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Speech at May Day Dinner

Mr Tharman Shanmugaratnam, Deputy Prime Minister, Orchid Country Club

Employment practices Skills, training and development
Ms Diana Chia, President of NTUC,

Mr Lim Swee Say, Secretary-General of NTUC,

Mr Stephen Lee, President of SNEF,

Leaders and members of the Labour Movement,

Distinguished guests,

Ladies and gentlemen,

  1. First let me say that it is honestly my privilege to be here tonight, to be part of this May Day Dinner, which we all know is one of the most important items on the Labour Movement's calendar each year.

    Addressing the Short-Term Economic Challenges
  2. This time, the dinner comes at a time of continuing uncertainty in the global economy, caused especially by the problems in Europe. The world economy is growing more slowly, and our own growth has slowed this year after a rapid recovery in the last two years.
  3. However, our economy is not in bad shape. In fact, it is in rather good shape. If you look at our labour market especially, our unemployment rate remains lower than in most other countries. This is due to the very large number of jobs created last year especially. With the economic slowdown, we have seen a pick-up in redundancies since the last quarter of 2011, and we can expect a slight increase in unemployment in the short term as workers who are displaced take some time to find new jobs.
  4. Overall, however, we still have a very tight labour market, with many more job vacancies compared to the number of unemployed Singaporeans. We have to keep working to match those who are out of a job with these jobs available.
  5. Incomes too have continued to grow. Most Singaporean workers saw good growth of incomes last year, faster than consumer price inflation. With more people obtaining jobs, and incomes at the same time going up, most Singaporean households saw significant real growth of incomes last year. In fact, our lower income households saw the highest growth of incomes last year, on a per capita basis.
  6. Inflation remains an important challenge, and one that union leaders are most concerned about. Our CPI inflation rose by about 5.2% in March 2012 compared to a year ago. This is a high figure. However, it does not mean that the average Singaporean will feel this high inflation. More than half of this ‘headline’ inflation rate of 5.2% comes from higher COEs on cars and the effect of higher market rents on homes and although most Singaporeans own their homes, the CPI index still records an imputed rental on these owner-occupied homes. So the CPI index shows a very high inflation figure of 5.2% but in fact, for the majority of Singaporeans, it's not so bad. The vast majority of Singaporeans, who already own their homes and are not buying a new car, will not feel the effects of these sharp increases.
  7. The increase in prices of daily necessities and essential services, such as food, clothing & footwear and education, has actually been much more moderate, at 3.0% or lower. The inflation in actual household expenditures for most Singaporeans is hence lower than 5%.
  8. Nevertheless, we are closely monitoring the situation, including prices of everyday goods and services. MAS has been strengthening the value of the Singapore dollar gradually to reduce the impact of imported inflation. The Government has taken actions to cool the property market. Although property prices are not themselves part of the CPI, when you have an overheated property market, many other prices can also go up. So we will keep a close watch on the property market. In the meantime too, the Government is providing some help for Singaporean households to cope with the rising cost of living. As most of you know, this year, we introduced GST vouchers which will help lower income Singaporeans and especially our older folk with their expenses.
  9. As our economic restructuring is under way, and the labour market remains tight, we can however expect cost pressures on businesses as wages rise. There will be pressure on consumer prices this year and the next few years. This too is why we must do our utmost to raise productivity. With higher productivity, businesses will be able to pay higher wages in a tight labour market without pushing up prices.
  10. The National Wages Council (NWC) has been discussing the wage guidelines for 2012-2013. They will, I am sure, consider all factors carefully, including business competitiveness, productivity and the inflation that affects Singaporeans. The NWC expects to complete its work and release its recommendations in June. I hope the guidelines will allow workers to get their fair share of the growth over the last year and get wage increases that can be sustained, while ensuring that our businesses remain competitive and can continue to generate good jobs.

    Our Longer Term Economic Restructuring: Benefiting All Workers
  11. Our main challenges however are concerned with the longer term, not what happens this year or the next. We must restructure our economy, to create better jobs and enable our workers to earn significantly higher pay over the next decade. That's a key economic and social objective, a key part of how we will build an Inclusive Singapore.
  12. Every industry must go through upgrading and change, but those with the lowest productivity will have to go through the most thorough restructuring - those like construction, and the hospitality and retail industries.
  13. We cannot expect this to be an easy process, or one that will be over in a few short years. This can only be a multi-year effort, taking at least the better part of the decade to complete. We can expect problems along the way that we have to respond to. Not all businesses will survive, and workers in industries that see a shake-out may lose jobs. We cannot avoid these problems as we restructure the economy. But we must try and help as many businesses as possible to upgrade and survive, especially amongst our SMEs. And we will make sure, through our tripartite arrangements, that workers who are displaced are retrained and placed in new and better jobs as quickly as possible.
  14. We also cannot hope that all it takes is government policies to make this work, such as our tighter policies on employment of foreign workers and our productivity grants. Those are important policies, and necessary to give businesses strong incentive to restructure. However, while these government policies are necessary, they are not sufficient. Restructuring our economy for higher productivity and wages will require the full and sustained commitment of everyone - the unions, workers and employers, working with the Government. We have to push ahead together, and when difficulties come up, make changes so that we can keep progressing.
  15. Employers must take the initiative to invest in more efficient operations, build up the skills and capabilities of your employees, and find new ways to give your customers value and satisfaction. Employers must take full advantage of the government schemes that are there to help this along.
  16. Unions are critical too in seeing through this restructuring. Unionists can rally their members to the cause of raising productivity. Workers will often have practical ideas on how work can be made more efficient, without overburdening people. If you feel that your members need new or improved skills, encourage them to go for training and work with management to make this possible. And as businesses reap the benefits of improved productivity and better revenues, we must work together to ensure that workers get a fair share of the gains.
  17. As we go down this road of transforming ourselves for a more inclusive Singapore, we have to stay focused on four key challenges. First, to help low-wage workers benefit from economic restructuring through higher pay. Second, to maximise opportunities for the middle class too, who are mainly PMEs, so they can achieve their fullest potential. Third, to maintain the trust amongst the tripartite partners as we evolve in our practice of tripartism; and fourth, to ensure that the Labour Movement stays relevant to workers in the years ahead.

    Challenge 1: Helping Low-wage Workers Benefit from Restructuring
  18. First, let me say something about our low-wage workers. We can and must do more for them. Do more to improve their working conditions. Do more to equip them with technologies and with better skills so as to enhance the value of the work that they do, and to reward them fairly. And we all have to do more, whether as employers, as fellow workers and colleagues at work or as customers and members of the public, to respect every worker, no matter how simple the job.
  19. The Government has enhanced Workfare to help supplement the incomes of lower paid workers, and is paying for the bulk of the costs when employers send them for training. MOM is also stepping up the enforcement of employment laws and standards, and more so for industries with a high proportion of low-wage workers. We want to make sure that they are treated fairly, and that employers are paying their CPF. The CPF is extremely important. Once our low-wage workers are in the CPF, they will also get Workfare and other Government top-ups, such as to their Medisave accounts. So we must get all our workers onto the CPF.
  20. But most importantly, we are working to ensure that low-paid workers are the chief beneficiaries of our economic restructuring efforts. The Inclusive Growth Programme (IGP) led by e2i is a key part of this national strategy. NTUC started the programme in 2010, and over the last two years, about $30 million has been committed to see through over 500 projects. This has benefitted some 33,000 low-wage workers, who saw benefits. In fact, they saw, on average, a basic pay increase of 10% as a result of the IGP being implemented. Remember, this is basic pay, not one-time bonuses.
  21. Let me give an example of how IGP benefits the individual worker. Ms Chai Nui Fah works as a packer for People Bee Hoon, which produces the Chilli brand of bee hoon (rice vermicelli). As a packer, her job was to roll the bee hoon into standard sizes and then to pack the bee hoon individually into bags. This was very time-consuming as there are two separate tasks involved. Under the IGP, People Bee Hoon bought two machines that could semi-automate the packing process. Nui Fah, as an individual worker, is now able to complete her tasks six times as quickly. With the increase in productivity, the company was able to give her a permanent increase in her salary of 16%, as well as an additional one month's bonus. Not only that, she no longer needs to work one to two hours of overtime everyday just to complete her work. She can now go home earlier and spend more time with her family.
  22. The IGP is working, and we will now expand it. NTUC and e2i have set a target to help 100,000 low-wage workers through the IGP by 2015. The National Productivity and Continuing Education Council (NPCEC) supports this goal, and will therefore increase the funding of the IGP. On top of the $30 million that was provided for the first two years, we will provide another $70 million over the next three years to enable e2i to reach many more companies and help about 70,000 low-wage workers. In total, the IGP would therefore amount to $100 million of support for upgraded work processes, to help 100,000 workers.
  23. I urge employers to take full advantage of the IGP, in addition to the other funding programmes already in place, such as the Productivity and Innovation Credit and other government grants for industry upgrading.
  24. We are also helping low-wage workers in the specific industries that they are concentrated. Many low-wage workers are in the outsourced service industries like cleaning and security. They face special challenges as their conditions of employment are often not determined by their employers, but by the people or companies who buy services from these employers. We are stepping up our efforts to encourage Best Sourcing among service buyers, so that their employers do not end up in a vicious cycle of holding down wages in order to win outsourcing contracts.
  25. We have done this in a large way with security guards, through NTUC’s efforts. The employment terms and salaries of security guards have improved, and we are still looking at improvements so that nothing stands still. We are now turning our attention to the cleaning sector. NEA is strengthening its accreditation scheme to improve standards in the industry. The Government, on its part as a buyer of services, has committed to sourcing cleaning services only from accredited companies who meet higher standards. Beyond this, we are studying how we can achieve these higher standards more comprehensively, so that wages for cleaners can go up across the industry more broadly.
  26. There are real challenges that we will face as we go through these industry transformations. It cannot be done overnight. But we will get there, and make sure that our low-wage workers are the group who benefit the most from restructuring.

    Challenge 2: Maximising Opportunities for PMEs
  27. The second priority is our PMEs – those who are more educated and who are earning more. Their numbers in the workforce are growing. There are about 630,000 local PMEs today, which is about 50% more than in 2001. Altogether, they make up about 30% of our workforce today.
  28. While this middle-income group will generally be able to respond well to economic restructuring, we will put extra effort into making sure that all Singaporeans are able to adapt well and have good careers. On the training front, we are expanding the number and types of training courses for PMEs. Continuous education must be convenient, affordable and relevant to Singaporeans' careers.
  29. WDA has recently set up a dedicated channel called CaliberLink, to provide advice and career services for professionals who have been displaced or those who are looking for new opportunities. It is already busy. Further, MOM will work closely with NTUC to consider how the unions can play a greater role in representing the interests of PMEs.
  30. Fundamentally, we want to ensure that we have a Singaporean core in every industry, as our economy progresses into higher value and more sophisticated activities. Building a Singaporean core is about enabling Singaporeans to be part of globally competitive teams, and creating the best possible environment for them to keep learning and progressing in their careers. To do that, we must remain open to people with the relevant expertise and skills from around the world, who can help companies build the diverse teams that we need to stay competitive. But at the same time, we have to make sure that Singaporeans are given opportunity to develop to their fullest potential, in every area of skill and talent in manufacturing and services. A capable and confident Singaporean core will give us sustainable advantage in the world.
  31. That's an important balance, ensuring that we provide real opportunities for Singaporeans to progress. We must get it right. Both my colleague MOS Tan Chuan-Jin and I have spoken at greater length on this recently, so I will not elaborate further here. But on the whole, our PMEs have done well. The income of Singaporean PMEs has gone up significantly over the last decade. We do not face the problems seen in much of the developed world today - where graduate unemployment is high; and amongst younger graduates who do have jobs, many are doing jobs that require much lower skills. In fact in the US, 44 percent of those working on minimum-wages in 2010 had either attended or graduated from college. In Europe, joblessness amongst the young, including amongst graduates, is now leading to a social crisis not seen since World War II.
  32. We must never get close to the situation that we see in these economies. We have to keep our economy competitive and open, so that we can keep creating good jobs and make possible satisfying careers for all Singaporeans.

    Challenge 3: Maintaining tripartite trust
  33. The third challenge that we will face as we restructure our economy is to maintain the trust in the tripartite relationship, between employers, unions and the Government. This trust is one of Singapore's most valuable assets. It is what has enabled us to respond rapidly to numerous crises in the past. Indeed, the trust between the tripartite partners has been strengthened through the experience of working together to get out of these crises.
  34. We now have formal structures such as the Singapore Tripartism Forum, which regularly organises events for members of the tripartite community. It’s a very useful exercise. There are also informal ways such as bowling and golf friendlies, as well as weekly breakfasts, which are extremely important to foster the close personal relationships that are needed when trouble crops up.
  35. The period of economic restructuring that we have entered into may pose challenges to our tripartite relationships. Companies may make difficult decisions on their business operations. Certain businesses may be phased out or moved overseas, while new businesses taking over may choose to merge or rationalise operations. That is part of the healthy restructuring of the economy, to improve and sustain competitiveness. Some innovations at the workplace too may also not work out as well as planned. Throughout all this, the partners will have to keep finding ways to minimise the effects on affected workers, and always ensure that displaced workers are given opportunities to move on to new jobs.
  36. At the same time, there is now greater expectation for the tripartite partners to express their views on various employment matters more publicly. The partners do not necessarily agree or take identical positions on many issues - we know that. And this has always been the case. However, there are sometimes calls for the partners to be more adversarial, to push their positions more openly and to let the matter be decided in a court of public opinion.
  37. Discussing issues in a more public way can be useful if it helps to flesh out the complexity and real trade-offs in employment issues, help people understand the real trade-offs here. But the challenge is to avoid playing to the gallery, and equally to avoid advancing positions for short-term gains. This is in fact the problem in many countries. We must keep our advantage in Singapore, by maintaining a frank, open and constructive dialogue, which is always aimed at the shared objective of meeting the long-term interests of Singapore and Singaporeans.

    Challenge 4: Keeping the Labour Movement Relevant to Singaporean Workers
  38. The fourth challenge is in how the Labour Movement can stay relevant to our workers. As I mentioned, our PMEs now make up about 30% of our workforce, and this will continue to increase. It is only right that we look at how their interests can be better represented.
  39. But even as we do so, the Labour Movement should continue investing in its base of rank-and-file workers. Not just in equipping them with more skills and keeping them professionally mobile, but also in re-instilling pride and dignity in blue-collar jobs as new generations of Singaporeans enter the workforce. We are in danger of losing that - the pride and dignity of blue-collar jobs. We cannot be a developed society without improving the worth of blue-collar jobs, in manufacturing and services, and giving blue-collar workers the dignity and respect they deserve. We must also, wherever possible, reduce the distinctions between blue- and white-collar careers, and enable workers to climb ladders from wherever they start - ladders of skill, responsibility and reward.
  40. One example is Lim Yoon Wooi, a supervisor at Singapore JAMCO, which is a company specialising in airplane cabin maintenance and repair. Yoon Wooi started in the aerospace industry 17 years ago as a line repair and maintenance technician. He joined Singapore JAMCO later on in early 2009, where he was quickly recognised for his attention to detail and willingness to learn. His company sponsored him for a Professional Certificate course in Aerospace Engineering at the Temasek Polytechnic-Lufthansa Technical Training Centre - the course is in fact aligned to the WSQ framework and co-funded by WDA. Today, Yoon Wooi is a supervisor in charge of some 70 technicians who look after airplanes arriving at Changi Airport and ensuring that the planes can be turned around for departure quickly. With his hard work, new skills and willingness to take on new challenges at work, Yoon Wooi enjoys the confidence of his management and the respect of his team. He is one of many examples of people who have taken the ladder up in responsibility and reward.
  41. The Labour Movement will have to continue to adapt and respond to its own challenges too. One of these challenges is to sustain and renew leadership. What NTUC is doing to renew leadership is commendable and in fact rather unusual amongst labour movements internationally. Individual unions within the NTUC are also doing the same, so as to allow their younger leaders to flow up, work side-by-side with the veterans and learn from them.
  42. Another recent move by NTUC, to regroup its unions into key industry clusters, will help advance our national productivity drive, and help achieve the goals of Labour Movement 2015. These are bold structural changes. They will help NTUC to continue playing a critical role as co-driver in making an Inclusive Singapore.

    Conclusion
  43. Let me conclude by saying that the strength and responsiveness of the Labour Movement will continue to be crucial to Singapore's survival and success. The tripartite partners must prepare intensively for the work of the next decade – to make the leap in productivity, raise incomes, look out for the needs of our workers, and continue to strengthen the values that have made Singapore a self-respecting nation.
  44. On that note, may I wish you a happy May Day!