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Josephine Teo: 7 key concerns and how Singapore’s Government is tackling them

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During the Budget 2020 debate earlier this week, Singapore’s Minister for Manpower, Josephine Teo, highlighted the various ways in which the Government is working with employers to safeguard jobs and wages.

In her speech, she addressed seven key concerns and how the Government tackling them:

Concern 1: COVID-19 is causing economic uncertainty. Businesses need to save costs. So, how should I maintain or increase employees’ wages?

Of the S$4 billion Stabilisation and Support Package Deputy Prime Minister Heng Swee Keat announced last week, 60% (or S$2.4 billion) will go towards the Jobs Support Scheme and enhanced Wage Credit Scheme.

Here’s how businesses with local employees will benefit:

  • Jobs Support Scheme
    Companies will receive an 8% cash grant based on the gross monthly wages of their local employees for three months, subject to a monthly wage cap of $3,600 per employee. Over the next three months, the Government will inject about S$1.3 billion into this to employers and help keep 1.9 million local employees in their jobs.
  • Enhanced Wage Credit Scheme
    The Government will co-pay 20% of qualifying wage increases in 2019, and 15% of increase in 2020 if this higher wage is sustained. Through this, effectively, more than four months of the wage increase is borne by the Government over two years. The qualifying salary has also been raised from $4,000 to $5,000, with S$1.1 billion going to about 90,000 employers, benefitting more than 700,000 local employees.

Concern 2: Even with this support, I still need to save costs. So, my company is shutting operations temporarily. Can I tell my employees on no pay leave until further notice?

Employers should not do that.

It is one thing to ask if employees would like to volunteer for no pay leave. It is another to force it upon them.

Minister Teo noted an instance where an employer claimed she was told by Ministry of Manpower (MOM) to lay off employees.

She said: “It turns out the employer did not tell the full story. In fact, she had decided to shut operations temporarily and told her workers to go on no pay leave until further notice.

“But asking workers to bear the uncertainty of waiting for her business to re-start makes matters worse. For those workers without savings, they will need other jobs to pay their bills! It is one thing to ask if her employees would like to volunteer for no pay leave; it is quite another to force it upon them.”

Additionally, the minister noted that as the employer had stopped paying salaries, it would also not have been fair to expect her foreign workers to stay in Singapore with limited means of supporting themselves.

Hence, MOM advised her that it would be more appropriate to repatriate the foreign workers responsibly, and to reapply for work permits in future when business picks up.

When in doubt, refer to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.

The advisory recommends other options besides no-pay leave and layoffs. This could include redeployment to other work areas, shorter work weeks, job sharing or adjustments to certain wage components. These options would at least maintain most, if not all of the workers’ past incomes.

Concern 3: What should I do if my company has excess foreign workers?

Inform the Singapore Business Federation. There is a temporary scheme to help the workers be transferred to employers with manpower shortages.

This will help employers whose PRC workers have not gotten approval to return to Singapore, and also cannot hire new PRC workers because we have suspended approvals.

Concern 4: My company needs foreign workers, but the levies are too much for us to bear during these uncertain times. Would MOM waive or reduce the foreign worker levies?

Levies will be waived for employers whose foreign workers are required to serve quarantine, Leave of Absence or Stay-Home Notices when they have a travel history to China.

However, in general, foreign worker levies will not be waived.

Minister Teo gave three key reasons for this:

  • It will not benefit the many employers who only have local employees.
  • In supporting businesses, the Government’s priority is also to preserve local employment.
  • As much as the Government wants to help businesses, measures to deal with the short-term fallout should not negate longer-term efforts for companies to become less reliant on foreign manpower for growth.

Levy waivers or reductions would have run counter to the later two objectives.

At the same time, she noted that the levies have not been raised either, and have remained the same since 2017 for the Construction sector, and 2016 or earlier for other sectors.

Instead of levy reductions, the Government has put together a multi-agency support package worth more than S$15 million that also involves our tripartite partners, for businesses in the tourism sector to use the down time for more training and transformation.

Even for other sectors, the Government is looking into positioning Singapore for the future even when the chips are down. Hence the focus on Jobs Support and Wage Credits – so that businesses and their people can continue with operations, and press on with restructuring with help from the Enterprise Transformation Package.

Concern 5: I need more S Pass workers. Why did the government cut the quotas?

The cuts in the S Pass quotas for Construction, Marine and Process sectors came after much careful consideration. That said, these sectors will also get a longer period to adjust.

Minister Teo pointed out: “Unlike for the Services sector, the quota cuts for the Construction, Marine and Process sectors are at the S Pass levels and not at the work permit levels.  S Pass jobs are skilled jobs which polytechnic graduates, and even ITE upgraders, are able to perform.”

Short-term flexibility in meeting foreign workforce criteria is already available to employers under the Capability Transfer Programme and the Lean Enterprise Development Scheme. At a structural level, the Government also recognises the differing appeal of sectors.

Hence, in the construction sector, out of 100 employees, up to 87 can be foreigners, of which 15 can be S Pass holders, even after the changes kick in by 2023. However, a company in the Services sector of the same size, can only have up to 35 foreign employees, of which 10 can be S Pass holders starting from January 2021.

Minister Teo added: “Beyond these gradations, we should be realistic. Which sub-sector or occupation will accept having more restrictions compared to others that have less? Looking at it from a different lens, which local employees would feel it’s fair that their employers need not worry or try as hard to improve job quality to retain them because of more access to foreigners?

“Consider the longer term too. Can we be so sure that foreigners will always accept the work conditions our own people find unappealing, or that they will not find better jobs back home in time to come?”

Concern 6: Will Singapore consider implementing unemployment insurance?

While this has been extensively discussed in Parliament in May 2017, Singapore will not be implementing unemployment insurance.

Singapore’s current approach of focussing on employment support has shown encouraging results and is more sustainable, Minister Teo said, noting that as long as jobs are still being created, a focus on employment support helps both the individuals and businesses.

Programmes like Adapt & Grow and SkillsFuture help workers re-skill and seize better opportunities in the longer term. While short-term financial relief is still provided to the needy.

Minister Teo added: “Countries with unemployment insurance typically have persistently high unemployment. In contrast, Singapore has consistently had full employment. Willingness to pay for unemployment insurance is not the same as most people do not expect to need it and also have other buffers, for example a working spouse or child.

“While we keep an open mind on unemployment insurance, we should be also aware of its serious downsides, such as reducing employers’ willingness to pay retrenchment benefits. Studies have also found that unemployment benefits can have the unintended consequence of reducing motivation to find work.”

Concern 7: Will Singapore consider allowing the use of CPF to fund upskilling?

No, not at the moment.

The key question is whether the lack of training funds is the main barrier to career transitions, minister Teo said. At present, it does not appear the lack of funds is a barrier.

The Government is already directly subsidising a very wide range of training programmes, up to 90% in some instances. To fund the unsubsidised portion of reskilling or self-improvement courses, Singaporeans have access to workplace sponsorships and schemes such as the SkillsFuture Mid-career Enhanced Subsidy and the Workfare Training Support.

The Government is also redoubling support to both employers and individuals. Employers can now access Skillfuture Enterprise Credits up to $10,000, while individuals themselves have Skillsfuture Credit top-ups.

“I suggest that we focus on these initiatives instead of putting at risk the retirement savings of our people.  At the same time, focus on issues that matter to mid-career persons,” she said.

Photo / 123RF

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