As we step out of the shadow of the Covid-19 pandemic, Singapore continues to face numerous challenges as we navigate the uncertainties ahead of us. In my response to the Budget Statement, I would like to discuss the challenges faced by three stakeholders in our society: businesses, workers and families.
Businesses: Costs and rent
The Singapore Business Federation’s latest National Business Survey highlighted that the key challenges faced by businesses in Singapore were an increase in overall business costs, and the availability and retention of manpower. The main cost pressures include raw material costs, energy costs, manpower costs and rental costs. Singapore is generally a price taker on raw materials and energy. Higher manpower costs, while challenging to businesses, can improve the welfare of our workers by increasing their income, as long as the wage increases do not set off a sustained wage-price spiral.
High rental costs in Singapore, however, benefit a narrower segment of society, namely landlords and property owners, and come at the expense of tenants, especially SMEs, who may struggle to afford the rent. They can also affect the competitiveness of these businesses, which have to allocate more resources to rental expenses and less to other more productive aspects of their operations.
The Government needs to look for ways to moderate industrial and commercial rental costs for SMEs. This will benefit a broader base of businesses which play a critical part in growing our economy and providing good jobs for our people. To achieve this, JTC could expand its market share for industrial space that offers more low-rent options to SMEs, and HDB also could offer lower rent commercial spaces allocated by ballot, to stimulate micro-businesses and entrepreneurship in the heartlands.
Attracting Singaporeans to promising industries
Next, I would like to discuss the challenges faced by workers in Singapore, particularly those in industries that heavily rely on foreign workers. In recent years, the Government has implemented various work pass restrictions to manage the inflow of foreign workers and professionals. Additionally, the Government has allocated funding to help local companies become more productive and manpower-lean.
However, there needs to be more emphasis on attracting Singaporeans to work in industries that are currently over-dependent on foreign workers, such as the marine, manufacturing and construction industries.
The Government has introduced several programmes, such as career conversion and professional conversion initiatives, to equip those who have decided to switch to these industries. However, there has been less success in urging our local workers to switch to these industries in the first place. While the Government has been working to raise awareness of the job opportunities and career prospects in these sectors, more needs to be done to address the perception that these industries are less attractive or prestigious than other sectors like finance, technology, and law.
It is commonly believed that Singaporeans are not interested in working in these industries due to the long hours, shift work, low pay, and difficult working conditions. However, the popularity of platform food delivery jobs indicates that many Singaporeans are willing to work in physically demanding jobs. Food delivery riders work long hours, with many cycling around town for over 12 hours a day. The job can be dangerous, with around one-third of riders having been in accidents that required medical attention. And the median income is less than $2,000, according to a paper by researchers at the Institute of Policy Studies (IPS).
The IPS paper also found that of the platform delivery workers who intended to leave the food delivery industry for other industries, they were looking for higher salaries, longer-term career pathways and opportunities to learn new skills in their next jobs. A significant number were seeking flexible work hours, although less than a third were looking for jobs in air-conditioned offices.
If the industries that are currently lacking in local workers can provide these benefits, they will be able to attract more locals to join them. Some progress has been made in attracting more locals to work as nurses and early childhood educators. The same effort should be undertaken to upgrade other industries that are facing local worker shortages.
However, even after these human resource matters are resolved, these industries may still face difficulties attracting job applications from Singaporeans due to a lack of awareness of jobs in those industries.
To address this, there is a need to increase awareness of these industries among students early on in their school life. Schools can work with industry representatives to introduce these career opportunities to students as early as lower secondary school. By doing so, students and their parents will be more aware of the career prospects in these industries and be better equipped to select suitable subject combinations in Secondary 3 and eventually make informed career choices when they are graduating from school.
Our success in reducing dependence on foreign workers and professionals heavily relies on being able to raise local talent in these occupations. By providing better pay, training and career pathways, and better work-life balance, and by increasing awareness of these industries among young people, we can attract more locals to work in these industries and reduce our dependence on foreign workers.
Families: Impact of the increased CPF Housing Grant
Finally, I’d like to discuss the increased CPF Housing Grant and its effect on homebuyers. The Government has announced that it will raise the CPF Housing Grant for first-time homebuyer families purchasing resale HDB flats by $30,000 for those buying 2-, 3- and 4-room resale flats, and by $10,000 for those buying 5-room or larger resale flats. First-timer singles will get half the increase given to married couples.
This increase in the CPF Housing Grant will be welcomed by many first-time homebuyers, especially those who are looking to get a flat in a mature estate near their parents’ home, but have been unsuccessful in balloting for a BTO flat in a mature estate.
However, some property analysts have cautioned that the increased grant amount may also raise demand and prices of resale flats. The Hon. Member Hazel Poa also raised this concern in her speech. This could potentially offset any progress made towards enhancing the affordability of resale flats.
As such, it’s important to understand the Government’s projections on how much this increase in the CPF Housing Grant will elevate resale HDB flat prices over the next two years.
Has the Government projected any resale price increases as a result of the CPF Housing Grant increase, by modelling the large amount of housing transaction data available to HDB?
Additionally, since only first-timers will benefit from the increase in the CPF Housing Grant, non-first-timers may end up having to pay even more for resale flats.
I hope the Government can provide more information on its projections to help Members assess the net effect of the CPF Housing Grant increase.
More fundamentally, is increasing housing grants going to continue to be the Government’s main approach to making resale flats affordable?
Has the Government considered the alternative proposals which I shared during the debate on the housing motions earlier this month to moderate resale flat prices?
These include, one, providing more help to “empty nesters” who are prepared to sell their larger flats to obtain 2-room flexi flats and Community Care Apartments; two, requiring future buyers of private property to sell their HDB flats; and three, incentivising those who currently own both a private property and an HDB flat to sell their flat by rebating the Additional Buyer Stamp Duty they paid on their private property.
These proposals may provide longer-term solutions to moderating the price of HDB resale flats.
Conclusion
As we contemplate the future, it’s natural that Singaporeans are apprehensive, particularly for their children. The soaring property prices have made it increasingly challenging for families to purchase a new home. The Deputy Prime Minister has cautioned that we may continue to confront a period of high inflation, which is likely to persist throughout the first half of this year.
In these trying times, it’s imperative for us to keep our minds open to workable solutions — regardless of where they might emerge from — so that we can help our fellow Singaporeans in need, and progress and prosper together as a nation.
This was my speech in Parliament during the debate on the Budget Statement on 23 Feb 2023.
Cover photo by photosforyou on Pixabay