Tharman defends regulation of foreign worker numbers

by Neo Chai Chin, TODAY, 21 Nov 2012

Deputy Prime Minister Tharman Shanmugaratnam yesterday defended the Government's regulation of foreign worker numbers as adaptive and "practical", responding to recent charges by some business leaders that the tightened policies have created uncertainty for companies here.

The Government's approach has been to make clear its target of having foreign workers comprise one-third of the total workforce "on a continuing basis in this decade", ensuring their numbers do not grow indefinitely, he said. But this is an "inexact business" and exact foreign worker numbers cannot be fixed.

"What we do in the case of foreign worker policy is we set foreign worker levies and the dependency ratio ceilings (DRCs), and let companies decide on how many workers they need based on their ability to grow. Pay the foreign levy and you can get the workers, up to the level permitted by the DRC. And the DRC means that if you can attract more Singaporeans, you can hire more foreign workers. This is a practical approach that avoids major disruption, even as we tighten policies," said Mr Tharman at SPRING Singapore's Business Excellence Awards ceremony at the Shangri-La Hotel.

When the Government finds foreign worker numbers rising too rapidly, their growth will have to be tightened further to adapt to the situation, he said.

While companies are understandably concerned about where they stand and what the future may bring, the alternative is to announce policies five to eight years in advance and lock them in, which would mean more uncertainty over the long term, Mr Tharman said.

"It is therefore better to be clear on our long term strategy, avoid any U-turn, but to adapt and refine policy depending on actual foreign worker growth outcomes along the way.

This is the better way over time, because it provides a degree of certainty over directions whilst avoiding major changes down the road that could lead to significant disruption in the economy," he told an audience comprising mainly representatives of small and medium enterprises.

SMEs have in recent months aired their woes from foreign labour policy adjustments - lower dependency ratio ceilings and higher levies - with some shelving expansion plans, contemplating moving overseas or even ceasing business altogether.

Earlier this month, the Singapore International Chamber of Commerce - which represents about 700 multinational companies based here - also urged the Government to provide more clarity on its foreign manpower policies.

Mr Tharman called on businesses to adjust to the "new and permanent reality of a tight labour market" and raise productivity. Providing an update on the Productivity and Innovation Credit (PIC) scheme, which supports firms in their upgrading efforts, he said take-up has been encouraging, with about one in two small companies with turnover of S$1 million to S$10 million having claimed PIC benefits.

Seven in 10 larger companies with more than S$10 million in turnover have tapped the scheme, but fewer than one in five of smaller outfits with turnover of less than S$1 million have made use of it. More will be done to promote the PIC, especially to smaller companies, said Mr Tharman.

The Inland Revenue Authority of Singapore (IRAS) will also be flexible in PIC grant applications - as long as the equipment procured automates part of the company's operations, raises output and reduces the manpower needed. The prescribed list of eligible automation equipment has also grown to include mattress-lifting machinery for the hotel sector, for instance.

Direct grant assistance to SMEs has also been stepped up, with 1,100 Innovation and Capability Vouchers worth S$5,000 each awarded since the scheme's launch by SPRING Singapore in June.

SMEs will receive more tools to raise productivity, said Mr Tharman. He added that details on new initiatives to train and introduce productivity consultants to the retail and food services sectors, as well as manufacturing, will be announced today.

Firms welcome clarity on foreign labour policy
Knowing what to expect means businesses can plan ahead more confidently
By Jonathan Kwok, The Straits Times, 22 Nov 2012

NOT everyone is enamoured of the Government's foreign manpower policy that has led to the "new normal" of labour scarcity in some areas.

But yesterday, companies and business chambers welcomed fresh insights into the approach the Government is taking in handling this thorny policy. They said that the explanation offers more clarity and certainty.

Businesses said they could now plan ahead more confidently, understanding the Government's long-term manpower goals.

At an award ceremony on Tuesday, Deputy Prime Minister Tharman Shanmugaratnam said the Government is clear on the long- term strategy.

That is: to prevent the foreign workforce from growing beyond a third of the total workforce on a continuing basis in this decade.

But the proportion could vary around this one-third in the short term. Refinements to the policy can be made along the way.

This offers more certainty while avoiding economically disruptive changes later.

Mr Chan Chong Beng, president of the Association of Small and Medium Enterprises, said that setting out the long-term policy allows firms to "be prepared for what they can do and what they cannot do".

"It's very important, the policy clarity," he said. "Businessmen are looking at the long term, what to expect over the long term."

Britain's Rolls-Royce said the statement gives more certainty on the ultimate policy objectives.

Mr Jonathan Asherson, regional director for South-east Asia at Rolls-Royce, was encouraged by Mr Tharman's statement that foreign manpower targets can be flexible in the short term.

"With room for adjustment depending on prevailing market conditions in the future, businesses can work towards these targets while making less disruptive modifications along the way to strike a balance on the number of Singaporean and foreign workers they employ," said Mr Asherson.

Singapore International Chamber of Commerce chief executive Phillip Overmyer said some members had not been clear about the Government's plans.

They were "waiting and hoping to see a clearer description" of a comprehensive policy, he said.

Mr Tharman's comments could "be the beginning of the comprehensive policy that the companies were looking for", he added.

Some companies want a longer lead for short-term policy adjustments.

"The Singapore Government is too efficient," said Mr Loo Lip Giam, chief executive of chocolate distributor and retailer Focus Network Agencies. "They increase and reduce quotas very fast. The business cycle can't take the move up and down too quickly."

Mr Loo said firms sign leases of about three years but some cuts in quotas or rises in foreign worker levies come in over about two years, often in phases.

"Is one or two years enough? It's too fast for us to react," said Mr Loo. "My cost structure is already committed."

Some companies are starting to accept that the Government is not going to U-turn on its tighter foreign labour policy.

"Our association still receives complaints about the shortage of labour, but we are beginning to see people starting to engage older workers," said Mr Chan.

"They are realising that there is no point crying, the Government is very firm," he said.

Some members have achieved productivity gains as a result of initiatives in this field. "It's a sign of people accepting it, and understanding what the Government is trying to do this time."

More SMEs tapping Spring grant to upgrade
Spike follows broadening of $5,000 grant's coverage
By Toh Yong Chuan, The Straits Times, 22 Nov 2012

MORE local companies are tapping a Spring Singapore lifeline to help them restructure and upgrade.

Between June and October, 1,100 small and medium-sized enterprises (SMEs) received $5,000 grants under the Innovation and Capability Voucher Scheme - a sharp spike from the 1,000 given out over three years between March 2009 and May 2012.

Nine in 10 of the recent grants went to small businesses with an annual turnover of below $10 million.

Spring Singapore chief executive Png Cheong Boon said improvements to the scheme were a key reason for the spike.

Singaporean SMEs can now use the grant for hiring consultants to help them review their human resources, finance and productivity. Previously, it covered only reviews of how the companies were using technology.

"The scheme is now more comprehensive, covering broad areas that boost a firm's capabilities," said Mr Png.

It is also easier to apply for, with companies doing it online instead of filling in physical forms. Spring promises that applications can be processed in two working days.

Hardware shop Power-J Trading was one business that tapped the scheme this year. The family-run firm has two outlets, in Yishun and Geylang, and was looking to expand.

Its sales manager Victor Chow chanced upon the scheme online. He contacted Mr John Ong, who is on Spring's list of 150 consultants. After interviewing its staff and observing its operations, the consultant recommended sending employees for training to boost their skills, and computerising some operations.

"The review helped me better understand our weaknesses so that I can work out improvements," said Mr Chow, 35.

The company is now looking to open a new branch in the western part of Singapore and doing some of its sales online.

The strong demand for the grant raises the possibility that the budget for the scheme may run out prematurely. Spring has earmarked $32 million to help 1,600 SMEs each year, over four years. But already 1,100 firms have used it in five months.

Mr Png is not worried, however. "If the budget runs out, we will find more money." He added that the scheme would be reviewed at the end of next year.

Mr Chow said that while he found the grant useful, many SMEs may not know that they can get help to restructure and upgrade. "It will be good if there is more publicity to (reach) them," he suggested.

Mr Png agreed, saying the statutory board was stepping up its outreach to SMEs by working with groups such as the Association of Small and Medium Enterprises.

He said Spring was also working on consolidating the other grant and subsidy schemes that help SMEs. The details will be ready early next year.

$2.3m to train productivity consultants
By Yasmine Yahya, The Straits Times, 22 Nov 2012

TWO Government agencies are launching programmes to train "productivity consultants" who can help companies organise their operations more efficiently.

Spring Singapore and the Singapore Workforce Development Agency (WDA) will set aside a total of $2.3 million to roll out two training programmes, one focused on the retail and food services sectors and another on manufacturing.

These programmes will train 90 consultants over three years.

Spring and WDA have engaged the Japan Productivity Centre (JPC) to develop a training programme for retailers and those in food services. JPC has been conducting such courses since 1958.

The nine-month course will comprise classroom sessions and on-the-job training in selected local firms, such as Hans Cafe and Bakery and FarEastFlora.com.

It also includes a week-long study mission to Japan to allow trainees to observe and learn the best practices of Japanese retail and food services companies.

"One of the key challenges faced by the retail and food services sectors is an acute shortage of competent consultants with good domain knowledge to help small and medium-sized enterprises implement productivity improvement projects," said Spring chief executive Png Cheong Boon.

This programme will address the gap, he added.

A similar training programme for the manufacturing sector will be rolled out by WDA in partnership with the Singapore Institute of Manufacturing Technology of the Agency for Science, Technology and Research (A*Star).

The one-year course includes a month of classroom training, after which trainees will spend four months being mentored while working at selected local firms.

Trainees will then spend seven months mentoring other local firms using the knowledge and skills they picked up over the course of the programme.

The course would be most suitable for jobseekers with at least five years of working experience in the manufacturing industry, WDA said.