Mr Speaker Sir, I would like to begin with my heart-felt thanks to the voters of Hougang, for allowing me this opportunity to serve our country in Parliament. I also wish to express my gratitude towards Mr Low Thia Khiang for his guidance. I aspire to and will work diligently to meet the high bar set by my predecessor.
Mr Speaker, I would like to take this opportunity today to address two main issues affecting Singaporeanworkers: First, we need to always put Singaporeans first when formulating our manpower policy. Second, we need to look at international best practices in addressing unemployment and retirement needs. I will conclude by sharing my vision of how I will serve Singapore as a WP parliamentarian.
Putting Singaporeans First
Mr Speaker, I would first like to address the concerns many working Singaporeans have about our foreign manpower policy.
I read in the Straits Times on Saturday that there is “a rare show of disagreement” between NTUC and the SNEF. We have noted this “new development” from the NTUC and are pleased that the NTUC is now in line with the Workers’ Party’s position on manpower policy, which we described in our Labour Day Message in 2008 as “Putting Singaporeans First”.
The WP is pro-Singaporean and recognises that immigrants and foreign workers have an important role to play in our country’s progress. We do not see this as a contradiction. Our goal should be to strike the right balance between an efficient system of manpower supply and to achieve the best outcome for employers, employees, and above all, Singaporeans.
I would like to discuss three areas we need to work on to achieve this balance. First, we need more transparency and accountability in our employment and S-pass system. Second, we need further tightening of the work pass system by adjusting the inflow of foreign manpower by industry. Third, we need to enhance current workforce training in order to increase productivity.
The Employment and S-Pass system needs to be more transparent. Figures showing a breakdown of the different categories of passes issued, and across different industries are not released to the public. Why this secrecy? We need regular reports showing the relative standing of Singaporeans and Passholders. Singaporeans have expressed their concerns about losing their jobs to foreign workers. With the release of such detailed figures, it will help us better understand the need for foreign manpower across various industries. Analysis of these figures would help us calibrate foreign manpower recruitment across employment segments. Transparency will also go far in removing insecurity on the part of Singaporean workers and cool unwarranted anti-immigration sentiments. Transparency begets accountability.
Although the circumstances of labour supply are not made clear to us, it is evident that Singaporeans are at a disadvantage under the current system. Because Singaporean workers cost more to employ. The need for Singaporean males to serve National Service aside, employers are also required to make CPF contributions for Singaporeans and Permanent Residents but not for Passholders. In the recent move to tighten the Q1 pass criteria, the Ministry of Manpower estimated that it will increase the wage cost for about 20% of current Employment Pass holders or 30,000 foreign professionals by 1 to 2%. This tiny amount does not level the playing field for Singaporeans as employers do not make CPF contributions for foreign employees while the CPF component of the wage cost of Singaporean workers amounts up to 16% of gross wages.
There needs to be measures in place to enable Singaporean workers to compete equally with foreign skilled workers. Already, letting in lower cost foreign skilled workers without consideration for different demand across industry sectors are putting our workers at a great disadvantage. The WP believes that the inflow of foreign workers should therefore be calibrated for each industry, considering FIRST the suitability and availability of Singaporean workers for these industries.
Mr President in his speech mentioned our shared goal is for every Singaporean worker to have a skilled, well-paid job. In order to achieve that, we must start from our formative years, and continue to ensure that there are effective training programmes to allow each worker to maximise his ability and to keep his skills up-to-date throughout the course of his working life.
The setting up of Continuing Education and Training Centres and big employment institutes is well and fine. But instead of waiting for employers and employees to flock to the classrooms, we should also be proactive and bring more training programmes to workplaces to encourage employers to retrain Singaporean workers. Existing and new training programmes should be enhanced to ensure that they would target increasing actual productivity in the workplace, and not just abstract ideas of improving productivity in the classroom.
Since WDA has been shifting its focus from employer-based training programmes to worker-based and outcome-based programmes, we should reconsider the principle guiding the Skills Development Fund that assistance is to be given to employers as incentives and not as subsidies. It is time to move towards giving assistance in terms of both subsidies and incentives to workers. Payroll subsidies should be provided to help workers bear the costs of training for worker-based programmes. This is especially important, as workers may not have employer sponsorship and employers will naturally be reluctant to let workers select their own training programmes and take no-pay leave to complete them.
All government-funded training programmes should have an outcome-based effectiveness measuring system tailored to industry requirements. Given that increasing productivity is our topmost concern, we need to develop quantitative performance indicators that evaluate the contribution of training programmes to increasing productivity over an appropriate time-frame. Monetary incentives pegged to the performance indicators should be awarded to top up payroll subsidies and to pay for course fees.
On this note, I urge the government to think twice before accepting Member for Ang Mo Kio GRC, Mr Yeo Guat Kwang’s proposal for a compulsory training framework for work permit and S Pass employees. As things stand, Singaporeans do not compete with foreign workers on a level playing field because foreign workers cost less. Let us make sure that the odds are not further stacked against Singaporean workers by subsidising foreigner workers’ training using our tax payers’ monies to increase their effectiveness and employability. This, I believe, would contradict the WDA’s chief objective to help Singaporean workers to improve our employability.
Unemployment and CPF: Learning from the World
Mr Speaker, I would like to now turn my attention to unemployment and the inadequacy of retirement provision.
The global financial crisis has highlighted problems in these areas. We need to be able to analyse these shortcomings, study international best practices, and learn how other countries have dealt with such issues. We can then take these valuable lessons and apply them to ourselves, with the aim of recalibrating our own system always with our people’s interests at heart.
Our workers need better protection from involuntary unemployment. Singapore has a small open economy, susceptible to external forces of globalisation. The current sovereign debt crisis in the US and Europe, the problems faced by the Eurozone — these affect us too. Our economy is maturing and growth is moderating in the context of the current prolonged global economic crisis. Cyclical and structural unemployment is a reality and our people are facing increasing risks of retrenchment.
Already, the resident unemployment rate for the second quarter of 2011 has crept back up to 3.9%, very close to 2010 levels. Since the height of the financial crisis in 2008, only 50 and 58 percent of residents have been re-employed within six months of having been made redundant, compared with 66 to 78% before the crisis. Yet, the government let in more Employment and S Pass professionals, increasing the number from 188,000 foreign skilled workers in 2008 to 240,000 in 2010. This is a 27% increase as half of our laid-off resident workers struggled to find work.
Under these circumstances, the combined weight of financial commitments for laid-off workers — be it rent, mortgage re-payments, utility bills, medical bills and educational expenses — can be considerable. There must be some level of support for the unemployed to continue to live a decent and dignified life. It is also important that the involuntarily unemployed be provided with peace of mind to retrain, upskill and look for employment.
We do not want unemployment to push our workers into the vicious circle of poverty. We note that there are Comcare Work Support and Transition programmes for the unemployed to tide them over periods of unemployment. The stringent criteria for these programmes include a household income of not more than $1,500. This will not help the unemployed from the sandwiched middle class with a household income that exceeds this ceiling; they too have bills as well as mouths to feed and elderly to take care of.
For a long term solution to temporary and involuntary unemployment, we should very carefully study the feasibility of an unemployment insurance scheme. The Prime Minister dismissed this idea in 2006 on the basis of affordability. He said it will reduce a worker’s take-home pay or add to wage costs and reduce competitiveness.
Five years on, global economic conditions have changed and the risk of unemployment faced by our workers has risen considerably. However, we now have the benefit of seeing mixed results from many unemployment insurance schemes around the world, particularly after they have been put through the crucible of the global financial crisis. Some schemes are costly and cannot be sustained, but there are also schemes that appear to have been successfully implemented.
Not all unemployment insurance schemes provide income without work. Unemployment insurance can encourage the unemployed to find work or even to retrain, for example by tying payouts to participation in WDA job placement and training programmes. We must therefore study international best practices and consider whether they could be adapted to our context. We cannot dismiss it out of hand without due consideration and research, especially now that we are facing challenging economic conditions ahead.
Finally, I would like to address the adequacy of our CPF in providing for Singaporeans’ retirement needs. The Australian Centre for Financial Studies and Mercer have just released their Mercer Melbourne Global Pension Index report for 2011. Among 16 countries (which include developed countries and fast developing countries such as Brazil, India, China and Chile), Singapore is ranked 11 and received a ‘C’ grade. In terms of the three dimensions of the index, our CPF is doing well in terms of sustainability and integrity, but we fared badly for adequacy. In other words, our CPF is at risk of not delivering adequate retirement benefits for Singaporeans. We ranked second from the bottom for the adequacy index, scoring only 41.9 points when the average is 63 points. We scored 51.7 points in 2009 and have dropped nearly 10 points in just two years. This is very worrying.
The Melbourne Mercer report suggests six ways for us to improve our CPF system. I want to highlight three of them which echo what the WP has proposed.
Firstly, our CPF should raise “the minimum level of support available to the poorest pensioners”. We have a duty to protect our senior citizens who have spent the better part of their lives contributing to Singapore’s growth. Not everyone turning 55 in 2013 will be covered by CPF Life, as only those with $40,000 or more in their Retirement Account will be automatically included in the scheme. The CPF board estimates that 70% of the cohort will be auto-included, while the rest with less than $40,000 in their Retirement Accounts would have to opt in. Ironically, the bottom 30% are the ones who need better support.
Furthermore, we understand that the CPF Minimum Sum or CPF Life monthly payouts can be less than the prevailing Public Assistance allowance of $400 per month for a one-person household. Those who are receiving less can therefore apply for Public Assistance. Even so, is $400 a month enough, in the words of MCYS to “sustain basic living?”. I note too that CPF Life is not inflation indexed. If core inflation continues above 2% each year, and headline inflation is above 5%, the purchasing power of each monthly payout will have eroded by between 25% to 50% in 15 years.
How is this insurance for longevity? The government should consider setting up a Longevity Fund to supplement the income of our senior citizens inadequately covered by the CPF Minimum Sum or CPF Life schemes. The Fund could be built up through transfers from budget surpluses. This small but significant step by the government will go a long way in our goal to ensure that all our senior citizens will have adequate means to enjoy their golden years after spending their prime years contributing towards nation building.
Taking the second and third points together, the report states that our CPF should “invest a portion of the CPF in growth assets and reduce the barrier to establishing tax-approved group corporate retirement plans”. We welcome the recent announcement that the SMRA interest rate will continue to be fixed at 4%. The extension of the 4% rate is only a temporary solution. In the first place, the aim of the 10-year SGS floating rate policy is to improve returns for Singaporeans beyond the 4% rate. It is cold comfort when the Minister of State for Manpower recently boasted that the 10-year average real rate of return is 2.6% for the Special Account in 2010, when the 10-year average real GDP growth is 5.6%. Singaporeans deserve fair returns for what we work for.
It has also been said that this portfolio is largely risk-free. It is only risk-free insofar as the government will pay out the amounts that have flown into the fund. The Minister should be reminded that risk includes present and future inflation risk, past real returns notwithstanding, and inflation risk has grown significantly in the past few years. Past performances are not indicative of future ones. The time has come for a comprehensive study drawing on international best practices to assess the feasibility of a pension fund model tailored to Singapore’s own circumstances to enhance CPF returns.
I would like to conclude by saying that the issues I have highlighted above are very real and pressing problems for my constituents and also for the people of Singapore, as we fight to find our footing in an ever-volatile and challenging environment.
It is my hope that in carrying out the business of this House, we will work together towards a better life for each and every single Singaporean.
On the cusp of what we are constantly told is a new era in our young country’s political development, I am energised by what I have seen in the past decade: the development and the gradual maturity of our politicallandscape. I look forward with much anticipation to my part in ensuring that reasoned, alternative voices continue to make ourselves heard in this honourable institution.
It is an honour and a privilege that I will preserve while serving the people of Hougang constituency and the Republic of Singapore. Thank you.