expiry date, but also changes the current notion about the expiry of work abilities as fixed by age. It will change the ageist mindset.

The reemployment age should be redefined so that it is not referring to another expiry date, but to a transition at 70 years old. This transition obliges employers to put our senior workers on rolling contracts on the same terms that should go on without an expiry date, as long as the workers are still able and productive and want to work.

It is a transition that allows employer and employee to evaluate performance and productive levels together, work out flexi-work contracts if the employee so wishes, and collaborate on job and workplace redesign to keep up productivity.

Triple-Weak Companies – Pritam Singh

Sir, according to the MOM, triple-weak companies are those that do not meet the minimum criteria in terms of nurturing and having a Singaporean core in their workforce, and have a tangential relevance to Singapore’s economy and society. The prospects of Singaporeans been hired into such companies and doing well or getting promoted are low. In September last year, the Minister of Manpower confirmed that the Ministry was monitoring 250 companies labelled as “triple-weak” up from the 100 in February. Out of the original 100 companies, about 20 were removed the watchlist as their HR practices had been raised to industry standards.

Does the Minister have an update on MOM’s investigations into the remaining companies? Separately, has there been a reduction in the prevalence of such triple weak companies? What is the current number of companies that are under investigation and which industries do such companies predominate in? How does the Ministry identify such companies and is there scope for greater enforcement, including whistle-blowing channels to identify such companies early? What action does the MOM take for companies that are uncooperative, show no improvement in their policies, or slide back to their old ways of being “triple-weak”. Finally, are the directors of such companies also barred from setting up new companies and the status of their directorships in other companies reviewed?

Minister mentioned at the last Committee of Supply that some employers have the pre-conceived idea that local PMETs are either unable or unwilling to work, so such companies write off Singaporeans without even considering them fairly. Can I enquire what specific action TAFEP or the Ministry takes to deal with and how does it educate such employers?

Employment Pass Regime – Leon Perera

Sir, in applying for EPs, employers submit educational certificates for employees they want to hire. However for educational certificates other than from India and China, where additional information is needed, not all employers perform independent verification with universities.

The case of Mikhy Farrera-Brochez, who forged his educational certificates, dramatically illustrated the limitations to this approach.

I would like to ask if MOM currently performs some degree of checks, be it in-house or external, on educational certificates submitted for EP applications, such as using a risk-based sample check approach.

As MOM has practical limitations on its ability to verify all certificates submitted, I would like to suggest that MOM could advise employers to conduct the verification via a panel of low-cost service providers. Verification need not be made a compulsory condition of granting the EP. But there is every reason to believe that voluntary use of such a verification process would be high, should it be cheap and accessible. After all, few employers would want to hire an employee who falsifies credentials. Through this, we could cut down cases of such credentials forgery.

Next, what are the current enforcement mechanisms against kick-back or false salary declaration schemes whereby foreigners on EPs are paid below the salary floor or pay a portion of their salaries back to the employer in some way? It is stated in press advisories that “MOM conducts proactive checks to detect and enforce against false applications.” However, this is a crime with “a willing buyer and seller”, as both parties are incentivised to collude and conceal the facts.

Right now, there is an MOM hotline for people to report infringements. How many have used the hotline and how many successful prosecutions have resulted? If effective, can we consider investing in greater publicity for this hotline.

And are there are other means of proactive enforcement used? For example, can more be done with AI and data analytics to flag out suspicious activity for enforcement?

CPF Transfers to Relatives – Sylvia Lim

Mr Chairman, under the CPF Act, CPF members are allowed to transfer their savings to their parents and grandparents, provided the members satisfies certain conditions. Members aged below 55 need to have the Full Retirement Sum of at least S$166,000 in their accounts, before they can do so. When the Act was amended in 2017, this provision was extended to members who had the required Basic Retirement Sum of about S$83,000, if they also had a sufficient property pledge or charge to make up the rest of the Full Retirement Sum.

These provisions are useful to enable CPF members to help provide for the retirement needs of their family members, giving them some peace of mind and reducing intra-family poverty.

These days, the formation of an immediate family nucleus should not be assumed to be the norm. Many Singaporeans are single or childless in their senior years. These persons will not have children or grandchildren who can top up their CPF balances.

I would like to suggest that the Government consider widening the categories of persons who can receive CPF transfers from family members, to include the members’ own siblings and the siblings of one’s parents, that is, uncles and aunts. These are already relationships recognised under our law for inheritance of estates, and will help boost retirement adequacy of single and childless seniors.

Retirement and Housing – Png Eng Huat

Sir, we will spend the most productive years of our lives building up our CPF savings by age 55. After that, we will probably have to confront ageism at work, health issues, and rising cost of living. The last thing we want to do at that point in time is to argue with the Government on when and how we can tap into our hard-earned CPF savings for retirement.

The recent public disquiet over the allegation that CPF Board had quietly moved the Payout Eligibility Age (PEA) to 70, though unfounded, goes to show how much we look forward to the day when we can finally see and touch our CPF money. So, any attempt to change that day, regardless of intention, will be met with disgust and anger, and rightly so.

Thus, the call to set the auto payout at PEA by default should be considered seriously because it sends a clear message that the Government does not intend to and will not keep the members’ hard-earned savings beyond what is mandated by law.

The question we should be asking ourselves is, by setting the auto payout at PEA, will it change the fundamental tenet of the CPF saving scheme in any way? The answer is no. There is not an iota of change at all. Members can still choose to delay their payouts to earn more interests, if preferred.

Sir, CPF is like a fixed deposit instrument to me. Upon maturity date, you can expect to see your money deposited into your account with interest, unless you have instructed the bank to roll over the deposit. I can assure the Minister that no members will quibble with the Government when they see their hard-earned money deposited into their accounts automatically on their PEA unless instructed otherwise.

Next, I wish to talk about balancing retirement and housing needs using CPF. I have residents who needed to tap into their Special Accounts or Retirement Accounts to help service their mortgage arrears but such requests were mostly rejected. The standard reply given was members must always strike a balance between retirement and housing needs.

Sir, most members would not even think about tapping into these accounts for housing needs, if not out of sheer desperation. Some of these members were hauled to court by the lenders, and each court appearance would only push these members deeper into debt. Some of them were staring at a very real possibility of losing their flats.

Some of these members have less than $10,000 standing in their SA or RA, and they are already in their late 40s or 50s. How is that amount even meaningful for retirement purpose? How long can these members stretch their payouts at PEA and how much would the payout be per month? Can the CPF Board not feel the gravity of the predicament these members are facing? It is not right to make these members beg to use their own money to save their flats.

Sir, the CPF Board must also strike a balance between retirement and housing needs. If there is no roof over a person’s head, what is retirement? With his home intact, a member can still rent out a room or two to make ends meet.

The member can also explore the possibility of moving into a smaller flat when not under duress and use the proceeds for retirement. But all these options will vapourise if there is no flat left for the member to even plan his retirement.

Furthermore, any money used for property purchase would have to be returned to the member’s CPF when the flat is sold with accrued interest. No one can siphon off any CPF money used for property purchase in any way. The money is going straight back into the CPF and nowhere else.

Sir, I certainly hope that the Ministry can exercise more flexibility in the use of CPF savings for housing needs in situations like this.

Finally, I wish to reiterate the call for more flexibility in allowing members to tap into their RA before their official retirement age of 62.

We certainly do not know when we will need to slow down or stop working completely before age 62. When that happens, our income will drop drastically. We should allow members to do their own sums to determine if they need to start their CPF payouts early before retirement age. CPF members should be given the option and flexibility to plan their retirement needs at their own comfort level. PEA should be lowered to age 60. Let us decide if we are comfortable to take the lower payout at age 60 or wait out for a higher payout later.

Singaporeans have continued to support this Government despite knowing that they can no longer withdraw their money completely at age 55. They have continued to give this Government the mandate knowing that they will not see their entire CPF savings until PEA and only in monthly payouts. Why is this Government so reluctant to even offer such flexibility to Singaporeans in return?

Non-discrimination in Employment – Faisal Manap

Sir, the survey done by the Ministry in 2014 showed that two in three firms reported that they had implemented fair employment practices. The majority of those which did not were planning to do so. It has been five years since the last survey. I would like to know when we can expect to see the next survey results from MOM.

To get a more accurate picture of the situation, the survey should include interviews of employees and job applicants and not just employers, as the then Minister of State Teo Ser Luck said, would be the case for the next survey in employment exchange in 2016.

The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) sets an important framework for protecting workers. However, it still just a guideline. According to the Government’s Report in December 2018, “there are enforcement mechanisms that complement these guidelines. For instance, if employers are found to have discriminatory hiring practices, such posting discriminatory job advertisements, MOM restricts such employers’ ability to hire foreign workers in Singapore”.

Sir, how far do these enforcement powers extend if the alleged discrimination does not violate existing laws like the Re-employment Act or Women’s Charter, and where the company does not employ foreign workers?

Additionally, the Government should lead by example. MOM can consider ensuring Government agencies and Ministries avoid procuring services and goods from companies placed on the Fair Consideration Framework Watchlist.

Economics incentives can also be given to companies who consistently do well and are not on the Watchlist as a means of encouraging fair employment practices.