Singapore Update: Employment issues discussed in Budget debate 2021 – March 2021

The first day of the Budget 2021 debate last week saw various labour issues being raised and debated in Parliament, covering several segments of the labour force including older workers, gig workers, lower paid workers and the enhancement of the Singaporean core. We set out a summary of these debates below.

1. NTUC to implement progressive wage model (“PWM”) for food services and retail sectors

The PWM, which sets out minimum monthly salary for local workers in the cleaning, security and landscaping maintenance sectors as well as the lift and escalator maintenance sector by 2022, will be expanded in the coming years. Deputy Secretary-General of NTUC, Dr Koh Poh Koon, announced that NTUC hopes to expand the coverage of the PWM to include workers in the food services and retail sectors within the next 2-3 years as well as for strata management, pest management and solar technology sector in the near future. Employers in these sectors must start planning ahead.

2. Government to press on with raising of retirement and re-employment ages

In 2019, the Singapore Government announced that the retirement age will be raised from 62 to 65 and the re-employment age from 65 to 70 progressively by 2030. Deputy Secretary-General of NTUC, Mr Heng Chee How, called for the Government to press on with the increase as well as the increase of CPF contribution rates for older worker, which was deferred from 1 January 2021 to 1 January 2022. He also stated these changes should be accompanied with measures such as the enhancement of Job Growth Incentives for the hiring of senior employees. Employers will need to recognise that likely with effect from next year, the retirement age will indeed hit 63, which thus calls for planning ahead insofar as manpower numbers are concerned.

3. Parliament considers issue of maintaining Singaporean core and over-reliance on foreign labour

The issue of maintaining the Singaporean core of the workforce, a perennial topic, was once again floated during the debate. Assistant Secretary-General of the NTUC, Mr Patrick Tay, suggested tougher measures such as a formal anti-discrimination legislation to curb discriminatory hiring and level the playing field for locals. It was also observed that there were employers who exploit existing loopholes such as downgrading employment pass (“EP”) holders to S Pass holders to circumvent the more stringent requirements applicable to EP holders. Given this, Mr Tay called for S Pass requirements to be tightened as well.  This comes on the tail of the announcement last week that the S Pass quota for the manufacturing sector will be cut from the current 20% to 18% in 2022 and 15% in 2023. S Pass quotas for the construction, process and marine shipyard sectors were also cut to 18% earlier this year and will be further reduced to 15% in 2023 as well.

In addition, Mr Tay also suggested other measures such as removing preferential tax benefits and other benefits to companies with discriminatory hiring practices. Other Members of Parliament also urged for measures to encourage companies to invest in Singaporeans to enhance their long-term competitiveness. It should be noted that it was announced that the SGUnited Jobs and Skill Package will be expanded to support the hiring of 200,000 locals this year.

4. Members of Parliament urges Government to increase protection for gig workers

Assistant Secretary-General of the NTUC, Mr Desmond Choo, observed during the debate that gig workers such as delivery riders for platform companies are currently not protected by labour legislation such as the Employment Act (“EA”) and Industrial Relations Act and urged the Government to accord them greater protection through representation by NTUC or for coverage under the EA. Ms Foo Mee Har also suggested that Singapore could adopt the recent UK Supreme Court ruling that uber drivers should be considered workers rather than self-employed.

This is obviously a difficult area, as even the workers themselves would want the flexibility of not being deemed employees. Yet, it is possible to extent a limited amount of protection, which are critical for such employees, whilst nevertheless maintaining the flexibility.  Rather than a knee-jerk approach, careful consideration will need to go into how gig workers are to be managed.  Nevertheless, employers ought to start considering how best to manage their gig workers, not least because CPF might become payable for such workers.

Several of these issues such as discriminatory hiring and protection of gig workers have been debated extensively and it is not surprising that tougher measures such as formal legislation are now being tabled to tackle these issues. It will soon be impossible to ignore such issues without serious repercussion and employers will do well to monitor and take early steps to ensure compliance with these policy changes.

By Kala Anandarajah, RAJAH & TANN LLP, Singapore, a Transatlantic Law International Affiliated Firm. 

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