Speech at STF Conference on Managing Manpower Challenges 2010

Mr Gan Kim Yong, Minister for Manpower, Suntec Singapore International Convention and Exhibition Centre

Mr John De Payva
President, National Trades Union Congress;

Mr Stephen Lee
President, Singapore National Employers Federation;

Tripartite partners;
Ladies and Gentlemen,

Good morning.

Tackling the Downturn in 2009

1. Exactly a year ago, I was at NTUC’s Workplan Seminar where brother Secretary-General Lim Swee Say was on stage rallying unionists passionately. He urged union leaders to work with other tripartite partners and to “upturn the downturn”. One year on, we can now look back and say that we have fought the battle well.

Economy recovering with tripartite collaboration

2. Retrenchments for the first three quarters of 2009 numbered just over 18,000 and the retrenchment figure for the whole of 2009 is likely to be significantly lower than the record level of 29,000 in 1998. Our unemployment rate of 3.4% as of September 2009 was low compared to many developed countries and lower than the record 5.2% in 2003. The key was tripartism – which was our secret weapon to tackle the downturn. This positive outcome would not have been possible without the trust, commitment and joint efforts among employers, workers and the unions that represent them.

3. Looking forward, we are now seeing positive signs that the worst is behind us and Singapore’s economy is recovering. Our GDP grew 3.5% in the last quarter of 2009, compared to a year earlier, and the economy is expected to grow by 3 to 5% this year. Even as we are on the road to recovery, we need to be mindful that it may take quite a while to see recovery spread evenly across the board. The future manpower landscape will evolve and there will be challenges ahead. It is therefore all the more crucial for us to ensure that our manpower laws, practices and particularly our tripartite partnership, remain relevant for the economy, for businesses and for workers over the long term.

Developing a “Future-Ready” Singapore Workforce

4. How is the Singapore workforce changing and how can we develop a “future-ready” workforce? Changing demographics such as the ageing workforce and the increasing pool of professionals, managers, executives and technicians (or PMETs) have made it imperative for companies to rethink their business strategies and restructure their operations to be future-ready. The labour movement must also evolve to keep up with the changing landscape.

Singapore’s Greying Workforce

5. By 2020, more than one in three Singapore residents will be 50 years and older. For this reason, we are introducing re-employment legislation by 2012. To guide employers in implementing re-employment, the tripartite partners released the draft Tripartite Guidelines on Re-employment of Older Employees for public consultation in November last year. We have received valuable feedback and views from various sources. The tripartite partners are currently reviewing the feedback to refine the Guidelines, which are scheduled to be finalised and released for implementation over the next few months. This will set the stage and prepare employers, unions and workers for re-employment.

Meeting the Needs of the Growing Number of PMEs

6. As our economy evolves and our local workforce becomes more educated, we are seeing an increasingly larger proportion of PMETs in the workforce. PMETs now form more than half of the local workforce, up from around 40% a decade ago. The proportion of PMETs will continue to grow in the years to come, as better educated cohorts join the workforce. We therefore need to pay greater attention to this group of employees.

7. MOM and the Workforce Development Agency (WDA) have already started supporting more continuing education and training among PMETs. For example, the Professional Skills Programme, introduced in 2009 as part of SPUR, brings together the entire range of skills upgrading and job assistance initiatives targeted at helping PMETs.

8. Moving ahead, as the size of our PMET population grows, more may face employment-related issues. Currently, Professionals, Managers and Executives (or PMEs) who have employment disputes with their employers would mostly have to resort to civil litigation to settle the dispute, which can be costly and protracted for both parties. On average, about 240 PMEs seek MOM’s assistance on employment issues every year. In 2009, we received some 350 cases involving PMEs and their employers. The increase was partly due to the economic downturn. We recognise that there is a need to facilitate speedy and low-cost settlement of such employment disputes for PMEs and their employers. This will help to bring about more harmonious workplace relations. In this regard, trade unions and employer federations, which have been instrumental in maintaining industrial harmony, can play an important part in helping to resolve employment disputes involving PMEs.

9. Following discussions with our tripartite partners, SNEF and NTUC, I am pleased to announce that we will introduce an employment dispute resolution process to help junior and mid-level PMEs earning up to $4,500 and their employers to address common employment issues, such as salary arrears, retrenchment benefit payment and other employment-related contractual issues. This process will be in place next year. To facilitate the PME employee and his employer to reach an amicable settlement without incurring significant costs, the proposed process will primarily involve the use of mediation. It will ride on the existing strong tripartite partnership with SNEF and NTUC, who have the expertise and track record of resolving employment disputes.

10. How will this process work? MOM will lead the mediation session, with the support of SNEF and NTUC. Some PMEs are union members and eligible for collective bargaining or limited representation in the company. They already have established avenues to address employment related disputes. PMEs who are union members but are not eligible for collective bargaining or limited representation may make use of this proposed mediation process. If the dispute cannot be resolved through mediation, the PME employee may pursue his claims through the civil courts. In addition, he may refer disputes on salary claims for adjudication by MOM. The setting up of this new dispute resolution process involving mediation and adjudication will help save PMEs and their employers the costs of going through the civil court route by giving them the opportunity to mediate at an early stage, with assistance from tripartite partners. Through this tripartite partnership approach, MOM believes that many of such disputes could be resolved amicably.

11. The exact details are currently being worked out in consultation with the tripartite partners.

Pressing on to Raise Skills and Productivity

12. Even as we respond to the changing demography of our workforce, it is equally important to stay focused on enhancing our productivity through continuing education and skills training. Productivity gains have declined in recent years due to a heavier reliance on labour inputs to generate economic growth. We cannot grow the size of our workforce indefinitely. Companies must find innovative ways of delivering higher value products and services, redesign their systems for higher efficiency, invest in technology and train their workers. We must press on to upskill our entire workforce and raise productivity levels. This is why even in the midst of the downturn, the government has allocated $650 million to encourage companies to send their employees for training under the Skills Programme for Upgrading and Resilience (SPUR). To date, SPUR has seen 4,000 companies, mostly SMEs, with 264,000 employees committed for training. SPUR funding will end this year and I urge companies which have not tapped on SPUR to make use of this opportunity to upgrade your workforce and improve your productivity.

13. As our economy continues to transform, Singaporeans and Singapore companies should start to prepare themselves for the changes to come. We must be future-ready. The Economic Strategies Committee (ESC) chaired by Finance Minister Tharman Shanmugaratnam and comprising members from the Government, the labour movement and the private sector, is reviewing the longer-term strategies for Singapore’s growth. They will be releasing their recommendations next month, and one of the key focus is on how we can raise productivity.

Working together for a brighter future

14. One of the enduring strengths of tripartite collaboration is that we have always been able to mobilise quickly to tackle challenges together and emerge stronger. The tripartite partners demonstrated this ability and commitment to overcome adversity during the downturn last year. We are continuing to work together as we recover from the recession. Tripartism is indeed Singapore’s competitive advantage, and will continue to be so in the years ahead. Likewise, I am sure we will work hand-in-hand to prepare employers and employees in Singapore to embrace the manpower challenges and gear up for the changes in Singapore’s workforce and economy in the decade ahead. Working together, we can then be confident of a stronger, better skilled and future-ready workforce.

15. Thank you and I wish all of you a fruitful STF discussion ahead.