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Cablegate: Secretary of Labor Chao Meets Singapore Acting

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PP RUEHCHI RUEHDT RUEHHM RUEHNH RUEHPB
DE RUEHGP #1017/01 2620739
ZNR UUUUU ZZH
P 180739Z SEP 08
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC PRIORITY 5788
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 2862
RUEHMO/AMEMBASSY MOSCOW 0371
RUEHFR/AMEMBASSY PARIS 0330
RUEHSI/AMEMBASSY TBILISI 0021
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHBS/USEU BRUSSELS
RUCNDT/USMISSION USUN NEW YORK 0213
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 SINGAPORE 001017

SENSITIVE
SIPDIS

DEPT FOR EAP/MTS
DEPT PASS DOL - FOR IAB AND OSEC
DEPT ALSO PASS USTR FOR KARESH, ROSENBERG STRATFORD AND LEE
TREAS FOR OASIA/ISA-CUSHMAN AND RAND
USDOC FOR 4420/ITA/MAC/MCQUEEN AND DAS KASOFF

E.O. 12958: N/A
TAGS: ELAB PREL PGOV OVIP SN
SUBJECT: SECRETARY OF LABOR CHAO MEETS SINGAPORE ACTING
MINISTER OF MANPOWER GAN KIM YONG, AUGUST 29, 2008

(U) This cable is Sensitive but Unclassified. Please
protect accordingly.

1. (U) August 29, 2008; 3:00 P.M.; Ministry of Manpower.

2. (U) Participants

United States

Secretary of Labor Elaine L. Chao,
Ambassador Patricia L. Herbold,
Associate Deputy Secretary of Labor Anna Hui,
Dr. James Chao,
Alden Sanborn, Special Assistant to the Secretary, and
Senior Political Officer Dan Jassem (note-taker)

Singapore

Acting Minister of Manpower Gan Kim Yong,
Leo Yip, Permanent Secretary, Ministry of Manpower,
Ong Ye Kung, Chief Executive, Workforce Development Agency,
Ng Cher Pong, Division Director, Workplace Policy and
Strategy,
Tay Choon Hong, Deputy Director, Manpower Planning and Policy,
Chng Yi Ken, Manager, Manpower Planning and Policy, and Lim
Choong Leng, Senior Manager, International Relations Unit
(note-taker.)

Summary
-------

3. (SBU) The United States and Singapore both face the
challenge of an aging population, Secretary of Labor Chao
noted in a meeting with the Acting Minister of Manpower Gan
Kim Yong on August 29. Gan said Singapore is revamping its
mandatory retirement account system to include a portion that
will require workers, funds to be pooled. Acting Minister
Gan suggested that the best system would be one that took
advantage of both individual and pooled accounts. Ministry
of Manpower staff gave Secretary Chao a briefing on
Singapore's plans and programs to meet the labor market's
challenges. End Summary.

An Aging Population
-------------------

4. (SBU) In an August 29 meeting with Acting Minister of
Manpower Gan Kim Yong, Secretary Chao praised Singapore's
emphasis on skilled manpower training and suggested that the
United States and Singapore could exchange ideas on the
subject. Secretary Chao also suggested that both Singapore
and the United States face similar challenges in managing a
graying population base. Secretary Chao noted with concern
that in the United States, the first wave of "baby boomers"
would start to retire next year and that the subsequent large
increase in retirees would put the U.S. Social Security
system under a great deal of strain. In response, Acting
Minister Gan highlighted Singapore's dual problem of an aging
population base and a fertility rate that is below
replacement level; resulting in the need for a steady influx
of foreign workers to maintain Singapore's economy.

5. (SBU) Secretary Chao inquired about Singapore's efforts to
manage its aging population challenge. Gan replied that
while Singapore already has a mandatory retirement account
that all workers and employers pay into, the government feels
that the current system is inadequate. The continued rise in
average life expectancy (it is now over 80 years of age) is
leading to older retirees essentially running out of
benefits, Gan asserted. (Note: workers are required to put 20
percent, and their employers 13 percent of a worker's salary,
into the government's retirement account, the Central
Providence Fund - CPF. The fund investments are individually
owned by workers, and can be accessed after they reach 55

SINGAPORE 00001017 002 OF 002


years of age. End Note).

6. (SBU) Acting Minister Gan then described Singapore's plan
to revamp the Special Account portion (the retirement
account) of the CPF, by shifting the present focus away from
individually-owned retirement accounts (for contributions
made after 55 years of age) towards a common pool. (Note:
The CPF has three accounts: the Ordinary Account ) the funds
in this account can be used to purchase a home, fund
education or fund an investment; the Special Account ) funds
can be used for retirement; and the Medisave Account ) funds
can be used to cover medical expenses. End Note.) Gan noted
that while under the current system, beneficiaries can pass
any unused benefits on to their descendants, in many cases
longer-lived retirees, benefits will run out. Under the new
system, retirees would receive benefits until death.
However, under the new system, the unused benefits of
deceased retirees would no longer pass on to their heirs.

7. (SBU) Secretary Chao suggested that while Singapore
appears to be going away from individually-owned retirement
accounts, the United States is exploring moving in the
opposite direction. Gan replied that a balance is needed
between individually-owned accounts and pooled accounts, and
noted that the new changes to the CPF would only cover the
Special Account portion (the retirement account) of the CPF
and that the changes would only affect contributions made
after a worker turned 55 years old, meaning that any
contributions made prior to turning 55 would still be owned
by the individual.

Briefing on Strategies to Manage Manpower Challenges
---------------------------------------------

8. (SBU) The MOM staff gave Secretary Chao a presentation
that highlighted Singapore's strategies to deal with its
manpower challenges. The staff touched on Singapore's labor
market trends, including its robust job creation, almost full
employment and the need for a steady influx of foreign
talent. The staff reviewed how the government, industry and
publicly-funded universities work together to ensure that the
right mix of critically needed graduates enters the job
market. The staff described in detail Singapore's continuing
education and training plans and programs, with a focus on
the development of national standards for needed skills.
Lastly, the staff gave an overview of Singapore's programs to
assist and retrain lower income and older workers.

9. (U) Secretary Chao's party cleared this message

Visit Embassy Singapore's Classified website:
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm
HERBOLD

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