Minister for Manpower on retrenchment, income gap, and upskilling

At yesterday's Parliament sitting, the Minister for Manpower Lim Swee Say provided four oral responses to questions from Members of Parliament (MP) on various workforce topics such as retrenchment assistance, income gap, WDA programmes.

These questions were asked by MP Patrick Tay Teck Guan, MP Saktiandi Supaat, and MP Patrick Tay.

Here are Minister Lim's answers:

Question on retrenchment assistanceMP Patrick Tay Teck Guan asked, " What can the Government do to assist non-unionised workers if their retrenchments are carried out irresponsibly such as when retrenchment benefits are not paid or short/no notice of retrenchment is given to the affected workers?"

Based on the last survey on retrenchment conducted by the Ministry of Manpower (MOM) in 2013 for retrenchment carried out in 2012, 9 in 10 companies paid retrenchment benefits, said Minister for Manpower Lim Swee Say.

"68% of them came from manufacturing, wholesale & retail trade, and financial & insurance services. 80% were non-unionised companies, and 66% were SMEs employing between 25 and 199 employees. We do not have data on smaller enterprises as the survey covered only establishments with at least 25 employees."

The 2013 survey showed that the norm was to pay a retrenchment benefit of between two weeks and a month of salary per year of service.

"In view of the current economic situation, we have brought forward the next survey due in 2017 to this year. We have also extended coverage to smaller establishments employing between 10 and 24 employees."

The Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment are issued and periodically updated the, Lim said, to remind the employers to implement retrenchment exercises in a responsible and sensitive manner.

As for the payment of benefits, the EA stipulates that no employee who has served less than two years shall be entitled to any retrenchment benefit, Lim noted.

"However, the Employment Act (EA) does not mandate the payment of retrenchment benefits for employees who have served two years or more. The quantum of retrenchment benefits, if any, is at the employer’s discretion. Even so, the vast majority of employers with 25 or more employees do pay retrenchment benefits commensurate with the industry norm."

"For non-union members, if their contract stipulates a notice period or the retrenchment benefits quantum, they have recourse through the Civil Courts. With the setting up of the Employment Claims Tribunals in April 2017, they will have a more affordable and expeditious avenue to resolve their contractual disputes, including retrenchment benefits."

Question on WDA programmesAre there plans for WDA programmes to be extended to university graduates, in particular those who are unemployed; and will the ministry consider more grants and financial aid for older graduates looking to upskill themselves under professional conversion programmes (PCP), MP Saktiandi Supaat asked.

"WDA programmes and initiatives are already extended to university graduates, including fresh graduates," Minister for Manpower Lim Swee Say said. In fact, 2015, of the job seekers assisted by WDA and e2i, 17% hold a degree qualification, Lim pointed out.

"PMETs including degree holders can also access programmes such as Professional Conversion Programmes (PCP), the Career Support Programme (CSP) and P-Max to transit to new jobs including in the SMEs. In particular, older PMETs are already offered a higher level of career and employment support."

With regards to the PCP, MP Saktiandi Supaat asked: "Across the 11 sectors, are there any plans to increase the caps particularly, the $4,000 cap as we will have an increased number of older PMETs who will be unemployed?"

"That is the reason why, besides PCP (around 7 – 8 years), last year October, we have introduced the CSP where are able to provide wage support ranges from $4,000 - $7,000," Minister for Manpower Lim Swee Say said. "In short, mature PMETs can be supported with combination of both the PCP and CSP."

Question on income gapWith regards to the income gap, MP Saktiandi Supaat asked: How has the income gap been trending over the past five years? What are longer-term strategic plans to narrow the income gap in a sustainable manner? How many people are in the bottom 20th percentile of household income over the past five years?

"The number of people in the bottom 20th percentiles of household income over the past five years has remained stable, alongside natural changes in total number of working households and household size," Minister for Manpower Lim Swee Say said.

He added that over the last five years, the Gini coefficient remained relatively stable, at 0.472 in 2010 and 0.463 in 2015 while the average household income from work per household member for the 1st and 2nd decile both grew by around 24% in real terms -  the highest among all deciles.

"The Government has also introduced transfers to help lower-income Singaporeans. This is reflected in the lower Gini coefficient of 0.41 in 2015 after Government taxes and transfers."

The government's core measures to help low-wage workers include the implementation of Workfare Income Supplement and Training Support for all lower-wage workers, and the use of policy levers to implement the Progressive Wage Model in the cleaning, security and landscaping sectors.

"These measures are bearing fruit. The gap between real income growth of full-time employed Singapore citizens at the 20th percentile and median has narrowed in the past five years as compared to the previous five years, from 2.1% vs. 2.9% to 2.9% vs. 3.0%."

There is however still much to be done, Lim pointed out, "we will continue to strengthen our support framework for low-wage workers. For example, the Progressive Wage Model (PWM) is today a ladder of minimum wage points."

"We are working to transform it to become a ladder of wage ranges so as to provide more scope for wage growth for our low-wage workers. This will help prevent wage stagnation at the various wage points, a common challenge faced by other countries with minimum wage policies."

While aware of the policies that Singapore has undertaken, MP Saktiandi Supaat was concerned about the global trends with income inequality: "Are you concerned about potential risks arising from global trends that may actually impact Singapore even though it has not happened?"

"In the recent G20 labour and employment ministerial meeting held in Beijing last month, this was one issue being discussed by the labour Ministers from G20 countries, which is on the widening of income gap. Which is the reason they call this inclusive growth,"Minister for Manpower Lim Swee Say said.

"In the case of Singapore, we adopted slightly differently. Our approach is through WIS, WTS and PWM. I am happy to say that the approach adopted by Singapore drew some interest from countries.

"Having implemented minimum wage for a long time, many countries found that they have not found a way to help the Low Wage workers to break away from wage stagnation at the bottom," he added.

While the implementation of PWM in Singapore is still in the early stages and there is room to strengthen it further, he noted that many countries at the G20 meeting have a greater interest in what Singapore is doing under PWM.

"So for example for the cleaning sector, we are not talking of transforming the minimum wage point into a ladder of wage ranges so there is more scope for cleaners for cleaners to see their wages moving up within the wage range, so this is something the tripartite of cleaning is working on."

"We are not stopping at PWM in terms of basic framework, rather, we are still looking for ways to further sustain that. Our aim is to ensure that wage increase at the P20 level in the coming years will at least be able to keep up with that of the median wage, if not higher."

Addressing concerns Singaporeans have around the 'sandwich class', MP Patrick Tay said: "With the early successes, we have done well with the lower wage group. But I think one area is the sandwich class (30th - 60th percentile). I think we can do more and better for that segment of the population and I hope MOM and tripartite partners will be able to go full force on this particularly with this uncertain outlook of economy."

"In a way, we want to make sure workers at all levels to be able to see their wages go up in a sustainable manner, we agree the best way is through productivity, innovation, job transformation through skills upgrading. I would say that this effort is well underway," Minister for Manpower Lim Swee Say said.

"Just last week, DPM Tharman launched the industry transformation plan for the F&B sector. F&B is a very traditional sector."

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