Mr Speaker, Sir, thank you for the opportunity to move this motion*. I beg to move, That this House reaffirms its commitment to inclusive economic growth and calls on the Government to continue doing more to support low-skilled and low-wage workers so that all Singaporeans may share the fruits of our prosperity through better skills, better jobs and better incomes.
Sir, in November 2006, President Nathan addressed this House at the opening of the 11th Parliament. He spoke on the overall theme of Singapore as a competitive economy and an inclusive society.
Today’s motion is not about why we need to build an inclusive society. This is already a well-recognised national imperative. Neither is this motion to highlight the challenges faced by low-income families and to call the Government into action. The challenges are well known and the measures to tackle them well in place.
Rather, today’s motion examines the progress of efforts to bring about inclusive growth, whether we should persist or change course, and what needs greater attention.
Several Members will be speaking on this motion. It is my hope that we will have an energetic, focused and constructive debate on the current efforts to promote inclusive growth.
Firstly, how effective they have been? Secondly, what should be the way forward? And, thirdly, what more could be done? To answer the first question of how effective we have been, we have to ask what inclusive growth means.
There are many ways for Government to share the fruits of prosperity. For example, it can build better homes, transport networks, schools and hospitals. It can also increase financial assistance to the needy. All of these are important ways of sharing.
As a labour MP, I think inclusivity must be seen in employment. To be meaningful to working people, growth must provide three things: i) opportunities for the large majority to enjoy higher incomes and quality of life, ii) jobs for those who do not have one and iii) improved incomes and prospects for low-wage workers.
Sir, I will focus on the second and third groups, that is, the no-wage and the low-wage workers as they are at greater risk of being left behind. Mr Speaker, Sir, unemployed Singaporeans tend to fall within three categories: i) those without educational qualifications or skills, ii) mature workers who are retrenched as their companies restructure and iii) women who left the workforce for a period of time to care for their families. How have they fared in the last few years? Did the growing economy create new jobs for them?
Sir, a few months ago, 59-year-old Mdm Goh Guek Choo lost her job as a production operator. She has only primary school education and faced the prospect of long-term unemployment. Though she has not stepped into a classroom for more than 21 years, which was when she started work as a production operator, she signed up for several courses at e2i through an outreach event to build up her confidence and to pick up new skills. To e2i’s pleasant surprise, even before she finished the training programme, she had plucked up the courage, walked into a store at the newly opened Nex Mall in Serangoon to ask for an interview. Her determination got her successfully placed as a sales-cum-cashier assistant. She started work last week.
Mdm Goh is an example of the 32,000 job seekers that e2i has helped to get jobs in the last two years, many in growth sectors such as the integrated resorts, retail and healthcare sectors. More than 3,000 of those placed have primary education or below. Thirty-five per cent are 50 years or older and 10% are 60 years or older.
The transition for workers like Mdm Goh is never easy. They have to confront their fears and insecurities. In the case of Mdm Goh, she had no experience in the sales line, in the retail industry. But she was willing to ask for help, willing to learn a new skill, move into a new sector. And there are many workers like her who have benefited from the new jobs created by growth.
Efforts by the e2i and others, such as the CDCs and the self-help groups help vulnerable workers, including older and less-educated workers, get new skills to take up these jobs. As a result, resident unemployment has gone down to 3.1% from 4.8% a year ago. More importantly, the employment rate of workers aged 55 to 64 has gone up from 47% in 2005 to 59% today, a 12% improvement over the course of five years. Brother Heng Chee How and Brother Terry Lee from the labour movement, who are both closely involved in promoting re-employment, will speak on this too.
Sir, the employment rate of women aged 25 to 64 and above has also improved, from 59% in 2005 to 66% in 2010. So that is an improvement that is quite significant too. My fellow MP Mdm Halimah Yacob, who heads NTUC’s Women’s Development Secretariat, will elaborate on the back-to-work initiatives that have made such a positive impact on so many families.
Sir, if you ask Ang Hin Kee, the CEO of e2i, what keeps his team of 100 going, he will tell you it is the satisfaction of knowing that e2i not only places vulnerable workers in new jobs but equips them with skills to help them stay employable. This is what inclusive growth should look like - giving vulnerable workers the means to take up jobs created by a growing economy, and helping them to stay employable.
But that is not all. To be inclusive, growth must also benefit workers who are somehow caught in low-wage jobs. These are workers with poor skills who often get stuck in low-wage jobs. The jobs may pay poor salaries for two reasons.
The first is that they are easily cheap-sourced with little consideration for quality. When service buyers award contracts based on price alone, service providers have no incentive to upgrade the skills of their workers or the quality of their services. Cleaning jobs fall into this category. Wages remain depressed unless buyers move from cheap-sourcing to best-sourcing.
Mdm Wong Mee Lan, another 59-year-old cleaner was one such worker who experienced the difference in wages because of the shift from cheap-sourcing to best-sourcing. She worked for cleaning contractor Gallant Sanitary Works and was deployed to PSA Corp.
In 2010, e2i approached PSA Corp to tell them about the Best Sourcing Initiative (BSI), particularly the Early Adopters Scheme (BSI-EAS). The Best Sourcing Initiative Early Adopters Scheme encourages service buyers to award contracts based on quality and performance standards, in addition to price considerations. PSA agreed to come on board the programme.
Gallant Sanitary’s greater emphasis on quality during the bidding process gave it an edge. With a fresh contract in hand, it sent staff for in-house training and Workforce Skills Qualifications (WSQ) training. It invested in new machinery to improve productivity. After the training, Mdm Wong was given additional responsibility, this time to coach her newer colleagues in their jobs so that they can do them better. And the company, to recognise her better skills and enlarged job scope, gave her a pay rise from $800 a month to $1,050 per month. On top of that, she receives Workfare Income Supplement of $2,100 per year.
Since the Best-Sourcing Initiative was launched in 2006, more than 4,000 low-wage workers like Mdm Wong have benefited. My colleague Mayor Zainudin who heads the NTUC’s Unit for Casual and Contract Workers which has been spearheading the BSI will say more about the progress they have made.
Sir, besides cheap-sourcing, another reason for some jobs paying persistently low wages is stagnant productivity. There are many contributing factors such as poorly-designed work processes and outdated equipment. Sometimes, businesses expand by simply adding new headcounts instead of investing in multi-skilling or re-skilling of their workforce.
The Economic Strategies Committee (ESC) recognised that productivity gains were necessary for workers to enjoy sustained wage growth. As a result of the ESC’s recommendations, the National Productivity and Continuing Education Council (NPCEC) was set up, chaired by Deputy Prime Minister Teo Chee Hean. To support the work of the NPCEC, NTUC launched the $40 million programme - Inclusive Growth Programme (IGP).
The push for productivity is not entirely new. As a result, some ask if the IGP will deliver. Can it reach diverse sectors? Can it impact SMEs, which collectively employ 60% of the workforce? I challenged my colleague Ong Ye Kung, who chairs the e2i and is personally championing the IGP, to give me a few examples of IGP projects.
Ye Kung provided a long list, one of which is Seiko Instruments, a Japanese multi-national with over 30 years’ history in Singapore. Seiko Instruments manufactures and assembles mechanical and quartz watch movements. Today, the Singapore plant is the global leader in the production of small parts. So, very high-precision work.
Business is expanding and manpower is stretched. The company decided it must raise productivity. Each of its 55 injection mould machines has 24 cavities. If it can bring in a more advanced process with new machines, each with 42 cavities, it can double the output per cycle and increase monthly output by 23% with the same manpower.
The company is committed to share its productivity gains with the workers who will be trained to operate the new machines. As a result of this IGP-supported project, 368 local workers can expect, on average, an increase of 16% in annual wages, through a mix of built-in pay and bonuses.
One unexpected project involves an SME operating a spa business. Located in the heartlands, Epi Treatz Pte Ltd employs about 15 Singaporeans at any one time. As the customer base grows and sales increase, existing manual processes to manage customer information, inventory and even commissions to sales staff, are no longer adequate. The IGP supported Epi Treatz to implement a salon management system. After training, the same administrative staff can handle a higher sales volume efficiently. As a result, staff can expect an annual wage increase of 13%. Epi Treatz is located in the East Coast GRC. If Members would like to have the company's address, I can give it to them.
Sir, Seiko Instruments and Epi Treatz are good examples of inclusive growth. As the economy expands, there is more output from production lines and more consumption of services of all kinds. Companies across many sectors – large and small, local and foreign -- achieve business growth, and workers gain through better skills, higher productivity and higher wages.
IGP is only five months into its implementation. Already, 166 projects have been lined up. They include projects in manufacturing, hospitality, food and beverage, retail, logistics, aerospace and many more. As the projects are implemented, more than 15,000 workers will benefit.
What is even more encouraging is that the vast majority of the workers, 86% to be exact, will experience wage increases of more than 10%. In fact, seven in 10 or 10,500 Singaporeans will see wage gains of 16% or more. These are real Singaporeans in real jobs, getting a real lift. And this is what inclusive growth is all about.
Against this backdrop, my colleagues and the labour movement have kept a close watch over the debate on the minimum wage. Several people have spoken up in favour of it. They argue that it will "boost wages and morale" and encourage lower-skilled Singaporeans to seek out work. Another argues that the minimum wage is less draining on the national Budget than Workfare Income Supplement.
Because it concerns the livelihoods of low-wage Singaporeans, the proposal of a minimum wage should not be dismissed too lightly. The supporters of minimum wage are well-intentioned and the idea certainly looks attractive. With a stroke of a pen, we can dictate to employers a minimum salary to pay their low-wage workers. Why are we so reluctant?
Within the labour movement, we are clear that government intervention is needed to help low-wage workers do better. The Government has responded vigorously through Workfare, Best Sourcing Initiative (BSI) , Inclusive Growth Programme (IGP) and others. So the issue is not whether the Government should act but rather, how it should intervene to be effective. The real question is: Would minimum wage work better than all the other programmes already in place?
Sir, to be meaningful, a minimum wage must force some employers to pay more than the market rate for labour. As a result, it will have the same effect as a tax on employment. In fact, if this is the minimum wage (hand gesture), and this is the market clearing rate for labour (hand placed at higher level), the lowest-wage worker attracts the highest "tax". Will this help previously unemployed Singaporeans like Mdm Goh get jobs at minimum wage? I am not so sure. To survive, some of these workers will choose to work illegally below the minimum wage, just as some choose to forgo CPF today. Are we to blame them for doing so?
Companies that do not wish to engage in the illegal practice of paying below minimum wage and find it too costly in Singapore, will close shop or relocate. Restructuring and relocation is already happening. It has to. Introducing a minimum wage will accelerate the pace without sharpening our competitiveness. Local SMEs -- and we must remember local SMEs employ 60% of the entire workforce -- which may be too small to move out, will face even greater pressure. If they close, more Singaporeans will be thrown out of work. Will these workers find new jobs at the minimum wage? From whom? I am not sure about this at all.
Does this mean then that we are satisfied with the low wages of some workers today? Of course, the answer is “not”! We are not satisfied. We can and must do more to help them get better pay. But if wages move ahead of productivity gains, our unit labour costs will go up. When that happens in Singapore faster than elsewhere, we will lose competitiveness. This will put at risk the jobs of all Singaporeans, not just the low-wage workers whom we are trying to help.
So, this is why, Sir, to top-up the incomes of low-wage workers, it is better to have Workfare, which the Government pays for. Instead of burdening businesses with minimum wage, let us get them to help by training their workers, improving productivity and sharing the gains.
Let us be pro-worker in a pro-business way. To be effective, our measures must involve the tripartite partners – the Labour Movement, the employers and the Government. There is simply no shortcut to achieving sustained and inclusive wage growth.
Sir, to summarise, we are on the right track to achieving inclusive growth. We should persist and not rest until all low-wage workers have been helped. I have five suggestions for the Government to consider so that we can further strengthen inclusivity.
The first is to increase the WIS payout when the economy does well. One way to do so is to pay a WIS GDP bonus when GDP growth is good. By doing so, low-wage workers also have something to look forward to when they see others doing well. Let us reward Singaporean workers who have kept faith with the Government. Show them that Workfare works for Singapore and for them.
My second suggestion is to increase the cash to CPF ratio. The current ratio of cash to CPF in the Workfare payout is 1:2.5. A 50-year-old worker drawing $1,000 monthly will get $1,400 from Workfare annually and $400 will come in the form of cash, $1,000 will go into his CPF. This means that he gets $33 in cash every month. I think the Government should raise the cash component to provide a stronger incentive for the workers to stay in work.
My third suggestion is to introduce a Workfare Family bonus. A WIS Family bonus can be considered if two or more family members in the same household receive Workfare in the same period. This encourages families to work together to improve their circumstances.
The fourth suggestion is to promote best-sourcing and minimum skills. To raise the pay of low-wage workers, there must be a much higher expectation on quality and insistence on minimum skills. We need to reduce tolerance for shoddy service, poor workmanship, sub-standard delivery. The Government, through its procurement practices and regulation, can help to tilt the balance in favour of best-sourcing and minimum skills in sectors where cheap-sourcing is rampant.
The fifth and the final suggestion from me is to leverage on the Inclusive Growth Programme (IGP) to benefit more. The IGP was initially conceived as a pilot program to target the bottom 20% of wage earners. With the momentum built up, it is worthwhile for the Government to commit more resources. Funding support today allows for up to 25,000 low-workers to benefit at the end of two years. We should extend the IGP to at least 100,000 low-wage workers within five years.
Mr Speaker, Sir, from the perspective of the labour movement, growth in the last few years has been inclusive. Our tripartite approach works. More vulnerable Singaporeans have found jobs. Many low-wage workers are getting better wages. Now is the time to stay on course. As the economy grows, now is the best time to catch the wind and help low-wage Singaporeans do better and for Singapore to become even more inclusive.
Sir, when my children were younger, our family used to solve picture puzzles together. Starting from 20 pieces, 50 pieces, progressing to 100, 200 pieces and so on. The more the pieces, the bigger the effort. Over one weekend, we may at best complete a small segment – a corner here, a small patch there. We do not get discouraged because we bond over the challenge and the finished work is always worth the while.
Building an inclusive society is also a family effort, an effort for all of us in the Singapore family – the workers, unions, the employers and the Government. There are many parts to the future we want to create together. We have to coordinate our efforts and work towards a common vision. We have to put pieces together one by one, let everybody play a part and also not to give up easily. Most important of all, we keep building, building and building until the picture is done.
Therefore, Mr Speaker, I urge Members of this House to strongly support the motion.
Question proposed.
