Lee Boon Yang
Singapore
“6 The other guidelines are that there must be a post office sited within 5 km of every private residential estate and within 1 km of any commercial or industrial estate. MAID LEVY CONCESSION (Applications by the disabled) 32.”
“Madam, can I quickly respond to the point on assistive technology? Certainly this is an area of interest. We cannot say that we have the capability at this juncture but we will certainly look into what is possible and work with our ICT sector.”
“Nevertheless, if the spouse of the homemaker is working, he will be eligible for WIS if he satisfies the criteria. Husbands of homemakers are further eligible for tax relief.”
“Sir, I do not think it is quite correct to say that we always expect our own artists to perform for free or do public service. There are, of course, occasions where we do seek Singapore artists and arts companies to contribute to the national causes. For instance, when we went international for Singapore Season in China.”
“Ms Sylvia Lim asked the Minister for National Development (a) what checks does the Ministry or the National Environment Agency have in place to prevent mistaken payments to hawkers who cease operations due to upgrading works at hawker centers; (b) how did the mistaken payment of $18,000 to Mdm Lee Ah Muey come about; and (c) what will the…”
“While it was also true that initially the reaction or the response of the licensing authority was that foreigners should not participate in such an event at the Speakers' Corner - because there is already an existing prohibition against any foreigners taking part in any activities at the Speakers' Corner - subsequent assessment resulted i…”
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“These are supplementary measures to address concerns of the high costs of retaining older workers. These measures will be implemented through the tripartite guidelines. We do not need legislative changes at this juncture for the measures to be applied. In fact, some employers and unions have already started to implement these measures. While some teething problems may crop up at the initial stage of implementation, I am confident with good tripartite co-operation, we will be able to make progress in these reforms. Mr Speaker, Sir, since the retirement age was raised from 55 to 60 in 1993, it had provided employment opportunities for some 63,000 employees who are above the age of 55. With the raising of the retirement age to 62, it is estimated that another 7,000 employees who will turn 60 next year will benefit. In the 2nd, 3rd and 4th year of the implementation, about 10,000 workers are expected to benefit each year. The raising of the retirement age is clearly beneficial to older workers as it allows them to remain gainfully employed for a longer period. Employers will also stand to gain from the retention of these skilled and experienced workers. Sir, I beg to move. Question proposed.”
“Hence, in a situation whereby an employee's salary is still reflective of the job worth at the age of 60 but not beyond, his employer can choose not to cut his wages at the age of 60 but to initiate a cut later on, say, at age 61. At the same time, employers are allowed to either introduce a one-off cut in the wages of their older employees by up to 10%, or to stagger the wage cut in such a manner that the total extent of the reduction does not exceed 10% of the employee's wages at age 60. In view of the differing productivity levels and performances among employees, the extent of the wage cut could vary from one employee to another. The Bill hence enables employers to implement the wage reduction in a manner most suited to the company's needs and circumstances. However, employers should follow closely the Tripartite Committee's recommendation of initiating a wage reduction either through a direct wage cut or through a combination of various wage cost items which include fringe benefits, variable bonus, AWS and the basic wage. In the case of unionized companies, the union concerned should be consulted. Besides the key recommendations on raising the retirement age and reducing wages of older workers, the Tripartite Committee also proposed several other measures to address the problems of an aging workforce. These include :- A 25-year cap on the service period for the calculation of retrenchment benefit; Adoption of a base-up-wage system in place of the seniority-based-wage system; An Alternative Medical Benefit Scheme in place of the current medical benefit scheme; and An outplacement programme to assist older workers who cannot be re-deployed within the company, to secure a suitable job in another company.”
“Essentially, the Bill seeks to amend the Retirement Age Act (Cap 274A) to enable employers to reduce the wages of their employees who attain the age of 60 years and above, on or after 1st January 1999. The higher retirement age of 62 will be effected separately through Regulations. Clause 2 of the Bill introduces a new section 4A to spell out the circumstances and conditions whereby an employer can reduce the wages of employees above the age of 60. This section stipulates that an employer should give reasonable prior notice in writing to an older employee of the intention to reduce his salary. The prior notice should furnish information, such as the amount and the effective date of the reduction. The extent of the wage reduction is limited to 10% of the employee's wage at the age of 60. Employers will be required to give the older employees a reasonable opportunity to consider and respond to the proposed wage reduction. In the event that no agreement can be reached, the older employee may choose to retire on his own accord. Alternatively, the employer may retire him from service. A new section 4A(5)(a) lays down the grounds whereby employers can initiate a wage cut. It states that the reduction shall be based on reasonable factors, such as the employee's productivity, performance, duties and responsibilities, and whether he is on a seniority-based-wage system. Employers are prohibited from initiating a wage cut solely on the ground of an employee's age, unless age is a bona-fide requirement for the performance of his job. To provide more flexibility, section 4A(5)(b) allows employers to introduce the wage cut, either at the age of 60 or at any age above 60.”
“To supplement the 10% wage cut for older workers, the Tripartite Committee also proposed that employer's CPF contribution rate for employees aged 60-65 years be reduced from 7.5% to 4% and from 5% to 4% for employees aged above 65 years. The recommendation to introduce wage and CPF cuts came about after extensive discussions and deliberations by the Tripartite Committee. The Committee took note of the fact that since most workers are on the seniority wage system, it is currently not uncommon for an employee to accept a wage cut of 20% to 25% when they are re-employed upon retirement at 60 years. The Tripartite Committee's proposal to cut wages by up to 10% in addition to the CPF cut is therefore a more favourable arrangement for older workers. This should encourage more older workers to work beyond 60 and continue to contribute to their companies. Although the employers have given the full discretion to initiate a wage cut, the Tripartite Committee also urged them to be judicious in implementing this policy. Employers should bear in mind that the wage cut is introduced with the aim to rectifying the problems arising out of the seniority-based-wage system and to bring wages of older workers in line with their productivity and performance. They should therefore take into account their companies' maximum-minimum salary ratio, as well as their job worth and performance of older employees when deciding on making the wage cut. A wage cut is not needed if the older employees' salaries are already reflective of their job worth or their productivity or where their productivity and performance already justify their salaries.”
“We need to take a pro-active approach to address the issue now before it develops into a serious problem in future. The time to tackle such potential problems is now, not when our competitiveness is already seriously weakened by an aging workforce. But in raising the retirement age, we must not ignore the reality to employers, which is, the cost of employing older workers is higher as a result of our seniority-based wage scale. With the current wage structure, the longer a worker has been employed, the higher is his pay. In other words, wage levels are determined more by an employee's length of service than the value of his job or performance. As a result, wages of older workers are not closely linked to their productivity or performance. Consequently, older workers are often being paid beyond their job worth. That is why employers are reluctant to retain or to employ older workers. To address the problems of the seniority-based-wage system, the Tripartite Committee on the Extension of Retirement Age had recommended that employers should implement the base-up wage system. The adoption of the base-up wage system will help to narrow the maximum-minimum salary ratio and enable wage increases to be more closely linked to productivity and performance. However, before the base-up wage system can be implemented, companies have to adjust their salary ratio to the optimal level of 1.5:1. Since it will take some time to achieve the optimal salary ratio, the Tripartite Committee recommended that employers should be allowed to initiate a wage cut of up to 10% for employees above the age of 60. This measure will make it more attractive for employers to retain their older workers.”
“Many Singaporeans are healthy and vigorous well beyond 60 years of age. It is a waste of valuable human resources if workers are required to retire at the age of 60 when they are still able to add value to the economy. Moreover, an early retirement means that a retired worker or retiree will have to start living on the CPF savings much earlier. This will result in a faster depletion of their retirement savings. Hence, an extension of the retirement age will not only maximise the utilisation of our human resources, it will also provide the opportunity for older workers to continue earning a regular income and accumulating more savings for their eventual retirement. I should point out that most developed countries are already ahead of us in this area. The retirement age norm in countries like Germany, Switzerland, United Kingdom, Sweden, Netherlands and Italy is 65. Some countries like Norway and Denmark set a higher retirement age of 67 years. We understand that the United States has recently announced its long-term plan to raise the retirement age to 70. The current retirement age is 65 and is due to increase to 67 next year. Even in the Asian NIEs, workers are now working well beyond 60 years. For example, retirement age norm in Taiwan is now 65. As a country with a small population, we should maximize our limited indigenous human resource, including the older Singaporeans who have accumulated valuable skills and working experience. There should be no doubt that raising the retirement age will generate long term benefits for our economy, for the employers and also for the workers themselves. It is a win-win strategy. Despite the current economic downturn and an increase in unemployment rate, we should not ignore the long-term impact of a rapidly aging workforce.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, in July last year, I informed this House that the Tripartite Committee on Extension of Retirement Age had proposed that the retirement age be extended from 60 to 62 with effect from 1st January 1999. The Tripartite Committee also recommended the reduction in the employer's CPF contribution for workers above the age of 60 and allowing employers to reduce the wage cost of older employees by up to 10%. Sir, the raising of the retirement age is a strategic move to tackle the problem brought about by our ageing population and declining birth rates. Currently, eight economically active persons aged between 15 and 59 support one person aged 60 and above. This ratio will decline sharply in future. By the year 2010, there will only be four economically active persons supporting one person aged 60 and above. This ratio is expected to fall further to 2.5 in the year 2030. Sir, this decline in economically active persons will affect our economic vitality. The working population will be faced with an increasingly heavy burden of having to support a growing number of elderly persons who are not able to work. The growing number of economically inactive senior citizens will also place a heavy demand for a wide range of social services including health care. This will result in a heavier tax burden on those who are still working. Furthermore, a dwindling supply of local workers will compel employers to turn to more foreign workers to meet their manpower needs. While an increase in skilled and talented foreign workers will be an asset to Singapore, an increase in the number of unskilled foreign workers will create more social problems. The life expectancy at birth is 77 years.”
“I think this industrial sector should also benefit from the rental reduction from the PPD and property tax reduction from the land office so that they will be able to cut their costs and make their products more competitive in the international market. Sir, I support the motion.”
“I think the authorities concerned should look into this very seriously to understand why the prefabricated building process has cost more and the prefabrication factories are unable to survive before going in a big way for the prefabrication concept. Misunderstanding the situation will only add to cost and it is not good for our building industry. In short, the Government measures are closely related to cost. We have to ensure that our policies are pro-business. I think it is the only way to go. With the cost-cutting package announced yesterday, I am sure the wage earner's ability to spend will be lowered. The businessmen will benefit. I am concerned about those businesses who are providing services to our domestic market, like the shops, transport services, and hawker stalls. How are they going to provide better services and cheaper goods? This is very important. Last week, in one of the programmes on radio, some hawkers were interviewed. Nobody agreed or intended to cut down their prices. If that is the case, the Government should also consider how we can plough back the benefits from the cost cutting measures to our ordinary citizens so that they will also benefit. One way is to ensure that these rebates are not automatic. They must apply for it and show how they are going to reduce prices before the rebates are given. In this way, when the cost-cutting measures are implemented, our consumers can also get some benefits. In the CSC Report and the announcement of cost cutting measures yesterday, no mention was made to high-tech agriculture.”
“On the one hand, the Government is sympathetic towards the developers and it has given them property tax rebates, allow them a longer time to complete their projects and free the Government land sales, but insists on the anti-speculation measures in property announced in 1996. The Government should monitor very closely the price trends in our property market and continue to adopt the anti-speculation strategies, so that when it reaches the bottom we should start releasing lands to meet the demand. By doing so, we will be able to avoid this sudden rise and fall of rentals, thereby affecting our competitiveness. Yesterday, it was announced that, in response to the one-third drop in land price in the past one year, all rentals of JTC industrial properties would be cut between 20% and 40%. HDB will also cut their rentals for industrial and commercial premises by about 20%. Unfortunately, JTC offers an increase of about 4% of the rentals per annum for those who asked for a fixed rental rate. I think this will give a false impression that future rentals will move upwards. Other Government measures could also cause some cost increases. For instance, take the construction industry as an example. In the case of shortage in supply of labour, the compulsory requirement for safety officers and resident engineers at worksites will add to the cost, because companies have to employ a lot of non-productive employees at higher than market prices. The Report also referred to low productivity in the building industry. It was suggested that prefabricated concept be used to increase productivity.”
“If we compare the 7.2% wage increase and GDP per worker increase of 8.2%, then the average annual wage increase over the past 10 years of 7.2% is not unacceptable. If we want to maintain our competitive edge and to satisfy the desire of workers to improve their standard of living, our economy must, as stated in the Report, go through the transformation process towards a knowledge-based economy with better training of workers, better education, more creative innovations and entrepreneurship, so that we can reach for higher value-added of new products. This strategy for wage cut is one measure that we have proposed to tide over the present difficulties. After this storm, we should be able to restore the wages and improve the quality of living of our workers. Rental is an important component in the cost of operation. Yesterday, I went to a coffeeshop in my constituency. I spent 60 cents on a cup of black coffee. I made a simple calculation. How much does rental cost impact on the price of a cup of coffee? I found that it accounts for about one-sixth, that is, about 19% of the price. Rentals have been rising for many years in Singapore. For one particular year from 1994 to 1995, rentals for factories, offices and warehouses have increased by about 45% to 50%. Such a huge increase in rent affects the cost of operation significantly. The ups and downs of rentals are caused by supply and demand situation and also speculation. I am glad to note the Government is dealing with the over-supply of properties and the downward trend in property prices.”
“They have asked for pay cuts by 30% and some hope that the pay, especially that of the graduates, be reduced to those prevailing in the Philippines, Malaysia and Indonesia. These are excessive and unreasonable demands and taking advantage of the situation. As a result, the people may doubt their management's sincerity in tripartism. In my view, the wage cuts must be within the bearable level of the workers. For those companies that are not viable after these significant cost cutting measures, in my view, the problems they have are beyond what the Government and the workers could help. If that is the case, we should allow these non-viable companies to wind up, so that the resources can be diverted to the viable companies. Over the long term, this will be better for our workers and Singapore. On the question of costs, apart from wages, I think there are other charges such as Government charges, cost due to Government policies, efficiency in production and rentals. On wages, whether we like it or not, it must rise according to the higher standard of living, higher standard of education, as well as the progress in society and a higher value added economy. This is inevitable. A society's progress must bring about a better income and a better life. This is progress and advancement of a country that will bring benefits to the people and that is why we are able to motivate our people to work harder. If we look over the past 10 years, the average wage in 1986 was $1,140 per month per capita, and this has increased to $2,219 in 1995. This is an increase of 100%, averaging about 7.2% per annum. If we go by GDP, the value-added per worker has increased from $32,000 in 1986 to about $71,000 in 1995. That means over a period of 10 years, there is an increase of 8.2% per annum.”
“We all know that Singapore is not a cheap place. In terms of wages, rentals and cost of living, it is quite high. So we are able to, in spite of all these circumstances, maintain our competitiveness in a higher rank, as stated in the Report, because of the qualitative factors. It is because we have political stability, we have tripartism and a high degree of transparency and pro-business policies. The announced cost cutting package by DPM Lee is the result of this qualitative factor in our competitive capability as mentioned in the Report. We all know that Singapore is a country marching towards a developed status. Our cost of production cannot be compared to those in Indonesia, Philippines and Malaysia. Our competitiveness will go through economic transformation towards a knowledge-based economy and strengthen the qualitative factors. At the moment, in this regional currency crisis, because of the realignment and depreciation of currencies in the region, our competitiveness is affected. So for the short-term strategies, the Report has already made recommendations for cutting wages and CPF. I think these should only be short-term measures. When our economy recovers and competitiveness regains, all these should gradually be restored. I hope that the management will be able to make use of these cost-cutting measures to revive their competitiveness and to increase their sales and market share, so as to help the Singapore economy to recover as quickly as possible. I feel that in the public debate in cost cutting, the people and the unions have already expressed their support for tripartism and they have accepted the wage cut and CPF cut. But some managements have asked for excessive demands.”
“Mr Speaker, Sir, if an employer wants to send his foreign worker for training, we will look into the particular training requirement. In many instances, it can also be supported. But, of course, in the context of the work permit holders, the unskilled and semi-skilled workers, it will be so much better if the employers make a special effort and recruit skilled workers from abroad, rather than bring in unskilled workers here to be trained. That is why my Ministry has encouraged the construction industry to take up private initiative to set up skill assessment centres in our overseas sources of foreign workers - China, Thailand, Bangladesh, Myanmar. The purpose is for them to screen the applicants for work permits who want to come to Singapore to find out who are the skilled workers and then bring them to Singapore. I think that is a far better approach than to bring hundreds of thousands of unskilled workers into Singapore and then set about trying to train them to upgrade their skills. The skilled workers are available out there. Go out there and recruit the skilled workers. It is far cheaper that way, more effective and efficient for business. Assoc. Prof. Low Seow Chay (Chua Chu Kang)(In Mandarin): Mr Speaker, Sir, the CSC has made a Report on the economy of Singapore in the past and it has also made recommendations for our present and future economy. It is a rational look at our economy and I endorse the view of the Committee and also support the recommendations. In looking into the past, the Committee made use of the assessment of Singapore's competitiveness by various economic consultancy agencies, and it came to the conclusion that if not due to the currency turmoil, Singapore's competitiveness was ranked very high.”
“Mr Speaker, Sir, in September this year we introduced a new work pass framework, PQR framework, whereby the top talent would be under the "P" work passes and "R" for restricted, before the lower skilled workers. The "Q" passes would be for the in-between grades of talents that we need in Singapore. It is a very flexible system. Although there are wage criteria such as $2,000 for a "Q" pass or employment pass, we are prepared to look at the background or the working experience and qualifications of a particular worker and decide which particular pass to grant to the foreigner. So in this case, there is no necessity to further revise the wage criteria, because we have sufficient flexibility within the system to cater to the needs of employers.”
“Mr Speaker, Sir, for the first nine months of this year, about 20,000 workers had been retrenched. Overall, when companies retrench their workers, they retrench them in the proportion of their workforce. Companies that have more foreign workers will retrench in proportion to the profile of their workforce. So out of that 20,000, on average, it is about 70:30, because that is the typical profile of the foreign workforce in most manufacturing and service sector companies. So foreign workers will constitute about 30% of those who were retrenched. With regard to the number of foreign workers in Singapore, my figure obviously would be a more reliable figure. It is more than 450,000.”
“Conclusion Sir, when the region recovers from the current economic crisis, there will be intense competition for talent. We must not wait for this to happen and then set out to attract our fair share of talent. In fact, we must try to attract our fair share of talent now and take advantage of the inherent strength in our economy to attract talent at this juncture so as to stay ahead in this race and to better position ourselves for the competition in the future. Sir, the recession we are experiencing is a consequence of the regional problems. But we must act firmly and positively to deal with the new economic conditions. We have to make adjustments, including those that are painful. The CSC's recommendations to cut business costs, including wage cost, is a sound and viable approach to cope with the loss of competitiveness. However, cost-cutting measures alone will not ensure that Singapore would remain competitive. In the longer term, it is the creativity, capability, productivity and enterprise of Singaporeans which will determine whether we will prosper in an increasingly competitive global environment. As long as our employers and companies, trade unions and workers continue to strive for productivity improvement and skills upgrading, we need not fear. Through tripartite cooperation and support, we have been able to implement cost-cutting measures to overcome the economic crisis in the 1985/86 recession. Given the close partnership and strong co-operation between workers, employers and Government, I am confident that we will again be able to work hand-in-hand as a Singapore team to meet the challenges ahead, and help our economy recover speedily from the present crisis. Sir, I support the motion standing in the name of the Minister for Trade and Industry.”
“At the same time, we must augment local talent with a flow of international talent. This will provide Singapore with the enhanced capacity to generate high value added activities which is in tune with the knowledge era. Examples of such high-value added activities are the areas of e-commerce, wireless communications, automotive components, pharmaceuticals and chemical industries, where our companies today still find themselves short of IT and engineering talent, despite the current economic downturn. Sir, we must be prepared for the new global competition and change our mindset and mode of operations accordingly. Our vision of Singapore as a globally competitive knowledge economy and a world-class workforce has scope for home-grown talent to realize their full potential. It will also serve as a magnet to attract international talent to participate in the many challenging opportunities which are unfolding with the new economic re-positioning of Singapore. With an augmented talent pool we are in a better position to expand our economic pie and have more gains to be shared by all. We need to grow our stock of talent to excel in the competition which would be brought about in the future. My Ministry will adopt a comprehensive approach to developing our own manpower as well as the recruitment of international talent. Sir, we must not lose sight of the longer-term challenges because of the current downturn. Attracting foreign talents to Singapore is one aspect which can be easily swept aside during this period of rising unemployment. But if we do so, we will only hamper the growth in new businesses and industries which could play a major role in speeding up recovery.”
“CREST is a $200 million programme launched by the Productivity and Standards Board. It is aimed at encouraging the workforce to acquire core skills, which will provide the foundation for skills upgrading in all occupations and sectors. These skills are important in achieving a thinking, learning and innovative workforce. Sir, the on-going Manpower 21 planning exercise will study the recommendations of the CSC which pertains to manpower development. Apart from establishing a national lifelong learning system, the Manpower 21 Committee will be looking into how we can enhance the workplace environment, upgrade the manpower industry structure, and harness international talent to ensure that the capabilities of our workforce remain a key competitive advantage for Singapore in the next century. We should have detailed proposals from the Committee by the middle of next year. Enhance the attractiveness of Singapore to foreign talent On foreign talent, Government agrees with the importance of tapping into global sources of talent to sharpen our competitive edge and overcome our manpower constraints. Foreign talent combined with a highly skilled local workforce will enable us to transit smoothly and rapidly into a knowledge economy. They can help us to raise our attractiveness to more MNCs to locate key knowledge operations in Singapore and thus enhance our economic value-added. As Singapore evolves into a knowledge economy, the key determinants of success will be the skills, capabilities and innovativeness of our workers. Increasing global competition will put a premium on skilled workers. We will develop our home-grown talent fully with a new strategic manpower blueprint under the Manpower 21 planning effort.”
“This system is critical to maintaining the currency and competitiveness of Singapore's workforce. It would provide opportunities and support for every Singaporean to undergo lifelong learning for their continued employability. In this system, the stakeholders are employers, public and private training providers, unions and community organizations and, of course, the workers themselves. Everyone will play an enhanced role in supporting the in-employment training needs of our workforce. Additional funding will be allocated and new learning initiatives will be developed to encourage employers and workers to engage in lifelong learning. A national skills recognition system will be established to recognize and certify in-employment skills acquisition. New training technologies will be harnessed to support this endeavour. To kick-start the process of lifelong learning for continued employability, two national programmes have been put in place. These are the Skills Redevelopment Programme (SRP) and the Critical Enabling Skills for Training (CREST). Training under SRP leads to national skills certification and every worker trained is placed with a job, either with his existing employer or a prospective new employer. This ensures that the training is immediately relevant. SRP has been progressing well since its launch in December 1996, as I have informed this House yesterday. A total of about 190 companies have committed to skill certifying more than 10,500 workers. In June this year, the Government committed an additional $20 million to developing a Skills Development Centre to improve the training infrastructure to support training activities under SRP. I am glad to say that the Skills Development Centre has already started taking in trainees in November this year.”
“We should study this further to see how the private sector can also benefit from such a monthly variable component to achieve higher responsiveness to sudden economic changes. Incorporating a monthly variable component in the flexible wage system may help to minimise the need for future CPF reduction, which is a much more drastic measure with wider implications because people have committed their CPF savings for mortgage repayment and other long term commitments such as insurance policies. In fact, this has been suggested by Mr Ahmad Magad in his speech yesterday. We will study this further to see how it can be extended to the private sector wage structure to allow for greater flexibility. While we are grappling with the immediate concerns caused by the regional economic crisis, we must also be aware of the need to build up capabilities and formulate strategies for our long-term competitiveness. If we ignore the challenges that globalization will bring, we will become even more vulnerable in the future. In this respect, the CSC's vision of Singapore as an advanced and knowledge-based economy provides a sound basis for us to plan our manpower development. My Ministry supports the CSC's two-pronged approach to developing a world-class workforce: firstly, to maximize the full potential of the domestic workforce; and secondly, to attract foreign talent to enhance our capabilities and competitiveness. Maximize the full potential of domestic manpower With regard to maximizing the full potential of domestic manpower, my Ministry is working closely with the Ministries of Education and Trade and Industry, economic agencies like the Productivity and Standards Board and Economic Development Board, as well as industry partners, to develop a lifelong learning system in Singapore.”
“It is a strong signal to investors and employers that our workers are willing to shoulder their share of the burden to help companies retain their cost competitiveness. This willingness to suffer a wage cut will help many companies to weather the downturn. It will preserve jobs for workers and minimise unemployment. The NWC has also recommended that the wage reduction should as far as possible be effected through the variable component of the flexible wage system. We introduced the flexible wage system in the aftermath of the 1985/86 recession, precisely in anticipation of the kind of problems that we are facing today. Adjustments to the flexible wage system by cutting variable components would have less impact on the monthly incomes of workers and should be easier to shoulder. I urge the private sector employers to abide by the NWC recommendations to make the wage cut in the variable component. I would also urge all employers to follow the Government's example and apply the NWC recommendations to moderate the wage cuts for the lower income employees. Private sector employers should make a bigger wage cut for higher income executives and management staff and a smaller cut for the lower income workers. The lower income employees have less discretionary income and are more likely to suffer greater difficulty coping with wage reduction. Applying the NWC recommendations will help them to better weather this recession. Sir, the Government has also decided to make a cut in the civil servants' monthly non-pensionable variable payment. This monthly variable payment is missing from the private sector's wage structure.”
“There are also some employers who have been retrenched and are now jobless. But I find it difficult to accept that even jobless Singaporeans are able to continue to enjoy the service of a foreign domestic worker. We have to be practical. Losing a job means making major adjustment to one's lifestyle, including getting down to domestic chores, if necessary. Losing a job may well require us to make sacrifices in other areas. We cannot continue to assume that whether we have a job or whether we have a pay increase or not, we should be able to afford and enjoy the services of foreign domestic workers. Furthermore, cutting the foreign domestic worker levy will in fact not benefit the vast majority of low income families who are not employers of foreign domestic workers. It is these low income families who are most in need of Government assistance and support during this period of downturn. Government will, in fact, introduce other measures to help the low income families cope with the wage cut, as announced by DPM Lee yesterday. Sir, in November 1997, my Ministry announced that the foreign domestic worker levy will be adjusted annually. We announced in November last year that we will make regular reviews and announce the changes in November to take effect in the following April. In view of the economic downturn and wage cut proposed for next year, we have decided to suspend the levy revision. Sir, on the NWC guidelines, DPM Lee has already announced Government's acceptance of the new NWC guidelines for 5-8% wage cut. Sir, our ability to reach this difficult decision with the support of workers will have a major impact on investors' confidence in Singapore.”
“The foreign domestic worker levy will not have an effect on the competitive position of our industries, since the foreign domestic workers are employed by the households. The levy for foreign domestic worker cannot be reduced at this juncture. However, as an offset, working mothers will continue to be able to claim or enjoy the double tax deduction for the foreign domestic worker levy which they pay. Several Members have spoken on this earlier. Dr Vasoo has suggested that during this economic crisis, it is not necessary to use the foreign worker levy as a means of moderating the demand for foreign domestic workers. I am afraid that he is wrong on this score because, as it is, the number of foreign domestic workers has actually increased despite the economic downturn. Yes, the rate of increase is lower now compared to past years. But the increase shows that the demand is still strong. Hence, we still need some measure to moderate this demand to ensure that the number of foreign domestic workers does not grow out of proportion. Sir, the income of most of the households which employ foreign domestic workers far exceeds the cost of employing a foreign domestic worker, including the levy. It is therefore unlikely that the current wage cut in the end-of-year variable component would seriously affect the employment of foreign domestic workers in many households. Members may be interested to know that more than 80% of the households which employ foreign domestic workers have an income exceeding $4,000 per month, not including the employer's CPF contribution. Even with the 5-8% cut in wages, these households should still be able to retain their domestic workers if they want to do so. There are, of course, some marginal cases, whose incomes are lower.”
“It is therefore unfortunate that some local construction firms, for reasons best known to themselves, have continued to rely on large numbers of unskilled foreign workers despite the many efforts by Government to encourage skills upgrading and productivity gains. These companies only have themselves to blame. I would strongly urge construction companies, both local and foreign, to employ more skilled foreign workers or to upgrade the skills of their existing workers, not only as a cost cutting measure but also to raise productivity and standard of the industry. Sir, contractors should seize this opportunity with the reduction on the skill levy to employ more skilled workers. They would not only enjoy the substantial savings in levy, about $440 per worker per month, but also benefit from the higher productivity of the skilled workers. For Singapore as a whole, it would also be beneficial as social problems are minimised. And this approach is consistent with our long-term goal of reducing the number of unskilled foreign construction workers and to enhancing construction productivity. We are, in fact, conducting a thorough and comprehensive review of how to achieve this objective under our Construction 21 study. As for foreign domestic workers, many Members have spoken on this subject and many Members have made passionate appeals on why the foreign domestic worker levy should be reduced. DPM Lee yesterday already said that the key point in cutting the foreign worker levy is to address export competitiveness. We are trying to help employers. We are trying to help companies reduce cost of production so that their products can sell well in the international market place and, instead of losing market share, they can regain lost market share.”
“Since April this year when we lowered the skilled worker levy from $200 to $100, there has been an increasing number of skilled construction workers from these countries, particularly from Malaysia, our traditional source. When we subsequently implemented the 20% basic skill certificate requirement in August of this year, the proportion of skilled workers from other sources increased further, as new testing centres were set up in these countries. Hence, in the last six months, the proportion of PRC construction workers on low levy had, in fact, gone down. I would also like to point out that the PRC construction workers are not solely employed by PRC construction firms operating in Singapore. Our records show that there is a sizable number of non-PRC construction companies including local contractors that employ skilled PRC workers. Hence, PRC construction firms do not have an unfair advantage over local companies. My Ministry has always actively encouraged construction companies to employ skilled foreign workers. If PRC construction companies had benefited from the low levy, it shows that they have heeded our advice and quickly taken up the initiative to employ more skilled foreign workers and to upgrade the skills of their existing workers. Indeed, there is nothing to stop local construction companies from doing likewise. Local construction companies are, in fact, in a better position to tap the pool of skilled construction workers from Malaysia, in view of our historic ties and closer proximity. They can also tap many other sources of skilled workers.”
“If we were to reduce the levy for unskilled construction workers at this juncture, it could encourage such malpractice to grow, bringing more unskilled foreign workers into Singapore. And this would result in more social and law and order problems for us. Sir, yesterday, the hon. Nominated Member, Mr Chuang, commented that the levy differential between skilled and unskilled foreign workers had led to an unintended side effect of PRC companies having an unfair advantage over local construction firms. I believe I am correct in this summing up of what he said. He said that because many of the workers on the low levy are PRC workers and they are employed by PRC construction companies which are better able to manage them, and that has given the PRC companies an advantage in Singapore. In other words, our policy has resulted in an uneven playing field. Sir, I would like to correct the observation made by the Nominated Member, because I do not think that is reflective of the industry overall. It may well have happened that a PRC company with skilled PRC workers had been able to tender lower and therefore won some contracts, but I do not think it is reflective of the industry as a whole. Because I would like to point out that the lower levy applies not only to skilled PRC construction workers but also to skilled workers from all other sources. Our records, in fact, show that PRC workers constitute only a minority of the number of construction workers on low levy, in other words, skilled workers. Most of the skilled workers on low levy come from Malaysia, our traditional source of supply of skilled workers, as well as other sources such as India, Bangladesh, Thailand and Myanmar.”
“Hence, since 1995, the productivity level for construction had actually gone down by more than 15%. We need to take a determined approach to upgrade the skills level of the construction workforce in order to achieve a breakthrough in productivity. That is why we cannot reduce the levy for unskilled foreign construction workers. The levy reduction for skilled foreign construction workers and the increase in the levy for unskilled foreign construction workers, which took effect in April of this year, have in fact resulted in improvement in the quality of the construction workforce. The proportion of construction workers who have obtained Skills Evaluation Certification rose from 12% in April this year to 16% in October 1998. To reduce the levy for unskilled construction workers now will undermine the progress that we have achieved in upgrading the workforce and the industry. Instead, we should provide more incentives to the construction industry to upgrade their workforce by widening the gap between employing a skilled and an unskilled foreign construction worker. That is why we are cutting the levy for the skilled construction workers by another $70. Sir, apart from productivity consideration, unskilled foreign workers are the ones most vulnerable to abuses and malpractices. We are aware of labour suppliers who collude with contractors to cheat ignorant and unskilled foreign workers. These workers had paid agents in their home countries large fees on the promise of well-paying jobs in Singapore. Some end up abandoned without a job and accommodation shortly after they arrive in Singapore. We have already taken various measures such as the introduction of the levy bond early this year and new allocation formula, to stem such abuses.”
“Cutting CPF for local workers thus gives us an opportunity to also lower foreign worker levy without widening the wage gap between local and foreign workers. Sir, to recap, the levy for skilled workers will be reduced from $100 to $30 for all sectors with effect from 1st January 1999. This is a reduction coming on top of the $100 reduction which was implemented in April this year. In other words, within a period of less than a year, we have reduced the foreign worker levy for skilled workers by $170. The levy for unskilled foreign workers will also be reduced by $90 with effect from 1st January 1999. This reduction will apply only to companies in the manufacturing, marine and services sectors to enhance their export competitiveness. The levy for unskilled foreign construction workers will not be reduced. Construction is a domestic industry and is not directly vulnerable to international competition. Overall construction costs have in fact come down for all building types during this period. The weighted Tender Price Index has fallen by 4.5% in the first six months of this year, partly due to falling material costs. Sir, moreover, the construction sector has remained overly-dependent on unskilled foreign workers. This is the main cause for the very low productivity of the sector. The productivity level of our construction workforce lags far behind those in countries such as Japan and Australia. In terms of value added per worker in the construction industry, Australia is 1.5 times ahead while Japan is three times that of Singapore. For the last three consecutive years, productivity growth for the construction sector has been negative. So far this year, productivity growth for the sector has declined by a further 2.1%.”
“Some may even become less willing to go for skill upgrading and retraining, thinking that they have their CPF savings that would tide them over this difficult period. This mindset will only delay our recovery and may well result in a self-fulfilling prophesy. In other words, if we allow CPF withdrawal, we induce inertia to change and to work harder. As a result, we remain uncompetitive, recession deepens and more and more people become unemployed. So, on balance, I think it is better for us to help unemployed Singaporeans find alternative jobs, and for unemployed Singaporeans to be prepared to take on more difficult jobs at even a lower pay. The situation has changed. These are difficult times. Tens of millions are unemployed in the region around us. We must be prepared to make drastic adjustments. Sir, coming back to the foreign worker levy, the Committee has recommended that the foreign worker levy be reduced as a means of cutting cost of business. DPM Lee yesterday also announced Government's acceptance of this recommendation. Let me say that there are now more than 450,000 foreign workers on work permits in Singapore. This means unskilled and at best semi-skilled workers. Many companies are still dependent on foreign workers for jobs which locals do not want to do. In particular, in the manufacturing sector, many companies have to rely on foreign workers to fulfil part of their manpower requirements. However, when we cut the foreign worker levy, we should be careful not to remove the differential between local and foreign workers. We should not cut the levy to the extent that employers are tempted to replace Singaporeans with more and more foreign workers.”
“If we in fact allow CPF members to draw from their CPF savings for living expenses, it would mean that more CPF members would deplete their CPF savings faster and that would create a bigger problem in servicing their home mortgages. It may even cause some of the home owners to have to lose their homes in the process. Mr Peh has made a specific suggestion that we allow jobless Singaporeans to draw $150 from their CPF account to tide them over this period. My response is that if $150 is what a jobless Singaporean needs for himself and his family, the better solution is to help him find a job. We still have a large number of foreign workers in Singapore today, working in the manufacturing and service sectors, earning anywhere from $500-$600 a month, doing many jobs which Singaporeans up to now are reluctant to take on. In a crunch, jobless Singaporeans may be better off taking on similar jobs than relying on their CPF savings to sustain themselves. We will do our best to help Singaporeans who are prepared to take on such jobs, provided they are realistic about wages and the working conditions. Employers should also consider attracting unemployed Singaporeans by making use of their savings on the foreign worker levy when they employ a local worker. This is, I believe, a far better approach than allowing the unemployed to draw down on their CPF at this juncture. Sir, the danger of allowing CPF withdrawal at this early stage is that it would give some Singaporeans a false sense of security. They may be lulled into not reacting to the changed labour market situation and remain reluctant to accept jobs which pay less or are more onerous.”
“The CPF cut will result in a wage saving of some $3.9 billion a year to employers. This will help companies and the economy to regain and improve competitiveness in the current economic downturn. The CPF contribution rate will be adjusted upwards when the economy recovers and when a higher rate of saving will not undercut our overall competitiveness. Foreign Worker Levy Sir, I next turn to foreign worker levy. But before doing so, I should respond specifically to some points made by several MPs including Mr Leong Horn Kee and Mr Peh Chin Hua. They have suggested that CPF members should be allowed to draw some amount of money from their CPF savings during this downturn. I would like very much to agree with the Members, particularly Mr Peh Chin Hua, who is also my GRC colleague. But on this occasion, I am afraid that I have to disagree with him and the rest of the Members who have made this proposal. We have always maintained that CPF savings may be released for living expenses if Singapore runs into a prolonged and deep recession. The situation today is certainly not in this category. We are not in a prolonged and deep recession as yet. While the economic challenges are more severe than any that we have encountered previously, we should not quickly turn to the CPF account to support the living expenses for the unemployed. Most CPF members are using their CPF savings to pay for their housing mortgages, as I have just explained earlier on. As it is, with the reduction in CPF contribution by 10% point, many CPF members (217,000 of them) would have insufficient CPF to continue their monthly mortgage repayment.”
“Repayment will commence one year after the end of the three year draw-down period, with full repayment to be made over a period of 10 years or by the age of 65, or upon the sale of the property, whichever is earlier. The BLS will also be extended to HDB flat owners who are paying market interest rate, and whose flats were likewise purchased before the CPF cut was announced. The market rate currently applies to Permanent Residents, owners of resale flats whose household income exceeds $8,000 a month and third time purchasers of HDB flats. This is a separate group of HDB flat owners who are servicing their HDB loans at the interest rate pegged to that of the Credit POSB's interest because they have already had their fair share of the housing subsidy. As for HDB lessees who are currently enjoying concessionary interest rates (which is CPF + 0.1%) for their outstanding mortgage loans, they need not apply for the BLS as they can apply for HDB's financial assistance package at the same concessionary interest rate. Further details of the BLS and the HDB Financial Assistance Programmes will be released separately. The Government is also aware that the cut in CPF contribution rate will have an impact on CPF members who have committed their savings for insurance policies which they bought previously or who are participants in the education loan scheme. In other words, they have borrowed against their CPF savings to finance either their own education or their children's education in institutes of higher learning. To ensure that such payments are not disrupted, whether it is insurance or education, members will be allowed to set aside sufficient CPF savings to meet these payments when they apply for the bridging loan or for HDB's assistance.”
“These measures will benefit both lessees of existing HDB flats as well as affected applicants of new and resale flats. These will include allowing more working family members to become joint owners, thus using their CPF savings to meet the mortgage repayment. HDB will also reschedule mortgage loans to a longer repayment period, defer mortgage repayment and allowing payment of arrears by instalments for those who have financial difficulties. Applicants for new and resale flats will also be eligible for these assistance schemes. In addition, first-timers with financial difficulties will be allowed to downgrade to a smaller flat. In the case of private properties purchased before the CPF cut, the Government will offer affected CPF members a Bridging Loan Scheme (BLS) similar to that provided in 1986. The BLS is for CPF members who have depleted their Ordinary Account and Special Account savings for their monthly mortgage repayment. The bridging loan will be made available over a three-year period in the first instance, with the commencement of the first draw down on 1st March 1999. The quantum of the monthly bridging loan drawn down will be capped at the amount of shortfall, which arises directly from the cut of 6% point in the Ordinary Account contribution rate. To reduce the burden of mortgage repayment of CPF members during this recession, the bridging loan will be offered at a concessionary interest rate based on CPF interest rate plus 0.1%. This is significantly lower than the commercial interest rate for housing loans. The cut-off age limit for the eligibility of the loan will be based on the minimum statutory retirement age of 62 years which will take effect on 1st January 1999.”
“For older workers above the age of 55 whose current contribution rates are lower, the rates will also be cut proportionately by half as announced by DPM Lee. In the case of employees above the age of 55 to age 60, their employers' CPF contribution rate will be reduced from 7.5% to 4% (a round up from 3.75%). For employees above the age of 60 to age 65, I have previously announced that existing employers' CPF contribution rate will be reduced from 7.5% to 4% with effect from 1st January 1999 as a result of the proposal to extend the retirement age from 60 to 62. Similarly, for employees above the age of 65, their employers' CPF contribution rate will also be reduced from 5% to 4% as a result of the extension of the retirement age. In line with the principle of proportionate cut, the CPF contribution rate for this group of workers will be reduced to 2% from 4%. As announced by DPM Lee the cuts will take effect on 1st January 1999. Approximately 18% of active CPF members (or 217,057 active CPF members) will have monthly CPF contributions that are less than their monthly housing instalments as a result of the cut. Out of these members, 165,661 are HDB owners, 46,446 are private property owners and 4,950 are concurrently HDB and private property owners. To help the affected CPF members, the Government will allow the use of savings in their Special Account, apart from the Ordinary Account, to meet the shortfall in their monthly loan repayment arising from the CPF cut. In addition, there will also be separate assistance schemes to help HDB and private property owners tide over the difficulties of mortgage repayment. In the case of HDB lessees, the HDB will put in place measures similar to those offered in the last economic downturn.”
“Whereas indirect taxes paid to Government represent only 10% while profits to companies take up the rest of 47%. So obviously any measure to reduce cost of doing business and to enhance competitiveness must involve adjustments to wages and salaries, apart from reducing the indirect taxes from Government. This is a pragmatic and an effective approach. By doing so, we will be signalling to international investors and employers that Singaporeans are adaptable and pragmatic. We do not cry over spilled milk but get down quickly to build up lost competitiveness and regain market share. This is the approach adopted by the Committee on Singapore's Competitiveness (CSC). I applaud the Committee for its courage in facing up to the realities and not flinching from prescribing bitter medicines. The Committee had recommended a 10% point reduction in the employer's CPF contribution rate as well as a cut in wages to achieve a total 15% reduction. On CPF, DPM Lee had already announced yesterday that the Government accepts the CSC's recommendation and to minimise the impact on homeowners who are using their CPF savings or contributions to service mortgage loans, 6% point of the cut would come from the Ordinary Account. Contribution to the Special Account would completely be suspended. In other words, the 4% point that goes to the Special Account will be cut off. For example, a person earning $2,000 a month would see a drop of $120 in CPF savings available for mortgage repayment and not $200 which is the actual size of the CPF reduction for a person earning $2,000. As CPF members and their families may need to utilize their Medisave to meet their medical expenses even in an economic downturn, there is no need for us to reduce the Medisave contribution rate.”
“We have to revitalize our economic engine in order to get us out of the woods. The CSC's comprehensive study has made it clear that our business cost is now too high compared to our competitors, as a result of the regional currency and economic crisis. We are no longer competitive in areas where our neighbours are also vying for market share. We must bring business cost back in line to survive this downturn and to avoid more painful setbacks such as higher unemployment rate. On 29th October 1998, the Straits Times published a table compiled by the Economic Intelligence Unit (EIU) showing the cost of doing business in Singapore versus Hong Kong, Indonesia, Malaysia and Thailand. The EIU concluded that regionally, Singapore was the "most expensive country to do business in". We were rated even more expensive than Hong Kong. What was particularly striking was our wage cost, which was shown to be as much as 1.7 times that of Hong Kong, 4.4 times Malaysia and 15 times Thailand. The hourly cost of labour in manufacturing in Indonesia was only one-twenty-third of that in Singapore. While Singapore need not compete on low cost labour because we offer investors and businessmen many other advantages for operating in Singapore, we also cannot completely disregard this sudden swing in the region which has severely eroded our overall competitiveness. The decline in demand and the higher costs of operations in Singapore could lead to bigger losses in market share for Singapore. If we do not tackle this problem, it will cause even more retrenchments and higher unemployment in the years ahead. As DPM Lee has pointed out, total wages and salaries paid to workers are a key component of GDP output amounting to 43%.”
“We have also formed a proactive Employment Facilitation Team to reach out to employers in various sectors to determine their manpower requirements in the near future and to help them with strategies to fill their job vacancies with appropriate manpower. In particular, we seek out employers who are still recruiting so as to capture their vacancies in our job bank. In this way, we have been able to provide as many as 80% of the registrants at our Employment Service Department with at least one job referral. If a registrant is not successful in getting the job in the first instance, we have been able to make follow-up referrals to him. We have also created a Retrenchment Advisory Unit (RAU) to help employers cope with the need to downsize as demand for their goods and services shrink. The RAU has already helped employers to introduce alternatives to outright retrenchment, laying off workers directly by introducing shorter work week, temporary lay-off and putting excess manpower on training programmes and also working out how they could reduce wage costs by reduction of the flexible wage component. However, these measures cannot solve the problem of rising unemployment in this recession. Already the number of registrants at the ESD has exceeded available vacancies, unlike in the past when we used to have more than twice as many jobs as job seekers. What else can we do in response to this sudden change in economic climate? Obviously, we cannot insulate ourselves completely from the chill winds of recession sweeping through the region. We are already in fact feeling the first twinge of the biting cold brought about by the external forces. Unemployment has, as I said, reached 4.5% in September this year. This is nearly 2.5 times higher than a year ago in September 1997.”
“Mr Speaker, Sir, since Monday, about 35 hon. Members have spoken on perhaps twice as many issues and concerns of Singaporeans arising from this economic downturn and recession. I rise to speak in support of the motion but I will confine my remarks to areas impinging on the Ministry of Manpower's responsibilities and the recommendations of the Committee on Singapore's Competitiveness where it touches on the responsibilities of my Ministry. Sir, yesterday, DPM Lee had explained that we are facing the most severe economic crisis since our independence. The drop in demand from our regional trading partners who were more severely hit by the regional economic crisis had dimmed our growth prospects. The regional currency realignment had also affected our share of the global market. Recession is unavoidable. Sir, the downturn in the economy has led to a deterioration of the employment situation in Singapore. In the first nine months of this year, more than 20,000 workers had been retrenched. This is more than twice the number of workers laid off for the whole of 1997 and is also higher than the 19,500 workers who were retrenched during our last recession in 1985/86. We have also suffered the first contraction in total employment since the last recession in 1985 over the last two quarters. Sir, the total unemployment rate had risen from 2.3% in June this year to 4 1/2% in September this year on a seasonally adjusted basis, indicating an increase in momentum in the rise of unemployment. Sir, my Ministry has introduced many initiatives to help retrenched workers. We have expanded our Employment Service Department as an additional channel to help retrenched or unemployed Singaporeans to look for alternative jobs.”
“Mr Speaker, Sir, the hon. Member has been waiting for quite sometime for an answer on this question, because he raised this question at the last sitting of Parliament. I am sorry I have to request that he wait a little longer because the substance of the reply to his question forms part of the Government's response to the recommendations of the Committee on Singapore's Competitiveness. The Deputy Prime Minister will deliver this response later today and he will get the full answer then. ILLEGAL PARKING IN SENNETT ESTATE (Enforcement action) 10. Mr Chiam See Tong asked the Minister for Home Affairs whether he will step up enforcement action against illegal parking along Mulberry Avenue, Jalan Wangi and Angsana Avenue in Sennett Estate. The Minister of State for Home Affairs (Assoc. Prof. Ho Peng Kee) (for the Minister for Home Affairs): Sir, there has been occasional illegal parking along these roads. Many of the offenders live or patronise the shops and eating places in the vicinity. Police has stepped up enforcement action against the offenders. From January to September 1998, Police issued 34 summons, as compared to 27 for the whole of last year. In the meantime, Police has been working with the Land Transport Authority to improve the situation.”
“Mr Chuang Shaw Peng asked the Minister forCommunications if he will furnish statistics on the rates of increases/decreases in respect of public transport costs and tariff by the Port of Singapore Authority from 1988 to 1997.”
“Source : The World Competitiveness Yearbook, 1998 TABLE 3b : GROSS SALARIES US$ medians in each level Senior Managers Middle Managers Junior Managers 1997 1998 1997 1998 1997 1998 Singapore 119,137 101,577 61,382 52,320 31,626 26,949 Hong Kong 141,524 146,304 73,723 77,386 40,104 40,932 Tokyo 141,345 134,484 87,766 85,724 54,495 54,642 Seoul 115,903 59,908 64,585 34,981 35,989 20,426 Taipei 111,541 101,406 62,664 55,031 35,140 29,864 Kuala Lumpur 80,541 42,630 36,148 20,284 16,296 9,651 Bangkok 73,202 43,396 31,834 18,195 13,844 7,629 Jakarta 72,141 21,271 28,342 8,068 11,135 3,060 Shanghai 32,340 42,521 12,154 21,981 6,798 11,350 Notes : 1) Survey does not cover expatriate pay. 2) Feb 98 exchange rate used. Source : World Executive Digest, April 98 TABLE 4a : PRODUCTIVITY-REAL EARNINGS GAP IN SELECTED COUNTRIES Percentage Points Year 1993 1994 1995 1996 1997 Singapore 2.9 0.2 -0.9 -3.6 -2.0 Hong Kong -0.3 -1.4 1.7 -3.3 n.a. Korea -3.3 -1.1 -0.6 -1.9 n.a. Taiwan 0.7 2.3 4.5 5.5 n.a. Note : A positive figure means that the growth in productivity exceeds the growth in real earnings. A negative figure means that the growth in productivity lags behind the growth in real earnings. Source :Various sources TABLE 4b : CHANGES IN REAL EARNINGS, REAL BASIC WAGE INCREASE AND PRODUCTIVITY FOR SINGAPORE Per Cent Year 1993 1994 1995 1996 1997 Changes in 4.0 5.6 4.5 4.3 3.6 Real Earnings Real Basic 5.5 5.2 5.1 5.3 3.8 Wage Increase Productivity 7.0 5.7 3.5 0.6 1.6 Source: Earnings data are obtained from CPF Board Wage data are obtained from the Survey on Annual Wage Changes Productivity data are obtained from MTI Chart 4: SINGAPORE'S RELATIVE UNIT LABOUR COST In Manufacturing Sector Against other NIEs (in US$ terms) PUBLIC TRANSPORT COSTS AND PORT OF SINGAPORE AUTHORITY TARIFF 12.”
“Source : The World Competitiveness Yearbook, 1998 TABLE 2 : YEARLY WAGES IN SERVICE PROFESSIONS 1997 Gross annual income including supplements such as additional salaries, bonuses, vacation money, share of profits and children's allowances, in US$ Country Bank Department Primary Secretary credit manager school clerk teacher China 4,800 3,600 1,450 2,700 Philippines 5,300 10,600 5,500 3,200 Indonesia 6,800 11,100 1,650 6,300 Thailand 13,200 30,700 7,500 8,700 Malaysia 7,300 40,000 6,200 14,000 Singapore 15,500 33,100 15,300 16,200 Taiwan 20,900 34,100 18,800 17,900 Hong Kong 16,400 45,900 24,500 15,500 Korea 25,700 40,300 22,800 20,600 USA 33,975 64,625 38,250 30,775 Japan 75,100 84,100 37,400 28,300 Note : Jan 98 exchange rate used. Source : The World Competitiveness Yearbook, 1998 TABLE 3a : REMUNERATION OF MANAGEMENT 1997 Annual gross salary in US$ Country CEO Engineer Director, HR Manufactur Director ing China 42,823 15,561 24,367 22,799 Indonesia 73,720 31,482 51,882 46,408 Malaysia 95,983 34,838 61,500 54,390 Thailand 109,361 37,942 52,640 51,173 Korea 107,042 38,923 64,584 57,446 Philippines 171,185 39,734 64,097 51,610 Taiwan 166,707 56,545 88,458 79,365 Singapore 178,451 63,973 100,337 88,215 Hong Kong 200,852 69,491 103,462 100,232 USA 173,000 70,000 105,000 96,000 Japan 225,473 104,951 137,160 123,952 Note : Jan 98 exchange rate used.”
“We have hence correspondingly seen Singapore's relative unit labour cost rising gradually but steadily over the years. It has worsened further since July 1997 as the depreciation in regional currencies was not fully offset by a rise in their nominal wages. (Please see table 4a, table 4b and chart 4). On the questions regarding the proportion of high income earners, 7% of full-time workers in Singapore earn income of more than $6,000 per month, based on MOM's Labour Force Survey 1998. The income share of this group of high wage earners was 27% of total income earned by full-time workers. TABLE 1 : PRODUCTIVITY AND COMPENSATION LEVELS 1997 GDP per worker and total hourly compensation for manufacturing workers in US$ Levels, US$ Indices (Singapore =100) Productivity Compensation Productivity Compensation Countries (value-added Cost (value-added Cost per worker) (per hour) per worker) (per hour) Norway 99,671 21.59 174 323 Switzerland 78,850 23.74 137 355 Japan 77,108 17.51 134 262 US 67,228 17.70 117 265 Singapore 57,400 6.69 100 100 Korea 41,045 3.87 72 58 Hong Kong 28,426 5.13 50 77 Taiwan 28,234 5.57 49 83 Malaysia 14,431 0.9 25 13 Thailand 9,622 0.76 17 11 Indonesia 4,919 0.06 9 1 China 3,024 0.27 5 4 Notes: 1) The productivity data for Hong Kong refer to 1994 as the data for 1997 is not available. 2) Hourly compensation is defined as (i) all payments made directly to the worker before payroll deductions of any kind, and (ii) employer contributions to legally required insurance programs, and contractual and private benefits plans. 3) Jan 98 exchange rate used.”
“Singapore's wage costs are generally higher than other Southeast Asian economies and the NIEs, but lower than developed economies such as Japan, USA and European economies. According to the World Competitiveness Report 1998, the hourly compensation for manufacturing workers is US$6.70 in Singapore, higher than US$5.60 in Taiwan, much higher than US$0.90 in Malaysia, but lower than US$17 in Japan and US, and US$26 in Germany. The picture in the services sector is roughly similar. The annual gross salary of a bank credit clerk is US$15,500 in Singapore, higher than US$7,300 in Malaysia, comparable to US$16,400 in Hong Kong, but lower than US$33,975 in US. For top management, the salary gap between Singapore and developed economies is however smaller. The annual gross salary of a CEO is US$178,000 in Singapore, higher than US$96,000 in Malaysia, marginally higher than US$167,000 in Taiwan, and comparable to US$173,000 in US. Please see tables 1, 2 and 3. To determine whether wages in Singapore are high, low or medium, one way is to compare wages of people in equivalent occupations with other countries. Within the domestic economy, we should also benchmark the growth in wages against output, that is, whether productivity growth has been in tandem with wage growth. In recent years, productivity growth lagged behind real earnings growth in Singapore. While real earnings increased by around 4-5% annually over the past 5 years, productivity growth lagged, at 1-2% in 1996 and 1997. In contrast, in Taiwan, productivity growth outstripped earnings growth substantially. In developed economies, although productivity growth rates were lower, real earnings growth was even more subdued.”
“Mr Tay Beng Chuan asked the Minister for Manpower (a) what is the ranking of Singapore's wage costs in the Asia Pacific region and in the world; (b) what benchmark is applied in Singapore to determine whether wages are high, medium or low; (c) what is the percentage that high wages occupy in Singapore's total wage costs; and (d) what is the percentage of highly-paid executives in Singapore's labour force.”
“The foreign worker levy was introduced in 1982 as a pricing mechanism to moderate demand for foreign workers. To ensure that this objective is met, the levy rates are varied for different sectors and are revised periodically to ensure effectiveness. The rates from 1988 are as follows: Effective Domestic Construction Marine Manufacturing Service Date 1 Apr 88 $120 $200 $170 $170 $170 1 Jan 89 $160 $220 $220 $220 $220 1 Jul 89 $200 $250 $250 $250 $250 1 Feb 90 $230 $280 $280 $280 $280 1 Aug 90 $250 $300 $300 $300 $300 1 Jan 91 $250 Skilled: $300 $300 $300 $250 Unskilled: $350 1 Apr 91 $250 Skilled: $350 $300 $300 $250 Unskilled: $350 1 Jul 91 $250 Skilled: Skilled: $300 $300 $250 $250 Unskilled: Unskilled: $350 $350 1 Jan 92 $250 Skilled: Skilled: #DL 35% $350 $350 to 45%: $450 1 Apr 92 $300 Skilled: Skilled: DL 35% $350 $350 to 45%: $450 1 Jul 92 $300 Skilled: Skilled: DL 35% $400 $350 to 45%: $450 1 Apr 95 $330 Skilled: Skilled: DL 35% $440 $385 to 50%: $450 1 May 96 $330 Skilled: Skilled: Skilled: Skilled: $200 $200 $200 $200 Unskilled: Unskilled: Unskilled: Unskilled: $440 $385 DL 35% to 50%: $450 1 Jun 97 $330 Skilled: Skilled: Skilled: Skilled: $200 $200 $200 $200 Unskilled: Unskilled: Unskilled: Unskilled: $440 $385 DL 40% to 50%: $400 1 Apr 98 $345 Skilled: Skilled: Skilled: Skilled: $100 $100 $100 $100 Unskilled: Unskilled: Unskilled: Unskilled: $470 $385 DL 40% to 50%: $400 # DL stands for foreign worker Dependency Level, ie, no. of foreign workers as a percentage of total number of workers in the company. SINGAPORE'S WAGE COSTS 11.”
“With regard to training programmes, the older and less-educated workers who are forty years old and above are a target group of the Skills Redevelopment Programme (SRP). The SRP was launched in December 1996 by the National Trades Union Congress as a tripartite initiative to enhance the employability of the local workforce by encouraging employers to undertake skills upgrading for their employees. In promoting training among the older workers, the aim is to extend their employability by 10 to 15 years in their current companies, or for suitable jobs in other companies. Of the 6,115 workers who either have completed training or are currently being trained under the SRP, more than 2,800 workers or 46% are aged forty years and above. FOREIGN WORKER AND FOREIGN MAID LEVIES 10. Mr Chuang Shaw Peng asked the Minister for Manpower if he will furnish statistics on the rates of increases/decreases in respect of foreign worker levy and foreign maid levy from 1988 to 1997.”
“More than one third (36%) of the retrenched local workers in the first half of 1998 were aged 45 and above. Nearly one-fifth (19%) were aged 50 or older. In a softening labour market, older workers affected by retrenchment would experience more difficulty finding new jobs compared to their younger counterparts. The Ministry is concerned over this group of job seekers. We have been urging employers to refrain from discriminating against older workers. As far as employment assistance is concerned, the Ministry of Manpower's Employment Service Department (ESD) provides employment assistance to Singaporeans and Permanent Residents regardless of their age. All the nine Community Development Councils (CDCs) and other self-help and voluntary welfare organisations also have employment assistance schemes to help their residents/members look for jobs. They are linked to ESD's JOB System through the Ministry's LabourNet, which allows on-line registration and job matching for job seekers. The Ministry has also formed an Employment Facilitation Team (EFT) to proactively reach out to displaced workers and companies still recruiting workers. The EFT keeps in contact with industries and companies that have the potential to offer new employment opportunities. EFT officers meet with industry and company personnel to assess their employment requirements. The EFT visits companies that have decided to carry out retrenchments so as to determine the assistance needed by affected workers to obtain alternative employment, and provide any necessary counselling. The EFT also organises industry job fairs, often in cooperation with the CDCs, in order to bring together job seekers and prospective employers at a convenient location.”
“Low-income families, ie, those with gross monthly household income of less than $2,500, are eligible for the Ministry's BASC fee subsidy of up to $150 a month on a sliding scale. A family, which is eligible for the maximum subsidy of $150, needs, in fact, to pay only about $52 in BASC fees, or about $42 if their child attends a school-based BASC. On the question of temporary financial support, as you know, MCD has a Public Assistance Scheme which can provide financial assistance to the family which has no means of support and no one they can turn to for help. A family, whose sole-breadwinner is temporarily incapacitated or has lost a job, can apply for interim financial assistance to tide the family over this very difficult period. Families, whose sole-breadwinners are unable to work full-time to earn enough for the family, can also be referred to other Government agencies or Voluntary Welfare Organisations for supplementary assistance such as waiver of school fees/medical charges, food rations or additional monetary assistance. I would like to assure the Member that there are a range of schemes to help needy families through this very difficult period and at all times. Adjustments to the schemes will be made, if necessary, in accordance with the prevailing economic circumstances.”