Hansard, Friday, 7 March 2014

1 Mr David Ong asked the Minister for the Environment and Water Resources (a) what is the impact of the current prolonged dry and hot spell on our supply and availability of water; (b) how will our water reserves cope with the further absence of rain; and (c) at which point will the situation be considered a crisis.

Mdm Speaker, we have been experiencing a dry spell since January 2014. In response, PUB has stepped up desalination to its full capacity of 100 million gallons per day. PUB has also increased NEWater production to more than 100 million gallons per day. The NEWater produced is a very pure source of water, and is mainly used by industries. Nevertheless, we have been able to produce additional NEWater which we have used to top up our reservoirs by as much as 35 million gallons a day. That is why we have been able to keep our reservoir stocks at a healthy level despite the lack of rain.

It is sobering to bear in mind that all this additional capacity has only come about in the last decade. In fact, the most recent desalination plant which added 70 million gallons a day only came on line six months ago, in September last year.

PUB has been making major investments to build up and diversify our water supply sources in order to strengthen our water security. This led to the introduction of NEWater and desalinated water into our water supply in the last decade. This supplements our local catchment – the 17 local reservoirs – as well as the water that we import from Johor. All these investments have borne fruit. Today, desalination and NEWater are sources which are resilient against drought or dry spells.

Ms Ellen Lee asked a question yesterday, which I promised to answer today, on whether we still need to buy raw water from Malaysia, given the capabilities that we have developed in NEWater and desalination.

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Mdm Speaker, we have invested considerably in developing all our water sources – the Four National Taps. I want to state that imported water remains an essential part of our overall water supply. It is also worth bearing in mind that we have spent over S$300 million to build the Linggiu Dam and Reservoir in the upstream portion of the Johor River in order to increase the yield of the Johor River, and ensure that there remains sufficient water in Johor River even during a dry period, like what we are experiencing now. These investments on the Linggiu Dam and reservoir have enabled Singapore to continue to draw the 250 million gallons of raw water per day, and indeed, for the Malaysian plants upstream of us to continue drawing water for their own local production.

In other words, all these additional investments have been a premium that we have paid for greater security and diversity of our water supply. Whilst we aim to attain self-sufficiency in our water supply before the expiry of the 1962 Water Agreement, which expires in 2061, in the mean time, we expect all parties to uphold the current agreement for as long as it is in force.

Having said that, it is also worth emphasising that there is still a need for everyone in Singapore to play a part in water conservation. Non-household users – the Town Councils, MCSTs which manage the condominiums and private areas, commercial and industrial buildings – can reduce their water use through measures like only watering heritage trees or essential landscaping, reducing or stopping the operation of water features and carrying out washing activities only when absolutely necessary. This is related to the other point – that if we litter less, and we contaminate the environment less, washing and use of water will also be reduced. I will also be announcing other measures to encourage longer term water conservation efforts in the non-domestic sector next week during my Ministry's Committee of Supply session.

All of us can do more to save water. Even small adjustments in our daily life can make a difference. For instance, we may not be aware that each minute that you leave the shower running, it is nine litres of water used. Similarly, making sure that we only wash clothes when the machine is full in order to optimise economies of scale or even things like washing dishes in a container rather than leaving the taps running – all these little measures add up and can save a significant amount of water for us.

This current dry spell is a stark reminder for all of us not to take our water for granted. It is a reminder for us to be more conscious to save water; and it is also a vindication of the decades of planning, hard work, enforcement and significant investments that have been made into our water supply

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infrastructure, in order to give us the security that we currently enjoy.

Mdm Speaker, I would like to thank the Minister for a very comprehensive reply. It is very assuring to know that whatever we have invested in technologies for water has borne fruit. We would still need to look at conservation, and to see what the Ministry will be doing to conduct more public education, both to educate the public and the industries on water conservation. At what point does the Ministry deem it is necessary for us to start conducting water rationing exercises?

I thank the Member for the very useful comments. First, the emphasis on conservation: the Member is right that we need to step up on publicity. We have actually already commenced on that. About a week or so ago, we issued letters to over 25,000 establishments in the non-domestic sector to remind them of the importance of water conservation. The mass media has also helped. Apart from the reports, there has also been an editorial in The Straits Times today.

On our part, we need to get this message out at an individual and at a collective level. As I said earlier, every drop is precious and every action helps.

I am glad the Member brought up the point on water rationing. This illustrates one of the uniquely peculiar challenges that Singapore faces. On the one hand, we are in an extremely fortunate position but it is fortunate not because of luck; it is because of decades of planning, which we have been able to implement effectively. On the other hand, we have what I define as a margin of safety; but I am also equally aware that conveying to Singaporeans that there is a margin of safety carries a risk of complacency. In particular, if during a dry spell, our water usage goes up – and in fact, it has gone up. According to our latest water demand figures, we are currently consuming about 420 million gallons of water a day. If the demand figure continues to increase, then certainly, I will have to re-evaluate the adequacy of our current practices.

Assuming all of us do our part, and we can keep a lid or even better, bring down the demand, then I can tell you, that for the foreseeable future, there will be no operational need for water rationing.

I have also received feedback from other well-meaning members of the public. They say, "Even if you do not have an operational need for rationing, perhaps you should consider some exercises as a means of public education". This is a suggestion that I am thinking seriously about, to remind people the

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value of water. It may not be a bad idea for us to rehearse procedures and processes which are needed if we ever got to a point where water rationing is needed.

I am looking at it right now as more of a public education tool. Fortunately, we are not at a point where it is an operational necessity.

We do not have the time, so I suggest that Members who have clarifications on this matter raise these queries during MEWR's COS debate. Order. End of Question Time.

[(proc text) Order read for consideration in Committee of Supply [3rd Allotted Day]. (proc text)]

[Mdm Speaker in the Chair]

[(proc text) Resumption of Debate on Question [6 March 2014], (proc text)]

[(proc text) "That the total sum to be allocated for Head M of the Estimates to be reduced by $100". – [Ms Jessica Tan Soon Neo] (proc text)]

[(proc text) Question again proposed. (proc text)]

Mdm Chair, I thank the Members for their thoughtful comments and questions for the Ministry of Finance. My colleagues from MTI spoke yesterday about measures to support industrial and SME development, and to raise incomes through

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quality growth. In fact, a whole-of-Government approach is needed to meet both economic objectives and social objectives. MOF's policies and initiatives thus complement the efforts of MTI and other Ministries to create an enabling environment for businesses to thrive and to meet the needs of our citizens.

I will organise my response to Members' cuts around two themes: first, supporting economic transformation and SME growth; and, second, strengthening Government effectiveness. I will then deal with tax incentives, reliefs and our reserves.

During the Budget debate, we have heard how SMEs can continue to participate meaningfully in our economy. In fact, SMEs have also had good access to Government procurement, which is a question that Ms Jessica Tan had asked.

In 2013 alone, about 80% of all Government tenders – and these refer to contracts valued above $70,000 – were awarded to SMEs. In terms of contract value, this was about 50% of contracts awarded by the Government. It is higher than the target of 25% share of Government spending that, as Ms Tan had shared, the UK has set for its own SMEs.

More significantly, SMEs were successful in tendering not just for smaller projects, but fairly sizeable ones. For example, of the 1,100 or so contracts valued between $1 million to $50 million that were called last year, SMEs won about 80% or 872 of them. In the construction sector, when we look at projects with contract values between $50 million and $100 million, SMEs clinched 60%, or 19 out of 31 projects, in 2013. SMEs have had good access to Government procurement.

However, there is scope to help SMEs, in particular, smaller SMEs, take on more or larger projects. For instance, in the IT and telecommunications sector, SMEs won 60% of the tenders award, which collectively accounted for 40% of total contract value. We intend to do more to focus our help to nurture Singapore tech start-ups in the IT sector and, at the same time, achieve better outcomes for the Government. MCI will be addressing this in their Committee of Supply response.

Madam, in the Budget roundup speech, Deputy Prime Minister Tharman had explained that the PIC is a broad-based scheme that we have deliberately

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kept simple to support as many businesses as possible in the productivity drive. To help SMEs, we will make PIC claims easier and process them more quickly.

First, they will get help to avoid common mistakes when applying for the PIC cash pay-outs. And this will be done through a web-based application form that provides built-in validation checks. In other words, even before they submit their claims, the application process will indicate to them how they can avoid common mistakes.

Second, from early next year, IRAS will be able to process most claims within two weeks, compared to three months today. From early next year, IRAS will be able to do it in two weeks for most of the claims. This is because they are improving their processes and, by then, businesses will get their PIC cash pay-outs with less paperwork and in a shorter time.

Many SMEs apply for PIC themselves, without using consultants because it is a fairly straightforward process. Businesses which need help can attend PIC seminars or sign up for PIC clinics which offer free one-to-one consultation sessions with officers from IRAS and through the SMEs centres which Minister of State Teo Ser Luck has talked about yesterday. He also provided all the telephone numbers and contact details.

The PIC covers a very broad range of activities. It is unlike SPRING's Innovation and Capability Voucher Scheme which is designed specifically to help micro and small SMEs to take their first step in capability upgrading with the support of external consultants. To keep things simple for such SMEs, there are pre-selected modules and pre-qualified consultants for SPRING's ICV Scheme, but not the PIC, given its much wider support for businesses and activities. By having a list of accredited PIC consultants, as suggested by Ms Tan Su Shan, or even accredited PIC vendors, this will make the PIC more restrictive than necessary. So, we will take a practical approach. Where it makes sense, we can have a pre-qualified list of consultants or vendors, but where it would be restrictive if we had introduced such a pre-qualified list, we would leave it open to the businesses.

Ms Tan asked if the eligible list of equipment was adequate. In fact, it covers more than 90% of PIC equipment claims. The list is regularly updated based on feedback from businesses and trade associations. In the past two years, we have included new sector-specified automation equipment for sectors, such as F&B, construction and cleaning. Businesses with equipment not on the prescribed list fill in a one-page form. IRAS has approved a vast majority of

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these applications and 80% of them within three weeks. To require an independent expert body to assess the claims would complicate and lengthen the process.

Besides the PIC, there are many other schemes which support SMEs. However, a common feedback is that SMEs have difficulty figuring out which ones to tap on for their particular needs. The Government processes more than 127,000 grant applications by businesses annually. There is scope to streamline grant criteria and to make the application process friendlier. We can also auto-populate common data fields using previously submitted data, for example. MOF and MTI are working with our agencies to improve the accessibility of these schemes. This is a complex exercise as it requires a fair amount of streamlining and standardisation across several agencies, but it is a worthy exercise as it will improve the productivity of businesses and will enable the Government to do better to meet the needs of SMEs.

Mr Liang Eng Hwa asked if we can further reduce the corporate regulatory and compliance burden on SMEs. Our corporate regulatory environment is considered pro-business with rules that are effective and not excessive. Since 2007, Singapore has been ranked first on the Ease of Doing Business Indicator which the World Bank's Doing Business Report, when it is published, indicates.

And we can do more for our SMEs. First, when the Companies Act is amended later this year, more companies will be eligible for audit exemption. Currently, an estimated 200,000 companies enjoy audit exemption. With the change, another 25,000 companies – almost all SMEs – will qualify for audit exemption as well. And this will mean savings amounting to several thousand dollars each from the audit fees that they would otherwise have had to pay. Now, this does not mean a loosening of governance and accountability, and existing safeguards will still be retained, such as requiring all companies to keep proper accounting records.

Second, tax filing has been simplified for micro companies with revenues of one million dollars or less. They can also file their returns electronically, thus reducing paperwork. These companies do not need to submit their financial statements and tax computations unless required by IRAS for audit purposes.

Madam, let me now address Ms Jessica Tan's question about strengthening Government effectiveness. It is an important question because an effective and high-performing Government is needed to prioritise and utilise resources optimally. As a central Ministry, MOF plays a key role in bringing this

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about. I will share two sets of initiatives.

The first is crowd-sourcing. The World Economic Forum conducts an annual ranking of ICT usage and readiness amongst governments. Singapore has consistently been ranked amongst the top three, out of 140 economies. But we recognise that we can do more. The Government is pushing for a more pervasive use of data analytics. In fact, some agencies are already doing so. For instance, LTA uses data analytics to better manage crowding on public buses. It is through the mining of fare card data that has allowed the LTA to pinpoint which segments of a bus service are most crowded, down to 30-minute intervals. This has helped the LTA to plan for the introduction of the Peak Period Short Service which has eased over-crowding on certain services when the crowding situation is the most severe.

We agree with Ms Tan that there is, indeed, room for more agencies to mine data more intensively and there is also a rich diversity of experiences amongst our citizens that we should draw on to improve delivery of public services.

Several of our agencies have, in fact, started crowd-sourcing competitions to catalyse ideas from the public. One such platform is the Apps4SG Competition, co-organised by MOF, IDA and Singapore Land Authority. Last year, we received close to 90 submissions of new apps or online services to improve the way we live and work in Singapore. One of the finalists was a pair of siblings, Hairul and Shireen who proposed an app called FundWagon. Leveraging on publicly available Government data, the app promotes crowd-sourcing of donations, by matching interested donors to specific projects of non-profit organisations. Another example is the HDB, which has been organising competitions since 2011 to crowd-source "cool ideas for better HDB living".

To proactively reach out to partner more citizens, MOF will launch a prototype of a whole-of-Government crowd-sourcing portal called e-Citizens Ideas. This will be done by April. e-Citizens Ideas will bring all such crowd-sourcing competitions in the Government together to make it easier for citizens to participate.

The second set of initiatives to strengthen Government effectiveness focuses on procurement. I agree with Ms Tan that tightening procurement practices to the extreme can be counter-productive. A balanced approach would require equal emphasis on robust rules, supervision and top level oversight, as

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well as investing in the capabilities of the procurement officers.

Last year, I spoke about plans to professionalise the procurement function. We will launch the Procurement Specialist Track by September this year. This will send a clear signal to more than 2,000 procurement officers across the Public Service of our commitment towards their capability development. With the launch, there will be more structured development opportunities and career pathways.

The Procurement Competency and Training Framework will also be enhanced. Currently, all procurement officers undergo mandatory basic training on Government procurement principles and rules. We will introduce mandatory continuous training to ensure that skills are deepened as the procurement officers progress in their careers. Besides developing the capabilities of individual procurement officers, the Government can build up expertise in specific domains and share it systematically across agencies so that we can all be smarter buyers. For instance, IDA will deepen its expertise in developing complex IT systems, agile digital services and data science. This will help other agencies tapping on IDA's expertise to procure the right technologies that will improve service delivery and policy implementation.

Madam, let me now turn to tax incentives and reliefs. Ms Tan Su Shan and Mr Yee Jenn Jong raised concerns that the bar for qualifying R&D activities was set too high. Madam, our R&D definition is similar to that of other jurisdictions, such as the UK and Australia. To facilitate businesses in their R&D claims, we have issued a note on the criteria, as well as the qualifying R&D activities, taking into consideration the practices in other jurisdictions. In addition, IRAS has established a Technical Advisory Panel, comprising academics and industry experts in the fields of Science and Technology, which it can tap on for advice in the evaluation of R&D applications.

We agree with Ms Tan that rules should not be set up to deter risk-taking of any kind. We are working with tax agents and relevant economic agencies to review the R&D note, to provide more helpful guidance to businesses. This new note will be ready by June.

Mr Yee Jenn Jong called for a review of two schemes, the Mergers and Acquisition Allowance (M&A) and Life Insurance Relief. The M&A scheme was introduced in Budget 2010 and enhanced in Budget 2012 to help defray the cost incurred by companies undertaking M&As. Sixty-seven companies have benefited from the scheme thus far, of which 50 – which is about 75% – are

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SMEs. More than three quarters of the tax benefits in Year of Assessment 2013 went to SMEs.

The M&A scheme's main purpose is to promote restructuring through consolidation amongst SMEs. Therefore, the requirement is that the acquiring companies must take a controlling stake in the target companies, which can include acquisitions taken in smaller steps over a 12-month period – restructuring does not have to be just a one step to achieve the controlling stake but it can be smaller steps over a 12-month period. It is not catered to companies acquiring parts of a business operation, such as plant and machinery or intellectual property rights. Such asset acquisitions already qualify for other tax deductions or allowances, for instance, under the PIC.

The M&A scheme is due to expire in March 2015. We will take on board the feedback and useful perspectives provided by Mr Yee and others when conducting the review.

The Life Insurance Relief is claimed by fewer than 10% of individual taxpayers, so Members may not be familiar with it. It has been around since colonial times and catered to people who bought life insurance as a form of retirement savings. In 1955, we introduced the CPF, and that provided citizens with a dependable form of retirement savings. As part of the Government's support, taxpayers enjoy tax relief for their mandatory employee CPF contributions.

However, the Life Insurance Relief has been retained as a concession to those who are not required to contribute to CPF, or who have low CPF contributions of less than $5,000 per year. The cap of $5,000 for life insurance premium relief is not low. Based on current information, more than 60% of the claimants were not affected by the cap. In fact, there are three-quarter million, or 40% of CPF contributors, with less than $5,000 in mandatory employee contributions. These will, thus, enjoy tax reliefs of $5,000 or less.

We have no immediate plans to increase the cap for the Life Insurance Relief cap. To boost retirement adequacy, our focus is on strengthening the CPF system. Tax relief is available for voluntary contributions by self-employed individuals, as well as for the topping up of Retirement Account or Special Account under the CPF Minimum Sum topping-up scheme.

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Madam, let me now turn to some very important questions that Mr Inderjit Singh has posed regarding our reserves and also CPF. First, Mr Inderjit was concerned that we may be spending too much from our investment returns and asked if the returns would be sufficient to prevent a decline of our reserves. The Net Investment Returns (NIR) framework allows us to tap on the investment returns of our reserves for budgetary spending in a sustainable way. Under the framework, the Government can only spend up to 50% of the long-term expected real returns from the net assets managed by GIC and MAS. Hence, what this also means is that 50% of the expected real returns are retained in our reserves, ensuring that it is not de-cumulated over time.

Our Government spending needs will increase over time but that should not drive the investment strategies of GIC and Temasek. They must continue to invest with the aim of achieving good risk-adjusted returns over the long term. So far, they have achieved this. If the Government is in need of more revenues besides that attainable within the NIR framework, the solution is not for our investment entities to take more risk in the hope of higher returns. The solution has to rest on our budgetary measures, not the investment strategies of GIC and Temasek.

Mr Inderjit also asked if the interest rate of 2.5% for the CPF Ordinary Account is fair and how it compares with other systems. Let me first highlight a few points that have to be borne in mind when comparing CPF returns with those in other systems.

First, for the purposes of long-term savings, it is not appropriate to look at the Ordinary Account, or OA, rate alone, as most CPF members use the OA account mainly for home purchases. If we look at the Special Account, the SA, and the Retirement Account, the RA, that are invested for the long term, the interest rates are higher. Members can also choose to transfer monies from the OA to the SA. The SA, which is for long-term savings, pays an interest rate of 4% currently. Further, we pay an extra interest of 1% for the first $60,000 of CPF balances.

A second point to bear in mind is that the returns on any financial instrument have to be viewed in the context of the performance of their domestic currencies over time. Interest rates are typically higher in countries whose currencies have tended to depreciate over time because higher interest rates compensate for weaker currencies.

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A third factor is that many pension funds abroad, especially in emerging markets, are predominantly invested in their domestic capital market and take on the risk of the equities and bonds that they are invested in. For such pension funds, the returns that can be expected by members will depend mainly on the performance of the domestic market. Unlike many other pension funds, the CPF system does not expose members to market risks. The CPF monies are invested in risk-free Singapore Government securities. Their value is assured as they are guaranteed by one of the few remaining AAA credit rated governments in the world. Regardless of when CPF members retire or the state of the financial market when they retire, their CPF monies are safe.

In many pension funds abroad, there is a promise of higher returns. But depending on when you retire and the state of the financial markets at that time, your pension withdrawals can vary quite significantly. In our system, with the CPF monies being invested in Government securities, it is the Government that bears investment risks. And what does this mean?

The Government's assets that back its liabilities to the CPF include those managed professionally by GIC in particular. GIC invests in a widely diversified global portfolio with the aim of obtaining good long-term returns. GIC has, in fact, delivered creditable results over the long term. However, over the short term, returns can fluctuate widely, depending on global market cycles and shots. This is, indeed, what happened during the global financial crisis when the global markets fell sharply. GIC's returns during this recent period were, hence, much lower than what the Government paid the CPF and, in turn, what the CPF paid its members. GIC's returns over five, 10 and 20 years are presented and explained in its annual report. Temasek also publishes, each year, extensive information on its performance.

The basic point, Mdm Chair, if I could summarise, is that unlike many pension funds, our CPF system does not expose members to market risks. It provides a fair return for the majority of Singaporeans who would not want to be exposed to high levels of investment risks. Those who are prepared to accept higher risks in the hope of potentially higher returns can already invest through the CPF Investment Scheme although, in doing so, many have found their investments not performing better than the returns offered on the Special Account.

Madam, we have achieved good returns from the GIC over the long term but, over the short term, its exposure to local markets can mean that its returns fall short of what the Government pays the CPF. The Government takes the risks, not CPF members. As I have explained earlier, investment returns that we

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expect to make by taking this long-term view and, bearing the risks of investments, are not hoarded away in the reserves. Fifty percent of the returns from our reserves flow back to our annual Budget. The long-term returns, therefore, help to fund spending, which benefits our citizens.

Mr Inderjit asked if giving higher CPF returns will be better than sharing benefits through Government transfers. The CPF system, with its risk-free returns, together with our fiscal transfers, is a fair and equitable approach for our citizens in the long run. Unlike most pay-as-you-go pension systems, our CPF system is designed to be sustainable. There are no inter-generational transfers. Instead, CPF contributions are personal savings and members withdraw their own savings.

However, the Government systematically tops up the CPF savings of the lower income. We do this through Workfare, housing grants and other schemes. These top-ups are all borne by the Budget as explicit fiscal transfers. So, the main responsibility for progressivity is placed on the fiscal system.

Mdm Chair, we have and will continue to adapt our system of CPF and social transfers that are borne by the Budget to suit our changing circumstances and needs. Mdm Chair, I thank all Members once again for their cuts and thoughtful comments for MOF.

We have very little time, so please keep your clarifications and replies short.

I would like to thank the Senior Minister of State for the answers. She has said that the Government is reviewing the R&D note for PIC for better advice. I am glad to note that. I just want to share that a lot has been talked about Block 71 at Ayer Rajah. In fact, that is where I went to ask them about their claim experience for R&D on PIC. So far, it has all been negative. These are companies that are trying to develop some world-changing app or stuff like that. Is it intended to be so that the IT companies will find it rather difficult to claim for R&D, and are the ground staff in IRAS able to assess their claims?

Mdm Chair, as Mr Yee was asking his question, I was also thinking about earlier comments that Er Dr Lee Bee Wah had raised during her contributions to the Budget debate. As it turns out, Er Dr Lee had been given feedback by a number of businesses who had difficulties claiming for PIC cash pay-outs. It is a relevant question; it is a meaningful question to ask and it gave

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us impetus to check.

What our checks do reveal is that there are such companies. Part of the reason why they did not get their cash pay-outs as quickly as most others was due mainly to incomplete documentation which can be easily rectified. I would attribute it, in part, to a lack of familiarity by the companies involved and also on the part of our officers responding quickly so that they can make the adjustments soon.

I suspect that in the case of R&D claims, we are also going through this learning process. I do not discount at all the important view that Mr Yee has shared, which is that startups operating in Singapore have found it to be not so easy for them to make their R&D claims. Our commitment is to understand it more deeply and to find ways to be helpful. So, what I can assure Mr Yee is that we will take his feedback, as well as those of the businesses that are operating – not only at Block 71 but elsewhere – very seriously, and whatever it is possible for us to do to help them, we will certainly do so.

I would also hasten to add that tax incentives are just one of the many ways in which we can encourage R&D and innovation. Putting an over-emphasis on the incentives will not serve us well. Many other factors need to come into play in order for the economy, in order for the businesses within an economy, to have a very enterprising spirit as well as to be willing to take risks and to venture. And our approach is to try and be as supportive as possible. That is the assurance that I will give to Mr Yee.

If there are no other clarifications, Ms Jessica Tan, do you wish to withdraw your amendment?

Mdm Chair, I would like to thank the Senior Minister of State Mrs Josephine Teo for taking our questions and considering all the cuts, because I went through the list. She had addressed all the cuts. Thank you very much and, with that, I beg leave to withdraw my amendment.

[(proc text) Amendment, by leave, withdrawn. (proc text)]

[(proc text) The sum of $677,424,100 for Head M ordered to stand part of the Main Estimates. (proc text)]

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[(proc text) The sum of $157,022,500 for Head M ordered to stand part of the Development Estimates. (proc text)]

Mdm Chair, I beg to move, "That the total sum to be allocated for Head S of the Estimates be reduced by $100".

Madam, our small independent nation will turn 50 next year, a tender age, compared to many other countries around us with established histories.

We have come far in such a short period of time. Let us take education, for example. In 2006, there were 62,918 going to universities. In 2012, six years later, this number went up to 76,665. That is a huge jump of about 20%. Over a span of six years, the number of graduates will certainly be on the rise with our constantly improving education system and the opening of more tertiary level institutions. That would mean more highly educated people looking for employment and career opportunities.

As our country becomes more developed, it will be more challenging to create good jobs and career opportunities for Singaporeans. As an example, in cities like Tokyo, Seoul and Beijing, their youth are contending with the problems of more college graduates than good jobs. Like the Chinese idiom goes, "More monks than porridge".

In 2013, it was reported that only 28% of Beijing's graduates and 44% of Shanghai's graduates had found jobs. In Tokyo, undergraduates start job hunting as early as one year before graduation so that they can secure good jobs in large corporations. The competition is so intense that some of these graduates went through at least six rounds of exams and interviews to get a job. These are real recent circumstances that others are facing. It is not happening in Singapore but could fall on us if we are not careful.

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The examples and challenges that I mentioned beg the question to be answered: what should we, as a small country, do to grow and develop quality manpower in a sustainable manner that will be able to drive the economy?

I believe our strategy, going forward, must be to ensure that Singapore workers, and in particular Singaporeans, enjoy good jobs, competitive wages, and that companies are able to have a highly skilled workforce to help them grow at the same time.

For many years our approach has been to boost productivity for the workers. The productivity enhancement to education and training is, hopefully, giving us the results. Are these efforts to improve the productivity of our workforce giving us the outcomes that we want? Very often, we hear feedback from our young complaining about not getting the good job, the good pay. And, sometimes, we can understand that they are also looking at the investment that they have put in over the years and by their family for education. How then could we ensure that we maintain the sustainable workforce load and at the same time providing opportunities for Singaporeans?

Nevertheless, in the current tight labour market, I am heartened that the Government is taking more concrete measures to promote employment for women and also for the elder workforce. Are we getting more traction for our flexi-work schemes or are we still having challenges in the efforts to get the women to come back to the workforce? We also hear feedback about other workers who are willing to work beyond the age of 65. I believe that the elder workers who are healthy, capable and skilful should be allowed to continue to contribute to our economy without the worries and the cut-off age being put over their heads.

As we look at the Budget this year, Deputy Prime Minister Tharman had announced at the Budget there will be no foreign workforce tightening measures except for the construction industry. Besides managing the quantity of the foreign workforce, we need to seriously manage the quality of our foreign workforce. In this regard, Madam, what are the measures that are being looked at that can help our industries improve their foreign workforce quality?

In conclusion, Madam, a few days ago, this House had overwhelmingly endorsed Budget 2014 that has a far-reaching set of planning parameters. This commendable vision that we want more white collar workers to be active in the industry but more steps need to be taken to ensure that Singaporeans are prepared for the future. What can we do to ensure that they have the proper

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skills and aptitudes so that they can pick up these jobs in the future and continue to provide a good workforce and manpower quality in Singapore?

Madam, a key assumption of Singapore's success with our restructuring and transformation is premised on growth. And Mr Lim Hng Kiang yesterday in our COS discussions talked about the growth sectors that we are looking at and what is being done.

I have spoken on the point of access to qualified manpower to support this growth. This is an area that I am concerned about as I feel that while we are driving growth opportunities and creating these quality jobs, how do we ensure that we also have the right talent to be able to fill and support these jobs? Given the constraints of our labour market, the core of this talent base has to be a Singapore core.

Access to quality manpower is a key determinant for the businesses to locate their operations here, as well as to encourage our companies in Singapore to continue to locate their operations here, which then, in turn, creates our ability to build those jobs, improve wages and continue to have the quality jobs.

One of the areas I also touched on in my Budget speech was about innovation and our ability to use technology as well. What we have noticed is that there has been a drop in the enrolment of students in engineering, the sciences and IT as well. This is an area that needs to be addressed. I would like to ask what measures are being taken to ensure that we continue to have the talent going into these areas so that we can then build on the skills.

I had also mentioned in my Budget speech that technology and globalisation will affect the way that we work while they present new opportunities as well as challenges. Many of the future jobs do not even exist today. What this means is that our workers have to be agile. What are we doing to help the workforce as we talk about skills building is more than just training? What are we doing to ensure that our workforce is able to adapt to these changing environments? Skills like critical thinking, problem solving, collaboration, communication: these are going to be very core for our workers to be successful.

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Change is not a bad thing. In fact, change in this instance is good because we are talking about better jobs, better quality and a better work environment for our workers. But in order for them to succeed, they need to be able to adapt. I would like to ask MOM what is being done to help our workers adapt to these changes as we continue to train them with the specific skills required for future jobs.

Mdm Chair, Members of Parliament, good afternoon. Budget 2014 is a far-sighted, bold and inclusive Budget which can be characterised by 3 Ps – Pioneer, People and Productivity.

For the business portion of the Budget, productivity is at the centre of the economic agenda. Since 2010, the call for productivity has been repeated in practically every major policy speech. There is a strong push for productivity at all levels.

SMEs have accepted the Government's call to rely less on foreign workers and taken measures to raise productivity. It is not an easy path, as SMEs, unlike the larger companies, may not have the knowledge and guidance on how to embark on their transformation journey. Nevertheless, most SMEs know that this is a path that they have to take for their long-term business sustainability.

However, even with all these efforts made and the help from the Government, we often hear SMEs' frustration over the inability to recruit Singaporeans, including local executives. SMEs, unlike the large local companies and MNCs, cannot afford to meet their relatively higher salary expectations. The manpower shortage also means that companies, especially the larger ones offering better salaries, better career advancement and employment terms, would be able to recruit the workers they need. SMEs, thus, would be left with the short end of the stick.

By 2020, 16,000 Singaporeans would have been placed in six local universities. This would represent 40% of Singaporeans in each cohort, up from 27% today. We have not included the graduates from private schools and those who had gone overseas. These better-educated Singaporean graduates will have higher job expectations. Jobs deemed to be of a more humble nature will be less desirable. But this means that there is an increasing vacuum for the lower-end jobs which are subject to foreign labour restrictions and higher levies. If manpower needs are not met, companies will be stranded as they cannot

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deliver goods and services and may be forced to close or relocate. Firms like Japanese specialised chemicals maker, Ishihara Sangyo Kaisha, and hard-disk maker, HGST Singapore, have already closed their doors and retrenched a few hundred workers.

This brings to us another casualty of economic restructuring – retrenchments. We may be looking at a situation where many of the retrenched are PMEs who used to command a relatively higher pay and positions. According to the statistics from MOM's third quarter 2013 Labour Market report, PMETs formed nearly two-thirds of residents laid off in the third quarter of 2013, and as many as 33.7% of those unemployed are actually university graduates. On one hand, there is a manpower shortage. On the other hand, those older or mature PMEs find it difficult to get absorbed back into the workforce, especially among SMEs who are constantly screaming out for manpower. PMEs find it difficult to lower their salary expectations substantially, and are much less willing to take on a more diverse job scope, but that is mainly in SMEs. Ironically, SMEs account for 70% of our employment. So, how can this situation be tackled?

Manpower issues are extremely challenging, and we have been trying our best to counter them with productivity measures. But at the end of the day, can productivity gains solve all the manpower problems?

SPRING Singapore has put together an SME Talent Programme to help Polytechnic and ITE students get jobs in SMEs to help with the manpower crunch. Perhaps, a similar programme could be started to help displaced and mature PMEs find relevant jobs in SMEs.

In addition, we noted that WDA, through the Professional Conversion Programme and Max Talent, has made an effort to help retrenched PMEs in reskilling themselves for the possibility of finding new careers in selected industries and placement in SMEs. However, SMEs may not be from these selected industries, such as healthcare, tourism, aerospace, finance, F&B and so on. Therefore, would it be possible for this Programme to be finetuned so that more SMEs can enjoy the Programme? We certainly look forward to having specific support to bring the two groups together.

Madam, in May 2013, the National Development Minister made a call for more local crane operators in the construction sector. It was reported that only half of the 3,600 operators here

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are Singaporeans. There is a need to reduce reliance on foreign workers for two reasons. These are well-paying jobs that Singaporeans can do. According to the Minister, crane operators can earn $4,000 to $7,000 a month with overtime pay and allowance.

A tower crane operator came to my MPS recently and shared his side of the story. He said many companies in the construction sector are still hiring more foreign crane operators, not less. These foreign workers are cheaper and can work longer hours. As a result, salaries came down and many of his operator friends are unable to secure full-time work. Some of his friends work only two times a week. He handed me a letter with the names of 46 tower crane operators pleading for help.

Last night, I met a fellow diner at the hawker centre near my house and I found out he is also a crane operator. He added that foreign construction companies tend to hire their own people to operate cranes. He also felt that the number of foreign crane operators has not come down despite the move to train more local crane operators.

Madam, the reliance on foreign crane operators will never come down despite the call to train and hire more Singaporeans. This is because BCA has launched a temporary initiative to relax the recruitment of foreign crane operators at the same time when it launched an initiative to attract more Singaporeans to join the trade. Under the relaxed ruling, for every new local crane operator hired and trained, a company can now recruit up to four new foreign crane operators. This will probably explain why people are seeing more foreign crane operators and not fewer.

Putting the two initiatives side by side, the percentage of Singaporean crane operators in the construction sector will come down significantly over time. So, the call to reduce reliance on foreign crane operators will not happen anytime soon. I would like to ask the Minister when we can see an improvement in this sector.

Next, major clients like LTA and HDB often require tower crane operators who have at least five years of experience to improve safety. So, the idea of hiring and training new local crane operators is not going to make sense for companies bidding for major public projects. Some have called for the five-year experience requirement to be reviewed and replaced by the number of hours an operator clocked at work as a better gauge of safety regulations.

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This idea is worth exploring because an experienced pilot is known for the number of flying hours clocked and not by how long he has his licence. I urge the authorities to look into this so that more local tower crane operators can qualify to work on major projects sooner rather than later.

Madam, I also urge the Minister to look into helping local crane operators find a footing in the industry, if necessary, set in place rules to protect them so that they can have job security. Does it not make sense for the Government to encourage more locals to become crane operators when there are few jobs for them at the end of the day?

Madam, the world's economic agenda is not to preserve existing jobs. The preservation of jobs is in direct conflict with labour productivity. Manpower-saving technology is being created more rapidly these days. The case is even stronger now as we face smarter machines.

MOM cannot focus only on pseudo-productivity growth within a sector or within a division. We need to integrate cross-industry trends. For example, 3D printing has productivity innovation potential for the biomedical and chemicals sector.

What we need is a quicker pace of transformation. Industries that do not pick up pace should be engaged. Their workers should be offered social support, such as unemployment insurance and special lump-sum subsidies. It may be even more costly to keep a low value-added job than to create a stronger social net. MOM should begin to study the economics behind this.

We cannot resist change. But we can mitigate the impact. Singapore seems to be making small change and is afraid of increasing social expenditure. Getting workers to retrain and upgrade themselves may be a luxury that the Government can no longer afford. Upgrading was still feasible in the 1980s when technology was improving progressively. Now that change has come exponentially faster, adjustments would become more painful. Singaporeans will be brave enough to face it if the Government is also brave enough to face the change. Unless we embrace revolutionary changes by restructuring our

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industries, we will become obsolete and irrelevant to the needs of the world.

In the latest breakdown of economically inactive persons in Labour Force Survey 2013, there were 8,600 discouraged workers. These are persons who are not actively looking for a job because they believe their job search will not yield results.

There are others who want to work but cannot because of family responsibilities like childcare, care-giving to family and relatives, and housework. Almost half of the over 300,000 economically inactive women cited these reasons.

There were also over 85,000 time-related underemployed residents. These are part-timers who were willing and available to work additional hours but are unable to find better work.

Finally, there are underemployed workers who are doing work that they are overqualified for. Many older PMEs are in this group.

May I ask the Minister:

What is MOM doing to help discouraged workers to find work?

How does MOM help the underemployed to increase their working hours or find jobs commensurate with their skills and experience?

And how is MOM working with companies and other agencies to remove structural impediments to employment, like lack of childcare, student care, eldercare or flexi-work arrangements?

Can MOM publish a new aggregate measure of labour under-utilisation that factors in not only the unemployment rate, but also discouraged workers, the underemployed and economically inactive persons who want to return to the workforce?

Tracking this measure will help focus minds on factors that lead to a lower labour force participation rate, which has a direct impact on economic growth

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and household incomes.

Mdm Chair, thank you. The principle of meritocracy should apply not just in school but at the workplace.

A recent IPS study on racial and religious harmony reported that of the more than 3,000 people polled, 20% of Malays and 18% of Indians said they often, very often or always feel discriminated against when it came to applying for a job and there was a similar response for promotions. Significantly, this perception was not limited to members of the minority races.

While this survey was about perception and not actual discrimination, in such matters, perception is also important. Age discrimination made the news last year when it was reported that several agencies in schools had imposed an age limit when hiring security guards, thereby flouting anti-discrimination guidelines. These examples are not exhaustive. Other forms of discrimination exist, including against gender, nationality and the disabled.

We have guidelines against discrimination issued by TAFEP but they do not have the force of law and there are no penalties for non-compliance. The time has come for anti-discrimination legislation. The usual argument against such legislation is that it will be ineffective —

Mr Hri Kumar, your time is up.

I have two minutes, Madam.

Please proceed. There is something wrong with the system here.

Thank you. The time has come for anti-discrimination legislation. The usual argument against such legislation is that it will be ineffective as employers who discriminate will not admit to doing so. Yes, it will be difficult to enforce but that is not a reason for not having it. More importantly, such a law will carry a strong moral force and it sends the message about what we believe in and that there must be accountability in employment practices.

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In line with this, I also urge the Minister to set up a labour tribunal to hear all employment disputes and grievances quickly and at low cost, much like how FIDReC does for financial disputes. Having a job makes a world of difference in the lives of many people, and those who lose their jobs or are treated badly at work rarely have the ability or appetite to take on their ex-employers in court. Where Singaporeans have a legitimate grievance, we should help them resolve them in a fair, transparent and expeditious manner.

Mdm Chair, in this knowledge-based economy, globalisation and technological advancements can greatly improve productivity and output. Computers are now smarter, can access more data and, in certain sectors, have even replaced many workers' jobs with just a click of the mouse. As we embrace the wave of technological advancements, we must also look out especially for PMEs even in the service sectors and in office and administrative roles.

If workers and PMEs are not multi-skilled or up-to-date with new skills, they will be vulnerable to retrenchment at a faster rate. The employment statistics released by MOM indicate that in 2013, 11,400 workers were laid off, 390 more than the year before. If more is not done for our Singaporean PMEs to stay employed or employable, this figure may continue to rise, in line with technological advancements.

Firstly, can the Minister identify PMEs working in low-growth sectors and launch, nation-wide, an intensified and concerted effort to help them be trained for alternative jobs in high-growth sectors? This is to ensure that they will be protected against redundancy. Assistance can also come in the form of funds required for training, should they make a mid-career switch, especially if they are in their 40s.

For example, present funding support for Part-time or Executive Diplomas in our national institutions are restricted to a five-year time lapse upon completion of the Diploma before the applicant is allowed to embark on subsequent courses funded by the subsidies. With globalisation and a knowledge-based economy, we must constantly stay ahead of global competition through innovation and better productivity. This means that continuous training, learning and education are a necessity for all Singaporeans to stay competitive. Can this five-year time lapse be reduced to two years if we

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are to remain relevant?

Secondly, will the Minister consider tripartite determination of a national wage range for different jobs? Through the tripartite consultative process, we now have the Progressive Wage Model for the cleaning sector. Extending this to other sectors would be a good progression to determine a wage range to commensurate with PME jobs. This is not a call for a minimum wage, but a conscious tripartite effort encompassing professional associations, including the unions and industry bodies, to determine the fair wage to be paid to PMEs in different sectors. This would be a more comprehensive extension for the role of the National Wages Council.

Thirdly, simply open up any newspaper or online job ad and you can see many jobs in the market today that require someone to be a degree holder – even if it could be a simple and entry-level marketing or administration job at times. If this is to be the trend, will the Minister extend the funding to help citizens in terms of scholarships and bursaries for a University education, since the phenomenon has become more of a necessity than the norm.

Governmental stimulus or policy is crucial in allowing our talented and hardworking PMEs, who will be the rank and file of tomorrow, to flourish and succeed and lead better lives in this Singapore we call our home.

Madam, I have observed three trends that will change the face of the workforce of the future in Singapore.

One, trends that are closer to home, the Singapore labour market:

trimming of the foreign workforce;

rise of the blue-collar workforce;

entry of more fresh graduates into the workforce with the new targeted 40% University enrolment rate per cohort; and

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the continued push for productivity improvements through IT, process engineering, job enrichment and lifelong learning.

Two, trends that arise from the unstoppable pace of a digital global world.

This is an age where work is not bound by geography, where learning is not confined to physical classrooms and face-to-face lecturers. This is the age of not only full-blown Massive Open Online Courses but also simpler "playlist-type" of learning models where digital citizens can personalise what they want to learn, sometimes from just YouTube or Google education channels without being obliged to take full certification courses.

Three, trends that relate to an expanded and changing pool of contributors to work.

Beyond the confines of the enterprise wall with its core set of permanent staff is a critical new extended workforce – a global network of outside contractors, outsourcing partners, vendors, strategic partners and other non-traditional workers. Many of them may be one-man self-employed workers or "portfolio workers" who serve several clients; whose work can range from being gardeners to plumbers to webmasters to bookkeepers or even lecturers. Some are partners in small start-ups, similar to the founders of companies like Facebook and WhatsApp in their early days.

I have three recommendations for the Ministry's consideration as it maps manpower plans for the future.

One, MOM should update the mode of teaching and learning of the 21st century workforce in the new CET masterplan it is developing. Three groups of people that make up the workforce of the future in the next decade and beyond will need different types of learning support:

the digital natives who are born into the world of iTune, smartphones, apps and playlists;

digital migrants – many of us here – those who have to learn how to retool and learn to work in the world of digital tools and language;

digital outcasts – those who, for various reasons: age, ability or deprivation – are aliens in the digital world and are at risk of being outcasts

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forever if they are not supported.

For all of them, it is important to identify and develop the core skills and prioritise elective skills that each group needs in order to maximise their full potential.

Even for vocational skills training, there is room for current MOM-approved CET solutions to move from a more traditional face-to-face methodology to a more updated pedagogy. For instance, to learn how to make a bed, it is likely that a typical WDA trainee will be taught through face-to-face Powerpoints and demos from a trainer. How much more efficient and consistent it is if there are online resources, such as good quality bed-making YouTube clips that will allow the trainer to repeatedly use to ensure a consistent best way to make a bed; and the trainee, if he is able, to first learn at his own time, pace and place and then meet his trainer face-to-face for more individualised coaching? Blended online face-to-face instructions; and flipped classrooms are already common practices in the education system.

I urge the Government to provide more funding to allow MOM to source learning content, pedagogy and assessment that are more relevant to the 21st Century.

Two, MOM should study the profile of the new extended workforce and include them in the Ministry's efforts to attract, train, develop and retain talents. The CET masterplan and any other efforts to improve productivity through schemes, such as the PIC, should seriously take into account self-employed individuals or smaller scale local employee-owners.

Lastly, but not least, I urge MOM to take an even stronger interest and be one of the lead Ministries to innovatively identify and stitch jobs and contracts for those who are at risk of being left behind – the elderly and those with special needs. This cannot be simply left to charity and compassion. If properly trained and supported, they can perform many work tasks for the Government and other employers and free other human resources to be redeployed to more suitable areas of work.

Mdm Chair, the need for higher wages is most acutely felt by low-wage workers who earn less than $1,500 per month. These workers often struggle to make ends meet and require

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the assistance of Government schemes to assist them with their daily needs.

Therefore, there has been a clear need for the Government to adopt measures that would mitigate the wage disparities in our society, and to ensure that low-wage earning Singaporeans are not left behind. Rather than simply mandating a minimum wage or forcing employers to increase the wages of employees across the board, the Government has rightfully adopted a wider and more comprehensive approach by raising wages the right way.

Initiatives, such as the Workfare Income Supplement (WIS), have been an effective means for low-wage workers to supplement their incomes, be it in the form of cash payouts or CPF top-ups. Similarly, the Workfare Training Support scheme has been implemented to great effect to provide generous subsidies for the continued training of workers and, consequently, raise the wages of these workers.

In addition, the Government introduced the Wage Credit Scheme (WCS) and the Inclusive Growth Programme (IGP) to provide support for employers who raise the wages of their local employees, as well as to incentivise employers to share productivity gains with their employees.

Taken together, these initiatives have paved the way for low-wage workers to improve their skills through training and to increase their productivity and wages over time. However, I wish to ask the Minister for Manpower: what further efforts are being contemplated to continue to raise the wages of our workers the right way, particularly the wages of low-wage workers who have to make ends meet with less than $1,500 a month, through increased productivity and training?

With the Government and the public sector taking the lead by implementing best sourcing practices, through supporting programmes like the Best Sourcing Initiative, it is my hope that such best practices will also filter down to the private sector and influence their procurement procedures.

I would like to also commend MEWR for championing the recent amendment to the Environmental Public Health Act in Parliament this month. In a sector that is particularly prone to cheap-sourcing measures, the implementation of the new licensing regimes in the cleaning industry will ensure that cleaners are offered better training and employment conditions.

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This amendment is particularly important as it will operationalise the implementation of the Progressive Wage Model that was recommended by the Tripartite Cluster of Cleaners in late 2012.

A further expansion of the Progressive Wage Model should be encouraged across other industries like the security and landscaping sectors as this model provides a fair and transparent means for workers to attain an increase in wages. As these are industries where wages are often suppressed due to the cheap sourcing measures, the implementation of the Progressive Wage model ensures that low-wage workers in these industries have a clear path for career progression and an increase in wages.

Furthermore, by having a clear ladder for the increase in wages through skills training and increased productivity, workers will be empowered to take a personal responsibility in the improvement of their own skills and the consequent increase in wages.

Progress has certainly been made in recent years to raise the wages of our workers. However, there is still more that can be done to further improve the wages of our workers and to do so the right way.

Madam, we all recognise the need to complement our workforce with migrant workers, but rather than recruiting by headcount, employers should recruit migrant workers for the skills and value that the migrants can bring to the job. MOM should help our employers to keep their better foreign workers for longer, rather than to encourage the churn of new migrant workers into Singapore which will facilitate illicit profiteering by the errant overseas employment agencies, and the young and unskilled migrants are able to come here for the low-skill jobs just simply by paying more money to the intermediary.

We need to actually emphasise the skills and productivity in our recruitment process. I urge the MOM to have a skills and performance-based standard as a condition for Work Permit renewal for migrant workers. This will increase the overall skills profile of our migrant worker population. Better skills and qualified workers are also easier to upgrade and integrate, more productive and are also less likely to come with the burden of a large agency debt.

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Besides skills certification, currently, there is also no standard contract for the migrant workers and this leads to malpractices and exploitation by overseas agents promising terms and conditions that distort and misrepresent the true state of the working and living conditions here.

I hope the MOM would also work with the unions, as well as the Migrant Worker Centre (MWC), to put in place some form of standardised all-model contract for migrant workers or sectoral guidelines covering all the key terms and conditions for employment, living and social amenities in Singapore and yet, at the same time, incorporating the terms or guidelines into the permit approved documentation, and also translate this into a language that they can understand, so that they all know what they are really coming for.

Of the grievances handled by the MWC over the last four years, a large share is due to the calculation and payment of salaries. While the mandating of payslip issuance to the workers has been put in place in the pipeline – MOM has set a two-year implementation target – but to avoid such salary disputes further, I hope the Government will reconsider mandating electronic payment of salary through Giro for all workers, particularly of all the Work Permit holders, as it is already the case for all the S-Pass holders currently.

Mdm Chair, I commend the Ministry for the willingness to review the "one employer from entry to exit" rule at the moment. I hope the Ministry will review this, however, because this control has created an environment that discourages aggrieved migrant workers from coming forward to report the infringements of their employers as they fear being repatriated even if their grievances are legitimate.

I urge the Ministry to allow a change or transfer of employer scheme for all the Work Permit holders, for example, one, workers who have reached the end of their terms of employment; two, workers who can prove legitimate grievances against their employers; three, workers who have obtained their existing employer's consent to change employers. The benefit is definitely significant.

Next point – fair and proper treatment for migrant workers should extend beyond the workplace into their living environment. The major dormitory operators in Singapore, under the advice of the MWC, have already come together to organise Dormitory Associations of Singapore, and have a self-initiated collaboration with SPRING Singapore to formulate some form of

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accreditation standards for the industry.

I want to call on MOM to encourage as well as participate actively in this collaboration and also lend its endorsement to this set of standards. I would like MOM to consider making this set of standards a regulatory bottom line for the industry to guide the enforcement and prosecution of those who fall below the standards of care, hygiene and amenities.

I would also like the Ministry to tell us whether there are plans to build more recreational centres for all the migrant workers in Singapore.

Madam, connected to the issues of living conditions and the standards of work is also the issue of transportation for the migrants. So, I would like to also ask the Ministry whether they have a plan to ensure that such transportation remains accessible and is safe for all migrant workers between their workplace and their "play" place.

Madam, we would also like to urge MOM to really look into how they can work more closely with the NGOs to strengthen the dispute resolution mechanism for all migrant workers to ensure that there will be amicable resolution of all disputes.

Thank you, Madam, for allowing me to raise the issue that is affecting the reliability and reputation of our services sector. I would like to declare my interest on this subject.

In the bid to reduce the dependency on manpower, particularly foreign manpower, we have tightened the foreign manpower quota and raised the levy. This has been applied across all sectors, with the different types of businesses grouped together. While this approach may have helped some industries, I would like to highlight the significant inconvenience and loss of business to some service sectors, like retail and F&B.

These businesses are very heavily dependent on labour. Setting up a retail store is a function of people who sell the product, organise and maintain thousands of products you choose from in a store. But, today, the services sector is a broad classification in which retail, F&B, financial, insurance, real estate, transport, storage, and so on are all lumped together. It is apparent that the level of automation possible and the human customary interaction needed

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are not the same in all the listed industries.

I would like to request that a study to afford to segmentise the service sector businesses, based on the dependency on human labour, be done so that labour-intensive businesses like retail are not punished unduly.

Today, with the severe staff crunch, we are losing businesses with inadequate services and opportunities to service our customers. Further, the severe drop in quota is already hitting the businesses so hard that the increased levy is an additional blow. The quota, in itself, is sufficient to reduce the foreigner influx, if that is the motive, and the additional levy may not be needed.

I would like to seek a study to rationalise the grouping of the service sector businesses, keeping the practical differences between the businesses in mind so that we do not inflict damage unknowingly with heavy curbs on quota and levy.

Madam, the pleasure craft industry is an off-shoot of our maritime and hospitality industry that is centred around Singapore's four marina clubs, namely, Raffles Marina Club, ONE Degree 15 Marina Club, the Republic of Singapore Yacht Club and Marina at Keppel Bay Club. Luxury multi-million dollar yachts and pleasure boats owned by the wealthy are berthed here as we encourage them to come to Singapore to work and play.

According to the Business Times in 2012, Singapore's pleasure craft industry commands a cool US$45 million or approximately 13% of the Asian market, which is estimated to be worth US$345 million a year. As an industry associated with the affluent, we have identified this sector as one with a high potential for Singaporeans if given the opportunities to earn good wages.

On 1 January 2013, MOM discontinued the issuance of Landing Passes by the Immigration and Checkpoints Authority (ICA) and imposed a work pass requirement for foreign crews working onboard a Singapore-registered pleasure craft. Further to that, a progressive reduction of the dependency ratio was introduced over five years – from one Singaporean to four foreigners, to one Singaporean to two foreigners by 2018. These initiatives give opportunities for Singaporeans to work in the pleasure craft sector and give time for the industry to adapt during the transition phase.

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Mdm Chair, I would like to ask the Minister:

What enforcement measures are presently in place to ensure that foreign crews employed to work and allowed to reside on a specific pleasure craft are not freelancing or working for another employer within the respective marinas?

What enforcement measures or legislation prohibits foreigners from entering on social visit passes under the guise of a guest of the pleasure craft owners but, in reality, are working on these pleasure crafts?

I hope that these policies are in place and with rigorous enforcement, so that Singaporeans can benefit from the good jobs and wealth this industry brings.

Mdm Chair, it is the hope of every Singaporean Professional, Manager and Executive (PME) to have a fair shot at the job they desire. I applaud MOM for introducing the Fair Consideration Framework (FCF) and National Jobs Bank which both will be in force later this year in August. I recall, as part of the milestone of the FCF implementation, that MOM will start to engage companies with a disproportionate number of EP holders the first half of this year. Can the Minister provide an update on the outcome of this first phase of actions, how the FCF is taking shape, and the progress of the National Jobs Bank software system development?

On the topic of S-Pass, I wish to submit that despite raising the qualifying salaries for S-Passes to $2,200 and new quotas, I still hear two kinds of complaints. Firstly, the complaint of creative circumvention of this salary requirement by companies. Secondly, although S-Pass is for selective strategic skillsets in specific industries, for example, like healthcare where they are welcomed and needed by fellow workers, there are cases where S-Passes are issued to employers for workers doing mere administration or office tasks.

Considering how local mature and young PMEs are facing challenges in having employers' acceptance and finding good-paying jobs, such practices have caused much angst and frustrations amongst our people. Are there any safeguards to make sure that Singaporeans are not replaced by these younger, better educated S-Pass holders? Is the scheme too attractive and flexible such

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that it will be abused?

Mdm Chair, I welcome the Fair Consideration Framework that will come into effect soon, as the outcome is intended to benefit local professionals, managers and executives. I see this as among the positive outcomes of the framework, but there may be question marks and uncertainties about how the framework will work and its implementation.

Many Professionals, Managers, Executives and Technicians (PMETs) I speak to have concerns with regard to how effective the framework will be, as they are concerned that some employers could find ways to navigate their way around the requirement and, in the end, continue with unfair hiring practices.

In this regard, people need to be aware of the idea behind this framework, how it will work, and what the intended objectives are – for this to work effectively for both the employers and job-seekers.

On the part of employers, some see it as a disadvantage, as it may slow down their hiring process, especially smaller companies. Hence, I agree that the framework applies to companies with over 25 employees and they need to first advertise for jobs on a Government-run jobs bank. Can the Minister update the House on what are the details of this jobs bank and what are some of the inputs gathered from employer feedback?

It remains to be seen how companies adhere to this requirement and what sort of impact the framework will have on the economy, especially how we continue to attract new investments. Companies will also need to review their human resource policy and factor in this new framework.

What is MOM's assessment in terms of the impact of this policy on Singapore from the foreign investors' and foreign business' perspective? But over the long term, this framework has to be one that will balance the needs of the local worker. At the same time, employers will also find it valuable over time as a resource to seek local employees more effectively than they would have in a tighter labour market.

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Mdm Chair, with your permission, may I request for slides to be presented during the course of my speech?

Yes, please.

I thank Members for sharing their views about our manpower policies.

As Minister and Member of Parliament, I have had the privilege to meet many Singaporeans from all walks of life. To me – and I think many of you would agree with me – this is probably one of the most meaningful parts of life in public office. They share with me a slice of their life stories. I have listened to their aspirations and hopes for themselves and, especially, for their children. They work hard and seek to have good jobs, stable jobs, good incomes, to buy a home and save for their retirement and also for their children's needs.

Low-income families worry about how to make ends meet; young graduates worry about competition; mid-career workers worry about whether they have enough savings when they retire, and business owners worry about rising costs and manpower constraints, as many Members have shared over the past few days.

Sometimes, there are contradictions and tensions. Some Members would have encountered this as well. Some feel that we should slow down and smell the roses, and in the same conversation later, express concern about whether we will be sufficiently dynamic and vibrant, so that we can create good opportunities for their children when they grow up; or whether the economy would be strong enough to provide for all their needs when they themselves grow old. Some will grumble about the fickleness of our local workforce, how they are very picky, how they will job-hop at the slightest opportunity for pay increments, and that we should loosen our foreign manpower policies. But in the same conversation later, they will lament about the loss of character in Singapore with too many foreigners here and, of course, the crowdedness they encounter every day. I will always ask them, "Which part of your request would you like me to fulfil?" I suspect they probably want answers to both parts.

On our part, we have to listen and, ultimately, we have to discern and decide what is the best option. It really is never about just doing more. We have to face the inevitable trade-offs even as we still try to settle for win-win

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outcomes wherever we can. There are always competing demands to balance.

Our responsibility as a Government is to provide for our people's needs, and this forms the bedrock and foundation for them to pursue their dreams and to achieve their aspirations. We are responsible for not only the individuals but also for the broader community. The needs are not always exactly the same. We also have to be responsible for our future generations by ensuring sustainability in all the things that we do.

The practical side of governance need not be incompatible with the aspirational desires and values that many of us share. Making our economy work for every Singaporean is at the core of what we need to do. Better jobs and higher incomes for Singaporeans are at the centre of our mission at MOM. How we do it will reflect the values that we hold. Achieving it will also provide us with the ability to realise those very aspirations and ensure that Singapore remains a nation of opportunities for our people.

Let us take a look at the present. I will first update Members on the present state of our labour market before going on to the future economy and other issues. Our economy grew by 4.1% last year. The unemployment rate, which is 2.9% for Singapore citizens, is among the lowest in the world.

To Mr Gerald Giam's question, I am especially encouraged that Singaporeans, in particular older workers and women, have benefited from our economic restructuring efforts. The labour force participation rate of women aged between 25 and 64 rose quite significantly over the decade, from 61% in 2003 to 72.2% in 2013. The labour force participation rate of older citizens, aged 55 to 64, also climbed to 66.8% in 2013 from 47.2% in 2003. This is quite a significant improvement over the past decade. Mr Gerald Giam raised the issue of the economically inactive and those who are discouraged. I think that is important. We are particularly concerned about this group. There are many diverse challenges that they face and we are trying to do what we can.

Senior Parliamentary Secretary Hawazi Daipi will elaborate further on our efforts and some of the measures that would help in this area. Some have been out of the workforce for quite some time. They do need substantive support and skills training to improve their employability. This is why we heavily subsidise training programmes through our Continuing Education and Training (CET) system to help them pick up skills, so that they can re-enter the labour market. We have also introduced WorkPro to incentivise employers to hire them. Clearly, it is not just only about skills, it is also about hand-holding, because many of

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them would be discouraged. They also do lack the confidence to return to work. So, we have started traineeships where we attach trainees to companies to undergo on-the-job training programmes. This enables them to try out and adjust to working life again and, hopefully, they can transit to actual work and thereby rejoin the workforce.

Singaporeans have benefited from economic growth. It is important for us to understand that without economic growth, many other things will not be able to follow and we are better off than we were previously. For example, growth in real median monthly income – and this includes CPF contributions – for full-time employed Singapore Citizens was 4.6% in 2013. Over the past five years, from 2008 to 2013, real median income increased by 1.7% per annum. This is not bad, considering that many countries are also facing wage stagnation. That is for the median income. Let us look at the lower percentile, the 20th percentile. The real income growth for them was 2% per annum, keeping pace with real income growth at the median level.

The foreign manpower tightening measures that were introduced over the past years are beginning to bite, which explains the concerns that many Members have expressed. Many of us have received the same feedback as well. In 2013, foreign employment, excluding Foreign Domestic Workers (FDWs), grew by 48,400, down from the increase of 67,100 in 2012. About two-thirds of this growth was driven by the Construction sector, and we understand why. There are a lot of infrastructure projects that we need to fulfil. If we exclude the construction sector and FDWs, foreign employment grew by 16,800 in 2013. This is about half of the growth of 32,200 in 2012, and the lowest growth since 2009. Having said that, we still have some way to go in terms of reducing overall foreign manpower reliance. So, that effort needs to continue.

When we compare ourselves to other advanced economies, and when I meet my foreign counterparts, it becomes quite apparent that we are in pretty reasonable shape. While certainly not perfect, we should not shortchange ourselves; what we have here is respected and admired. We need to continue to build on it and not take it for granted, to continue to strive and improve where we can.

Ms Denise Phua and Mrs Lina Chiam asked very important questions about our future – the competencies that we may need and the impact of technology. Let us take a quick glimpse at what the future might be like.

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We believe that Singapore's future economy will create many diverse and exciting career opportunities for our people. We are well-placed in our region to ride on the growth that is happening around us. We are transforming our economy to develop higher skilled, higher value industries. While Mrs Lina Chiam has expressed some of these concerns, I can assure her we are not taking it for granted, and we are definitely seeking to transform, as much as possible, where we can and where it makes sense. New growth opportunities will emerge as technologies like data analytics, robotics and 3D printing become more pervasive.

The future economy will be driven by rapid technological change and shorter skill cycles. Longer life expectancy and shorter skill cycles mean this – workers, both white- and blue-collar workers alike, are unlikely to just have one career for their entire lifespan. In all likelihood, there may be two or more distinct careers over their working lives. Therefore, it is crucial that workers are able to master new skills, adapt, evolve and move on to new things. Change will be the permanent feature.

Let me just cite one example. We all remember Nokia. We used to have Nokia phones and MMI was great, and you cannot imagine anyone else doing any better. In 2005, Nokia had about a third of the world's mobile phone market. But it failed to adjust to iPhone's introduction in 2007 and evolving smartphone technology. By 2009, its profits fell sevenfold and it was sold to Microsoft last year.

Today, smartphone technology continues to evolve. A single messaging application – WhatsApp – can be valued at US$19 billion. We are seeing wearable mobile electronics, such as Google Glass and Samsung's Gear. Our workforce of the future should have both the hard and soft skills to competently adjust, not to mention also the soft aspect, the ability to communicate with acronyms, hashtags and the emoticons! So, let me, perhaps, for the first time, introduce emoticons into Parliament.

This is exactly why workers – and I would add and emphasise – including PMEs, must be able to adapt to change and have that commitment to lifelong learning. Ms Jessica Tan talked about the need to help our workers adapt and to move on. That is something that we are committed to. MOE is doing its utmost to continuously strengthen our education system. On MOM's part, we believe that our cutting edge would be our Continuing Education and Training (CET) systems. This is where we will raise the quality of our local workforce, especially as the world adjusts and moves on, we will be able to respond quite quickly. I totally agree with Ms Denise Phua's comments about the way we

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teach and learn. That is something that we will have to embrace. It is happening in the classrooms. When I was in the army, that was something that we were moving on in a very big way.

In the CET realm, that is something that we need to go on to as well. To better prepare for our future, our entire system needs to help us build a broader and deeper foundation for learning, and enable our people to be adaptable in picking up new knowledge and skills throughout their lives. Mr Teo Siong Seng expressed concerns about PMEs and their re-employability. Let me emphasise this again. Sometimes, we do get feedback that people look at CET as something that is required for blue-collar workers. CET is something that everyone needs to embrace and PMEs themselves also need to embrace it and participate in it. We will do our part to support it as best as we can with programmes and assistance. For example, we tried out the PMEs Specialist Assistance Programme.

The composition of the workforce will also change. Some Members have made mention about that. We know that more are aspiring to enter University – as Asians, that is probably particularly more acute. As a result, we see increasing numbers of graduates entering the labour market. By 2020, we will see 40% cohort participation in our local Universities. There are also many who are pursuing private education and overseas degrees. In theory, what this would mean is that we would be able to increase the pool of better-educated employees in Singapore. We will have a more skilled workforce. We should also be able to move up the value chain. Mr Teo Siong Seng recognises this but he is also concerned about what would the impact be on the lower-end jobs. In fact, we see these trends happening elsewhere as well.

We need to understand that these jobs will only be created by good companies. These companies, both local and foreign, will only be in Singapore if we have healthy economic growth and also a conducive business environment. Let us not kid ourselves; the competition is real. It is not about "if" but it is about "when". Companies will move; companies will go. Labour capital is exceedingly mobile and, increasingly, will continue that way. We do need to compete to have the companies, even our local companies, to remain here, so that these jobs can be created and those opportunities can be provided for our children as they grow up and as they pursue their education opportunities.

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Therefore, it is important for us to understand that even as we look at providing for our people across the different areas, especially on the social side, we still need to make sure that our future economy needs to be strong, robust, healthy and vibrant, so that these opportunities can be created for our people. That is the base upon which they can then go on to fulfil their dreams and aspirations. It has to go hand-in-hand. Our economic agencies will do what is possible to continue to anchor Singapore as a regional headquarters for high value-added activities, while helping local enterprises to grow as well.

Other countries are facing a different type of challenge. Mr Zainudin Nordin raised similar concerns. In particular, we should note the situation in South Korea and Taiwan. Mr Zainudin cited some examples in Japan, and we can see some of these trends happening across the world. In South Korea and Taiwan, there has been a relentless pursuit of paper qualifications. It has resulted in a glut of graduates. The Director-General of Taiwan's MOE stated that "the abundance of university places had undermined the quality of degrees and created a skills mismatch in the job market. People have become over-educated and under-employed." Taiwan is taking steps to address this.

But again, this is something that we need to observe. We can potentially see some of these trends happening. So, we cannot take for granted that we will not face these problems in the future. I was talking to Education Minister Heng Swee Keat last night and we were discussing about our respective parts in the Budget today. This is one area that we are watching carefully the developments. It is important for Singaporeans to make informed educational choices, not just the individuals but especially the parents. We will also develop viable career pathways and options for those who may prefer a more vocational and technical route instead of pursuing a University education. Singaporeans should not have to feel that the only way that they could be successful in life would be to pursue a University education. As we all know, if everyone becomes a University graduate, which theoretically could be possible, we will not have enough jobs to go around as well.

Correspondingly, the market would also respond to the quality of degrees that come from different institutions. The ASPIRE Committee that is helmed by Senior Minister of State Indranee Rajah will play a very important role to help address this situation. This is one area that we are particularly concerned about and we will pay attention to that. I agree with some of the concerns raised, especially from Mr Zainudin Nordin. Ultimately, as people move up the value chain in terms of the education process, we need to make sure that we continue to create jobs. That is key. For many countries that face some of these problems, they are not creating enough jobs. That is something that we are doing fairly

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well at the moment. We should not take it for granted. We need to create jobs at various levels, not just at the graduate level, but also at the non-graduate level – the vocational level, technical level – so that good job opportunities abound for Singaporeans at all levels because all of us do have different potentials and abilities. At the same time, we should equip our people with the skills and facilitate the information transfer so that we know where the jobs are. It is an entire continuum of effort.

Going forward, we must continue to restructure the economy, and change the way jobs are being performed. Restructuring for higher productivity will be painful. There is no way around that. We need to invest more in technology, streamline processes and create higher value products through innovation. This is the only sustainable way to ensure wage increases for all workers.

But let me end this section about the future by stating that even as we transform the economy, there will be natural limits to what education and training can do. There will still be Singaporeans working in lower skilled jobs. We will do what we can do to upskill them, but that segment of society will remain even as we go forward. What we need to do is to not neglect the contributions of Singaporeans at that level. They continue to play an important role in our society and we will and must continue to support them in their endeavours.

Given how the future may unfold, how do we ensure that our economy will work for all Singaporeans? I will highlight three areas: (a) creating better jobs and raising incomes for Singaporeans through upgrading our workers and supporting restructuring; (b) achieving inclusive growth and retirement adequacy; and (c) making sure that workplaces get better and are safer.

Firstly, creating better jobs and raising incomes through upgrading the workforce and supporting restructuring. We all know that raising productivity is central to our efforts to create better jobs for Singaporeans.

For businesses, it means taking a long hard look at their business models and processes, to see how they can produce higher value goods and services, and reduce their overall reliance on manpower. We are already seeing some changes. Many Members may have noticed when eating out that more F&B outlets have started using iPads for food orders. Others are asking customers to pay at the cashier on their way out, reducing the number of service staff required. So, do not get annoyed. This is an inevitable part as we tighten, as we move up the productivity and value chain. These are practices that will be there.

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All of us, as consumers, have a part to play by supporting this effort.

Other companies are finding different ways to deal with it. For example, I hear this story of Jellyhearts. It is a bakery selling customised cakes. The owner is Mr Darren Loh. He partnered e2i to prototype moulds that will help reduce the overall time taken to produce these customised cakes. When we took this picture, we wanted him to show that mould. But he said that it was a trade secret, so he could not show us. The key thing to this is this: the workers at Jellyhearts saw an eventual wage increase of about 10% to 20% as a result of improved productivity. This is why productivity is an important effort. Not only will it allow us to streamline our economy to be manpower-leaner, but at the same time, it will allow us to help our workers to earn more wages. Because only with productivity can income increases and wage increases happen.

I agree with Mr Zainudin Nordin when he says that, for workers, raising productivity means undergoing training to improve their skills so that they can add more value to their jobs. The Government is committed to providing Singaporeans with the fullest support possible to improve their skills through CET. This is a cutting edge and we will support that. We are in the midst of a major review of our CET Masterplan, and we will make our CET system even more relevant for our workers and businesses, and to further strengthen the link between training and skills utilisation at the workplace. So, the participation of employers is important, because their feedback will shape the kind of courses that we run, so that they will be applicable and relevant for the workers, and when they are trained and re-enter the workforce back to the companies, they are completely relevant.

This is a real tripartite partnership. This is something that we can make it work and work well. This will ensure that our workers will adapt quickly to industry needs and provide Singaporeans with more assistance to achieve their career aspirations. Senior Minister of State Amy Khor will be elaborating on this in her speech.

Let me address the point raised by Mr Png Eng Huat about tower crane operators.

We know that the demand for crane operators is increasing, largely in terms of where we are going for the construction industry, not just by the volume of work, but we are also pushing the industry to adopt much more prefab approaches, so crane operators play a very important role. In terms of numbers, for local crane operators, they have increased in the last couple of years, from

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3,600 to 4,600. Foreign workers have increased from about 1,600 to 2,950. There is also a Dependency Ratio Ceiling (DRC) imposed. At present, we have a transitional DRC where you need one Singapore crane operator before you are eligible to hire another. You can hire up to four foreign crane operators. The idea is to transit to a ratio of 1:2 by 2017.

For Work Permit crane operators, only Malaysians are allowed. For S-Pass, we also allow crane operators from China as well. While we recognise that there may be some concerns, I would appreciate if Mr Png could flag out those specific cases. I also face residents who come to me for crane operating jobs, not of the nature that Mr Png had mentioned. I am quite distressed because when I arrange for jobs, they go and work and then they drop out for a host of reasons. It is not an easy job, mind you. We also find it challenging because for many Singaporeans who may not be able to find other jobs, this becomes a very suitable option. We find that some of them are quite reluctant to take on that job, I think for good reasons. Ultimately, we leave it to the individuals to decide.

What we need to do is to support that local pipeline. Similar to what we mentioned earlier, how do we support in terms of training? We have a crane operator apprenticeship programme. For example, we offer various types of crane operations and provide apprentices with an attractive monthly remuneration package of at least $2,500. It is a one-year programme and it offers training for them. On completion of the training, to obtain a crane operator licence, these apprentices will commence employment with their employers and undergo on-the-job training and future upgrading courses which are also subsidised. After completion of this programme, apprentices will qualify for BCA's CoreTrade registration. BCA has received an overwhelming response from local applicants and we will also facilitate in the placement process.

This is just to illustrate how we can support from the training perspective and also from the job placement perspective. This is what we mean when we talk about supporting our workers in terms of their employability and upskilling as they move to other sectors.

In terms of inclusive growth and retirement adequacy, we do know that many Singaporeans are worried that they do not have sufficient savings for healthcare and living expenses upon retirement. Some of these issues have been touched upon. MOH will cover quite extensively some of the programmes that we are looking into, to assure Singaporeans. Those are important. It is also important to make sure that those packages are sustainable. This is something

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that many countries are grappling with. Others have also shared their concerns over the more vulnerable groups of Singaporeans who struggle to make ends meet and have fewer opportunities to move ahead.

We remain as a Government committed to fostering inclusive growth. Much of what we have done – not just this year but in the last few years – has indicated that that is something that we are placing emphasis on. We want all our citizens to enjoy the fruits of our economic success to achieve financial security for themselves and their families.

Work is the best form of financial security. Our strategy at the broadest level is to keep unemployment low by keeping the economy healthy so that good jobs can be created; and at the same time, maintaining a tight labour market and encouraging more to work. With increasing life expectancy, many Singaporeans are able and want to work until they are older.

As announced in Budget 2014, we will be increasing the CPF employer contribution rates to the Medisave Account for all workers. Older workers will also enjoy further increases to the CPF contribution rates to help them build up more savings for their retirement needs.

I share the concerns of Mr Christopher de Souza and recognise that certain groups of Singaporeans will remain there, even as we transform. Particularly, lower-income Singaporeans will require more help. Mr Teo Siong Seng, Mr Gerald Giam and Ms Denise Phua also asked how the Government can assist retrenched mature workers, the unemployed and other vulnerable groups. This is important not just from MOM's perspective but from a whole-of-Government perspective to support them, not just in terms of work but also education, health, housing and so on.

Workfare remains the key pillar of our social security landscape. It is one pillar but it is an important one. We made enhancements to the Workfare Income Supplement (WIS) quantum and income cap last year, to boost take-home pay and retirement savings of low-wage Singaporeans. We also further enhanced the Workfare Training Support (WTS) scheme, to provide greater subsidies for training. With better skills and capabilities, our low-wage workers can raise their productivity and employability to enjoy positive wage outcomes. We need to continue to build on this to help more of our workers move up the value chain for themselves and, ultimately, for their families.

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For the unemployed or those seeking a career switch, they can tap on the existing networks of Career Centres at CDCs, e2i and also CaliberLink, which is focused on helping the PMEs, to enjoy employment assistance and training advisory services. We also have targeted career conversion programmes to help individuals reskill and acquire necessary competencies to take on new jobs. Senior Minister of State Amy Khor will speak more on these efforts and retirement adequacy, while Senior Parliamentary Secretary Hawazi Daipi will touch on measures to uplift low-wage workers later on.

We are also paying particular attention to lower-income Singaporeans, especially for those who work in industries that are more prone to stagnating real wages. Where productivity improvements do not translate well into wage increases, for example, in sectors where there is cheap sourcing, I am glad that the unions are also working closely with us on this. We plan to introduce sector-specific and targeted measures. We have done this by incorporating the Progressive Wage Model, which is developed by NTUC, into Government regulation for the cleaning sector. We will also set up a tripartite body to assess the need for a Progressive Wage Model in the Landscape sector. Senior Parliamentary Secretary Hawazi will further elaborate on this.

It is important to move in these sectors for a range of reasons, one of which is what I alluded to earlier. There will always be Singaporeans, despite whatever efforts that we have made to try to uplift them in terms of educational level, who may continue to work at some of these lower-skilled jobs. That is why having the Progressive Wage Model in these sectors is particularly important because these are viable, respectable jobs that Singaporeans can take up.

It is essential that as we carry out these various measures, we need to continue to make our workplaces better and safer. We will re-double our efforts to entrench a safety mindset and culture in the workplace. In 2013, we had 59 workplace fatalities, a slight increase from 56 in 2012. The Construction sector continues to be the main contributor to workplace accidents. In the first two months of 2014, we had nine Construction workplace deaths. This is quite unacceptable. We will step up enforcement efforts against errant employers, who will face harsh penalties under the law, including imprisonment.

Harsh penalties aside, the key to having a safer workplace is about having a safety culture. It is not just like about building the big stick, which plays a part, but, more importantly, we must all embrace that mindset. That is not easy to

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mandate but it is something that we will continue to promote.

As we build safe and healthy workplaces, we are also embarking on encouraging progressive workplace practices. This is the part about a better workplace. Singaporeans have increasingly indicated a stronger desire to have a more fulfilling pace of life; more time to pursue other goals and priorities outside of work. Many have called for greater support for flexible work arrangements and more pro-family practices. We will strengthen our efforts on this front to promote more progressive employment practices, to support work-life priorities for Singaporeans. Senior Parliamentary Secretary Hawazi Daipi will talk more about this. Again, some things can be mandated, but a lot of it is also about culture. A lot of it has to do with the fact that we need to look at ourselves as employees in the way we work and look at ourselves as employers as well, in the way we make our demands upon our employees.

Even though the Employment Act was recently amended to protect more Singaporean workers, Singaporean PMEs who earn more than $4,500 a month and fall outside the scope of the Employment Act have approached NTUC and MOM for assistance on workplace disputes. There are cases where employees have legitimate grievances but might not be able to afford to take legal proceedings. MOM is presently working with our tripartite partners to enhance employment dispute resolution mechanisms, as part of the Employment Act Phase Two review. We are looking to provide an affordable and expeditious avenue for employees to resolve disputes relating to breaches of individual contract of employment. As part of this review, we are also looking into how we can enhance the current tripartite mediation framework for union members in non-unionised companies. We are discussing with relevant stakeholders and we will provide an update in due course.

Let me now return to our efforts to restructure the economy. Mr Teo Siong Seng and Mr Dhinakaran have expressed the strains the businesses are feeling, due to the tight labour market and rising business costs. In fact, many of you have raised this in the past few days. As Minister Lim Hng Kiang shared yesterday, we are keeping close tabs with the ground. We have been receiving this feedback ourselves. Some of these business people are not your big businesses; they are small SMEs in your local area; and they are struggling because, for some of them, it is really a matter of life and death. Ms Jessica Tan spoke at the time about how it is so important to access to quality manpower because it is key for businesses to locate high-value operations in Singapore. As I mentioned, this is important because, ultimately, when that happens, job opportunities are created for us.

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Let me share with Members a recent dialogue that I have had with Pasir Ris East residents. You could see their tensions. Mr Benjamin Wan, a resident, shared how he was affected by employers who, he claimed, preferred to hire foreigners to locals. Some Singaporeans, like Mr Wan, wanted us to be more stringent on admitting foreign talent; others call for a "Singaporean first" policy.

At the same dialogue, another participant, Mr Leong Weng Kuan, lamented about our tightened controls on foreign workers. Mr Leong runs a local business and shared how difficult it was to find locals to fill jobs that are available in his firm. Mr Leong was less concerned about PMEs as he felt that these Singaporeans are quite mobile and that there are already significantly good career opportunities for them. Within one dialogue, we could see divergent views – both equally valid in some sense, but how do you strike that balance?

I have one over-riding consideration when I look at how to shape our manpower policies. Do they, on balance, benefit Singaporeans and Singapore? I had mentioned earlier that it is critical that our economy remains healthy so that good jobs can be created to meet the needs of a better-educated workforce. As a country with a small domestic market, it is important for us to understand that we need to remain open to the global economy. It is our lifeline. It enables us to thrive and create those opportunities that we have been talking about. An important part of this equation is to have a diverse global workforce that allows employers to tap on skilled foreign manpower who complement and augment. Some global and even regional set-ups, need a cosmopolitan make-up due to the nature of their business and the reach. Yes, it will mean that when foreigners are here, they will compete for jobs, but yet, at the same time, by being here, it allows companies to be here and at the same time, generate those very jobs that go to our people. These jobs are generated directly from the jobs created in these companies, and indirectly from the business that is generated by having those companies here in the first place. Again, it is a fine balancing act.

We also know that given Singapore's physical size – we have discussed some of the concerns in this House because of the constraints and the infrastructure – we really do need to grow within the constraints that we have. This explains why we need to tighten foreign manpower access at all levels. Again, you can see that there is a balancing effort that needs to be struck here: that between maintaining our competitiveness and the need to moderate growth in our labour force. We need to ensure that whatever the trade-offs, that these trade-offs are real. On balance, what is the net effect? Is it positive for our people? Is it positive for our society?

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We have introduced tightening measures in a progressive manner since 2010. Foreign employment growth has slowed down significantly, for the non-Construction sectors. We know that many local companies, both SMEs and non-SMEs, are feeling the pain. Take Yang Kee Logistics, for example. This is a local SME with more than 60% local employees. The company provides end-to-end logistics solutions for various sectors. Similar to many logistics firms, Yang Kee faces difficulties in servicing their clients, given the tighter manpower situation.

Yang Kee has adapted by forming an alliance with four other transport companies to pool excess trucking capacity through an order exchange cloud server. This has helped to alleviate manpower constraints in its trucking positions, as companies are able to fully utilise the resources at their disposal. The companies are also able to tap upon each others' expertise and enjoy access to resources previously unavailable. So, this is a classic example of how some companies have embraced change. These changes have allowed Yang Kee to enjoy productivity improvements of up to 20%.

We want our SMEs to do well, we want them to adapt, we want them to continue to create good jobs and opportunities for Singaporeans. But we cannot proceed with business as usual. We will be committed to helping companies like Yang Kee transform their existing business models. This includes support through the Productivity and Innovation Credit (PIC), which has been extended until 2018 and other schemes, such as the new PIC+ that is targeted at SMEs specifically. The feedback that Members have provided in terms of making sure that these PIC schemes are easily accessible remains an important one. We will continue to improve on that.

I want to take this opportunity, and I think it is important to do this, to remind all businesses that a few of the foreign manpower tightening measures that we had previously announced will take full effect this year and in 2015, when the transition period ends. Often times, we get feedback, "How come you suddenly change policy?" We have not. It has been announced; we have given time for transition. We would like to remind all businesses that this is going to happen in July this year and in 2015. This includes the higher S Pass minimum qualifying salary, and the reduction in Dependency Ratio Ceilings (DRCs) and S Pass Sub-DRC from 25% to 20%. Members will be glad to know that we are not introducing further tightening measures this year, with the exception of the increase in foreign worker levies for the Construction sector. We will monitor foreign manpower growth and productivity improvements in each sector carefully, before deciding whether any further measures are necessary.

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I would like to thank Mr Zainudin Nordin, Mr Yeo Guat Kwang and Mr Teo Siong Seng for their views on the foreign workforce. The measures that we have announced in the Budget this year signals our intent to raise the quality of our foreign workforce and, by extension, productivity. We need to encourage firms to recruit and retain skilled foreign workers, and move towards having a slightly smaller pool of skilled foreign workers, rather than just relying on sheer numbers of inexperienced and low-skilled foreign labour. That transition must happen; we cannot grow at the same rate as before.

Therefore, we have introduced a new Market-based Skills Recognition Framework for the construction sector. This is to encourage firms to retain experienced "Basic Skilled", or what we call the R2 Work Permit Holders for a longer period, on higher salaries. With this, companies can upgrade their R2 workers to "Higher Skilled", or R1 status, and therefore, will not have to bear the higher foreign worker levies that we announced in Budget 2014. We will also extend the maximum Period of Employment (POE) for R1 workers from Non-Traditional Source (NTS) countries and the People's Republic of China (PRC) who work in the Construction, Marine and Process sectors.

Together with MND and BCA, we will also be consulting the industry on a longer term proposal to impose a minimum level of R1 workers across all Construction firms.

We will also review our Skills Recognition Framework, and the eligibility criteria for foreign workers to qualify for R1 status. We want to ensure that we raise the quality of the foreign workers here and encourage employers to retain experienced and skilled workers. We have already begun discussions with firms in the Process sector, and will soon be extending this review to cover the Marine sector. We encourage companies to provide your feedback to us. In response to Mr Yeo, we feel that the situation is less pressing for Services and will not extend this move to that sector.

These measures will mean that firms that are more reliant on new, inexperienced workers, or who choose to constantly churn foreign workers, will be subjected to higher levy bills. I think this makes sense. Conversely, firms that rely more on experienced, higher quality workers, will be less affected.

As I had mentioned in Parliament in January, while the situation with regard to our foreign workers' well-being is generally good but we do intend to improve where we can. Mr Yeo spoke about holistically and deliberately planning for the needs of our foreign workers, not just in their workplaces, but

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also where they live and play. Indeed, this has been so in our on-going efforts in managing the foreign workforce in Singapore. Since 2008, an Inter-Ministerial Committee has been looking into issues, such as foreign worker housing and transport. One of our on-going priorities is to speed up the construction of dormitories so that foreign workers can stay in these purpose-built accommodations. As part of these efforts, we intend to enhance our levers with the larger foreign worker dormitories by developing new regulations. I mentioned previously that the Government will also be launching more dedicated foreign worker recreation centres. In all, these measures will enable us to better meet the evolving needs our foreign workers face as well as to facilitate a more harmonious co-existence with the communities in the vicinity of large dormitories.

I would like to take the opportunity to thank Mr Yeo for his leadership and his team, and to congratulate the Migrant Workers Centre (MWC) and the Private Bus Associations on their initiative to enhance weekend transport for workers. We want to celebrate such ground-up initiatives because they will definitely play a part in complementing whatever that we are doing. And we encourage and hope to see more of these efforts.

We regularly review our legislation to ensure adequate protection for workers. We will study Mr Yeo Guat Kwang's suggestions to facilitate electronic salary payment and we have already begun discussing with industry on how to broaden the circumstances under which foreign workers may change employers, with a view to reduce the churn of experienced workers. This is something that MOM has been looking at for some time and I am particularly keen to take this forward, to see if we can make this possible.

With regard to having a standardised employment contract and sector-specific guidelines, a sample contract covering key employment terms has been worked out in consultation with the tripartite partners, and this has been made available on the website of the Tripartite Alliance for Fair Employment Practices (TAFEP). We further welcome any efforts by industry associations to come up with sample contracts covering specific terms that are relevant to their sectors. Please do come forward with your suggestions.

With a large and diverse workforce, invariably and inevitably, some employment disputes will be inevitable. I would like to reassure Mr Yeo and Members of this House that where these involve basic employment standards under our laws, we will ensure that standards are upheld. We will continue to build on existing processes for NGOs like Migrant Workers Centre, HealthServe and so on, to help workers seek assistance from MOM. MOM will also continue

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to step up enforcements against contraventions of the Employment of Foreign Manpower Act (EFMA). In 2013 alone, we prosecuted about 550 employers for EFMA contraventions.

Mr Dhinakaran raised a suggestion to further segmentise the DRC for the Services sector. We have debated this in the last several debates. We have applied our foreign manpower policies consistently across the Services sector. However, in exceptional circumstances, we have been flexible. Healthcare is one industry where we have granted more liberal controls, due to their essential nature and an acute shortage of trained locals.

We do not rule out further flexibility where warranted, but we would want to be assured first that the industry is essential, that productivity is already high, and that the locals therein are relatively well paid and have reasonable career and wage progression pathways.

For industries appealing for more generous foreign worker quotas and lower levies, we need to ask whether the industry is as manpower-lean as it is in other developed countries, whether the local workers are paid fairly and, more importantly, are paid better than alternative jobs in Singapore. Because that raises the question of whether the wages offered are not as attractive as it should be and why these industries are not generating good jobs for locals.

Mr Dhinakaran has also asked whether we should increase levies when we have reduced quotas. Well, we have looked at this extensively over the years and the point is, we do need to do both but in a judicious manner. Why? Firstly, despite the DRC cut, the number of Services work permit holders and S Pass holders is still growing, albeit at a slower pace.

Secondly, if the cost of foreign labour is significantly lower than local workers, firms will be incentivised to recruit foreign workers first on the basis of lower cost and will seek to maximise their usage of foreign workers.

Thirdly, too low a cost of labour will also delay and deter the adoption of labour-saving technology. That is the whole point. We need to move towards a much more manpower-lean economy.

Firms can reduce their levy burden by either becoming more manpower-productive to rely on fewer foreign workers, or in hiring higher skilled R1

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workers where they are needed. The more foreign workers they rely on, the more levies they pay. It is quite a fair and simple principle, but I think it is meant to shape the economy so that we can move towards the direction that we are looking at. It sends a clear signal to less productive firms and industries that behaviours and business models will have to change in order to survive.

Let me next address the concerns raised by Mr Patrick Tay, over the relevance of the S Pass in our Work Pass framework.

The S Pass was introduced in July 2004 to enable companies to bring in middle-level skilled manpower, such as Associate Professionals and Technicians (APTs), to augment manpower gaps across various industries within a given quota. Even as our local workforce becomes more educated and skilled, the S Pass will remain relevant in two ways. First, there will still be APT manpower gaps which our local workforce may not be able to fill. In the 2013 Job Vacancy Survey administered by MOM, there were more than 4,000 APT vacancies reported by employers in September 2013, which they found hard to fill with locals. Second, more junior-level foreign PMEs will fall into the S Pass category as we progressively raise the Employment Pass (EP) qualifying criteria to level the playing field for local graduates, and they will be subject to the S Pass sub-DRC and levies. This forms part of our effort to raise the overall quality profile of our foreign workforce over time, so that they continue to complement our increasingly educated local workforce.

To strike a careful balance between meeting the manpower needs of industries and maintaining a level playing field for locals, we have been progressively tightening the S Pass qualifying criteria, raising the foreign worker levy and cutting the S Pass sub-DRC since July 2011. Most significantly, in July 2013, we required S Pass holders with more experience to qualify at higher salaries and further cut the S Pass sub-DRC for the Services sector from 20% to 15%, as locals do tend to look for jobs in that sector. As a result, Services S Pass growth has moderated from 8,100 in the second half of 2012, to 1,000 in the second half of 2013.

We will continue to monitor the situation closely as the effects of the recently announced S Pass tightening measures are still working their way through. We will continue to review the S Pass framework, to ensure that the quality of S Pass holders continues to meet the manpower needs of industries and complement our local workforce.

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Mr Patrick Tay and Mr Zaqy Mohamed have asked for an update on the implementation of the Fair Consideration Framework (FCF), and the specific actions that we had taken on those with nationality-based discriminatory HR practices.

The purpose of the FCF is to encourage a level playing for Singaporeans and signal the importance of considering Singaporeans fairly for job opportunities. From 1 August 2014 this year, firms must advertise their vacancies in the Jobs Bank for at least 14 days before they are eligible to apply for an Employment Pass if needed.

The Government has started identifying firms that may have scope to improve their hiring and career development practices. These are firms with a disproportionately low share of Singaporeans within the PME levels in their industry. Since the start of this year, we have identified and started initial discussions with more than 50 employers.

Firms with shortcomings in their HR practices will be required to implement an action plan to address these shortcomings. In some cases, the issue may not be a problem with their HR practices, but rather a gap in the skills that are available in the local workforce. This happens. We will work closely with the industry, to explore ways to support manpower-lean business models or develop a local pipeline of workers with the relevant skills and experience. This is where MOM, MTI and MOE work closely to make sure that the local pipeline is provided for.

The new Jobs Bank will be launched in the middle of 2014. WDA is now in the process of engaging groups of employers and potential job seekers, to test the beta version of the Jobs Bank. As with all new platforms, I do not think it will be perfect from the word "go" and users will take some time to become familiar with it, but we will continue to refine and improve the Jobs Bank, as we gain more experience and feedback from Singaporeans and employers. This is an exciting development, and we see a lot of potential in this.

Mdm Chair, allow me to summarise in conclusion. While we have not announced major foreign manpower tightening measures for the non-Construction sectors in Budget 2014, businesses must press on with restructuring and should lose no time in making the adjustments needed to remain viable. As Members can see, some companies have moved on and have embraced the change. Many companies are now coming round to it and many of them have been appealing. Many Members have received the appeals but

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we do need to move on and many are beginning to respond, so that is encouraging. The fact is there will be casualties in any restructuring effort and it will be painful for many. But for those willing to adapt, the Government will help through our transitioning support package.

All of us – Government, employers and employees – play a part in our restructuring journey. This strong spirit of tripartism is a real strength for Singapore. In addition to restructuring their businesses, employers have a role to play to make their firms attractive places to work. This means paying attention to career and wage progression, engaging employees, and designing work arrangements that enable their employees to contribute their best to the firm. This has significant bearing in productivity. Are they prepared to go the extra mile for you? If we are able to pay attention to that, that would have a big part to play in productivity. Employers also have a significant role to play in training and upgrading their employees' skills. Singaporeans, too, must respond by seizing these training opportunities and ask what value we as employees can add to the firm and not simply focus on what the firm can offer to us. All of us really, have a part to play.

So long as we keep working together, we will continue to ensure that Singapore remains a Nation of Opportunities, for all Singaporeans.

Madam, as part of our growth strategy to entrench Singapore as the Global-Asia Hub, both Government and employers have critical roles to play in ensuring that Singaporeans have the capabilities and skills to take up the best jobs. I urge the Government to broaden the coverage of CET to include the development of Singaporean leaders to fill top regional jobs here. This will not only secure the best opportunities for our people, but also enhance our competitiveness with the availability of world-class management talent.

Currently, the typical approach taken by MNCs to fill top regional jobs is to simply send in senior managers from their foreign head offices or overseas branches.

This is partly because these organisations need their "man in Singapore" to have deep knowledge of the corporation's culture and processes and a well-cultivated network of contacts in the wider organisation. But I believe that Singaporeans can be prepared for these roles, if we provide them with

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opportunities to gain international experience.

The Government should launch a programme to encourage employers to proactively identify and groom top Singaporean managers. A key part of this programme should include sending high-potential (Hi-Po) executives on overseas job postings to either manage a large overseas market or to take on assignments at the head office.

These postings should be for about two years to be meaningful both to gain management experience in different markets as well as build wider networks in these large organisations. These Hi-Pos are then required to return to work in Singapore.

Such postings are costly undertakings for most companies. I propose that the Government consider off-setting their costs, as part of our efforts to build a strong Singaporean Core in strategic industries for the future.

Madam, in fact, nine years ago, in my previous capacity as the China Head for Standard Chartered Consumer Banking business, I supported the Asian Business Fellowship programme under MTI by sponsoring seven Singaporeans. Under this programme, the Government paid for the interns to gain valuable exposure in a fast-growing Asian market, whilst the Bank provided them with development opportunities in an international setting.

Madam, instead of just focusing on entry/mid-levels, we need a programme targeted at senior executives, which we may call the Future Leadership Incubation Growth and Hi-potential Programme or FLIGHT school, in short. This Top Gun programme will give wings to a Singaporean Core of world-class corporate leaders who can then help take the country soaring towards our aspiration as a Global-Asia hub.

Mdm Chair, firstly, I would like to thank the Acting Minister for agreeing to and supporting NTUC's call to look at the spending; the Tripartitie Mediation Framework and also expanding the employer dispute resolution for PMEs earning more than $4,500.

Our PMEs in Singapore remain vulnerable to a changing landscape and the economic restructuring. We have talked about getting PMEs to be equipped with T-shaped skills – the vertical part of T signifies a deepening expertise of a

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particular skillset or discipline whereas the horizontal part of the T signifies the ability to collaborate across disciplines.

Learning from the series of crises the past decade, the uncertainties of the global and local economy and having dealt with and engaged many PMEs in Singapore, I would like to put forward, the first time in this House, the concept of developing not T-shaped but π-shaped PMEs. Why Pi-shaped and the symbol π? Because the two verticals connote having two deep skills instead of just one deep skill. In other words, Pi-shaped also means second-skilling.

Why second skilling? We must not just develop competency and depth in one's main job but should equip ourselves with an additional backup skill or training that will come in to ensure employment and employability in the unfortunate situation of job loss or retrenchments.

As a real example, an IT programmer may have a passion for photography. His main deep skill is in IT programming but his second skill can be photography; professional photography. In the event he loses his job as an IT programmer, he can switch to being a professional freelance photographer to stay employed. Another example would be a banker who has a passion for counselling, possibly even a hobby for it. His second skill could be in counselling. Once he develops the deep skills of counselling, if there is a downturn and he is laid off from his banking job, he could still use his professional counselling qualifications to take on work as a counsellor or social worker in a VWO. The list and examples go on.

We seriously need a fundamental rethink of how employers, Government and PMEs should view second skilling and whether employees would be happier and far better off if they are allowed to explore new areas of professional development in their personal time. The employers can play their part; we will also need a shift in Government perspective in terms of how training funds can come in to support second skilling. This can come through by increasing the channels of deployment of the Lifelong Learning Fund and Skills Development Fund.

If we can expand the scope of Government funding for individual-initiated training, it will really help to facilitate the growth of second skilling, hence, assuring the employability and financial security for Singaporeans.

Previously, I have mooted actively for the establishing and linking of Lifelong Learning Fund to individual-based learning programmes rather than

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just relying on employer-centric training programmes. I am, therefore, pleased to note that there is a current trial on the Individual Learning Portfoilo by WDA that will provide a history or tracking of the individual PME's learning and development.

I recall vividly this. We had the Surrogate Employer Scheme in the past decade but which has now been overtaken by the Workfare Training Support Scheme. Can MOM or WDA continue the Surrogate Employer Scheme so that PME employees, some below 35 years and have PME level incomes, who are not supported by their employers and who embark on individually initiated training like embarking on Diploma or higher programmes in our local Polytechnics or reputable private education institutions enjoy funding and training allowance or absentee payroll? Madam, in Chinese, please.

(In Mandarin): [Please refer to Vernacular Speech.] In this globalised world where people face stiff competition in the labour market, our local PMEs must plan ahead. I propose that we not only develop "T-shaped" PMEs, but also "Pi-shaped" as well. Why the Pi-shape?

This is because for local PMEs to have just one deep skill is not enough; they need to have two deep skills. A good example would be someone in the finance industry. If he has a passion for counselling and if he were to be retrenched during a financial crisis, he can also join the counselling industry to continue working as a counsellor. There are many such examples.

I hope that employers would continue to encourage and develop local PMEs so that they can master a second skillset. I also hope the Government can allocate more resources to help them.

Your time is up, Mr Tay.

Mdm Chair, currently, those who wish to withdraw their names from the HDB flat that is co-owned with their aged parents, in order to purchase a new BTO flat with the spouse or spouse-to-be, would require the repayment of the CPF funds used, with accrued interest by the remaining co-owners. The remaining co-owners are usually the aged parents. This repayment, usually in cash, has to be made within six months of

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the name withdrawal, back into the CPF account of the co-owner who has withdrawn.

I have met several residents who are in this very situation. One of them is Mr Yeo and Ms Liu, who are getting married and have applied for a new BTO flat. However, Ms Liu currently co-owns a flat with her aged parents which she has helped pay for over the past three years. She appealed to CPF Board to seek a waiver of the repayment of about $42,000 by her aged parents, back to the CPF account when she withdraws her name from the current flat. However, her request was rejected.

Mr Yeo and Ms Liu are not alone. In the past two-and-a-half years, I have met a few other residents who are in the same predicament. The reasons for wanting the waiver for repayment are reasonable. They are still young, they are working, and are capable of building up the CPF funds for retirement, but their aged parents, usually in their 50s or 60s, are not able to do so.

There is a strong sense of filial piety amongst these young Singaporeans who feel that waiving the CPF repayment by the parents is a small gesture of repaying their parents' kindness and sacrifices. And they feel that the current CPF policy prevents them from being able to proceed to purchase a new flat and may be an obstacle in them starting a family. I understand the reason for rejecting the waiver of repayment, which is to ensure enough funds for their own retirement in the future. But this is another 20 to 30 years for them.

I would like to seek MOM's consideration to review the existing policy for repayment of CPF funds used, and instead allow options where Singaporeans can decide to: (a) seek repayment of the CPF funds used as a lump sum; or (b) seek repayment of CPF funds used in instalments for an agreed period of time; or (c) waive the repayment of CPF funds used entirely. Impose caveats, if need be, but I hope that the Government can consider these.

CPF proceeds are distributed according to the intestacy law if the member did not make any nomination prior to his or her death, with the exception of our Muslim friends whose proceeds will be distributed under the Administration of Muslim Law Act.

The intestacy law states that when a CPF member is married, it will revoke a previous nomination. However, when a member goes through a divorce, it

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will not revoke the previous nomination unless the member makes a fresh nomination after the divorce or remarries. Unfortunately, many CPF members are not aware of this fact.

I have come across cases in Punggol East where there is confusion amongst the immediate relatives of the deceased, uncertain about where their relation's CPF money has been transferred to. Very often, family members approach the CPF Board to understand who the beneficiaries are but are turned away as this is considered confidential information.

This allocation process may not be in line with the member's wishes and their money may not reach the people whom the member feels need it most. For example, if spouse and children are financially self-reliant, the member might have wanted to provide for their elderly parents, disabled or unemployed siblings, grandchildren or even grandparents.

I would like to suggest to the Ministry to send notices to CPF members whenever their marital status changes so as to allow members to make changes to their nominations if they choose to. This will require some additional administration but it can help to eliminate confusion and pain for CPF members and their immediate families.

Section 73 of the Conveyancing and Law of Property Act (CLPA) has generated much controversy in the past. One of the contributing factors was lack of awareness. Similar to CPF nomination, members are not aware that their beneficiaries change according to marital status. It is timely to conduct a review of the consequences of the intestacy law and greater awareness must be generated to the public on how this will affect their CPF money.

Although the increase in Minimum Sum for 2012 was about one-third lower than what it would have been, only about 50% of the active CPF members were able to meet the Minimum Sum at age 55 last year. For those who are unable to meet the Minimum Sum, many also have difficulty serving their housing loan. And many of them come to our Meet-the-People Sessions for help.

On the other hand, over the last 10 years, about 10%-15% of each cohort turning 55 has chosen to leave the balances in their CPF accounts above the

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Minimum Sum. These are sums of money that they could otherwise withdraw.

Thus, when the Minimum Sum reaches the target of $120,000 in real terms (2003 dollars) next year in 2015, may I know if the Government will conduct a review on the long-term Minimum Sum policy?

May I also suggest that the future Minimum Sum policy to have a tiered Minimum Sum targeting at different income groups, with higher income Singaporeans having bigger Minimum Sum and lower income workers keeping a smaller Minimum Sum?

In this House, we always hear this phrase: "not one size fits all". I say: "not one sum pleases all".

With the Retirement and Re-employment Act (RRA), the statutory minimum retirement age is now 62. Employers are also required to offer re-employment to eligible employees who turn 62, up to the age of 65.

This year's Budget has also announced an increase in CPF contribution to Medisave and an increase in CPF contribution for older workers. With Singaporeans working longer and retiring later, marrying later, and more are single, should there be a refinement to the age requirement for CPF funds transfer to the Retirement Account at the age of 55 to meet the Minimum Sum? If individuals at age 55 are still servicing their housing loan, once the funds are transferred from the Ordinary Account to the Retirement Account to meet the Minimum Sum requirements, the individual may not have much funds left in his OA to continue to service his housing loan and his Home Protection Scheme (HPS) or Dependants' Protection Scheme (DPS) insurance premiums. This would mean that they would have to service this through cash and, in some cases, as Mr Seng Han Thong had referred earlier, the low-wage workers do have challenges meeting this.

I have had several cases of residents who come to see me at MPS where they continue to work and they are still making contributions to the CPF. And once their funds are transferred at the age of 55, they have problems meeting their monthly mortgage payments.

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I do understand the logic for the fund transfer to meet the Minimum Sum to ensure retirement adequacy. But at the same time, I look at the cash flow implications for these individuals who because of that age change, but they are still contributing to CPF, are now facing challenges in their day-to-day servicing of their loans, as well as meeting their daily requirements.

Mr David Ong, you have two cuts. Please take them together.

Singapore is a rapidly ageing population and that translates to a fast-greying workforce. The changing demographic will require adjustments to be made by individuals and society at large. In particular, Government policies and attitudes of both employers and employees on retirement age, CPF and employment of seniors need to be re-calibrated to reflect the signs of our time.

For many years, in our policy to enhance the employability of older workers, we reduced the employer's CPF contribution. To-date, many of our older workers suffer a drop in their CPF savings. Older workers, as they age, would, therefore, suffer the double whammy of stagnated and reduced salary or a drop in employer's CPF contributions. Both combined worsen our older workers' retirement savings.

Budget 2014's move to further restore the CPF contribution rate for older workers will help them accumulate retirement savings faster and is a welcome move. But it may not be enough as older workers have faced reductions in their CPF contributions for many years. CPF savings is significant for our seniors, as they will depend even more on them for their retirement and healthcare needs.

In 2012, less than 50% of those who turned 55 were able to meet their Minimum Sum, whilst 40% did not meet the Medisave Minimum Sum.

Even with this Budget's attempt to restore CPF, our seniors' CPF savings will take a dive as they age. From next year, when they turn 55, their total CPF contribution will drop significantly by 10% and at 60, another 9% dip resulting in a 20% gap between them and their younger counterparts. Hence, the older they get, the tougher it is for them to shore up CPF savings for retirement and housing mortgages. This is especially so, given the changing Singapore demographic, where people are getting married and have kids later, upgrade

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their homes in their mid-career and thus may still be paying their mortgages and their children's education even when they are in their 50s.

As our workforce is greying and more are staying longer in employment well into their 50s and 60s, I call on MOM to move towards helping older workers grow their CPF retirement savings. Rather than tinkering with the older workers' retirement savings by using CPF as a calibrating tool to make them more affordable and employable, I hope the Government can continue to leverage on other levers, such the Special Employment Credit and now the Temporary Employment Credit, to help improve older workers' CPF retirement savings whilst assisting companies cope with rising costs.

On mindset change for employers, the Government can implement schemes where employers who want to recognise the contribution of their older workers can be motivated to voluntarily restore their CPF contributions.

Mdm Chair, it is important that workers remain employed longer as this will enable them to start dipping into their savings at a much later date, thus supporting financial self-sufficiency.

In my Budget speech, I asserted that staying employed for longer is not just important for financial reasons, but also for self-worth, dignity and productive ageing for our seniors.

MOM reported an improvement in the participation rate of seniors in the workforce, but we have also heard of many others who are unwillingly ushered into an earlier-than-planned retirement, are denied promotion, or are offered re-employment contracts with lesser pay and benefits even though they are re-employed to do the same job.

Let us start honouring our seniors in the workplace by paying them fairly. Our Civil Service has taken the lead in establishing fair and equitable compensation upon re-employment for Divisions 3 and 4 officers. More can be done to both the public and private sectors to accord our older workers a compensation based on merit and contribution, rather than on perceptions of productivity based on age.

The setting of a statutory retirement age perpetuates prejudices, stereotypes and age discrimination, thus creating barriers that prevent

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organisations from accessing and retaining the skills and talent they need.

Whilst the Tripartite Re-employment legislation provides the framework and flexibility for both employers and employees in re-employment, I would endeavour to seek an enhanced Re-employment legislation where we raise the re-employment age and do away with the statutory retirement age. Recourse for wrongful dismissal or inequitable compensation will be provided under this legislation regardless of age.

Hence, the removal of the statutory retirement age is, at its core, a symbolic but important step in changing the mindset and attitude of employers, to drive home the message that age is not a barrier to productive employment. Workers should be given the flexibility to choose how long they want to work or when they wish to retire. The important factor is the restoration of choice for our senior workers on retirement rather than being subject to a legislative policy.

However, the removal of retirement age does not necessarily mean that jobs will be available for older workers. The Government can and must do more to help our senior workers enhance their employability currency. At the same time, companies can extend the productive years of our older workers through deployment of productive technologies, re-designing jobs, adapt workplace practices and upgrade skills of older workers. If our companies are unable to adapt to an ageing employee profile, the economy will suffer from structural rigidities, ultimately, leading to job losses for all.

Mr Heng Chee How, you have two cuts. Please take them together.

Thank you, Madam. Last year, I pushed for the Re-employment Age ceiling to be further revised from 65 years old to 67 years old in view of the ageing population of our workforce, the tight labour market, as well as for the self-esteem and dignity of our older workers. The Re-employment law was enacted in January 2011 and it became effective from January 2012. It has been two years of implementation since. And the outcomes – the employment rate of older workers aged 55 to 64 continues to improve, as shared by the Acting Minister earlier. The employment rate of those above 65 years old has also increased. And we can all see that the tight ongoing labour market conditions

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are favourable.

Another point to note is that workers who reached 62 years old in January 2012 will turn 65 years old in January 2015.

I am glad that the tripartite partners have agreed to put this on the agenda to discuss and to learn from the on-going implementation experience and to see what measures need to be put in place to get ready for the next step. I would like to ask MOM whether there is a timeframe to aim at in making this move, as I believe that many older workers are looking forward to it. Such an indication would also help employers in their planning and in acquiring the know-how in good time.

Madam, my second cut is on enabling age-friendly workplaces. There are four manpower taps: school-leavers, labour productivity gains, retaining and prolonging the work lifespan of older workers and encouraging women to go back to work, and as well as imported manpower.

With prolonged low fertility, the pool of school-leavers will remain limited. Labour productivity improvement has been lacklustre in recent years. With tighter management of imported manpower, tapping the source of older workers cannot be over-emphasised.

At the same time, the labour market is very tight and employers are experiencing difficulty in filling vacancies. Furthermore, the citizen population is ageing, and many older workers value the opportunity to continue to contribute at work and to earn a fair wage.

Against this background, it is clear that both economically and socially, pervasive adoption of age-friendly human resource, operational process and job design practices will be critical to help both employers and older workers find a win-win path forward.

One clear hurdle is the cost of making these adjustments and improvements. In this regard, PIC grants help. At the same time, there is also the WorkPro programme which was designed to help spur the creation and improvement of age-friendly and flexible workplaces. I would like to ask MOM

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for an update of WorkPro's progress since its launch at last year's Budget session.

Money aside, I believe a potentially even bigger hurdle is the lack of know-how. Without sufficient know-how, companies are likely to carry on doing things the same way, whether from a productivity standpoint or from an age-friendliness standpoint, that is, knowing how to design things to be more age-friendly. They will then just seek ways to lower cost instead of finding ways to unleash value and that would not be a sustainable approach in our realities.

I, therefore, ask for MOM's assessment of the state of know-how of companies in designing and implementing age-friendly measures, both from the human resource as well as operational standpoints. What is being done to help companies acquire such know-how and to nudge them towards making concrete efforts to acquire such know-how and then implement them? In this process, is there a sufficient pool of age-related job and process re-design consultants for them to tap on and how can we better help grow this pool for them?

A recent survey shows that many Singaporeans have their retirement plan but, in reality, they end up working longer than originally planned for various reasons.

The employment rate for our senior citizens aged 55 to 64 is now 66.8%. With more and more Singaporeans approaching the retirement age, may I know what is our longer term target of employment rate for older workers and what are the policies and programmes to encourage more Singaporeans to work longer and employers to engage older workers?

The Government's approach should be to create an economic structure that will make the older workers productive and are able to generate economic value. This is no different from EDB creating jobs for the graduates from University, Polytechnics and ITE. We can create meaningful jobs for the seniors and train them for these jobs.

With your permission, Mdm Chair, may I display some slides on the LED screen?

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Yes, please.

Mdm Chair, I thank members who spoke passionately about the need to ensure that our workforce remains responsive, relevant and resilient.

Acting Minister Tan Chuan-Jin mentioned the need to support the restructuring of our economy by promoting improvements in the quality of our workforce. I would like to elaborate on how my Ministry intends to do so. The main thrust of our efforts is to empower Singaporeans to embrace learning for life to meet the challenges of our collective future.

We cannot assume that what we know or do today will continue to be relevant. The future will bring new opportunities for all Singaporeans – many new jobs have yet to be created. A number of these jobs will be in new growth sectors that Ms Foo Mee Har, Ms Denise Phua and Ms Jessica Tan alluded to earlier. We need to prepare ourselves to take advantage of these opportunities.

I will first give an update on the broad-based measures that my Ministry has undertaken to improve our Continuing Education and Training system, or CET in short. These measures seek to better support our economic restructuring efforts and help our workforce seize the opportunities that restructuring will bring. I will then speak on our targeted efforts to reach out to two groups of workers who have more specific needs. Finally, I will speak about the issue of retirement adequacy.

Last year, as part of Our Singapore Conversation, MOM organised several sessions to hear what Singaporeans had to say about CET. As one participant said, "Learning is living; when we stop learning, we stop living. Lifelong learning is about how you create value for yourself." Our Government recognises that CET remains the cornerstone of a resilient workforce, and will continue to empower Singaporeans to improve themselves.

The story of Mr Jai Prakash illustrates this well. Mr Prakash, aged 47, sought assistance from WDA's Career Centre at North West CDC after being retrenched as a Distribution and Marketing Manager. He was keen to hone his skills as a trainer to widen his job options.

After understanding his needs, Mr Prakash's Career Consultant referred him for the Advanced Certificate in Training and Assessment (ACTA) course where he completed all six modules during a five-month period last year. On

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top of substantial course fee subsidies, he also received a training allowance.

His perseverance paid off when he secured a job through his own initiative as an Assistant Operations Manager with a logistics company in December last year, after being unemployed for eight months. He was able to apply his newly-minted skills gained from the ACTA course in his new role to train new staff in handling chemical products and managing inventories. Mr Prakash is currently pursuing the Singapore Workforce Skills Qualifications (WSQ) Advanced Certificate in Workplace Safety and Health conducted by NTUC Learning Hub, to further develop his skillsets.

At the Budget debate, several Members, including Mr Zainudin Nordin, had asked about the progress we have made in CET. Back in 2008, we launched the Masterplan to develop CET into a key economic and social institution that undergirds our economy, our competitiveness and helps Singaporeans stay employable.

Since then, we have more than doubled the number of CET centres from 19 to 51, and increased the coverage of WSQ frameworks to cover more than 30 industries, from Creative Industries to Precision Engineering. A total of one million workers have now been trained in WSQ. And with our two new CET campuses, more workers will be able to access CET programmes.

In addition, our Polytechnics and ITEs have quadrupled their academic CET programmes from about 40 in 2008 to over 160 programmes in 2013. Since 2011, these programmes have also been modularised to better meet the needs of working adults for flexible upgrading.

We also look at outcomes from the perspective of our workers and employers. WDA's latest survey findings are encouraging. Ninety-seven percent of our trainees indicated that they were better able to apply their skills, an increase from 93% in 2009 when the survey first started. Seventy-seven percent of employers felt that WSQ training led to productivity improvements, compared to 62% in 2009.

Mr Christopher de Souza had earlier asked about productivity and training for lower-wage workers, and I am pleased to share that our lower-wage workers, in particular, have benefitted from WSQ training. Based on another WDA study, from 2008 to 2010, lower-wage workers with WSQ Statements of Attainment (SOA) received wage increments of between 2.6% and 4.6%, compared to those

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without SOAs.

The progress we have made since 2008 has allowed us to fulfil the aspirations of more Singaporeans, such as Mr Low Weng Hoe. Mr Low graduated with a Degree in Network Computing and joined the IT industry as an IT executive, but subsequently decided to pursue a career in healthcare.

During a course for therapy assistants, Mr Low worked closely with therapists in the hospitals who dealt with neurological and geriatric patients. It was then that he discovered a passion for geriatric therapy. He enjoyed interacting with the elderly while assisting them in their exercises and felt a sense of fulfilment when he witnessed their recovery. In 2010, he won the WDA-Professional Conversion Programme award to do a three-year Diploma course in Physiotherapy. Although Mr Low is currently earning a salary which is 10% lower than his previous job in the IT industry, he has no regrets entering the healthcare sector.

We are also providing more support for our SMEs' training efforts. This contributes to the Government's efforts to transform the SME sector, as Deputy Prime Minister Tharman spoke about earlier in the Budget debate.

At last year's COS, I introduced the Enterprise Training Support, or ETS, scheme to provide a holistic HR and training package for companies to develop their employees and raise productivity. WDA rolled it out after we listened carefully to our SMEs, many of whom have asked for more help to develop their HR expertise.

By the end of last year, the ETS had benefitted 68 companies and approximately 12,000 local workers. Seventy percent of these companies were SMEs, and I am glad to share that feedback from the SMEs has been very positive.

Nonetheless, many SMEs also indicated that the tight labour market made it difficult to send workers for training. WDA will thus enhance the ETS to support e-learning and mobile learning from 1 April this year. This will provide more flexible training options for workers and, as Ms Denise Phua mentioned, reflect learning in the digital age.

Several SMEs have also told us that they found it difficult to access WDA's schemes and training programmes. Hence, since last year, through closer collaboration with the one-stop SME Centres set up by SPRING Singapore,

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SMEs that prefer one-to-one advice on training advisory or manpower development can approach WDA Programme Advisors at any of these five SME Centres.

Response from SMEs has been positive. Of the SMEs that approached the Programme Advisors, 40% eventually expressed an interest to tap on the schemes. In fact, the majority of SMEs engaged in this manner are small enterprises with less than 20 employees.

I urge more SMEs to tap on these services. A mindset of continuous improvement does not apply only to workers; employers are also important conduits for these improvements to take place.

At the start of my speech, I spoke briefly about the challenges of the future. CET is a key strategy in our response to these challenges. And we must actively look and plan ahead so that our CET system keeps our workforce agile in an evolving world fuelled by uncertainty.

Hence, as we announced last year, we are embarking on a major review of our CET Masterplan. Given the future challenges faced by our workforce, the review of the CET Masterplan will help to achieve the following.

First, to build a culture where individuals are better empowered to pursue their career goals and aspirations through CET. We will give greater emphasis to self-initiated upgrading to build a "career-resilient" workforce that embraces lifelong learning.

Second, companies need to take greater ownership of their HR planning. They can do this by more effectively integrating CET into their business strategy and performance management, developing attractive careers and wage pathways.

Third, at a systems level, we want to improve the responsiveness of our CET system to meet the evolving skills needs of growth sectors. More details on the revised CET Masterplan will be announced in due course.

Allow me now to turn our attention to two specific groups of workers, namely, the PMEs and our older workers. I thank Mr Patrick Tay, Ms Foo Mee Har, Ms Mary Liew and Mr Teo Siong Seng for their concerns about our PMEs. Let me set this issue in context. On the whole, our PMEs are doing well. For example, unemployment rates for Singapore citizen PMEs remain low at 2.5%

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in 2013, compared to 3.6% for all citizens. However, some PMEs are facing employment challenges, as alluded to by some of our hon Members.

On average, unemployed PMEs took longer to find jobs. The median duration of unemployment among those previously in PME jobs was 13 weeks in June 2013, compared to eight weeks for those from non-PME jobs.Fskil

While our unemployment rate is currently low, we cannot be complacent and expect it to remain that way. The number of PMEs in the labour market is also increasing. As the educational and skills profile of our workforce improves, the share of PMEs in the Singapore citizen workforce has risen from 25% in 2003, to 28% in 2013. And this number is expected to grow further.

Our efforts to provide broad support for PMEs to improve themselves must, therefore, be redoubled to help more to take on the jobs that have been created. WDA provides funding for training beyond WSQ and continually reviews this to expand the range of PME programmes funded.

Our PMEs also benefit from the Place and Train Programmes funded by WDA.

One such pilot programme that we fund, working with the Association of Small and Medium Enterprises (ASME), is the Max Talent programme which is open to all SMEs, regardless of industry or sector. Mr Teo Siong Seng will be glad to note that a total of 740 PMEs have been placed across 706 SMEs under the Max Talent programme, from its inception in April 2012 to 31 December 2013.

Ms Foo Mee Har pointed out that some PMEs need help to gain overseas exposure. She spoke about the Asian Business Fellowship (ABF) programme which she had supported during her stint at Standard Chartered. I am pleased to inform Ms Foo that the ABF has evolved into a "Market Attachments" component under IE Singapore's Global Company Partnership (GCP) Programme. In fact, the Deputy Prime Minister announced in this year's Budget Speech that "Market Attachments" will be enhanced, expanding the scope of support for staff attachments in overseas markets.

For displaced PMEs, we will continue to help them get back into employment quickly. CaliberLink empowers our PMEs with greater ownership

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of their CET journeys by providing more platforms for self-mastery, exploration and enrichment. Since its launch in December 2011, CaliberLink has assisted more than 5,000 PMEs through its training and career consultation services, networking events and workshops. Of these, about 2,000 sought dedicated employment assistance in the form of career coaching services, and 750 have since found employment. Although CaliberLink is relatively new, these figures are encouraging. Our career consultants are critical to ensuring that workers receive personalised advice that best suits their needs and aspirations.

Take Mr Glenn Au, for example. Mr Au was 51 years old when he approached CaliberLink in May 2013 when his position as a Senior Specialist in Human Resource at an MNC was made redundant in a restructuring exercise. Apprehensive about the job market's negative perception towards older workers, Mr Au wanted to explore job opportunities in other sectors and other job functions. He also felt that his degree in Engineering may hinder his finding a job in HR.

The career coach from CaliberLink, Mr Mohamed Alfee, advised Mr Au that his previous work experience in HR was relevant and that he should continue applying for jobs in HR. Through Mr Alfee's guidance, Mr Au overcame his self-perceived "mature age" barrier to employment by continuing to apply for jobs in Human Resource, working closely with the coach to redraft his resume to highlight his transferrable skills, as well as HR and Training experience.

Through CaliberLink's support, I am glad to note that he finally secured a job as a senior Human Resource Manager in SMRT Corporation and enjoys a higher salary compared to his previous job. I am told that he now even shares his job search journey with other job seekers at workshops organised by CaliberLink. We will help displaced PMEs like Mr Au get back on their feet as quickly as possible, so that they can continue to support themselves and their families.

Mr Patrick Tay and Ms Mary Liew spoke about the need for multiple skillsets for our PMEs, with Mr Tay further suggesting a PME Capability Development Fund. Over the years, our approach to helping PMEs develop their skills has evolved with the changing needs of the economy.

In light of the rapidly changing environment, deep expertise in one area may no longer be sufficient, as Mr Tay had noted. PMEs may require different skills and competencies from what they have today, and we will help them

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acquire these necessary skills through CET.

As Mr Patrick Tay suggested, one way to do so is to help PMEs develop deep vertical expertise in two or even more areas, and strong transferable skills which are relevant across industries – moving from developing T-shaped to pi-shaped workers. We are, in principle, supportive of this idea. In our review of the CET Masterplan, we will also be looking at funding support for training these PMEs.

Mr Patrick Tay also raised his concern about graduates from private education institutions. As he pointed out, strong career aspirations have led to a greater demand for academic upgrading, especially for degrees. Adding on, Ms Mary Liew and Mr Tay both spoke about affordability.

While we will continue to create quality jobs for Singaporeans, we also need to ensure that our educational institutions produce graduates who are highly employable, with strong substantive knowledge and relevant skills. For the private education sector, the Government will continue to maintain standards through a holistic approach that integrates regulation and quality assurance, and consumer education.

Students also need to take greater ownership of their own careers, and be discerning in their choice of institutions and courses. Prospective students should do their homework to find out about the employment outcomes of graduates of the education provider. Cost should also factor into their calculation.

Education should never be a paper chase. Increasingly, employers are seeking to recruit employees with relevant competencies and skills, regardless of the qualifications they hold.

Allow me now to move on to Older Workers. Several Members, including Mr Heng Chee How, Mr Seng Han Thong, Mr David Ong, Mr Zainudin Nordin and Mr Gerald Giam have raised their concerns.

Our basic principle is this: we want to help Singaporeans who desire to work to be able to do so. We will continue to improve job opportunities for them and help them develop the necessary skills to access those opportunities.

At last year's COS, I announced the WorkPro programme to provide comprehensive support to encourage older workers and economically inactive

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locals to return to work, and to promote work-life harmony. I thank Mr Heng Chee How for his concern about its progress.

The take-up rate has been encouraging, with more than 700 companies coming on board as at December 2013, nine months after the programme was launched. Another aspect of WorkPro is aimed at promoting flexible work arrangements. Senior Parliamentary Secretary Hawazi will elaborate more on the Work-Life Grant in his speech.

We are doing more for our older workers. With increasing life expectancy, many Singaporeans are capable of and desire to continue to work till an older age. I fully agree with Mr Seng Han Thong that we should help them to do so. This allows them to remain meaningfully engaged, to continue to earn an income and to be better prepared for their retirement. Just as importantly, working also sustains a sense of dignity and self-worth. So, it is not just about working longer for retirement adequacy.

The employment rate of older residents aged 55 to 64 reached 65% in 2013, a target we attained two years ahead of time. Few countries have achieved these levels, so we will monitor the trends going forward and see if it is realistic to push for an even higher target. But we will not let up on the current momentum and we will continue to help those who want to work to do so.

Mr Seng Han Thong will be pleased to note that we have reconvened our Tripartite Committee on Employability of Older Workers. Our efforts to help older workers can be grouped into five broad thrusts. First, improving workplace practices and support; second, raising productivity and skills of older workers; third, shaping positive perceptions of older workers; fourth, enhancing employment facilitation; and fifth, improving retirement planning.

Through our outreach to companies, we recognise that different sectors, such as hotels, retail and F&B, have unique needs and constraints. As Mr Heng Chee How has pointed out, some businesses may not know how to go about re-designing their workplace processes to cater to their older workers. Hence, the Tricom will work with industry associations to build companies' capabilities in managing an ageing workforce and roll out relevant age management practices. We will also work with industry partners to develop a training curriculum and standards for age management consultants, who can then help businesses implement age-friendly programmes.

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Mr Heng Chee How also asked for an update on our plans for re-employment. Since we implemented the re-employment legislation in 2012, progress has been smooth. Based on the preliminary findings from our latest survey, 99% of private sector local employees who turned 62 in the year ending June last year were offered re-employment, including 67% of retiring employees who were offered re-employment on existing contracts, with no change to their employment terms.

Mr David Ong raised a related issue of wage adjustments upon re-employment. I would like to re-iterate that any adjustments to the employment terms for re-employed employees should be based on reasonable factors, such as employee's productivity, duties and responsibilities, and the extent of seniority elements in the wage structure.

So far, statistics have been encouraging. Among those re-employed in the same job in the private sector, 96% did not experience a basic wage cut.

Overall, employers are keen to tap on older workers' skills, knowledge and experience. The positive results of re-employment have affirmed that this approach works for us. We considered various options, including extending the statutory minimum retirement age. But we have decided to adopt the re-employment approach as it allows workers to work longer, while ensuring that employers have sufficient flexibility to manage their manpower needs.

We are looking into further raising the re-employment age from 65 years old, possibly to 67. As the Retirement and Re-employment Act (RRA) has been in effect for only two years, the Tricom, in consultation with employers and unions, feels that we should allow time to monitor its impact. At the same time, the Tricom will review and iron out any outstanding implementation issues and update the law and the Tripartite Guidelines on the Re-employment of Older Employees. We will announce the proposals, including the appropriate time frame for raising the re-employment age, when these are ready.

We should also not rely only on legislation to support the employment of older workers. Mr David Ong rightly pointed out that addressing age discrimination is an on-going journey which requires a mindset change by all members of society – employers and employees, supervisors and so on. To that end, the Tricom will be launching an initiative to shape positive perceptions of older workers, to highlight the value they bring and to encourage companies to tap on their experience and skills.

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Finally, I would like to cover the important topic of retirement adequacy for Singaporeans. The CPF contribution rate changes announced at Budget 2014 were made in close consultation with our tripartite partners. In deciding on the quantum and the pace of the increases, we were mindful of the need to strike a balance between providing for better retirement adequacy, and making sure that we do not raise wage costs to an extent where it affects the employability of our workers and our businesses lose their competitive edge.

I thank Mr David Ong for his concern about the adequacy of retirement and healthcare savings of older workers, and for his suggestion that employers could contribute even more to the retirement savings of their employees.

Raising employer CPF contribution rates further is one way to help provide better adequacy, but it will have an impact on business costs and thus employment opportunities. I think both sides of the issue were aired during the Budget Debate. Any further increases in our employer CPF contribution rates will have to be carefully considered by the tripartite partners and, if deemed necessary, done in a calibrated and gradual manner.

More importantly, we have to keep at our efforts to improve the employability of our older workers. The Government supports the employment of older workers heavily, especially older low-wage workers, through schemes like the Workfare Income Supplement (WIS) and the Special Employment Credit (SEC).

Mr Seng Han Thong spoke about the increase in the Minimum Sum (MS) and asked if the Government could conduct a review on the long-term MS policy. The MS aims to provide enough for the basic retirement needs of Singaporeans. What is basic? If you have the full MS in cash at 55 today, you should be able to cover the expenditure needs of a two-member retiree household in the second quintile, in other words, between the 20th percentile and 40th percentile of households.