Sir, I am glad that the Government has decided to augment the contributions into the Skills Development Fund (SDF) by raising the Skills Development Levy salary ceiling from $1500 to $1800 with effect from 1 July 2004. With the levy rate staying at 1% of relevant payroll, this will increase SDF’s income by $22 million per year.
With more money in the Skills Development Fund, more worker training can be supported. Indeed, it was because of increased claims on the SDF, reflecting increased training activities on the part of companies making the claims and greater willingness of workers to undergo retraining, that has led to the SDF not being able to cover its annual commitments. This, to me, is a better problem to tackle, than if the opposite was the case.
Some companies will see the increased salary ceiling as an increased expense. I urge such companies to instead think of it as an investment provision. Indeed, companies that know how to make full use of the SDF to support their training needs can actually claim more than they individually pay into the Fund.
Traditionally, bigger companies have made more use of this source of funding than smaller ones. However, going ahead, I think it will become increasingly important for all companies, regardless of size, to embrace worker skills training and upgrading fully and regularly.
In my earlier cut on Jobs for Singaporeans, I spoke of the structural shifts driven by changing technology and competition that compel companies to upgrade or perish. This pressure will only intensify, and not recede. So companies and industry bodies should adjust to the realities and be more proactive in this.
When we look at developments during previous upturns from recession, we often hear companies complaining rather early in those upturns that they face critical shortages of skilled manpower. Those shortages then push up wage costs as companies compete with and poach from one another to satisfy their own needs. The next move would be to raise concern about cost competitiveness and call for further relaxation of conditions to bring in more foreign manpower. Does that sound familiar?
I think this sequence of events may yet repeat itself in this upturn. But it is not as inevitable as it sounds.
If companies and industries can take a broader and longer-term view, and invest in the training and upgrading of workforce capability, they will enlarge the pool of local skilled manpower. This enlarged pool will then feed their growing needs for a longer period without exerting immediate wage cost pressure due to shortage. More Singaporean workers will in the process also improve their skills and employability, and more will be able to take on the upgraded jobs. This is surely the more sensible and responsible way to move. It is akin to a pot-luck party, where each diner contributes a dish and gets to enjoy the full spread that results. It fails when companies think short-term, mistakenly believing that they can free-load on the training investment made by other companies. When that happens, everyone stands to lose.
I would like to ask the Minister what plans and programmes his Ministry have to step up the momentum of skills upgrading of workers in anticipation of growing needs in this recovering economy, and what steps will his Ministry be taking to forestall the negative consequences that free-rider tendencies among companies will bring about.
