Saturday 27 October 2012

Growth matters 'as a means to an end': Tan Chuan-Jin

It's about citizens' well-being in terms of bread-and-butter issues: Minister
By Janice Heng, The Straits Times, 26 Oct 2012

ECONOMIC growth is not an end in itself but a means to an end - that is, the well-being of Singaporeans, Acting Manpower Minister Tan Chuan-Jin has declared.

Countering the perception of the Government as overly focused on growth, he said policymaking "is not about the economy, not about the GDP growth, it's not about the numbers, not about having wonderful unemployment".

"At the end of it, it's (about) how does it add up, really, to the bread-and-butter issues of the individual concerned, how does it add up to the society."

The right level of economic growth depends on the results desired, such as low unemployment and being able to have "good wages for people, good jobs", he said.

"Secondly, are we able to, as a whole, generate enough income for the economy, for the country, to be able to do the things that you need to do?"

This includes investment in health care, education and infrastructure, he added.

Growth should thus be at a level that meets the above needs, concluded Mr Tan - which he suggested might be around 3per cent.

This is in line with the Government's target of 3 per cent to 5 per cent annual growth in this decade.

Mr Tan's comments cement what appears to be a gradual shift in the Government's stance on economic growth.

As recently as six years ago, Prime Minister Lee Hsien Loong said in his National Day Rally speech that when times are good, Singapore "must grow as fast as we can" so it will have the resources to weather tough times.

One of the criticisms that accompanied a period of rapid gross domestic product (GDP) growth averaging more than 8per cent in the years 2004 to 2008 was that the benefits of the expansion were felt more among the high-income groups.

Mr Tan said the Ministry of Manpower (MOM) is open to change on many fronts, and this lack of what he calls an "ideological bent" on policy options ties back to his approach to growth.

"It's about being very practical about what makes sense for our people," he said.

For instance, he has no personal "doctrinal aversion" to a minimum wage - a policy option that has long been anathema to the Government - though the Government's stance on this issue has yet to shift.

The MOM is also relooking policies both internal and external - from what its staff might be unhappy with, to resurfacing "old papers which had surfaced but got thrown back".

One move: making more data available to the public.

The trend of "releasing more and more info" is one Mr Tan expects to continue. "I think we will, over time, open up more," he said.

He is also looking at how to streamline policies that may have come to appear "very overbearing" in their proliferation.

While Mr Tan remained coy on the specifics, he suggested that changes are afoot.

"Certainly, I've asked my staff to look at resurfacing issues which have been surfaced before but have not moved. Perhaps it's time to move on some of these," he said.

Hard policies were not the only concerns of the Acting Minister, who also spoke in his exclusive interview with The Straits Times this week about the importance of building an employee-friendly culture rather than relying solely on legislation.

Fair employment practices and workplace health and safety are two areas of concern to the MOM, said Mr Tan.

But the Government cannot do everything.

"While we have all the different legislation, you don't want people to just make sure that you stay safe because (they) don't want to get fined by MOM."

Rather, workplace safety is truly improved when companies believe that looking after employees is "the right thing to do".

And while the MOM steps up enforcement on employment practices, such as making sure workers receive Central Provident Fund contributions, this is accompanied by the WorkRight campaign, which aims to make employers "feel that that's the right thing to do".

The main thing, summed up Mr Tan, is "culture-building".

"You can legislate, you can incentivise... but what you really need is to build up a culture where people embrace that sense of responsibility" - for that is what will cause "enduring change".


Growth as a means to an end, not an end in itself

"You need economic growth for things to happen. But economic growth is not an end in itself. And I'm someone who believes that (if) you pursue economic growth at all costs, it's wrong...

"Ultimately, it has to be about what is best for our people as individuals, what's best for our people as a society."

Trade-offs in foreign labour policy

"There are inherent tensions there. If you close off the labour market, then obviously Singaporeans will be sort of protected, so to speak.

"But if that happens, then obviously a lot of companies may not find it viable. They may actually move off and at the end of it, you end up hurting Singaporeans."

The importance of mindsets in improving work conditions

"We cannot be just talking about legislation. We just cannot be talking about punitive measures...

"You really need to advocate more, you need to promote good examples. Because that's where the real changes happen: When the culture really is in view and companies do it because they believe that it makes sense."

Staying Singaporean

"We must remain largely Singapore in character. There are cities out there where 80 per cent are foreigners - that's not the kind of model we want. We must still be Singapore. We must still feel like Singapore.

"And where that comfort zone is, I think, evolves with time. But certainly you can see the strains that come, which is why we do need to calibrate foreign labour."

The ongoing Workfare review

"We are not rolling back Workfare. I think we will strengthen it. I think the challenge really is, how do you make sure that you look after and provide the support for low-wage workers, but at the same time, don't take away that importance of one's desire to work and to stand on one's own two feet, which I think is important."

Govt may curb inflow of S-Pass holders
Spike in number of foreign workers on such permits raises concerns
By Toh Yong Chuan and Janice Heng, The Straits Times, 26 Oct 2012

THE Manpower Ministry (MOM) is looking at tightening the inflow of S-Pass holders in a bid to further slow down the increase of foreign workers here.

And to deter firms from employing locals on token pay just to hire more foreign workers, MOM will raise the minimum pay at which locals can be considered full-time workers when calculating a firm's foreign workers quota.

Acting Manpower Minister Tan Chuan-Jin disclosed these impending moves to The Straits Times in an exclusive interview this week.

Explaining the tightening of S Passes, Mr Tan said: "We have seen a spike in the numbers."

The number of foreigners on S Passes shot up by 14,200 to hit 128,100 in the first half of this year. These foreigners earn over $2,000 a month in supervisory or junior professional, managerial and executive (PME) jobs.

There are worries among Singaporeans that S-Pass holders are taking up decent-paying junior PME jobs that could have gone to locals.

When pressed for details, Mr Tan would only say: "We are looking at options."

He also spoke about tightening up on S Passes at a convention attended by small-and medium-sized enterprises yesterday morning. He said: "We should have an update on this perhaps in the first quarter of next year."

Another upcoming change has to do with the fact that the number of foreigners a company can employ is tied to the number of full-time locals hired, according to ratios that vary across different industries.

Currently, only local workers earning at least $850 a month are considered full-time.

Mr Tan hinted that the minimum monthly salary "will increase", but he would not elaborate on how big the increase might be or when it would be implemented. But he promised to talk to unions and employers before setting the higher minimum wage. "I think we will be able to talk about it sometime early next year," he said.

The moves reinforce the Government's commitment to a tight foreign labour policy which began in 2009 and has left some businesses feeling squeezed.

"There will be no U-turn as far as the manpower tightening is concerned," Mr Tan said.

But he emphasised that MOM will keep an eye on the economy and does not intend to jeopardise its health.

"If there is any prospect of a downturn, you do not want to accentuate (it) further," he said. "So you want to make sure that the policies are sensible given that climate."

Mr Tan acknowledged the tensions between keeping Singapore business-friendly and controlling foreign worker numbers.

But the ultimate consideration, he said, must be the well-being of Singaporeans.

"On a net basis, does it still benefit our people? I think that has to be the question. If it doesn't, then I think we have to relook the equations."

The tightening on S Passes does not surprise Mr Chan Chong Beng, president of the Association of Small and Medium Enterprises: "The signal is very clear to companies that they have to make an extra push to make the best use of their local workforce and increase productivity."

Employment Act: Have your say soon
By Toh Yong Chuan, The Straits Times, 26 Oct 2012

THE public will get to air its views on proposed changes to the Employment Act next month.

The changes are aimed at giving workers better protection by setting out the minimum employment terms and benefits.

Acting Manpower Minister Tan Chuan-Jin told The Straits Times that discussions on changes to the Employment Act have taken place behind closed doors with unions and employers "over the months and year", but public views will be sought "soon... in the next month or so".

He declined to elaborate on what the Ministry of Manpower (MOM), employers and union officials have discussed so far, saying: "It wouldn't make sense to discuss this on a very public forum."

The MOM announced in April that it will review the Act. The law was last updated in 2008.

Giving an update this week, Mr Tan said that while the MOM is looking at how the Act protects "all groups" of workers, the process will be divided into two phases. The first phase, which the MOM will likely be wrapping up in the first quarter of next year, will involve giving better legal protection to professionals, managers and executives (PMEs).

Now, only those who earn less than $2,000 each month are fully covered by the Act, and the labour movement has lobbied for the salary ceiling to be raised so that more PMEs can be brought under its protection.

The Act spells out the minimum terms and benefits such as leave and medical perks. It also provides redress to workers to resolve disputes with their employers and recover unpaid salaries.

"PMEs is a growing segment of the workforce and it would make sense to look at this... to open up the space from where we are now," Mr Tan said.

Contract workers may also get better protection, but they will have to wait longer. Changes to protect them will be covered in the second part of the review, he added.

Explaining the two-step approach, Mr Tan said the areas were prioritised "not so much in terms of importance", but rather how long it takes to gather views on the changes to be made.

Citing contract work as an example of a "complex" area, he explained that the MOM will need more time to work on it because contract workers are a "disparate group" covering different industries and players.

"We've evaluated it and we see that maybe, let's move with those things that we can move faster first - rather than get everything ready and then move in one chunk," he said.

The minister added that the MOM took a similar two-step approach when it amended the Employment of Foreign Manpower Act (EFMA) this year.

Besides the Employment Act and EFMA, he hinted that a third law might be up for review next year. "We are concurrently consulting tripartite partners to see if the Industrial Relations Act needs to be similarly reviewed," Mr Tan said.

Tighter foreign worker rules cut growth by half: Economist
By Yasmine Yahya, The Straits Times, 26 Oct 2012

SINGAPORE'S economy could have grown nearly twice as fast this year if not for the stricter rules placed on the hiring of foreign workers, said economist Chua Hak Bin.

The Bank of America Merrill Lynch expert warned in a report yesterday that economic losses could outweigh social objectives if the Government's foreign labour policies swing too far.

Under a liberal foreign worker regime allowing companies to hire according to their needs, the local economy could have expanded by 3per cent this year, Dr Chua said.

Instead, the economy has grown at an average pace of just 1.7per cent in the first three quarters.

While stricter foreign-worker policies are intended to reduce congestion and competition for housing, there are also costs, such as lower potential growth, a less dynamic job market and higher wage-cost inflation, he said.

Government moves over the past 21/2 years to tighten the supply of foreign workers here, by raising levies and reducing quotas, have shaved about $4.2 billion off Singapore's gross domestic product this year, he added.

The stricter foreign labour regime has led to the Government having to forgo $1.1billion of potential tax revenue, and about 35,800 jobs were forgone as a result of the stricter labour policy, Dr Chua said.

The search for productivity has also been somewhat elusive, as productivity flatlined last year and has shrunk 2.1per cent so far this year.

But other economists said Singapore's slower growth cannot be blamed solely on stricter immigration policies.

"While it is true that the productivity drive is facing difficulties, a large chunk of the current weak growth stems from generally sluggish cyclical demand conditions, rather than any inherent difficulty in raising output per worker," said Citi economist Kit Wei Zheng.

After all, labour productivity rose by 10.9per cent during the boom year of 2010, when the tightening of foreign worker policies had already started.

Barclays Capital economist Leong Wai Ho said the number of jobs added this year might not have reached 150,000, as Dr Chua had projected, even if the foreign labour policy had remained liberal.

"We added 122,000 jobs last year, and 116,000 in 2010, during which the world economy was doing a lot better.

"With growth slipping under potential due to mounting external pressures this year, it is a bit hard to envisage that we would have added 150,000 jobs, even if market demand for foreign workers were fully satisfied."

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