Speech at Singapore Business Awards 2012

Mr Tharman Shanmugaratnam, Deputy Prime Minister, Shangri-La Hotel

1. Good evening. It is an honour to be invited here once again to recognise a group of exceptional individuals and businesses, who have made significant contributions to Singapore’s business landscape. Now in its 27th year, the Singapore Business Awards is Singapore's oldest and most prestigious business accolade.
2. Our economy has generally performed well in the past year. Although we are seeing a slowdown this year, it comes after a strong recovery from the global crisis of 2008-09 and is taking place amidst a still tight labour market.
3. There remain major uncertainties in the global economy, which cast a shadow on growth prospects over the short to medium term. However, our key task must be to press ahead with restructuring our economy so as to sustain growth over the longer term and raise the incomes of our workers.
4. We have to invest more in our workforce, in every industry, and make high skills and business innovation our key competitive strengths. We have to create better jobs and entrench a culture of learning and skills upgrading at all levels of our workforce. That is the only sustainable way to hold our own in the international marketplace, especially as China and other emerging players move up the value chain. It is also the only way we can raise incomes for all Singaporeans, and build an inclusive Singapore.
5. The restructuring has to be deep and comprehensive. Some industries, especially those which are better able to adapt to a tight labour market and create good jobs, will grow faster than others. Some businesses, including small but dynamic businesses, will do better, as others phase out or shift their labour-intensive operations overseas. In the experience of several developed countries, this broad economic restructuring, where the more productive industries and businesses grow faster than others, is the major way in which overall productivity goes up over the long term. We have to let market forces decide on this, and allow the more productive players to grow, and make better use of the resources freed up by the rest.
6. But there is no reason to believe that industries that have relatively low productivity today will remain that way. In fact, industries such as construction, F&B and the retail sector, where productivity has lagged compared to the economy at large, are also the areas which have the most obvious and greatest scope to improve. Their productivity levels remain well below the international leaders. We must make a determined effort in this decade, to upgrade these sectors and enable them to be vibrant players in the Singapore economy even as our labour market remains tight. It can be done. And we can surely achieve this, with businesses, industry associations and government working together to achieve this transformation. We must borrow every lesson on how productivity has been raised in other countries, develop our own ways to improve processes or develop new and higher value offerings, and take advantage of every government scheme to upgrade.
7. In this year’s Budget, we have made significant enhancements to measures to help businesses, and especially our SMEs, to make the transition to high productivity. I urge all businesses make full use of these measures.
   
   Fostering Inclusivity
8. Our overarching objective is not economic growth in its own right, but higher incomes and a better quality of life for all Singaporeans. Both the economic and social measures in this year’s Budget are aimed at achieving an inclusive Singapore. We are introducing further initiatives, building on the significant moves we have made in recent years, to help lower- and middle-income Singaporeans do well. We are providing greater economic security and care for the elderly, and for Singaporeans with disabilities.
9. But building an inclusive society is not just about government redistributing resources to help those in need. That is a necessary role for government, but it is not what makes a truly inclusive society. We all know that. We can only be an inclusive society if employers treat their workers with respect, help them develop themselves, and reward them fairly. When Singaporeans actively participate in causes that will make this a better society. And when the more successful step forward to help others in the community because they feel it is their responsibility to do so. An inclusive society rests on this spirit of inclusiveness.
10. As corporate citizens, you therefore play a major role. First, as employers, with a responsibility for your employees. Second, as stakeholders in society, with a responsibility towards the broader community.
    
    Responsibility to employees
11. First, we must ensure that Singaporeans remain at the core of a diverse and competitive workforce. To do this, companies must actively look out for and groom local talents. We have to provide them the necessary exposure, training and career development opportunities, so that every Singaporean can maximise his or her potential. It is also how companies can build lasting competitive advantage, an advantage that rests on a skilled and experienced core of Singaporeans even as we bring in expertise and skills from abroad.
12. We have to get this balance right. We must stay open to expertise and knowhow from around the world so that we have the diverse teams that allow Singapore and Singaporeans to remain competitive. But we must at the same time ensure that we maximize every Singaporean’s potential, and develop the local capabilities that give us sustainable advantage.
13. I encourage business leaders to also take a more involved approach in understanding and addressing the challenges faced by those in the lower rungs of the workforce. Think of how to improve every job – no matter how simple, invest it with more skills, train up our workers to do the job well. Think of how you can give them a fair share of productivity gains.
14. Many of our businesses in fact do so. They find it improves morale across the organisation, reduces attrition and attracts more people to the company. I am encouraged by the companies and business leaders that I meet who do so. One such company is Teckwah Industrial Corporation, which makes it a point to involve not just the management, but all levels of staff in planning the company’s strategic direction. Teckwah’s senior management team also walks the shop floor daily to engage employees and find out more about their work. They conduct induction programmes personally, and participate in in-house training together with their staff. Such efforts have paid off. During the economic recessions in 1997 and 2008, Teckwah’s staff volunteered for a salary freeze and cuts, which helped the company tide over the difficult periods. When the recession ended and the company’s performance was better than expected, salaries were reinstated and all staff were given performance bonuses. Staff attrition has been kept low, and with a strong core of long-service employees.
15. Companies must also do more to redesign jobs to meet the needs of our older workers. The reality we face is not just a tight labour market where older workers are a useful resource, but also the reality that older Singaporeans are fitter and keen and willing to contribute to the workplace for longer. We are not the only economy facing this demographic challenge. Much like us, Germany has been experiencing a declining fertility rate and an ageing population. They have seen over the past decade how companies have begun to adopt a different approach towards older workers. Recent surveys in Germany show a significant shift in attitudes towards older workers within the space of a decade, on the part of both employers and the public. German employers now view older employees as valuable members of their workforce¹, and are putting in more effort in retaining them and maximizing their contributions. One piece of research by a team from the University of Mannheim found that older workers in a Mercedes assembly line were more productive than their younger counterparts, and the reasons for this were that experienced older workers made fewer mistakes, and were able to resolve unexpected problems more effectively.²
16. In Singapore, while outright discrimination is rare, we are seeing more feedback from older Singaporeans who encountered discrimination either at work, or when they are seeking employment. We need to make a determined effort to eliminate age-based discrimination. I would like to urge businesses to hire fairly based on the merit of the candidate, and to put in extra effort to harness the full potential of Singapore’s older workers. I think we will be surprised by what we find – the motivation, skills and the way older workers respond when given the opportunity. They may start slower or be a little unfamiliar with a new job, but if they are treated well and know the employer is going out of his or her way to make the job suit them, we will be surprised by the contributions we get. Like how some other developed societies have found older workers surprising.
    
    Responsibility to the community
17. It is heartening to note that in recent years, more companies have embedded social responsibility into their mission statements. Corporate social responsibility, or CSR, is not a zero-sum game between a company’s profits and costs. In fact, CSR can generate long-term benefits for businesses by enhancing brand image, as well as provide avenues for strengthening employee engagement and leadership development. More importantly, it sends a signal to the community about how the more successful in our society feel for their fellow citizens and take responsibility for wanting to help improve our society.
18. One key aspect of CSR is corporate philanthropy. It is encouraging that corporate philanthropy has been steadily increasing over the years. In 2010, about half a billion or $507 million came from corporate donations. This is almost double the figure in 2001. But we are still some ways behind several of the developed countries. For example, in the United States, corporate giving as a percentage of GDP is around 0.38%, while in Singapore, the figure is about half - at around 0.17%. I would like to encourage companies to build on what we have achieved so far and develop corporate philanthropy in various segments of our community, working where necessary with VWOs and the Government. Put some thought into areas you would like to contribute to – not just financially, but by taking ownership over some part of community improvement.
19. There will be many ways to help employees take the initiative as responsible citizens, and to signal to the community that those who are doing well are taking the responsibility to help others. Cerebos is an example of a company that has managed to do this, and even get their employees healthy and fit in the process. It has put in place a scheme where its employees can leave an hour earlier each day to exercise, and for every exercise session they attend, even on weekends and off-days, Cerebos donates $5 to the Straits Times Pocket Money Fund. Recently, Cerebos has also introduced a Volunteerism Leave scheme, which gives employees one day of paid leave to volunteer at a charity of their choice.
    
    Conclusion
20. Let me conclude by saying that the Government is committed to providing a conducive environment for businesses to grow. More importantly, we will continue to encourage businesses and workers to take every opportunity to grow incomes over time. Our growth must be inclusive if it is to be meaningful, our local talents and skills must be maximized for it to be worth our effort, and every worker must find opportunity for him or her to contribute to a better Singapore.
21. We can achieve this if we work together. I am optimistic we can do this in the next decade – to make a significant leap forward in productivity, to redesign jobs for the elderly, to look out for needs of those at the lower rungs of workforce, and look out of our usual businesses to see what we can do for the rest of society.

¹Cologne Institute for Economic Research , “IW Representative study (IW-Zukunftspanel) 2008”.

²“Productivity and Age: Evidence from work teams at the assembly line”, by Axel Borsch-Supan and Mattias Weiss, University of Mannheim, Jan 19, 2011