It seems that everyone is still in the Chinese New Year spirit and have looked to the Budget as an ang pow. This is understandable as everyone is concerned about the growing rate of inflation in Singapore. But we also have to bear in mind that mere ang pows or cash handouts are not a sustainable way to address growing economic pressures.
In fact, we already have in place numerous modes relief that address both immediate and longer-term needs for low income groups. These include Workfare Income Supplement, ComCare, various CDC-level assistance schemes and many other forms of help that is our ‘many helping hands’ approach.
What is most important – and a great and best ang pows we can hope for – is full employment, economic stability and the ability to grow our economic pie so every one can have a larger slice. This is where the challenge lies – help Singaporeans from all income levels improve their income levels through continued effort to increase skills and productivity.
I am pleased to note that this year’s Budget continues to emphasise, not mere handouts, but productivity and innovation for long-term sustained growth and incomes. At the same time, the Budget has also made important outlays in social investments – catering for the elderly, the ageing population and other crucial social issues.
Helping the sandwich and lower income group
Sir, the Budget has done well to share the good things with all Singaporeans, especially the lower income group. We must not forget the middle class, who continue to feel the pressures of inflation, but do not qualify for financial benefits and schemes aimed at the lower income groups. We must therefore continue to support and reassure our middle income professionals, managers, executives and technicians (PMETs) in the form of job stability, continued jobs upgrading, skills training, will continue to enhance their employability. We must give them opportunities to improve so that they can add value to their jobs. We must also reassure them that schemes are in place to alleviate some of the economic pressures. To this end, we must continue to strive for a ‘best wage for all’ mentality. I welcome the enhanced training support for PMETs in the form of more places at Continuing Education and Training Centres and the better subsidies.
The recent report on incomes has revealed that the Gini coefficient – which measures the income gap – is increasing. While this may be of concern, we must also dig deeper to understand why this gap persists so that we can see it in perspective. The Gini coefficient was 0.472, up slightly from 0.471 in 2009. With government’s transfers and benefits, the Gini coefficient was 0.452 in 2010, up 0.004 in 2009. This shows that government schemes have been helpful in moderating the income inequality. We must also be mindful of what causes the gap to remain large – perhaps it is because the rate of income growth in the higher percentile outstrips the growth of the lower income group which continues to grow, but at a smaller pace. At the end of the day, let us look how far the baseline has increased, rather than the gap that remains. We welcome the various Budget measures that address the lower income – especially the enhanced Workfare Income Supplement scheme and the Special CPF Housing Grant.
Can we also look into increasing the dependants tax relief for spouses and children in view of the rising costs that is ‘squeezing’ the budgets of many Singaporeans? In its latest budget I notice that Hong Kong has increased the dependent tax relief by 20%. It has also raised its child allowance and the additional one-off child allowance in the year of birth by 20%.
Fair wages for all workers
Employers, as responsible citizens, must continue to also review wage policies and job training – especially those for our mature and low wage workers. While a large majority of our workforce have diploma-level qualifications and above, we need to ensure that those who do not continue to upgrade so that they do not get left in the cold. We must also emphasise not only ‘best wages’ but fair wages. I am pleased that already, the NEA and Town Councils have schemes to recognise or elevate the skills of cleaners. Since employee skills training became a requirement in the Town Council cleaning contracts from 2008, a full-time cleaner can earn $1,000 monthly, up from $650 to $750 previously. Those skilled in handling machinery can receive $1,200 to $1,400, compared to the previous average of $750. This is a very good move and I urge other organisations – particularly schools. During one of my house visit, a school cleaner told me that his monthly income is remain very low due to the MOE’s outsourcing arrangement. The government agencies should do more.
The foreign worker challenge
The coming increase in foreign worker levy has been a matter of debate these few weeks. Some employers are complaining that the increases are coming down ‘like floodwaters’ – and there is some resentment on the ground.
While I can understand that the levy increases are significant, this must be seen in context. Firstly, the increases are staggered and the first increase this year was announced in 2010. The next increase will only kick-in in 2012 and again in 2013. Employers are being informed well in advance of the levy increase – the coming flood, if you will. This being the case, employers have plenty of time to escape the flood, step out of the way and build up their ‘dams’.
I believe that our current foreign worker reliance is not tenable and can be likened to an addiction. We must not allow our economy to rely on too much foreign labour – especially lower skilled work. I know many employers seek new permits for workers when the older, more experienced workers finish their contracts. Instead of continually getting a stream of low skilled workers, we need to have a system to upgrade workers so we can retain talent and experience for a quality foreign workforce.
To do this, we could look at incentivising companies that upgrade their foreign workers. We can also reward, instead of penalise companies that obtain good productivity goals. Can we look at developing a productivity scorecard for companies, particularly SMEs? For those that obtain good productivity gains, we could give them levy subsidies or rebates. Currently, the levy hikes affect all companies whether or not it does well in innovating or raising productivity. This should not be the case. The levy increases should be structured in a way that rewards innovation, skills upgrading and a productivity mindset.
As we continue to drive the productivity mindset in the labour market, we must also be conscious to ensure that this expectation of productivity applies to all our workers. Employers need to play their part to ensure that the qualifications, training and skills required of local workers are the same for foreign workers as well. Employment must continue to be skills and not headcount based. We must also continue to foster social integration among our diverse workforce.
At present, I believe the 1:2 migrant-locals ratio is adequate for not only practical manpower needs, but in terms of perception of neutrality. Let me illustrate with an example that one of my friends raised. If you line up one foreign worker and two Singaporean workers, the Singaporean in the middle, looking to his right and left will see one foreign worker and one Singaporean. The perception therefore is that it is “equal”. But raise the quota to 1:1 and the impression when looking beside him will be that there are two foreign workers versus only one other Singaporean. The perception will be that of being ‘crowded’ out of a job.
“Change is the only constant” and the global competition is real. Companies and employers have to review the way they do things, innovate and keep one step ahead. Recently, my NTUC colleague Ong Ye Kung shared with me that he visited a food manufacturing factory that has automated many of its processes. Thong Siek is a food manufacturing company at Senoko. It makes fish balls, fishcakes, crab sticks, Yong Tau Foo. Back of hand calculation is that for fish ball alone, it's annual production is about 700 million a year - quite a lot.
The production process is quite automated. From receiving the fish paste, defrosting, making into paste, cooking, etc, are done by machines. But when it comes to packing, the company hires tens of workers to pack them by hand. This is a bottleneck. So during Chinese New Year, they had to turn away orders because the packers will not be able to cope.
With the help of IGP, the company is starting to automate packing. It will reduce their reliance on manpower, and remove the current production bottleneck. Best of all, the company is measuring their performance, and prepared to award bigger bonuses to workers if KPIs are met.
In innovating, the company has reduced its operating costs and reliance on foreign labour. Happily, it has also meant that the company has done better and rewarded its workers – mostly locals – with an 8% wage increase. I believe more companies can learn from such an example.
Nurturing our young
As we continue to grow the economic pie, we must also not forget sustainability of our workforce. We can do more for education, especially in the early years to build a sound foundation, and in the later years to boost skills. Already, we have taken steps to prepare our children for life with a broadbased and holistic education, but we can also see where we can support schools further in this regard. And even as we build strong educational foundations in the school-going years, we must also continue the life-long learning approach.
For example, we should do more to nurture our young people. More and more Singaporeans want to have a more active part to play in their country and call for alternative views and channels. This is a positive thing- but only to some extent. What we need is for not just views, but understanding of issues and action. Already, the platforms are out there. We have REACH, social media and other online channels. How can we turn speech into action, and complaints into practical solutions? How do we respond and work with our youth to help them turn ideas into workable solutions? We should do more in these areas.
A responsive government
One clear signal from the Budget is that the government is being responsive to the practical needs of the people. In this Budget, we see fine-tuning of schemes to help businesses, more help for the lower income and middle income, and moves to counter inflation in the long term by growing incomes.
I hope that the government can also continue this people-centric approach in other areas of concern. One of these is the worry of many young Singaporeans on the affordability and timing of new flats. The recent revisions to raise the ceiling cap for DBSS and the shortened waiting time for BTOs are welcome. But perhaps the government could also look into opening more options for couples wanting to start a family early? For example, can we revive and bring back the interim rental schemes for couples that have booked flats?
Another area that needs a review and response is in the area of the industrial plot ratio of 1:4. As a land scarce nation, we should not confine our institutions that need more land. Flexibility in this area is needed so we can intensify and maximise our land for use.
Ultimately, the government has indicated it is listening to the needs of the people and the Grow and Share budget is one that will address our economic fundamentals while enhancing the social support for a strong and resilient society. It gives a helping hand where it is needed and opens opportunities for people to embrace to create a best home for all.
Sir, I support the Budget.
