Mr Speaker, Sir, in response to Dr Amy Khor's and Mr Steve Chia's questions. There has been some controversy and confusion since the NTU economists released wrong employment trends on 31st July. I therefore welcome this opportunity to answer Members' questions and to present the correct facts. More importantly, I want to address the concerns of Singaporeans who are worried about their job prospects and who fear that foreigners are taking away their jobs. Let me first present the facts. I have circulated two Tables (Cols. 2449-2452). I distribute detailed information on employment changes for every year from 1993 to 2002. This is contained in Table 2 which also provides the breakdown into broad sectors. But to prevent us all from being overwhelmed with details, I suggest we focus on Table 1, which gives the total employment change of both local and foreign workers. It is here where we will find some of the answers that account for our present predicament. Table 1 - Employment Change, 1993-1997 and 1999-2002 (Cols. 2449-2450) Table 2 - Employment Change by Sector, 1993-1997 and 1998-2002 (Cols. 2451-2452) Table 1 shows that in the earlier period from 1993 to 1997, almost 475,000 jobs were created. Of these, Singaporeans took up about 185,000 and foreigners, the remaining 290,000. Note that in this period of high economic growth and job creation, more jobs - 60% - went to foreigners than Singaporeans. But very few Singaporeans complained then because locals found jobs easily and the foreign workers helped us meet the labour demand. In the later period from 1998 to 2002, about 102,000 jobs were created. 93,000 of these jobs went to residents, and only 9,000 to foreigners. So the ratio of 9 Singaporean to 1 foreigner is statistically correct. However, if we compare the number of jobs created for Singaporeans in the two periods, only half as many new jobs were created in the later period for Singaporeans compared to the earlier period - 185,000 versus 93,000. I can therefore well understand, as many of the Members in this House have told me, the sentiment of retrenched Singaporeans who find no comfort in the 9 to 1 ratio. In fact, many of them do not even bother what the ratio is. Every Singaporean knows that the job market is tougher than before and, with the recent spate of retrenchments, is rightly concerned about his job security. He also wants to know why we allow foreign workers here when our resident unemployment rates have reached 5%. These are their concerns and let me now address these more important concerns. Why is the job market tougher? As Members should have realised from comparing these two periods, it is ultimately job creation which reduces unemployment. We are feeling pain because not enough jobs were created in the last five years. The ratio of foreign to local workers is unimportant when enough jobs have been created. We have about 35,000 additional residents entering into our labour force every year. From 1993 to 1997, there were about 100,000 jobs on average every year. So in fact, it was a grand `job buffet' as we created nearly three jobs for every Singaporean. From 1993 to 1997, Singaporeans could pick and choose the type of job they liked. As they could, indeed they did. So as Table 2 indicates, they declined jobs in the construction, marine, domestic, cleaning, kitchen, hotels and even manufacturing sectors. Singaporeans basically said no to hot or difficult jobs, those that had 12 hour or night shifts, those that required you to commute too far, etc. It was a natural reaction and the luxury we could afford in a time of plenty. Instead they chose to move into the services industry where working conditions were more manageable. It was a logical choice for some. Very few complained when employers who needed the manpower hired foreign workers to fill up those jobs that they did not want. So if you look at the number beginning in Table 1, from 1993 to 1997, the number of foreign workers in fact nearly doubled, but very few complained. But 1998 to 2002 were difficult years. Skilled workers from China and India entered the global market. The Asian financial crisis, September 11 and the Bali bomb blast took their toll. In Singapore, fewer jobs were created than the new entrants added into the workforce each year. So instead of 100,000 jobs created each year, only about 18,000 jobs were created. Instead of the luxurious spread, fewer and less appealing dishes were now on the buffet table. As a result, many foreign workers went home, especially from the construction and manufacturing sectors. Only in services did foreign worker numbers go up, and many of these were domestic maids. Hence, Table 1 shows a net increase of only 8,900 foreign workers over these five years as compared to the preceding five years where there was an increase in 291,000 foreign workers, ie, 9,000 compared to 291,000. But note that, despite fewer jobs being created during 1998 to 2002, Singaporeans continued to move out of manufacturing. The service industry was still creating jobs but not enough to absorb everyone. So the resident unemployment rate rose. Singaporeans had not shaken their attitudes shaped by years of plentiful jobs. How do we solve the current problem of unemployment? First, we need to get the economy growing again. New investments will create new jobs, and expand the economic pie for everyone. Secondly, we must emphasise training and skills upgrading, to enable our workers to do the jobs that are available and to hold their own against the competition. Thirdly, we need to free up the labour market, by reforming the wage system and retuning the CPF system. Our fixed, seniority based wages are a rigidity which discourages employers from hiring older workers. The CPF system achieves important social objectives, but its burden must be kept as light as possible so that it does not make our workers uncompetitive. Fourthly, we must get Singaporeans to take up the jobs which foreigners are doing, including in the industries which they previously avoided. In other words, when the buffet table has less appealing dishes, we have to encourage them to eat them because they are still nutritious even though they are less appealing. Foreigners form about a quarter of our workforce. There are around 200,000 jobs held by foreign work permit holders in the manufacturing and services sector, excluding the 140,000 foreign maids and the 150,000 construction workers. I encourage Singaporeans to take up these jobs. I appreciate that some of these jobs are not attractive because of lower pay or working conditions. We have been working with industries to redesign jobs to help them make the jobs more suitable for Singaporeans. If we can increase productivity through job redesign, wages can also go up. But we have to be realistic, and Singaporeans need to adjust to market conditions too. Why does the Government not simply tighten up the foreign workers policy to protect more jobs for Singaporeans? We have already restricted the proportion of foreign workers that a company can employ, to require each company to employ a certain minimum proportion of locals. We do this through the mechanism of the dependency ceiling. Let me explain that to you. Beyond the ceiling, even if the company is unable to recruit Singaporeans, we will still not allow that company to hire foreign workers. So in the services sector, the dependency ceiling is 30% which means that we require the company to hire at least 70% locals. This causes problems to many companies trying to reduce their cost, especially the smaller local firms, as many Members here will know from their MPS cases. But it is a way to get the firms to try harder to hire more locals. Furthermore, foreign workers are subject to the foreign worker levy. This levy reduces the differences in wages between Singaporeans and foreign workers, and attempts to tilt the playing field in favour of Singaporeans. Should we lower the dependency ceiling or raise the foreign worker levy to reduce the number of foreign workers? Will that help us solve unemployment? We have not done so because this will be counter-productive. We cannot force companies to hire more Singaporeans by depriving them of foreign workers. If we make it harder for companies to hire workers whom they need, we will make it more difficult for companies to operate in Singapore. This will discourage them from growing their business here. Because beyond a certain point, companies will relocate in order to survive - they have to compete along with you - or if they are unable to relocate they will simply close down. Our economy will shrink, and Singaporeans will lose even more jobs. When the SARS crisis hit the hotel industry, they had to reduce cost, and manpower cost was the first obvious target. Hotel owners quickly asked for a reduction in the levy. If we had not lowered the levy because we wanted to protect or reduce, in fact, encourage the foreign workers to go back, the hotels could not survive, and both locals and foreigners would have lost their jobs. In many factories, the night shift is manned almost completely by foreigners. They cannot find Singaporeans to work the night shift, despite shift allowances and resident unemployment at about 5%. Without foreign workers to do the night shift, the factories could not be viable in Singapore. They would relocate to Malaysia or China, causing those Singaporeans who perform the day shift, as well as the engineers and technicians, also to lose their jobs. In other areas, the staff shortages can have even more serious repercussions. Take nursing as an example. If not for the foreign nurses working side by side with local nurses, our hospitals would not be able to function. Members would remember that during the SARS crisis, no one would have blamed the foreign nurses if they had chosen to return to their home country. Instead, many foreign nurses stayed and risked their lives taking care of patients with SARS. Dr Amy Khor suggested that we introduce measures such as those in the US, where an employer can hire a foreigner only after he has failed in his attempt to employ a local. In fact, our dependency ceiling that we already have is even more stringent than what she proposes. So that even if an employer can show that he cannot find Singaporeans to hire, we will not allow him to hire more foreigners above the dependency ceiling. Also, if we require employers to show that he has failed to find a local, there will be endless disputes as to whether the company is offering fair terms, whether the wages are adequate, whether the job seekers are qualified or suitable. Better for us just to impose a levy on the foreign worker. And if the employer volunteers to pay the levy and hire a foreign worker, when he can hire a Singaporean without a levy, we conclude that he has a valid reason to do so. Countries that have tried to protect their workers by imposing rigid labour market policies have not reduced their unemployment - in fact the contrary occurs. Both France and Germany protect their workers well but both have unemployment rates above 9%. The same can be said for many European countries within the OECD, with an unemployment rate of 8.9%. We have been advised to follow labour policies of Canada. Well, Canada has an unemployment rate of 7.8%, so more protection does not guarantee more jobs for your residents. I agree with Members that from time to time, we will have to adjust our quota and levy system to get the right mix within our labour force. But the current problem is that of demand. As an open economy, we are dependent on the state of the global economy. Jobs will return when the economy picks up. They will not come from keeping foreign workers out. I well understand the sentiments of workers who lose their jobs, and are faced with the problem of providing for their families. But the way to help them is to create more new jobs and to prepare them for the new jobs through training and skills redevelopment programmes. We also need to focus on wage restructuring to reduce retrenchments, and on up-skilling for employability. This Government is a government of Singaporeans for Singaporeans, and its responsibility is to Singaporeans. All our policies, including the foreign worker policy, are directed towards the interests of Singaporeans. We will do our utmost to help citizens find and keep their jobs. But we cannot succeed by shutting out foreign workers from Singapore. MOM will give its full energy to help Singaporeans get jobs. One major initiative is the Workforce Development Agency, whose Bill I will be moving later. Mr Speaker, Sir, I have tried to explain the reality of the job market, because I think that is where the real focus of this discussion is. But I would like to end by addressing some questions about the comprehensiveness of the labour statistics we publish. Can I request that the attachment be circulated? [Copies of attachment circulated to hon. Members.] Our labour statistics are reliable and accurate. They follow International Labour Organisation guidelines on concepts and definition, access, integrity, data and quality. Singapore also subscribes to the International Monetary Fund's Special Data Dissemination Standards for key data on unemployment and employment figures. These standards cover four dimensions, namely, coverage, periodicity and timeliness of the data, access by the public, and integrity and quality of the disseminated data. Nobody has ever cast any doubts on the veracity of our figures. We are ahead of many countries in the range of labour statistics we provide regularly. The Government provides precise and accurate numbers regularly on labour market statistics for residents. The quarterly Labour Market Report issued by MOM gives detailed information on the profile of resident unemployed workers and on retrenched local workers and their re-employment rates. These are the more important indices to gauge unemployment. We have also published detailed information about the foreign workforce. Indeed we do. I refer Members to this circulated addendum which is the 2000 Census Advance Data Release. This release on the economic characteristics of the Singapore resident population is publicly available and comprehensive. Paragraph 7 and Table 2 of the Report provide the breakdown of the labour force by residents and foreign workers, and the growth of each group over the period 1990 and 2002. This is the correct data set for any academic to obtain the change in local and foreign employment during these years in each of the sectors listed, because further down there is a sectoral breakdown. So, you could derive the numbers for foreign workers. There is no guesswork that is required from this open document. Hon. Members of this House and others have called on the Government to publish still more comprehensive and frequent statistics on local and foreign workers. MOM will study these requests. However, Members will recall how from time to time the issue of foreign workers can cause friction between us and their countries of origin, despite the most sensitive and cautious handling. We should be mindful of this regional context and not inadvertently worsen these problems. Sir, at the end of this controversy, if Singaporeans can understand better the challenges of the new job environment, the new market reality and the necessary changes we must make to improve our unemployment, then something good would have resulted from this episode.