13 Mr Gerald Giam Yean Song asked the Minister for Trade and Industry regarding the introduction of the Manpower for Strategic Economic Priorities scheme (a) what signal does the Ministry intend to send to companies with regard to their commitment to reduce dependence on low- and mid-skilled foreign workers; and (b) what impact will this have on companies’ incentives to increase productivity through automation and develop a Singaporean Core in their workforce.
The Second Minister for Trade and Industry (Dr Tan See Leng): Mr Speaker, may I have your permission to take Question Nos 6 to 13 in the Order Paper together?
Mr Speaker: Yes, please.
Dr Tan See Leng: Thank you, Mr Speaker. Various Members have filed questions on the Manpower for Strategic Economic Priorities scheme, or the M-SEP scheme, which MTI and MOM launched last month.
Members of the House, it is important for us to understand the intent of M-SEP. This scheme is designed to work in tandem with the various Government programmes that support Singapore’s economic priorities. Firms that participate in these programmes contribute towards Singapore’s competitiveness and generate economic opportunities for Singaporeans. M-SEP provides these firms with time-bound manpower flexibilities, should these firms require it. At the same time, these firms should also be taking steps to develop the local talent pipeline.
Specifically, the scheme gives qualifying firms the flexibility to temporarily hire S Pass and Work Permit holders above the prevailing Dependency Ratio Ceiling, or DRC, and S Pass sub-DRC.
To qualify, firms must participate in programmes or activities in line with one of the following key economic priorities, namely: one, investments that support Singapore’s hub strategy; two, innovation or research and development (R&D); or three, internationalisation. These are important priorities for us to grow our economy and to create more economic opportunities for Singaporeans. We call this “Condition 1”.
Since the flexibilities afforded are only temporary, firms will need to develop their local workforce to meet their longer-term needs. We want to ensure that these firms start expanding their local talent pipeline early. As such, firms must also commit to employ or train locals while benefiting from the flexibilities. We call this “Condition 2”.
Let me turn to the specific questions in the three groups. First, I will address questions on Condition 1; then on Condition 2; and lastly, questions which fall under neither category.
First, Condition 1, which is about our key economic priorities. Mr Liang Eng Hwa and Mr Patrick Tay have asked how the Ministry will safeguard against abuse of these work passes and ascertain that foreign workers hired under the M-SEP scheme will be deployed in areas that advance Singapore’s economic goals. This is inherent in the design of Condition 1. The 16 programmes or activities under Condition 1 are specially selected to be in line with our economic priorities. In this way, M-SEP is selective in targeting firms or investments that will grow our economy and also grow our competitiveness. To take part in these programmes, these firms would have worked closely with our economic agencies, like EDB or ESG. Only about 1,000 firms will meet the qualifying criteria. This represents less than 1% of all registered business entities in Singapore.
One example of a Condition 1 programme is Scale-Up SG. This is Enterprise Singapore’s flagship programme to support local companies with high-growth potential to scale effectively and become leaders in their fields and future global champions. As these companies grow, they will contribute to Singapore’s economy, create good jobs for Singaporeans and strengthen the Singapore brand.
Let me share with Members an example of a firm under Scale-Up SG. Last month, I visited Goldbell Engineering, which is the market leader in industrial vehicle leasing. They have the largest fleet in Singapore at over 8,500 units. They shared with me their ambitious plans to expand to other businesses, such as electric car-sharing with their acquisition of BlueSG and financial services.
Enterprise Singapore has worked with Goldbell for the last five years and is very familiar with Goldbell’s plans. About 70% of Goldbell’s 1,000-strong workforce are Singaporeans and Permanent Residents. For Goldbell, productivity improvement through upskilling and automation remains as the main solution to labour shortages, especially for blue-collar workers. As it pushes these transformation and growth plans, M-SEP will enable Goldbell to move fast to seize these opportunities with additional workers.
I am excited to see Goldbell and other such needle-moving firms make clear and deliberate efforts to expand, because I know this growth will create good opportunities for Singapore and Singaporeans. This is the archetype of firms which the M-SEP scheme is targeted at. Because this scheme has been designed to be highly selective at the firm level, there is no need to stipulate further criteria on the specific deployment of each individual worker hired under the M-SEP scheme. Such micromanagement would not be helpful for the firms.
Mr Edward Chia, Mr Liang Eng Hwa and Mr Don Wee asked if the whitelist of programmes under Condition 1 can be expanded to cover three other firm archetypes. Again, I must underscore that M-SEP will be selective and highly targeted, as I have just explained.
First, for SMEs and smaller companies. I would like to reassure Mr Liang Eng Hwa and Mr Edward Chia that such firms can already qualify for M-SEP, as long as they are participating in the programmes under Condition 1. For example, they can qualify if they take part in programmes, such as Scale-Up SG, which I described earlier, or if they successfully raise funds from recognised investment firms.
Next, outsourced service providers. We recognise that needle-moving firms will rely on an ecosystem of outsourced service providers, including professional services firms. However, we will not extend M-SEP to these outsourced service providers solely because of who their clients are. Instead, these outsourced service providers need to be themselves taking part in Condition 1 schemes in order for them to qualify for M-SEP.
Finally, the firms in the essential services. I would like to reassure Mr Edward Chia that there are other measures already in place to ensure that firms which provide essential services, like healthcare and the cleaning of public housing estates, they have access to foreign manpower for essential functions.
Mr Gerald Giam also asked about the signals, as well as the incentives M-SEP is sending on automation and reliance on foreign workers. I hope that, as a result of the explanation, he can see and appreciate how M-SEP is about helping firms to create more opportunities for Singapore. In fact, some of the Condition 1 programmes are related not just to growth, but also to help firms to become more productive at the same time, through innovation and internationalisation. To reduce the reliance on large numbers of low- and mid-skilled foreign workers, and continue in their automation journeys, firms will need to pivot and transform. And this is what Condition 1 is fundamentally about – to support our strategic economic priorities. To further assure the Member, M-SEP only provides time-limited support. So even if a company uses additional foreign workers to transform initially, these flexibilities are time-limited and they will cease after the support period.
Coming to Condition 2, which is commitment to hiring and training locals. Mr Patrick Tay, Mr Desmond Choo and Mr Yip Hon Weng asked how this scheme will benefit local PMEs and workers, whether there is any impact on local wages and job opportunities, and what the Government will do to level the playing field. Mr Gerald Giam also asked if this scheme affects firms’ incentives to develop a Singaporean Core.
Even though Condition 1 is already highly selective to target growth opportunities for Singapore, we have devised and designed M-SEP to also have Condition 2. This condition requires firms to hire and train local workers to take on new jobs as these firms grow. M-SEP works alongside existing Government efforts to develop the local talent pipeline, including those under Workforce Singapore (WSG) and SkillsFuture Singapore (SSG).
To Mr Liang Eng Hwa’s question, M-SEP is part of a range of initiatives to benefit a larger group of Singaporeans. Mid-career PMETs will continue to benefit from existing Government programmes such as Career Conversion Programmes (CCP), under WSG and the SkillsFuture Career Transition Programme under SSG. Where such programmes lead to a net increase in local hires, this can count towards meeting firms’ Condition 2 commitments.
There are also other specific questions asked, about the design of Condition 2. Mr Shawn Huang, in a separate written Parliamentary Question (PQ), and Mr Liang Eng Hwa asked how the Ministry will ensure that the training and hiring commitments under Condition 2 are adhered to, how they are conducted at the right level and whether they are efficacious and relevant.
Ultimately, these are firms that support our strategic economic priorities and which we have worked closely with. They know that if they succeed, they will need more local workers with the right skills and it is good business sense to invest in the local talent pipeline while they move to seize new opportunities.
On hiring commitments, firms can choose to hire local workers through their own channels or through Government programmes, as long as these locals are paid above the Local Qualifying Salary of $1,400. Such firms will need to achieve a net increase in local hires.
In this tight labour market that we have today, we are conscious that it is not realistic to expect all firms to meet these hiring criteria. As such, there is also an option for a firm to commit to train local workers to fulfil Condition 2. Firms can do so by sending their local workers to a whitelist of training programmes. These are established training programmes which have demonstrated good outcomes for participants in terms of enhancing their job roles and raising their wages.
For instance, WSG’s Redeployment or Job Redesign Reskilling Career Conversion Programmes are whitelisted under Condition 2. These programmes allow firms to send workers for reskilling to take on redesigned and enhanced job roles. One specific example is the CCP for Infocomm Professionals (5G), which reskills Infocomm professionals to take on deep-tech, end-user and support roles relating to 5G networks and technologies.
Regardless of whether firms choose to meet Condition 2 through hiring or training commitments, all M-SEP firms will also need to minimally maintain their local workforce share during the M-SEP support period.
Finally, there is a third group of questions from various Members which falls under neither Conditions 1 nor 2.
To Mr Liang Eng Hwa’s question, the number of additional S Passes and Work Permits to be issued will really depend on the take-up of M-SEP. While there are around 1,000 firms that are eligible under Condition 1, not all may require M-SEP support. On the other hand, the greater the take-up rate, the greater the eventual number of locals who would be hired or be trained. We will monitor the take-up rate closely and we will review the scheme accordingly.
To Mr Yip Hon Weng’s question on the renewal process for work passes, additional work passes granted under the M-SEP scheme can be renewed as long as the firm has sufficient quota. This can be achieved if the firm successfully renews its M-SEP support by meeting the renewal conditions. Alternatively, the firm can hire more locals to unlock a higher mainstream foreign worker quota.
To Mr Desmond Choo’s question, we take workplace fairness issues seriously. Firms that have breached the Fair Consideration Framework (FCF) or the Tripartite Guidelines on Fair Employment Practices (TGFEP) may be barred from work pass privileges and will not be able to benefit from M-SEP. Firms that are still undergoing investigations will be assessed on a case-by-case basis. As Members would be aware, we are taking a very significant step forward of enshrining the TGFEP in law and we will share more details in due course. We will take reference from the penalty framework of the new legislation when deciding on the treatment of such firms.
To conclude, Members of the House, manpower should not be a constraint to growth. What is most important is to ensure that Singaporeans can benefit from our economic priorities. M-SEP will do so in two ways: directly, through the creation of hiring or training opportunities; and more significantly, indirectly, through the growth of needle-moving companies which support our strategic economic priorities.
Designed with these principal objectives in mind, M-SEP will strengthen our competitiveness. The Government will continue to monitor the outcomes of the M-SEP scheme and will enable us to generate economic opportunities and provide better outcomes for Singaporeans.
Mr Speaker: Mr Leon Perera.
Mr Leon Perera (Aljunied): Thank you, Mr Speaker, Sir. The first supplementary question to the hon Minister is, is the Government still planning to cap the ratio of foreign workers at one-third of the overall workforce and does the introduction of M-SEP put us at risk of breaching that cap? The reason I ask this is because I think this cap of one-third of the workforce, which was alluded to in the Economic Strategies Report of 2010 and is something that has been affirmed at various points for quite some time; and most recently, by Deputy Prime Minister Lawrence Wong in this House, I think last year.
Secondly, of the 1,000 companies that are deemed to be eligible for M-SEP, and apologies if I missed this, what is the percentage that are foreign MNCs versus local enterprises?
And lastly, I think, when introducing M-SEP, the Government has previously taken the view that there will be no U-turns and this was made very clear to the business sector. So, does the introduction of M-SEP, which is giving companies extra foreign worker quota, amount to a U-turn in the Government’s foreign manpower policies? Or how will the Government manage the risk that it will be seen by the business sector as a U-turn or as a sign that possibly in the future, the Government will U-turn and make some concessions on the foreign manpower policy, and therefore lessen the drive to increase productivity and strengthen the Singapore Core, which is the acknowledged policy aim of the Government?
Dr Tan See Leng: Mr Speaker, I thank Mr Leon for his five or six supplementary questions. Inherent in his three supplementary questions, the Member has a sub-numeral (a), (b) and (c); and then there is a roman numeral (i), (ii) and (iii). I would try to answer each one of them, but obviously because it is not a prepared written form, I will forget some parts. The Member can help me to fill in with those that I have not given an answer to.
I remember the first and the last part: the cap at one-third in terms of our workforce and this thing about whether there is a U-turn.
What we have done in all of our workforce policies is to continue to make sure that the talent in the EP as well as the S Pass segment continues to move up to the top, to be pegged to the top one-third of the wages of our Singaporean local talents.
In terms of capping the one-third, I think it really is a function of the needs of the economy. I do not think that it is at this particular point in time for me – I need to go back and refer to the 2010 notes that the Member was talking about. I do not have the context of it with me at this particular point in time.
So, let me clarify – at least for the last one year in terms of whether it is the ONE Pass, COMPASS framework, raising the qualifying salary for EPs and separating the EPs into the financial and non-financial part in terms of the qualifying salary, as well as the S Pass, it is meant to achieve that outcome over the next few years.
With regard to M-SEP, it is not a U-turn. I have said before, under Condition 1, we live in a rapidly evolving, rapidly disrupting world today. There are significant opportunities for our country to continue to boost our competitiveness and to grasp these opportunities internationally, continue to ensure that we not just maintain our hub status but to move ahead and pull ahead, and at the same time, significant opportunities for us to be able to tap into the R&D segment, for us to continue the pivot and transform ourselves.
Hence, the M-SEP scheme was conceived to capture this very, very tight space of the three specific economic priorities that I have shared very early on.
So, there is no U-turn, we continue to nudge, we continue to persuade our companies to automate, we continue to persuade our companies to up the productivity and to increase the value-add. But in the process of getting there —
Mr Speaker: Please carry on. Wrong button.
Dr Tan See Leng: Sorry, I lost my train of thought. Saved by the bell. [Laughter.]
In the process of getting there, this is how we see we can help a very highly selective group of companies that we have been working with and we know that they are on the cusp of being able to make that significant pivot and to help just give them the uplift as necessary. And hence, it is very tightly scripted between Condition 1 and Condition 2.
I understand your apprehension, but on the other hand, you can see that within the House, you have got both sides, we have got fellow Members of Parliament asking why can we not expand it even further. But we are saying, let us do this on a very tightly scripted and a very highly selective and differentiated scheme for these companies that can achieve.
I thought that was the gist of the Member’s two broad questions. I know you have a lot of sub-categories. I am happy to answer them if you think I have not answered it adequately.
Ministry of Manpower
9 January 2023