MP Chen Show Mao’s Budget 2012 Speech

Inclusive Growth

Mr Speaker Sir,
The mission of this Budget is to, I quote, “build an inclusive society and a stronger Singapore.”

The budget proposes to build an inclusive society by social policies designed to help the elderly, Singaporeans with disabilities and lower-income families.
The budget proposes to build a stronger Singapore by economic policies designed to sustain growth through higher productivity and reduce our dependence on foreign workers.

We are glad that the government has heeded the call of many Singaporeans for more inclusive growth.

That is our long held belief. And, as the honorable member Ms Sylvia Lim said, we believe we can do more.

Unlocking Social Value

The elderly, the disabled and the poor in need of social security should not be seen as social problems or “challenges” as the Budget puts it.

These “challenges” are in fact opportunities to invest in our human capital for great social returns.

We need to change our mindset.

Investing in our elderly, the disabled, the poor and other needy Singaporeans will reward society with the economic, social and cultural contributions they are able to make with assistance. It will also enable us to be inclusive, which is the basis for community and social cohesion.

We should not see social outlays only as spendings to be minimized over the short term, but also as investments to be optimized for our long-term benefit.

We should seek out such investment opportunities to realize social returns in different areas of social policy, not just social security, but also public housing, healthcare, education, and infrastructure and the environment.

We should actively, systematically and strategically seek them out, much as we do in the case of opportunities for economic returns, for example with agencies such as EDB, A*Star and SPRING.

We should seek to unlock not only economic value with our investments, but also social and cultural value that would make for an inclusive society and a stronger Singapore

The elderly, for example, are a repository of social and cultural capital to be treasured and tapped on to enrich each passing generation. With some investment that helps keep them close to their homes, we can leverage our elders’ longstanding ties in mature neighbourhoods to teach our children traditional wisdoms and values, and stories and lessons about our communities.

Similarly, Singaporeans with disabilities and other needy Singaporeans, when the locked-in value of their human capital is released with more investment, reward society with their enabled contributions as well as such intangibles as compassion and empathy.

This argues for investing in social safety nets that keep up with the costs of living. We want to see all Singaporeans run a good race in a globalized and competitive world. When some of us trip and fall behind, we should help them get back up and stay in the game. For a stronger Singapore.

Foreign Worker Dependency

For us to restructure and upgrade to an economy that is more productive in order to raise real wages, we need to depend less on foreign workers.

The Budget recommends we reduce the dependency ratio ceilings for businesses in the manufacturing and services sectors, and reduce man-year entitlement quota for those in construction.

How effective will the proposed measures be in reducing our dependence on foreign workers?

The population of foreign workers grew rapidly, at 7.5% each year over the last two years. Growth for our resident workforce is under half of that. The proportion of foreign workers had already breached the government’s one-third target set in 2010, and was over 37% last year.

Given the size of the task, a multi-year plan is needed to manage effectively our foreign worker dependency and allow our businesses time to adjust.

Let’s do more.

Let’s refine the Manpower Ministry’s current segmentation of industries for dependency ratio ceilings, to ensure more targeted foreign manpower policies.

As other Members have pointed out, The Ministry of Manpower’s current framework of segmenting the economy into broad sectors – manufacturing, services and construction — with exceptions for marine and process, is a blunt tool. For example, in the services sector, dependency ratio ceiling is the same for food & beverage, social services and also for finance and other industries.

Could we look into the possibility of having different industry sectors or clusters?

One cluster could comprise industries that have high productivity and generate good jobs for Singaporeans, for example finance, aerospace, biomedical and professional services. For these industries we may have more stringent foreign manpower policies so that foreign workers complement and not substitute Singaporeans. We could even include lower end Employment Passes into the calculation of the dependency ratios, as these are jobs that our young graduates would find desirable.

Another cluster could comprise industries that contribute to meeting Singapore’s social needs, and would have a significant impact if higher labour costs are passed on to consumers. It could include social services, public healthcare and construction for public infrastructure. For these industries, we may need less stringent foreign manpower policies to keep costs low.

Other clusters could be based on the industries’ different prospects for productivity gains.

The Deputy Prime Minister previously argued that quotas for different sectors are not workable and would constrain businesses’ flexibility to get the necessary manpower to expand. But remember, while we do not have different quotas targeted at different services sectors, for example, that does not mean we do not have quotas. We still have a dependency ratio ceiling that applies to all industries in the services sector.

We believe we can do more to help our businesses in the different sectors adapt to the permanent, but different, realities of a tight labor market in their respective industries, by working with them on the different targets and roadmaps of reducing the dependency ratio ceilings.

We are not asking, in the Deputy Prime Minister’s words, for a group of bureaucrats to decide which industry is more deserving; but for the government to work more closely with the different stakeholders, get their input, rally their support and render them assistance. The same way the government is working, for example, with stakeholders to set productivity targets and roadmaps for 16 different industry sectors.

Investments for Productivity Growth

Last October, in the opening of this Parliament, I cited the United Nations’ inaugural Human Development Report in 1990, which declared, “People are the real wealth of a nation”.

As it happened, 1990 saw the tail end of our first national productivity campaign. The mascot of the campaign is a bee by the name of Teamy, and his song is deeply imprinted in our cultural memory. “Good, better, best, never let it rest”.

However, in more recent years reliance on cheap foreign labour has coincided with a decline in our productivity growth.

We are in the midst of a third productivity campaign. Following Teamy and Productivity Action 21, today we have “Way to Go!” with a sectoral approach to productivity growth in 16 sectors with their own targets and road-maps.

Our national productivity campaigns must go deeper to achieve sustainable productivity growth.

Ultimately, we need to invest in the human capital of our workers for growth. We must start now and engage in long term sustainable investment in our people.

We need to invest more in our education in schools, in training our workers for the job so they can do a better job, and in empowering our workers on the job so they can make the job better.

We can also invest more in other aspects of a Singaporean’s life and that of her family — social security, public housing, healthcare, education, and infrastructure and the environment, so that she becomes a more productive worker.

In conclusion, Sir, let us go back to fundamentals. We need to put Singaporean workers back in the game before they can raise their game. To invest in Singaporeans is to invest in the future of Singapore. It has been said so many times and for so long that the only resource Singapore has is ourselves, that our most important capital is our human capital. Inclusive growth must be built on the growth of our human capital.

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