Profile of Employees Retrenched due to COVID-19 Pandemic

Ms Sylvia Lim asked the Minister for Manpower whether she can clarify how the national guidelines on managing excess manpower and responsible retrenchments and other related policies ensure that Singaporeans are better off compared to permanent residents and non-Singaporeans in terms of job and income security.

Mr Chua Kheng Wee Louis asked the Minister for Manpower of the total retrenchments of 11,350 workers in the first half of 2020, (a) what is (i) the number of workers with less than two years' service with the company versus at least two years' service and (ii) the median and range of the retrenchment benefit based on the number of months' of salary for every year of service; and (b) whether a baseline retrenchment benefit can be legislated.

Sir, Singaporeans are understandably concerned about retrenchments. Since the start of the COVID-19 pandemic, retrenchments have risen and exceeded the peak observed in the SARS outbreak of 2003 but are still lower than during the Global Financial Crisis of 2009. Nonetheless, MOM is monitoring closely.

In the first half of 2020, the incidence of local retrenchment was 4.9 per 1,000 local employees. To the question by Mr Yip Hon Weng, the incidence of local retrenchment for senior workers aged 60 and above was generally comparable, at 5.2 per 1,000 local employees.

As for employees on fixed-term contracts, they constitute about 8% of all employees in the workforce. The number of contracts not renewed in the first half of 2020 has remained stable compared to the second half of 2019. MOM does not have data on non-renewals of contracts by age groups.

To the question by Ms Sylvia Lim, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment – which I will henceforth refer to as the Tripartite Advisory – this emphasises retrenchment as a last resort, only after employers have exhausted non-wage-related and wage-related cost-savings measures. The advisory sets out expectations for employers when they have to retrench staff.

The main goal of the retrenchment must be to give the business the best chance of survival or continued long-term viability, without which both the employer and all employees are worse-off, even if they were not retrenched. Selection of employees to be retrenched should be based on objective criteria, with primary considerations given to employee merit and preserving skills to help the business keep going. In addition, the Tripartite Advisory calls on employers to maintain a strong Singaporean Core even as they retrench. So, let me say that again. The Tripartite Advisory calls on employers to maintain a strong Singaporean Core even as they retrench.

Based on MOM's investigation of retrenchment cases, businesses have generally taken heed of the advice and made serious efforts to retain Singaporeans in their workforce. Where retrenchments cannot be avoided, WSG will reach out to offer job assistance. In unionised companies, NTUC has sought to minimise their period of unemployment through its "lift and place" efforts, partnering with the Government. A good example is how Singapore crew members from SIA were helped to take up jobs in healthcare with funding support.

Beyond efforts to help them stay in work which I will say more about later, Singaporeans also get extra support in social policies, such as education, training and healthcare. Schemes like Workfare and Silver Support, which help to boost incomes during work and in retirement, apply only to citizens.

The Tripartite Advisory that Ms Lim asked about also stipulates that the prevailing norm is to pay a retrenchment benefit of between two weeks' and one month's salary per year of service, depending on the financial position of the company and industry practices.

To the questions by Mr Louis Chua, the requirement to submit retrenchment notifications to MOM covers about 90% of the workforce and provides a broadly representative view. Based on notifications received between April and September this year, about two-thirds of the employees affected by retrenchment had at least two years of service with their employers and were eligible for retrenchment benefits. About nine in 10 of these eligible employees received some retrenchment benefit, of which about 84% received at least two weeks' salary per year of service. Even amongst employees who were not eligible, almost half received some retrenchment payout.

The question of whether a baseline retrenchment benefit should be legislated is not new and has also been debated in Parliament. The tripartite consensus, after extensive deliberation, is that it does not guarantee better outcomes for retrenched employees.

The legislated baseline would likely become the default. Even when employers can afford to pay more, they would be unlikely to do so.

On the other hand, setting a high baseline retrenchment benefit would strain the financial health of businesses that are already struggling, and potentially jeopardise their survival and the jobs of the remaining employees.

With legislated retrenchment benefit, employers would also be less likely to offer long-term or permanent contracts to employees, and resort more to hiring employees on short-term contracts.

Hence, while recognising the usefulness of retrenchment benefit and encouraging employers to pay according to the prevailing norms, we are even more focused on helping retrenched workers return to the workforce. Besides heavy subsidies for skills programmes, we provide substantial training and wage support to employers while their new hires undergo conversion programmes.

During this period where hiring sentiments have weakened, we have significantly enhanced the support to local jobseekers.

We introduced the Jobs Growth Incentive to spur employers to expand local hiring, with double the support for new hires aged 40 and above.

We created the SGUnited Mid-Career Pathways Programme to help mid-career locals gain relevant work experience through attachments hosted by companies. This will position them to take up jobs later.

We have also expanded the SGUnited Skills programme which offers full-time training programmes ranging from six to 12 months.

Mr Yip asked about the additional help for seniors who wish to continue working. For many decades, we have recognised employers' concerns about the cost of hiring and retaining them. With encouragement from the tripartite partners, many employers have therefore moved away from a seniority-based wage system to competency- or performance-based wage systems. Senior workers aged above 55 years have lower employer CPF contribution rates. The Government further provides the Special Employment Credit to employers to offset wages of Singaporeans aged 55 and above. Employers who redesign jobs to be better suited for senior workers can tap on the Productivity Solutions Grant.

In more recent times, we observed that senior workers increasingly prefer to reduce their work intensity as they approach retirement. To encourage more employers to offer part-time opportunities for them and enable them to stay on in the workforce, we introduced the Part-time Re-employment Grant earlier this year that will provide up to $125,000 to companies that commit to a part-time re-employment policy.

Through these measures, we have made good gains in senior employment. Our employment rate for residents aged 60 and above has increased from 27.2% in 2009 to 38.5% in 2019. During this period of economic uncertainty, the unemployment rate for locals aged 60 and over remains comparable to that of the overall workforce.

Nonetheless, MOM recognises Mr Yip's concerns about ageism, especially in a slack job market. Singapore's employment laws protect employees against discriminatory employment practices, including wrongful dismissal on grounds of age. In January this year, we also strengthened the Fair Consideration Framework for greater deterrence against all forms of workplace discrimination by raising administrative penalties across the board.

Our seniors are important and are valued members of our workforce. We will continue to look out for them and support their employers' efforts to retain them.

Mr Speaker, I appreciate Members for raising these important questions on retrenchments. Until the economy recovers more fully, we will maintain the stance of heightened vigilance on the job situation.

Where retrenchment can be avoided through cost-cutting measures, we will keep a lookout for instances where the wage cuts cause excessive hardship to workers. In cases where MOM has intervened, employers that have the means have shown willingness to moderate their wage cuts. Where retrenchments cannot be avoided, we will watch out for Singaporeans, give full support to employers' efforts to retain them or to help them move into new jobs as quickly as possible.