Ng Eng Hen
Singapore
“I think we try to keep this virtuous state of affairs as long as we can to make sure that we can invest steadily. Year-to-year fluctuations would occur, whether it is economic, not so much in COVID-19, but remember the Global Financial Crisis? Everybody needs to take a haircut. If you have to take a haircut, you have to take a haircut.”
“Mr Chairman, as the World around us becomes more unpredictable and changes, the more we need to keep the strongest commitment to strengthen our own defences and, if needed, we must be willing to do more. Singapore celebrates 60 years of Independence this year.”
“MINDEF will continue to work with partners to encourage Singaporeans to raise their digital literacy, develop and maintain good cybersecurity habits, protect sensitive data and guard against scams, fake news and disinformation so as to make the digital domain a safer and more secure space.”
“The Singapore Armed Forces (SAF) conducts regular mobilisation exercises (MOBEX) of our National Service (NS) forces. In a silent mobilisation, NSmen are notified through their personal contact numbers. Open mobilisations include the broadcast of unit code-words through mass media.”
“In 2020, the Ministry of Defence replied to a Parliamentary Question on this matter that the relocation of Paya Lebar Air Base (PLAB) would likely occur around 2030 or beyond, after Changi Air Base and Tengah Air Base have been expanded to house the existing assets at PLAB.”
“When incidents or near-misses happen, as it did where one Hunter armoured fighting vehicle rear-ended another during Exercise Wallaby in Australia, thorough investigations are conducted and lessons learnt shared across the units.”
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“Our universities and polytechnics recognise the importance of maintaining high standards among the international students and staff they recruit. They have put in place checks to verify the academic degrees of foreign applicants who apply for jobs and scholarships as well as those who seek admission into their degree and diploma programmes. Such checks include ensuring that the applicants produce their original certificates for verification, ascertaining that the institution in whose name the degree is awarded is bona fide, and verifying that the student or job applicant had indeed graduated from the institution as he or she claims. Where in doubt, the university or polytechnic may also directly contact the degree-awarding institution or the job applicant's previous employer to verify his or her details. Our universities and polytechnics typically recruit their international students and potential employees from overseas institutions with whom they are familiar, and which enjoy a strong international reputation. These checks are intended to provide an additional level of quality assurance. Our institutions have encountered very few cases of falsified qualifications. Their strict processes have also enabled them to detect "fake degrees" in the past. For example, in 2007, the National University of Singapore (NUS) detected two undergraduate applicants and two postgraduate applicants who had tampered with their transcripts. These students either withdrew their application when confronted, or had their candidature terminated immediately. WORKPLACE CHILDCARE CENTRES 7.”
“Kalyani K Mehta asked the Minister for Education in view of the recent reported incidences of 'fake degrees' (a) what is the current process of verification of academic degrees of new 'foreign talent' applicants for jobs and scholarships at NTU, NUS and SMU; (b) whether any resume-screening methods are currently being utilised and, if so, what are they; and (c) how many cases of 'fake degrees' have been detected from 2003 to 2007. 6. Assoc. Prof. Kalyani K Mehta asked the Minister for Education in view of the recent reported incidences of 'fake degrees' (a) what is the current process of verification of academic degrees of new 'foreign talent' applicants for jobs and scholarships at our Polytechnics; (b) whether any resume-screening methods are currently being utilized and, if so, what are they; and (c) how many cases of 'fake degrees' have been detected from 2003 to 2007.”
“The purpose of the Full-Time School Counsellor (FTSC) scheme is to build a pool of counsellors to meet the counselling needs of schools and assist schools in the delivery of prevention-oriented guidance programmes. The job of the FTSCs includes the following duties: (1) Provide counselling services to pupils who require assistance in overcoming personal difficulties and to better support their learning needs; (2) Provide consultation to teachers, parents and community partners on ways to assist pupils through their difficulties; (3) Develop and deliver prevention-oriented programmes to build social and emotional competencies in identified groups of pupils, for example, FTSCs could conduct small group instruction for pupils who lack academic motivation or require help in stress management; (4) Develop counselling support structures to ensure the smooth delivery of counselling and guidance programmes. These include systems to identify pupils with social and emotional problems requiring counselling intervention and training of staff on specific issues confronting pupils. Schools are given the autonomy to assign specific duties and responsibilities to their FTSCs based on schools' needs. For example, schools with fewer pupils who need counselling may request their FTSCs to spend more time developing and conducting prevention-oriented programmes. The duties of patrolling the area outside of the school perimeter, however, are usually undertaken by the school's Discipline Committee in conjunction with the police rather than by the FTSC. REPORTS OF 'FAKE DEGREES' (Verification of academic degrees) 5. Assoc. Prof.”
“Currently, there are a total of 6,364 and 9,226 hostel places in the National University of Singapore (NUS) and the Nanyang Technological University (NTU) respectively. NUS has sufficient hostel places to house 27% of its undergraduates and is in the process of building more hostels. (The current level of provision is equivalent to providing one year's hostel stay for all undergraduates.) At NTU, there are sufficient hostel places to allow nearly half (46%) of their undergraduates to stay on campus. NTU will also be increasing their hostel capacity in the next few years to cater to the growing demand. INAUGURAL YOUTH OLYMPIC GAMES (Update on hosting preparations) 34. Mr Seah Kian Peng asked the Minister for Community Development, Youth and Sports if he will provide an update on the preparations for the hosting of the inaugural Youth Olympic Games, specifically (i) the impact arising from the recent decision to relocate the venue of the Olympic Village to NTU; and (ii) whether the remaining seven senior executives in key leadership positions have been filled.”
“MOE and MOH are now studying our medium and long-term healthcare needs carefully and how we can meet the projected demand for medical manpower. Over the years, we have improved our doctor-to-population ratio to the present ratio of 1:660. To keep pace with needs from an ageing population, MOE in consultation with MOH has decided that the annual medical intake of the National University’s Yong Loo Lin School of Medicine will increase from 250 to 260 for Academic Year (AY) 2008. There are plans to gradually increase this further to 300 in AY2011. DRAGON BOAT TRAGEDY IN CAMBODIA (Findings of Safety Inquiry Panel) 43. Dr Teo Ho Pin asked the Minister for Community Development, Youth and Sports (a) whether the Ministry is satisfied with the findings of the Safety Inquiry Panel on the dragon boat tragedy that took place in Cambodia in November 2007 and what lessons were learnt from the tragedy; and (b) what measures will the Ministry take to prevent further drownings in water sports.”
“As regards to Ms Ng’s second question on the use of proxy votes, just as a shareholder who cannot attend a company’s general meeting can cast his vote on the resolutions through a proxy, it is necessary to allow an owner to vote through a proxy at a general meeting of the corporation. Disallowing or limiting the use of proxy votes will mean that owners who are unable to attend a meeting will not be able to exercise their right to vote. We see no compelling reasons to deprive owners of this right. CARS REPOSSESSED BY FINANCE COMPANIES 28. Mr Lim Biow Chuan asked the Senior Minister (a) whether the Ministry is able to provide the number of cars which have been repossessed by finance companies in the last three years; and (b) whether there are plans to curb excessive lending by finance companies/institutions for the purchase of cars.”
“MOE will continue to monitor the progress. EN BLOC RULES (Review) 27. Ms Irene Ng Phek Hoong asked the Minister for Law whether the en bloc rules will be reviewed further, in particular, (i) to clarify and demarcate the roles of the management committee versus the sales committee; and (ii) to limit the use of proxy votes at annual and emergency meetings. Mr Shanmugam: MinLaw has been monitoring how the rules in the Land Titles (Strata) Act amended last October had been working in practice. As of now, we think that it is too early to decide whether there is a need for some of the rules to be further fine-tuned. I will now deal with the two questions that Ms Ng has highlighted. As regards to her first question, the role of the council of a management corporation and that of a collective sale committee is described in the legislation. The Building Maintenance and Strata Management Act provides that the role of a management corporation is, amongst other things, to control, manage, maintain and administer the common property of the development to ensure that they are in good and proper condition. Members of the management corporation council are responsible and accountable for carrying out the duties of the corporation for the benefit of all the owners. The role of the management corporation council does not extend to exploring and facilitating a collective sale of the development, which is under the purview of a collective sale committee duly elected at a general meeting. The role of a collective sale committee, as described in the Land Titles (Strata) Act, is principally to act on behalf of the owners on matters relating to a collective sale of that development.”
“The Integrated Programme (IP) was introduced in 2004. At this point, our evaluation can only be preliminary as only one batch of IP students has completed their ‘A’ level or equivalent examinations. Feedback from the IP students indicates that they have enjoyed the learning environment which allowed them to stretch their intellectual potential, while equipping them for self-directed learning. In terms of examination results, their performance has been good. Based on the 2007 A-Level results of the first batch of IP students from the IP JCs, namely Raffles Junior College, Hwa Chong Institution and National Junior College, the IP students performed at a similar level as last year’s cohort in the same JCs. [For information: 98.2% of IP students in the three JCs obtained a pass in 3H2 subjects and GP/KI, compared to 98.3% of the same JCs last year. ] Given the change in the A-level curriculum, we also looked at the performance within each JC, and IP students have also performed well when compared with their non-IP peers. In these three JCs, 98.2% of IP students obtained a pass in 3H2 subjects and General Paper/Knowledge and Inquiry, compared with 96.8% of the non-IP students. As with previous cohorts from these schools before IP was introduced, there are a handful of students who did not meet the minimum criteria to qualify for admission to our three publicly-funded universities. These students have chosen to repeat their ‘A’ levels, or apply to overseas educational institutions using their ‘A’ level and school-based results. Our preliminary assessment from initial results is that the IP programmes have been positive, and met their objectives of providing a more holistic education for our students.”
“Kalyani K Mehta asked the Minister for Community Development, Youth and Sports in view of the current squeeze on the middle and lower-income groups of Singaporeans due to increases in cost of food and other necessities (a) whether the Ministry (in partnership with Community Development Councils (CDCs) and other private foundations) will consider publicising on TV, radio and posters in various languages, the availability of food/grocery vouchers and temporary financial help for financially strapped families in these hard times; and (b) whether the Ministry will streamline the different schemes by different CDCs for easy utilisation.”
“About one-third of our local students who graduated between 2005 and 2007 from the local universities had taken up tuition fee loans to finance their undergraduate studies. (Another one-third of our local students drew down on either their parents’ or their own CPF under the CPF Education Scheme to pay for their fees.) Most students would have graduated with an average debt of about $20,000. Based on the maximum loan repayment period of 20 years, a university graduate would need to repay about $130 per month(1), which is about 5% of the average starting pay of graduates(2). The pay of a graduate is very likely to rise as he progresses in his career, enabling him to repay the debt in a shorter period of time. Government has introduced the Post-Secondary Education Account (PSEA) and will continue to top up the amounts from time to time when budget surpluses allow. For needy students from the lower income brackets, the Government has enhanced the financial assistance schemes to provide more help to these students. With the PSEA and the enhanced financial assistance schemes, needy students can use the PSEA and higher bursary quanta to defray some of their fees, thereby further reducing their debt burden. (1) This is computed based on repayment terms for the Tuition Fee Loan Scheme where interest is computed based on average prime rates of the local banks. The loan is interest free during the students’ course of study and interest would accrue only after graduation. (2) Based on the 2007 Graduate Employment Survey, the average starting pay of a graduate is about $2,800 per month. FINANCIAL ASSISTANCE SCHEMES (Publicity) 6. Assoc. Prof.”
“The Government and universities have put in place the Post-Secondary Education Account (PSEA) and a range of scholarships and financial aid schemes to ensure that no deserving student needs be held back due to financial difficulty, and in practice nearly all go to university. Our efforts to enhance social mobility extend to other levels, with high subsidies for education in our schools, ITE and polytechnics. We actively ensure that students at all levels are able to progress through the many education pathways and that promising students from poorer families are given every encouragement and support to pursue ambitious goals. LOCAL GRADUATES (Debt level arising from study loan) 5. Ms Sylvia Lim asked the Minister for Education for the past three years, what is (i) the proportion of local students who graduated from NUS, NTU and SMU in debt due to the financing of their studies; and (ii) the average quantum of debt incurred.”
“The Ministry of Education (MOE) tracks participation in local university education of the different socio-economic groups by housing-type. Table 1 provides the housing-type distribution of the students from the 1990-1992 Primary 1 cohorts. These cohorts would be age 22 to 24 in 2007 and have been admitted to NUS, NTU or SMU if they had qualified. Table 1: Housing-type Distribution of the 1990-1992 SC/PR P1 Cohorts Housing-Type % of SC/PR from the 1990-1992 P1 Cohorts % of SC/PR University students from the 1990-1992 P1 Cohorts 1, 2, 3-room HDB flat 23 13 4-room HDB flat 37 31 5-room and Executive HDB flat 28 36 Private housing 12 19 * Percentages may not sum to 100 due to rounding errors. The data shows a positive picture. Students from all socio-economic groups are making it to local universities. One of every eight undergraduates comes from poorer families who live in 1- to 3-room flats. When compared with the distribution of households of Primary 1 cohorts, students whose parents are more successful are more likely to make it to university. This is a trend seen in most stable, developed societies. It is not surprising that this is happening in Singapore too, after one-and-a-half generations of our meritocratic system. Able students from poor households have done well in their studies, risen in life and now have children of their own who also tend to do well. Admission to our publicly funded universities is strictly on the basis of merit. All those who qualify will have a place, regardless of socio-economic status.”
“Sir, I thank Ms Irene Ng for her observation, which I would say, give hope to those who feel that they cannot compete. And indeed our figures show that the employment rate has increased overall. So more of even those who were structurally at risk and who were vulnerable have found jobs. That is a good sign that our policies are working right. If the number of people working in Singapore as a result of allowing foreign workers to work here has dropped, I think we worry. But it has grown as the economy has grown. And it has produced more jobs, as I showed yesterday, than other economies that have employed exactly these policies by trying to make the labour market very rigid. Exploitation of foreign workers, yes, it is something that we watch over. Our basic strategy is to explain to the foreign workers their rights, and to take enforcement issues where we can. And it will help if we can communicate and create channels for them to be able to have access to inform the right agencies in their languages, and we are working at that. But this is something that we also want to watch, because I agree with the Member that if they are overworked, they can have safety lapses, they can have physical aspects. We also want to make sure that the foreign workers are well treated and their well-being is guarded.”
“Sir, first, an observation. Contrasting questions from this side of the House show the tension in the market place. There are some who advocate that we tighten, and make it rigid, so that Singaporeans have an easier chance to find jobs. But those who are running companies and those who are involved in business say, "relax so that businesses can grow". And this will continue, I suspect, in this House for many years to come. MOM's job is to maintain a tightly tuned balance to make sure that our economy grows. I think, as our results show last year, we sort of got the balance right. But there will never be a point where Members of the House will say, "well done". We always have to live with the tension. We have relaxed specifically for MYEs. We said that there are certain construction workers who do not need MYEs who work here more than two years. We have moved it from four years to two years; so that is a relaxation. We have also relaxed the quota. We will continue to watch and get signals from industry players. We have industry sensing mechanisms, and calibrate it if and when we need it. But the overall aspect is grow the economy, let businesses get the manpower they need, because that will generate jobs for Singaporeans at the same time.”
“But, to me, that is the hardest group, because these are women in their 40s and many of them have not been working for 10-20 years. How do we upskill them? I think it is a potential pool, but there are also challenges. I think this is where we want to put resources and try to bring some of them back into the workforce, because that will help their household income. Er Lee Bee Wah (Ang Mo Kio): Sir, I would like to clarify with the Minister. In view of the acute manpower shortage in the construction industry, will there be any relaxation on the employment of foreign workers and professionals? Will there be a review on MYE and S-Pass requirements?”
“Thank you to Mdm Halimah. She is right, we need to work with other governments when it comes to problems that arise before they come here. We want to put pressure to bear, but we have to do it in a sensitive way and MOM regularly attends global forums like the IOM (or the International Organisation for Migration) recently held in Abu Dhabi where both sending and receiving countries talk about how to resolve this. But there has to be a language, there has to be a comfort zone, so it will take time. She is right that it is a general direction that we want to reduce problems, because you really do not want to receive foreign workers who are at the same time saddled with debts. So it is something that we want to actively engage. 1.00 pm Mdm Halimah Yacob is also correct to say that this third group – women and low-wage workers, a point also raised by Dr Ahmad Magad – will continually be structurally vulnerable as we move up and as the economy restructures. This is why we want to place great emphasis on our continuing education training infrastructure. Policy-wise, the reduction in CPF that we did for low-wage workers, but supplemented from Government through the Workfare Income Supplement, is a structural change. And we are already seeing results, as we showed to Members. For the older workers, it has gone up. For the low-wage workers, real wages, even apart from Workfare Income Supplement, actually rose. I think we want to watch it. I like to remind Members of the House that we only started Workfare two months ago. I think we should give it some time, see how it goes into the market. Actually, the largest group of untapped labour, in that sense, as the chart shows, is women.”
“Sir, on the first question of unemployment rate, there is a thing called frictional unemployment. Within any given survey, various groups will be coming in and out of jobs. So I will not take the 3% as something alarming. It is quite common. Most economies at various stages will have a certain level of unemployment. What is more important, really, is the employment rate, because the unemployment rate captures a number of things. You may be looking for a job and you have not found a job. I think the employment rate gives us more information because it just tells us how many people are working at any given point of time. As we have shown, our employ ment rates are among the highest in the world for men. Even for those 25 to 64 years, it is extremely high. I think that is a good measure that our labour market policies are working. When it comes to productivity, I did mention that it was also due to the fact that more were employed. And exactly at this point last year, our unemployment rate grew, and I think this is something that NWC has to deliberate. How do we maintain productivity? Yesterday, I spent quite some time expressing my response to certain points brought up my Mrs Josephine Teo and Mr Seng Han Thong, that this is indeed something that we have to work at to upgrade skills and processes, and get our companies to upgrade, our jobs recreated, to enhance productivity.”
“Firstly, let me thank Dr Ahmad Magad for putting it succinctly that the policies have worked. But I would disagree with him that lower-wage workers and Singaporean PMETs have not benefited proportionately. In fact, as I showed yesterday, they benefited the most. If we look at the job creation for Singapore citizens, first of all, for PMETs, the number of job profile has changed compared to 10 years ago. More Singaporeans are occupying higher grade jobs. Even for low-wage workers, they have benefited. Real incomes have gone up. Employment for older workers has gone up. Employment rates, as we showed today, have gone up. So, if we look at the data, it tells us that this policy of cleverly using both our limited local manpower and allowing businesses foreign manpower when they need it, has benefited Singaporean workers across all occupations and grades. This is why I said yesterday, it is a very precious tool, we have to calibrate it, and we can show you some figures. But we have to do it cleverly and I think the clever way of doing it was the Workfare Income Supplement. In other words, the market dictates a certain amount of wage rise. The real wages even for the bottom 20% went up by 2%. But Workfare and other transfers supplement that. So there are other measures without distorting the labour market and we can help address our low wage workers as well as our older workers. 12.45 pm”
“Mr Deputy Speaker, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2008/2009, and ask leave to sit again tomorrow.”
“Sir, may I seek your consent to move that progress be reported now and leave be asked to sit again tomorrow? The Chairman: I give my consent. Resolved, That progress be reported now and leave be asked to sit again tomorrow. - [Dr Ng Eng Hen]. Thereupon Mr Deputy Speaker left the Chair of the Committee and took the Chair of the House.”
“5%, it is to be treated as a long-term fund, because 3.5% is even more than the 20-year SGS currently. So, we should treat it as long-term money and not short-term funds to be used for investments. Sir, recent changes in our CPF system, especially the CPF LIFE, have put us in a much stronger position to address the challenges of our population. We now have a more robust system, and the challenge is to get as many people on board as possible to enhance retirement sums. With the extra 1% interest on the first $60,000 and the introduction of CPF LIFE, there is even greater benefit for Singaporeans to contribute to and grow their CPF savings. Members and employers can play a part by top-ups. Husbands can top up their spouses' CPF. So, I urge all working Singaporeans to regularly contribute to their CPF, and for family members who can afford it, to top up the CPF of their loved ones. Re-employment of Older Workers”
“It is just being practical. We recognise that you are fixed with a formula that we inherited from whoever that when you grow older and your wages go up, the employers find it harder and less motivated to hire older workers. So let me just categorically say that it was not discrimination against older workers. It was to help them increase their employability and the figure tells me it has, whether it has been due to the economy or due to the reduction in the CPF rates, maybe both. But whatever it is, our Workfare Income Supplement tops up, and in a majority of cases more than makes up for their reduction in CPF. I also want to add that our CPF top-ups usually are more for older people as well. Ms Lee Bee Wah asked if we could allow CPF members to use CPF funds to fund their own part-time tertiary education. I understand the merits. I believe that education elevates and delivers. But as the Minister who is also looking after your old age needs for CPF, I have to ensure that there are enough CPF savings for old age. So there are trade-offs. When I look at how much longer Singaporeans are living, how much more rapidly ageing our population is, I think we keep to the current position. Do not liberalise it further. Part-time students are likely to be working adults so that they would be able to pay their tuition fees. I think MOE and the Finance Minister has announced liberalisation for use in certain courses. So, I think we keep it as it is and not expand the current CPF Education Scheme to fund part-time studies. 6.45 pm Mr Seng Han Thong asked about CPF investments. If I heard rightly, he said there are some people who will forgo the extra 1% on the $20,000. We have not factored that in. We can consider it, but our basic proposal was that if we pay 3.”
“And what if you cannot? What service have you done?" So if you say CPF LIFE, everybody jumps on board. It is a wonderful safety net. You do not have to bring in your rope. When the net breaks, what happens? I think we want to be very careful. It will be subsumed under the CPF interest framework which guarantees 3.5% for less than $60,000. Beyond this, the payouts will be paid based on actual interest rates and mortality experience. This is in line with standard practice of annuity providers to ensure that CPF LIFE remains adequately funded and sustainable over the long term. It is hard to predict how the 10-year Singapore Government Securities (SGS) will perform. We talked about this during the CPF debate. There was a substantial debate and most of us were here, it was a few days of debate, and many of the Members debated. We said at that time that 10-year SGS performed over 4% historically. We cannot predict it in the future. According to historical expectations, I think it will be above 4%, which means that the guaranteed 1% will be above 5%. Prof. Mehta suggested that CPF contribution rates of workers aged 50-55 be reviewed. Let me just say that I have no intention of being anti-family, against social gerontology on ages. We introduce this to help older workers remain employable because of our seniority-based wage system. She asked for empirical evidence that it helps. I do not know whether it is empirical. But the employment rate for workers aged 50 to 54 has risen, from 68% in 2002 to 75% in 2007. So it is a significant jump. But Prof. Mehta did not mention one point that we did not take away. The Workfare Income Supplement pays up to $2,400 a year and 25% of wages, and the Workfare Income Supplement increases as you grow older. So am I an ageist if I do that?”
“Lim's Committee struggled at length because it makes sense if you can have a payout that rises, so that your purchasing power is not diluted. I find it hard to make the distinction between the Ministry and the Committee making this wide consultation because we appointed the Committee to make wide consultation. But the point is they had wide consultation. The feedback was this. If you have inflation index, it means smaller amounts from the beginning and larger amounts when you are older. Many members of the public said they were concerned that they would not live long enough to receive the later amounts. So the Committee was practical and they say, "Let's just have it flat because the Minimum Sum scheme is flat." I think it is a sensible proposal. There are of course other ways to increase your income later in life. One good example is the HDB Lease Buy-Back Scheme which tops up the stream of income that you get from CPF LIFE. Ms Sylvia Lim also asked about sustainability. She is right. Prof. Lim Pin's Committee was very careful to say that payouts must be based on how long people are actually living and the interest rates. Because to be financially viable, payouts and premiums must correspond to actual interest rates and mortality experience. This is a universal rule that is applied for all insurance and annuity providers. It is nothing new. If you read the report, Prof. Lim Pin's Committee specifically noted the example of Equitable Life in the UK - I have circulated that - for a company that made promises, that they could not deliver and did no one any good. It is easy to make promises, in other words. It is easy to say, "I will give you this." But if I ask you, "how are you going to pay for it? Will you be around to make sure that you stick to your commitment?”
“My point is, at age 65, if we help him to continue to work, he will have $107,000 in his Retirement Account and $122,000 in his Retirement Account with Workfare. It is a substantial help that we are giving to low wage workers. But we are saying that he must continue to try to work. Is that a wrong message? Do you prefer a message which says, "I will take care of your needs. Unconditional assistance." Can you deliver? Can you have a system that provides that? So it is much safer. I think the better message to articulate is that, yes, you do your part, but Government will help and help substantially. So even if he uses a sum of money to buy a home, this takes into account that he does not use any of it to buy a home. But even if he uses half of it and with the additional housing grant, he can still own a home and half of that $40,000 in his Retirement Account to have an income under CPF LIFE for as long as he lives. I also want to add that since 2001, we have helped this group and others substantially. Since 2001, including the GST Offset package, special transfers, the Government has contributed a total of nearly $12 billion to members and to citizen residents. Some have talked about housewives. As I said, I encourage spouses to top up for their housewives, and this is why we have structured the L-Bonus as such. For the disabled, I take that there are other employment assistance schemes, such as the Open Door Fund and the Enabling Employers under MCYS. But my main point is, let us not mix the two. CPF LIFE is for those who have put enough into their own CPF and we need the other schemes to help the others. Ms Sylvia Lim asked about inflation in CPF LIFE. She is quite right. It is not inflation indexed. In fact, Prof.”
“I am sure this will not be the last time, and we will continue to reiterate so that people can understand. The CPF Board will step up its communications effort. Questions have been asked about how the self-employed (SE) and low wage workers (LWW) can save enough to be included into CPF LIFE. Ms Sylvia Lim and Mr Siew Kum Hong asked: what about those who do not qualify? What is the Government planning to do? Do we help cope with their needs in their old age? Other Members have also asked this - Mr Zainudin Nordin, Dr Amy Khor, Mr Ang Mong Seng, Prof. Mehta, Dr Lim Wee Kiak. The Minister of State Gan Kim Yong will elaborate on specific efforts in helping low wage workers and self-employed persons for CPF contributions. I want to make one or two points here. Let me point out that we have in place measures to help these low wage workers, self-employed and contract workers to build up their CPF balances. Firstly, Workfare will contribute up to 20% of a worker's wages into his CPF. This is a significant help. Let me explain to you how big an impact it is. I will not choose somebody in the 50th percentile. I will choose somebody with the 10th percentile wage earner who earns $900 a month. You agree that that is a reasonable starting point to help those who are low wage workers. Mr Harun, say, at age 40 today, he earns $900 a month. Let us say he has combined in his Ordinary and Savings Accounts of about $15,000 and he continues to work till 65 and contributes regularly. How much do you think he will have at age 55, 15 years later? $20,000 or $30,000? Not at all. He will have $71,000 in his Retirement Account. This is in effect steady contributions to CPF. And with the Workfare Income Supplement, he will have $82,000 in his Retirement Account.”
“For those who want to choose higher income plans, they want more from their CPF LIFE, they want a higher income than what they can get in the Standard Plan, they can do so but they may leave less for their beneficiaries. Or they can choose lower payouts, or less income, and may leave more for their beneficiaries. For a selected few, there are finally the non-refundable plans which provide even higher payouts but it may leave the least for your beneficiaries. It is quite easy to understand. What will happen when a member in the first cohort reaches 55 in 2013? I have given you a general example. Let me give you a specific example. Someone who has $67,000 in his Minimum Sum. At age 55, he is automatically put on the Standard Plan. He will get $610 a month for life. But that person may say, "Well, $610 is not enough. I want more." You can go up to $650, more for life but at least less for your beneficiaries because you are putting more into it - some of it is a non-refund plan - but you just basically put more into CPF LIFE. The others will say, "I don't really need so much income. I want to leave more for my children." You just choose one of the lower income which leaves more for your beneficiaries. It is quite easy to understand. The CPF Board will provide essential and personalised information to each member when he reaches 55. They will be told how much he or she has in their Minimum Sum and placed under the Standard Plan and how much they will receive for life. Any unused amount remaining in their Minimum Sum will be returned to the beneficiaries when the members pass away. If the member wants, he/she can choose the other options - which include no refund, so they get a higher payout. We will continue to educate members on LIFE plans.”
“For those who are 50 and below this year will automatically be included, if they have $40,000 and above. Those aged 51 to 54 now, they can opt in when they reach 55. The CPF Board will contact them then and facilitate. For members aged 55 and above this year, we will give them ample time to opt in, a year or more. For those who can benefit from CPF LIFE, again, the CPF Board will contact them and provide them the necessary information and opportunities to opt in. All those who meet the eligibility criteria and opt in will receive L-Bonuses. This will increase their CPF funds and monthly payouts. Some have fed back that CPF LIFE is complicated. So to make it easy to understand, let me have another go. You only need to remember three things, not 12. First, CPF LIFE guarantees you an income for life. It will start from 65 and after age 65, the drawdown age will be for life, for as long as you live. Second, the Minimum Sum will always be returned to you, and the unused sum will go to your beneficiaries. Third, if you want a higher income from CPF LIFE, you can do so by putting more into CPF LIFE which means at least less for beneficiaries. I think that is simple enough. Three key points. Some of you will say, what does that mean? It means that at age 55, all members automatically included will be put into the Standard Plan. Let me explain to you how it works. I have taken Mr Seng Han Thong's example and made a slide now called "The Standard Plan". There is no more refund or non-refundable, which is confusing. The Standard Plan provides a balance between what the member receives each month for life and how much he wants to leave for his beneficiaries. It is as simple as that. It is a balance.”
“If he uses cash, the first thing is that he will have up to $1,400 in tax savings. But if he tops up $20,000 so that Mrs Tan has $28,000 at age 50, the effects are dramatic. Five years later, Mrs Tan will not have $28,000. His wife will have $40,000. It is a jump of $12,000 in five years - $8,000 in additional interest earned, and $4,000 from the L-Bonus. If Mr Tan had kept that $20,000 in his account, because the extra 1% is capped at $60,000, he loses that 1%. If he transfers $20,000 from his CPF to his wife, there is an additional $200 a year in additional interest. So, $28,000 at 50, at age 55, you can join the CPF LIFE scheme, and at age 65, Mrs Tan can look forward to $360 a month, for life. And she will have a total gain of CPF interest, plus L-Bonus of nearly $10,000. So, if the husband tops up $20,000, the Government is, in effect, matching the top up by $10,000. We are adding a plea for spouses to top up your spouses' CPF and get more. Let me now address the specific concerns about CPF LIFE which have been raised. Many people have asked, and I know some Members have expressed that it is a bit confusing, the 12 options, and many people have asked "What do I do now? I do not fully understand the scheme but, from what I hear and read, it seems to be good, so what do I do?" My general assurance to all Singaporeans is this - do not worry. You actually do not need to do anything, if you are younger than 55, except work and contribute to your CPF, of course. I think that is a good piece of advice. But when the time comes for you to join CPF LIFE, the CPF Board will contact you and help you. But let me sketch out how the scheme will affect different broad groups, and provide some details. 6.30 pm As we said, in 2013, the scheme starts.”
“Note that it is to the full MS, which means that you can top up up to $99,000 this year. Secondly, for cash top-ups, we will remove restrictions on age and specific family relationships. Now, more people, including extended family members, will be able to make cash top-ups to members above or below age 55. Cash top-ups will also enjoy enhanced tax relief. Cash top-ups by a member or his employer can enjoy up to $7,000 tax relief per year. In addition, if the member makes cash top-ups to his family members, he can receive up to an additional $7,000 tax relief a year. To facilitate, I have asked the CPF Board to step up its communication efforts to encourage members to top up their relatives' CPF. These changes will take effect from 1st November 2008. From 1st November 2008, employers will also be allowed to make cash top-ups to their employees' Minimum Sum and they can enjoy a full tax deduction. The message from the L-Bonus, the liberalisation of the top-up rules is again simple and clear - family members who can afford to, should support one another. We strongly encourage husbands to top up the accounts of their spouses. This is a year of Budget and COS that all the Ministers encourage their husbands to top up the accounts of their spouses, so I am adding my voice to it as well. Mr Khaw Boon Wan said it for Medisave. Today, I am encouraging husbands to top up the other accounts of their spouses. But there are incentives in my encouragement, and the incentives are great. Let me give you an example. If a husband at age 55 tops up his 50-year-old spouse's account by $20,000. Here, we see Mrs Tan who is not working now but has $8,000 in the CPF in 2008. Mr Tan, the husband, tops up $20,000 in her account.”
“This is good, as members of the public have said. But during the Committee's deliberations - some of you can ask Mr Seng Han Thong who is on the Committee, including other unionists - the Committee and other members of the public said they were concerned about this aspect, that we should not oversell CPF LIFE because they were fearful that it will undermine family support for the elderly. It must not give rise to the wrong impression that the responsibility of children or family members to help each other is diminished. Family members must continue to play a key role in looking after the elderly and each other. This is a value that we must reinforce, not diminish. This is why, in tandem with the introduction of CPF LIFE, we further liberalise the Minimum Sum Topping-Up Scheme. This year’s measures come close to the enhancements that I announced last year. Last year, we raised the prevailing limit. It was previously very low and I said that we can raise it up to the current Minimum Sum (MS), and it will keep going up as the MS goes up. The results of last year's measures have been encouraging. If we compare 2006 to 2007, the number of top-up applications increased by two and a half times, while the total amount of top-ups increased by almost three times, to $44 million, up from $15 million. This year, we will make further enhancements to the schemes. All in all, the new rules make topping up simple and with added incentives, more will be able to receive top-ups, and those who top up for others can receive incentives. Let me make it simple. Firstly, you can top up more each year. Cash top-ups to the Minimum Sum will no longer be subject to annual caps. Previously, it was about $26,000.”
“That is why those who do not have enough in their CPF to provide an income for life, will not be automatically included. This is the reason. So when the compulsory LIFE scheme starts in 2013, as Mr Seng Han Thong says, about 75% to 80% of the first cohort of active members will have sufficient cash in their Minimum Sum of about $40,000, and they will be automatically included in CPF LIFE. But because of the extra 1% interest earned on the first $60,000, subsequent cohorts to that will have more, and we expect that, over time, almost all active members will be included into CPF LIFE. But even for those with less than $40,000, we want to encourage them to opt in, as well as for those who are older than 50 this year, and I will talk about that. The Life Bonus (L-Bonus) has indeed been structured to be generous to encourage opt-ins. Those who opt in must be willing to receive monthly incomes lower than those who are automatically included, but they will have the assurance that this will last for as long as they live. We have lowered significantly the threshold amount. From $40,000, we have lowered it to $20,000, ie, by half, for eligible members to receive the full L-Bonus, up to $4,000. Those lower than $20,000, we are allowing them to come in. We want them to come in, but they will get a pro-rated L-bonus. I think it is fair. But at $20,000 and beyond, they can get up to the full L-Bonus of $4,000. The message underlying the L-Bonus, the way it is structured, is very clear - CPF LIFE is a good scheme that provides for your old age, and the Government is providing incentives to get as many as possible to opt in, even if they are not automatically included. The introduction of CPF LIFE will help CPF members to better provide for their own retirement.”
“Lim Pin's Committee was also careful to point out that the payouts from CPF LIFE, as Ms Sylvia Lim mentioned, must take into account future mortality experience and actual investment returns, to ensure that CPF LIFE remains fully funded. Mr Siew Kum Hong and Ms Sylvia Lim talked about universal coverage and what about those who are not included. This does not mean that we do not assist those who do not work and do not have CPF funds, but we should mix the two. The CPF LIFE in the CPF system is not a financial assistance scheme. It is an individualised pension system. Neither does it imply that we should be satisfied that some groups are left out of CPF LIFE. Indeed, as Mr Seng Han Thong said, bring in as many as possible into this safety net. But they must be brought in on the correct terms and, indeed, we must step up efforts to increase the reach of CPF LIFE to include as many as possible, including those that Mr Siew Kum Hong talked about, ie, the low-wage workers, contract workers and the self-employed. Minister of State Gan Kim Yong will touch more on these aspects. I would also want to say that Singapore is not alone in applying this principle of self-provision to provident funds; that you receive amounts proportionate to what you have saved or put in is an established principle of most pension systems, even those which provide defined benefits. For example, if you log on to the US Social Security benefits webpage, let me quote from the website: “Higher lifetime earnings result in higher benefits. If there were some years when you did not work or had low earnings, your benefit amount may be lower than if you had worked steadily.” It is almost intuitive and sensible. Indeed, that is how pension systems apply this rule.”
“This is a new plan and we will take in the good suggestions to improve the scheme further. But I want to caution that we should not impose demands on CPF LIFE to deliver on goals for which it is not meant to address. Neither should we expect CPF LIFE to carry burdens for which it was not designed. If we did so, it would doom the scheme to fail eventually. We have to remember that this is a scheme that will have to provide for retirement needs for successive generations of Singaporeans. So we must ensure, first and foremost, that CPF LIFE itself is financially sustainable for the very long term. If we start in 2013 for those aged 50, some of them may live to 100 or more. So, at least, for one generation, it has to last 50 years or more. For successive generations, we will have to be very careful that CPF LIFE must be started and operated based on the correct principles. And this is exactly how we should start. The cardinal principle and critical pillar underpinning the viability of CPF LIFE must be that a member can only spend what he saves. This has been the guiding star of our CPF system since it was started 50 years ago in 1955. We have never wavered from this guide-post, despite any challenge. We have kept the CPF self-funded. All of us contribute to our CPF with that clear expectation that we can only spend what we saved. We should be very careful to reiterate that CPF LIFE does not dilute this principle. Yes, there is some risk pooling, but the amount you put can be determined by you, and you can even get out sometimes more than what you put in. It does not dilute the principle that you can only spend what you saved. This principle ensures that the assets within the CPF LIFE match its liabilities. This is why Prof.”
“Sir, let me thank Members who have commented on CPF LIFE - Ms Sylvia Lim, Mr Siew Kum Hong, Prof. Mehta and Mr Seng Han Thong. I think some other Members also commented on it during the Budget debate - Mr Ang Mong Seng, Dr Amy Khor, Mdm Halimah Yacob, Dr Lim Wee Kiak, Mr Yeo Guat Kwang and Mr Zainudin Nordin. I will try to take some of their queries here. The Government has accepted the recommendations of the National Longevity Insurance Committee chaired by Prof. Lim Pin. It was a Committee appointed by the Ministry, and my own reply to them is that they have done a great service for Singaporeans. I had called it a landmark report and it is so, because the Committee’s proposals for annuity plans, now simply called CPF LIFE, significantly strengthens our CPF system, and it provides a much needed tool to address the increasing lifespans of Singaporeans and our ageing population. As everyone should know by now, CPF LIFE will provide members an income for as long as they live, instead of an abrupt cut-off with no income when they are older and most dependent, as in the current Minimum Sum scheme. I am gratified by the positive response to CPF LIFE from members of the public, the media and MPs. The Straits Times said that it "recommends it thoroughly", and "that this is a plan that … sells itself." These positive responses from the media, grassroots organisations, unions and members of the public reassure the Government that its efforts to improve the retirement adequacy of Singaporeans - and I know that this requires substantial changes - are correct policies, and indeed appreciated by the public at large. I also want to thank Members of this House for supporting CPF LIFE. At the same time, we recognise that there will always be gaps.”
“In fact, even for mid-career executives, there may be disruption but a well established CET system will give assurance that they can make career switches as Andry Lie did. Third, offers progress - that every worker can sharpen his skills, maintain relevant and do his work better, whether he is like Mr Effandi or Ms Thereis Choo who learned professional tree climbing to do her work more effectively. Ultimately, we want to build a CET system that creates opportunities, offering many pathways for workers to play to their strengths and fulfil their potential and aspirations. It will empower workers to take charge of their own careers, and make the best out of the opportunities Singapore offers. There will be thousands of workers that will follow the examples I cited today - they will take charge of their own lives because our CET system is accessible, affordable and adds value to their careers. This is our vision, and with the support of tripartite and community partners, we can build a first-class CET system which will be a key economic and social institution that keeps us ahead and keeps our economy thriving and creating jobs.”
“Mr Effandi bin Mohamed, 27, holds a Diploma in IT. He used to be a videographer. I did not know that there was such a post called videographer. I thought all of us are amateur videographers, and I suppose he took videos. But he resigned and enrolled in a WSQ Specialist Programme in 3D Animation and Visual Effects. He graduated last year and was selected by a UK-based firm, Double Negative - I think it must become positive if it were double negative - to further his skills in a one-year attachment in London. Double Negative is the firm responsible for the visual effects in the Harry Potter series of movies. So I hope we have a chance to see Effandi’s work soon. Finally, not all courses need to be so long. Why am I showing you a girl climbing a tree? This is because Ms Thereis Choo is an NParks scholar. She has actually got a first class in Botany. Part of her job was to inspect trees. So to do her job better, she took a three-day course in professional tree climbing. I never knew there was such a course, and you could charge for it. She took a three-day professional course at the Centre for Urban Greenery and Ecology. They use ropes, harness and pulley system. She even won the tree climbing competition at last year’s Green Thumb, an annual event organised by NParks, and is now a champion tree climber! These stories carry a few important messages: First , hope - that workers can upgrade, secure better jobs and get better pay. Second, assurance - that we cannot promise Singaporeans that there will always be blue skies, that the economy will be like last year and that there will be no disruption.”
“Over time, MOM and WDA will work with the CDCs on elevating their job centres into career centres so that, beyond the capability to place unemployed into jobs, they can also help employed workers with advice on acquiring better skills and finding better jobs and better pay. I think this will strengthen the CDCs’ efforts in improving the lives of their residents. Let me also say to Members that I fully understand the challenge in building the CET system. I do not underestimate the challenge. It will take time and effort from all of us - Government, unions, employers and workers themselves. But the fact that many Singaporeans will benefit in life-changing ways should motivate us for the longer term, and this will take time. I want to illustrate quickly through real life stories because, finally, this is what is all about - helping Singaporeans. And these stories should keep our spirits and energy high. First example is Mr Poh Kian Hock - he is 43 years old, he was a warehouse supervisor in an electronics manufacturing company, he got retrenched last year. He sought help from NTUC, and was referred to take up training at the NTUC Learning Hub. He earned a WSQ Certificate in Generic Manufacturing Skills. This month, he will start work again, as a store supervisor in A&G International Holdings, a petroleum company, drawing a salary double of that in his previous job. Then there is Mr Andry Lie, who is an entrepreneur but he decided he wanted to be involved with MICE, not real running mice, but the acronym for Meetings, Incentives, Conventions and Exhibitions. So he took a WSQ Diploma Programme in the University of Nevada Las Vegas. He graduated from the programme recently and is working as an intern with Meeting Professionals International (MPI).”
“So the landscape will be a number of CET Centres and providers around the island, industry specific, so that a few workers can go to it and, within each industry, a few Centres will serve as standard bearers, with accredited WSQ trainers based on fixed standards. In addition, we want to promote peaks of excellence by according the best CET Centres the status of National CET Institutes and will invest more in their resources. They will be the best-in-class institutes, with excellent programmes and qualities, training methods and delivery of outcomes. The first few National CET Institutes will be announced later this year. We need to have quality and training effectiveness, as Dr Ahmad Magad has said. Some Members have said that we may not know how to do certain things, I agree with them. I think that we need to learn how to teach adults because we never had a long history of learning how to teach adults. So we will set up an Institute for Adult Learning to do research and development and help build up our capabilities in adult training methods. Our vision is to allow all workers access to adult training - whether it is to prepare for new jobs, switch careers or acquire new skills. And they must find the training relevant and exciting within our dynamic CET landscape, including PMETs, which is a point raised by Mdm Ho Geok Choo. We can build the systems and training institutes but to be more effective, we will need the human touch. As noted by others, sometimes, the workers lack the confidence to go for training or take up a new job. So we will work with our tripartite partners and our community partners – employers, unions, the CDCs and self-help groups.”
“This will facilitate the discovery of new technologies in manufacturing and developing pharmaceuticals, biologics and medical devices. So the centre will offer WSQ courses in pharmaceutical and biologics that can potentially articulate to Bachelor and Masters programmes in NUS. The fast-growing aviation industry also has something to look forward to. The Air Transport Training College, Singapore Polytechnic and ITE will work together to train more technicians for maintenance, repair and overhaul. So, now a technician undergoing this Aerospace WSQ course can become operationally competent in four months, and progress to a Certifying Technician after accumulating one or two years of work experience. It is much truncated and there is a progression pathway. In the services sector, we will see growth in areas like private banking, asset management and “high-trust” services such as accountancy, legal and other professional businesses. To support this growth, you have five CET Centres specialising in areas such as risk management, wealth management and insurance. This is a collaborative effort between WDA, the Monetary Authority of Singapore (MAS) and the Institute of Banking and Finance (IBF). In tourism and hospitality, an area close to Member Liang Eng Hwa's heart, ITE is studying the use of existing campuses to consolidate all of its hospitality-related CET offerings. This translates to about 2,500 training places a year in hospitality-related professions, such as restaurant and F&B managers, concierges and guest relations officers. This will raise the service standards of the sector, as Mr Liang has asked for. These developments will strengthen our adult training infrastructure.”
“What will the CET Masterplan mean for employers and vulnerable groups - those who are unemployed, structurally vulnerable? And I think these are important points. Let me address them just briefly with three key strategic thrusts of our Masterplan. First, we will better integrate our school systems, Pre-Employment Training (PET) and CET. Mr Seng Han Thong said that the WSQ and Employability Skills System (ESS) standards are now accepted by industry, but we will create more bridges. To illustrate, a worker who has a polytechnic diploma or a Nitec qualification from ITE can take up a WSQ course and vice versa, and someone with a WSQ Certificate should also be able to cross over to a diploma and even a degree in the future. MOM and MOE will be looking into establishing stronger linkages between the CET and formal education systems. It will give assurance to our workers that what they get is valuable. Next, as Dr Ahmad Magad said, we need to establish more CET Centres to deliver quality training for adult learners. By 2010, we will increase the annual training capacity four-fold from the current about 20,000 today to 80,000 by adding 10 more CET Centres in growth sectors and expanding the existing Centres. So 10 more new CET Centres. Some of these Centres will involve our polytechnics and ITEs. The training expertise of the private sector and NTUC will also be harnessed. Let me cite for you some things that are coming onstream to give you a better flavour. Take the pharmaceutical industry as an example in the manufacturing sector. Talks are underway between public sector agencies, NUS and key pharmaceutical companies, such as GlaxoSmithKline to set up a Singapore Academy of GxP (Pharma) Excellence (SAGE).”
“Just think about that. Six out of 10 will have at least a diploma. Now, it is only about 36%. It was 22% 10 years ago. And 40-odd percent or even half of new entrants into the workforce are likely to have degrees. Is our CET structure today compatible with our workforce of tomorrow? I think not. The shape and structure of our economy will change in tandem. It is harder to project what our economy will be but, generally, industries will have to move up the value-add and innovation chain, and will certainly require workers with higher skills. We are not alone in recognising that this future is coming upon us. The UK recently launched a major review of its future education system. Last year, they did it to improve its skills profile. And it is setting up new National Skills Academies, which introduce new diplomas and apprenticeships, and developing new qualification frameworks. As a small country, we cannot afford to lag behind and play catch-up. We need to stay ahead, and the way to do that is by continually investing in our people, so that each generation of Singaporeans will be better skilled and better able to seize the opportunities that lie ahead. 5.45 pm To successfully implement the CET Masterplan, we are matching our resolve with more resources with a top-up of $800 million in the Lifelong Learning Endowment Fund (LLEF). This fund is now $3 billion. We will eventually top it up to $5 billion. I thank many Members who have voiced their support for CET - Dr Ahmad Magad, Mr Heng Chee How and Mr Zainudin Nordin during the Budget debate, Mr Seng Han Thong, Mdm Ho Geok Choo and Mr Yeo Guat Kwang. They have also raised questions and challenges which I think are relevant. They asked: what are the key success factors?”
“There are well-established adult training systems in many parts of the developed world – UK, Canada, Australia, Germany and Scandinavia. We are promiscuous when it comes to good ideas. We will borrow where it suits us. We have learnt from them and implemented some ideas. Over the last few years, we have made good progress. Mr Seng Han Thong asked about the Workforce Skills Qualification (WSQ) system, how it is doing. Not bad. It used to be that advertisements only said three or five GCE O-levels. Now, there is a new line - "WSQ and ESS accepted too". And I think that is currency. That is worth it, because it shows people that if I get it, in lieu of my academic qualifications, I can show them this. I think that is useful. 145,000 workers have attained WSQ certification over the three years. We also have a cadre of competent training providers, something that Dr Ahmad Magad talked about. If we do not have good training providers, we would not have a good system. At the higher tier are 19 CET Centres, with a capacity to train about 22,000 workers a year. With these systems in place, it is now an appropriate time to ramp up and move up to the next phase in developing our adult training system with our CET Masterplan. The Masterplan aims to prepare Singaporean workers to remain competitive in the future. We should not be stuck in today’s mindsets based on today’s scenarios and present concerns. That would be the least productive thing that we can do. Instead, we must set preconditions now to succeed for the future. And we should do it now, while we are ahead. What will the future be? The future will be very different. Let me give two examples. (1) Our workforce. In 2020, nearly 60% of our resident workforce will have at least a diploma qualification.”
“They will press on, we will assist them, the WDA and the other agencies. Second, get companies to upgrade. This year's Budget provides new incentives to encourage companies to invest in technology and innovation to enhance productivity. Third, develop a first-class Continuing Education and Training (CET) system to help our workforce stay ahead. I agree with Members that this is the key challenge, if we want to keep our competitive edge. Members rightly pointed out, the PM had announced the CET Masterplan during the opening of the Employability and Employment Institute (e2i). This marks a significant milestone in the development of CET in Singapore and signals the training of adult workers as one of Government’s top priorities. But as Dr Ahmad Magad and Mr Seng Han Thong mentioned, we need to be careful and clever in crafting our CET. We cannot treat it like our school system. They must be different. They are different in two ways. First, it needs to be more industry-driven because workers will go for training if the skills are relevant, if they value the new skills they get, if they can get a new job and higher pay. Second, CET has to be adult-friendly. We should improve access through affordability and reduce unnecessary academic pre-requisites. Adults learn differently. I am not sure whether Members have noticed it, but the way we read the newspapers has changed through the years. I am sure we are reading more of the headlines and less of the fine print, and I think that is a one-way directional trend. So, courses have to be shorter, more practice-oriented. Attention spans are shorter, so it has to be less academic. We do not have to re-invent the wheel.”
“Because employment growth went up and wages, including local wages, went up. So, bear that in mind. How can we boost our productivity levels further? Mrs Josephine Teo suggested linking foreign worker access to industry upgrading and re-development efforts. Dr Ahmad Magad suggested that let us make employers sweat a bit. The basic theory of both of them is to make them sweat a bit so that they will increase their productivity or try harder to get local workers. Other countries have tried what Dr Ahmad Magad suggested. Do you know what they do? They published three times in a well-respected paper and that is the equivalent of looking for local workers, then they employ others. We make it stringent. We set a quota, you cannot bust this quota, and we set a levy. It is simple, it works and creates jobs for Singaporeans. But the main point is this. We have to continue to see how we can stay relevant and competitive and even, despite our relative ease of access to labour, we need to focus on skills and productivity to stay ahead. I do not think we can do it by restricting and making the labour market more rigid. It has not worked. It is counter-productive. Doing so would tie and restrict the growth of companies, because companies need to be nimble and get their manpower supply. Rather, from time to time, we have to maintain and refine our foreign worker policy so that companies can capitalise quickly on opportunities and grow and create jobs. But this issue of productivity is a central one. There are three things that we need to do: First, re-create jobs, as NTUC is doing and spearheading, and we have seen the successes they had in the security and landscaping sectors. Last year, 15,000 jobs were re-created.”
“Their average starting salary has also gone up by 12% over that in 2004, and last year it was at $1,810. So, contrary to the fear that allowing foreign manpower in Singapore might push locals out, the reverse has happened. We have created more jobs for Singaporeans, good-paying jobs, wages have gone up. Why is this so? A very simple reason is that in this borderless world, businesses will move to places where there are capital, ideas and labour. If we restrict their access to capital, ideas and labour, they will just move out, as other countries have found out. So, we do not protect our local workers here by keeping others out. We actually do them a disservice. This has happened in France, Germany and almost every country that adopts a closed-door policy, whether it is to capital, ideas or labour. They are, in this new world, fungible to some degree. But by no means does this mean that we can stop and rest on our laurels. In 2007, we were ranked as the most competitive labour market in the World Competitiveness Yearbook, and we will have to work extra hard to keep that pole position. As mentioned by Dr Teo and Dr Lim Wee Kiak, the productivity and value-add of our workers will be increasingly important, going forward. I cannot promise Dr Lim Wee Kiak when his two foreign workers will stop switching signs. At least, they are switching them correctly at this point of time. We will work with them and try to improve their productivity. Dr Lim is right. In 2007, our labour productivity actually fell by 0.9%, compared to the gains that we had in 2006 and 2005, which were about 1.5% to 3% respectively where productivity went up. So, our National Wages Council will have to bear this in mind during their deliberations this year. Why did they go down?”
“It explains to us why we have been able to deliver jobs to Singaporeans. But other countries are also wising up. They, too, realise that there is a secret in this formula. Australia and the UK recently liberalised their policies to attract foreign talent. Countries that have controlled tightly the admission of lower-skilled foreign workers, such as Canada, and even traditionally closed societies like Korea, have begun to relax their criteria to allow in foreign workers to support businesses’ growth. Is there an appropriate balance, as suggested by Dr Ahmad Magad, between keeping locals employed and admitting the right number of foreign workers or, as Mdm Halimah Yacob asked, in terms of the S-Pass relaxation? I think there is. Yes, indeed, this is not an unfettered free-for-all. We want to calibrate it using quotas, levies and various qualifications and, as Mdm Halimah Yacob mentioned, the S-Pass. But I want to point out that augmenting our local workforce with foreign manpower has actually increased job opportunities for Singaporeans and locals, even for those of a higher grade which Mdm Halimah Yacob asked for, ie, professional managers, executives and technicians (PMETs). Our diploma-holders and graduates have continued to benefit from the strong labour market. I will give Members a few figures. The unemployment rate amongst polytechnic diploma-holders fell from 5.6% in 2004, before the introduction of the S-Pass, to 3.4% in June 2007, after the introduction of the S-Pass. Last year, we saw an almost 50% increase in the number of job vacancies requiring at least a diploma qualification. When we asked the polytechnics, they told us they are doing well. 90% of new polytechnic graduates entering the labour market had a job within six months of graduation.”
“High GDP growth, high employment growth, far exceeding other countries, not experienced by any country with a similar GDP. We will play that once again because it was hard to catch, but the vertical axis is the GDP growth, the horizontal axis is the employment growth. So, if we could play that again, it would be useful. 2001/02, recession. But after the policies and economic growth started, look how Singapore jumped ahead and moved far to the right as an outlier unparalleled by any other country. I think we should not take this for granted. We are not trying to say that we are good. What we are trying to say is, what have we done right? No other advanced economy has managed what we witnessed in our economy. Why have our labour market policy succeeded despite being a small nation with limited manpower? Put simply, we have created good-paying jobs for Singaporeans through growth because we allowed businesses access to foreign workers to meet their manpower needs. This was the exact point raised in a recent article in The Economist which argued that migrants supplemented shrinking local workforces, as ours is. Similarly, the Chairman of the US Council of Economic Advisers, Prof Edward Lazear, concluded in a review that immigrants not only help fuel economic growth in the US but also had a positive effect on the income of local workers. If we had relied on our limited local manpower supply, growth would be slower and fewer jobs would be created. This is the experience in other countries. Look around us - France, Germany, even Indonesia. In other countries, they tend to close their labour markets. Indeed, Singapore was referred to in The Economist as “a developed country that grows at the rate of a developing country”. This is a big plus for us.”
“The bulk of the new jobs will be in the services sector, especially the tourism-related industries which are driven by strong tourist traffic, and we have a number of big scale events later during the year. I think there will be sufficient jobs for locals, including new entrants into the labour market. 5.30 pm Many Members of Parliament have recognised that we have done well last year. We trotted out the figures. But as equal as it is to understand how we did, I think we should also ask ourselves why is it we succeeded. If we miss those points, we are likely to make a wrong turn, change the policies that are working for us and find ourselves actually arguing against what we want. If we look at other countries, eg, France, Germany, some of the Scandinavian countries and even the countries around us, they have employed different policies but they have not delivered on their promises or wishes. What explains our ability to create jobs? Is this something to be taken for granted? Do other developed economies perform similarly? Members of this House will agree with me these are essential questions because, if we answer them, then we have the secret of our success. In fact, Singapore is unique. I have distributed a chart which is across sequence but let me show you a dynamic chart. Before I play it, if Members could look at the screens, this basically is a dynamic chart from 2001 to 2006. Singapore would be one bubble but you have other countries there which include Malaysia, China, UK, US, Hong Kong and Japan. I want Members to see the effects, over time, of how Singapore did. We will play the chart now. If Members will note, in 2001 and 2002, there was a recession. GDP growth went up but, after 2003, Singapore jumped and leapt ahead.”
“6 million locals aged 25 to 64 were working and this is an all time high of 77%, which puts us almost right there in the top league of nations. We are now essentially at full employment. Our overall and resident unemployment rates are 1.6% and 2.3% respectively. Wages have also gone up. So it is not just numbers. Last year, the median monthly income for locals in full-time employment rose by 7.7% to $2,330, or about 5.5%, after adjusting for inflation. Lower income workers have also benefited - the bottom 20%. They saw their average real income rise by 2%. Singapore citizens in this group would have received more with Workfare Bonus, which is up to 13% of their incomes as well as other one-off Government surplus sharing schemes. So the income that they receive if they are working would have been more than just the wages. My Ministry recently released an occasional paper which looked at the employment of Singapore citizens and PRs. In 2006, PRs constituted about 14% of all locals employed. So it is 14% PRs, 86% citizens. And citizens too are indeed benefiting from the economic growth and are getting good jobs - more are employed compared to three years ago when almost two-thirds of this increase in employment are in professional, managerial, executive and technical jobs. Mdm Halimah Yacob and Mr Teo Ser Luck asked, "will this continue?" It is a very good question. There are uncertainties but, at present, we continue to maintain a GDP forecast of 4% to 6% for this year. We should have continued employment growth for the year ahead. But I think it will likely be lower than the record gains chalked up last year, which was a phenomenal year. It is hard to believe that our economy can generate almost a 10% growth in the workforce, which is unheard of.”