Labour market to tighten further, but help will be available

Singapore

SINGAPORE'S labour market will tighten even further over the next decade, as local employment growth slows dramatically and strict foreign-worker caps stay in place, said Manpower Minister Tan Chuan-Jin on Monday.

To help citizens and businesses remain competitive amid these structural shifts, the Ministry of Manpower (MOM) will develop Singaporeans through the SkillsFuture initiative; it will also take progressive steps to raise the productivity of the foreign workforce by introducing measures to encourage the retention of higher-skilled and more experienced foreign workers.

Even though local employment growth was 95,000 in 2014 - more than twice the 38,000 in 2011, thanks in part to women and older workers joining the labour force - Mr Tan warned that this increase in local hiring will not last.

"We expect our local employment growth to slow dramatically in the next few years, dropping from this base of 95,000 last year to around 20,000 per annum in the last part of this decade. This is largely due to our baby boomers gradually exiting the workforce, and our smaller cohorts entering the workforce.

"I am highlighting this situation not to signal a change in our direction. There will be no change, we will continue to keep foreign workforce growth sustainable and allow it to grow at the current tight pace. The main message is this: taken together with the slowdown in our local workforce growth in this coming year, companies must note that we will experience a very significant tightening of the labour market going forward. If businesses do not become manpower-lean, if they do not become productive, they will have great difficulty in finding enough manpower - be it local or foreign - to run their operations."

One sector that will have reason to cheer is the process sector, which includes plants in the manufacturing of petroleum, petrochemicals, specialty chemicals and pharmaceutical products.

Through changes to the criteria for higher-skilled or R1 workers, eligible firms in the process sector will pay a lower R1 levy for employees who possess the traits of skilled and productive workers - a combination of skills-test qualification, salary and experience. These changes seek to encourage the retention of skilled and productive workers.

Another policy change will enable employers in the process sector to hire experienced Work Permit (WP) holders at the end of their WP term, or at any time with the previous employer's consent, without having to send them back to their home country first - something companies have long called for.

These two changes take effect in 2017.

In addition, from June this year, WP holders in the construction, process and marine sectors will be allowed to take on driving as a secondary job function, subject to a cap. This will reduce the need for firms to hire additional foreign workers as dedicated drivers; this should achieve a more optimal deployment of resources.

As for Singaporean workers, Mr Tan reiterated that although the government is a "key enabler" in the SkillsFuture push, he added that the drive is "truly a national movement", involving individuals, employers and education and training providers.

He also assured Members of Parliament (MPs) that recognised courses will be varied, of high quality and be relevant to industry needs.

He added that SkillsFuture initiatives will be implemented in phases, to ensure that the training landscape is able to develop in tandem with the new measures. Early initiatives comprise the SkillsFuture Mid-Career Enhanced Subsidy, Earn and Learn Programme, Study Awards, Leadership Development Initiative and SkillsFuture Mentors.

"We need to avoid a case where training institutions face this sudden surge in demand, and resort to offering sub-standard programmes or expanding class sizes and compromising on quality. This will lead to a wastage of both individuals' time and public monies," said Mr Tan.

He also clarified that SkillsFuture Credits are meant to support training initiated by individuals - not to fund training employers send them for.

Responding to concerns about potential abuses of the SkillsFuture framework, he took pains to stress the need for a balance between a flexible system and one that is not too lax.

"We are always mindful that there will be people who want to take advantage, and that's where the audit trail is important, (and) individuals providing feedback," he said. "And I think the important thing is to have a sufficiently punitive series of measures that deter individuals (from abusing the system). And if they do, then we will have to whack them."

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