Mr S Iswaran at the 52nd Anniversary Dinner of the Singapore Manual & Mercantile Workers' Union, 2 Dec 2011

SPEECH BY MR S ISWARAN, MINISTER, PRIME MINISTER’S OFFICE AND SECOND MINISTER FOR HOME AFFAIRS AND TRADE & INDUSTRY AT THE 52ND ANNIVERSARY DINNER OF THE SINGAPORE MANUAL & MERCANTILE WORKERS’ UNION, ON 2 DEC 11, FRIDAY,1930 HOURS, AT THE RITZ CARLTON, MILLENNIA SINGAPORE

Mr. Andy Lim, President, SMMWU,

Mr. John de Payva, President, NTUC, and Secretary-General, SMMWU,

Mr. Heng Chee How, Deputy Secretary-General, NTUC,

Distinguished Guests,

Ladies and Gentlemen,

Brothers and Sisters,

Introduction

Good evening. I am very pleased to join you this evening for SMMWU’s 52nd Anniversary Dinner, and would like to thank SMMWU and the organisers for your kind invitation.

Past Contributions of SMMWU

SMMWU has a long and illustrious history and it is fitting, on this occasion, to reflect on your union’s contributions to Singapore’s nation-building efforts. In the 1960s, which marked the early years of the union, a fierce struggle was raging for the future of our country. The contest between the Government and the communists was so keen that it was common for communist and non-communist unions to be active in the same company.

SMMWU leaders, such as the late T V Gomez, took on their communist counterparts despite the very real threats that they faced. Through their tenacious but peaceful efforts, they resolved workplace grievances, and delivered tangible improvements to the welfare of the union’s members. In doing so, they won the hearts and minds of workers, and discredited the communists.

In more recent times, SMMWU has consistently stood up to be counted whenever Singapore faced major economic challenges – from the British military withdrawal in the 1970s and our first-ever recession in 1985, to the Asian Financial Crisis in 1997 and the recent downturn in 2009. During difficult times, the union persuaded workers to accept wage restraint and CPF cuts. It was not a popular thing to do, but SMMWU leaders understood that this was the only viable way to help companies stay afloat and to save workers’ jobs. To its credit, the union was equally committed to ensuring that the sacrifices made by workers were not forgotten by employers.When the good times returned, SMMWU fought tooth and nail for pay restoration and increases – as employers would know only too well.

Economic Outlook

Today, the celebration of SMMWU’s 52nd Anniversary comes in a year of solid economic growth for Singapore – but our challenges remain the same. The growth forecast for 2011 is about 5 percent. This is a credible performance for a mature economy like ours.

However, as we are all well aware, much uncertainty lies ahead. In Europe, public debt levels are very high, and the risk of defaults is real. If mismanaged, this could result in capital flights, bank runs and credit crunches in the Eurozone and beyond. The situation in the US is not much better.Recently, the Republicans and the Democrats failed to reach an agreement on reducing the federal budget deficit. This has once again raised questions about the US’s ability to rise above partisan politics to resolve its deep structural problems.

Singapore will not be insulated from a slowdown in the West. In fact, our export sectors have already been affected by softening business sentiments in the G3 markets. On a year-on-year basis, our non-oil domestic exports – or NODX – contracted by 16 percent in October, due in large part to a sharp decline in NODX to the US and the EU[1].

Therefore, our growth forecast for 2012 is a conservative 1 to 3 percent. This does not factor in downside risks to growth, such as a worsening debt situation or a full-blown financial crisis in the advanced economies. Should these risks materialise, growth in the Singapore economy in 2012 could come in lower than expected.

On the positive side, the economic rise of Asia offers us growth opportunities in the medium to long term.Based on data published last month in an Asian Development Bank report, China and India are projected to grow by a healthy 5.5 and 4.5 percent per annum from 2011 to 2030.Consequently, Asia’s share of the world economy is slated to increase from 34 percent in 2009 to about 50 percent in 2030.

Tripartism

Even as we prepare ourselves for various economic scenarios, some fundamentals remain the same.Tripartism is one.The strong tripartite partnership between our unions, employers and the Government will be, as always, the bedrock of our resilience as an economy and as a country.Tripartism is the foundation of Singapore’s hard-earned reputation for stability and reliability. It has allowed us to preserve harmony in our industrial relations while implementing measures that serve Singaporeans’ long term interest, even if it might entail some short-term pain.

We should never take this for granted.The recent experience of Australia’s national airline, Qantas Airways, presents us with a cautionary tale.In August this year, Qantas announced its expansion plans in Asia.Consequently, some of its employees staged a series of strikes to protest against the off-shoring of jobs. In response, in late October, the Qantas management grounded the entire Qantas fleet and barred all its employees from work.

In the end, there were no winners.The Australian tourism sector was affected. Qantas incurred losses and, more crucially, it suffered severe reputational damage.The tens of thousands of passengers who were left stranded in airports will not forget this experience.This will also affect the prospects for the workers at Qantas.

Inclusive Growth

We must never go down the same path. Fundamentally, good industrial relations are based on mutual trust and respect. It is equally important to harmonious industrial relations that workers and businesses get their fair share from an enlarged economic pie.

To achieve this, a second important fundamental is inclusive growth, which the Government has been working to foster. Even as Singapore’s economy as a whole grows, we must ensure that the benefits of such growth reach all Singaporeans.This includes the low wage workers, older Singaporeans, and middle income groups who are stretched by the cost of healthcare and education.The Government has implemented a series of measures such as Workfare, the 3M framework and enhanced subsidies for tertiary education, to address the needs of these groups and, as our Prime Minister has said, we will do more to help where it is needed.

We have also adopted broad-based strategies to achieve inclusive growth across the board, for workers as well as companies. The two key strategies are:

·Retaining a Singaporean core in the workforce; and

·Raising labour productivity.

Retaining a Singaporean core in the workforce is fundamental. In growing our economy and anchoring investments here, the primary objective must be to ensure that Singaporeans benefit in terms of good jobs and good pay.

To discourage an over-reliance on foreign workers with lower wages, we have been tightening access to foreign manpower. Since July last year, foreign worker levies for Work Permits and S-Pass holders have been raised progressively every six months. They will continue to rise in half-yearly phases till July 2013. In the same spirit, the qualifying bar for Employment Pass salaries and qualifications will be raised from January next year.

However, retaining a Singaporean core does not mean having an entirely Singaporean workforce. Rather, it means supplementing the Singaporean core with foreign manpower who can help make us more competitive overall. This is a balanced approach that takes into account the interests of our workers and employers.

Given our size, we need this balance and flexibility to tap foreign manpower in order to grow and expand - especially to anchor new growth sectors that can provide exciting opportunities for our children and allow them to realise their aspirations.

Let me illustrate this point with Lucasfilm – the film production company behind the Star Wars series. Lucasfilm would certainly not have set up its flagship studio here in 2004, if it were allowed to employ only Singaporeans. There were simply not enough locals with the requisite skills.

Allowing Lucasfilm to bring in a team of foreign digital animation artists has provided opportunities for its local employees as well. Not only do these young Singaporeans get to learn from the top experts in the trade, they get to work on high-profile film projects such as Transformers and Iron Man. This grooms them for senior positions within the company, and grows our pool of skilled manpower for the digital media sector. Meanwhile, our tertiary education institutions are training a younger generation of Singaporeans in the knowledge and skills that are relevant to this field.In this instance, Singapore, Lucasfilm and our next generation are all winners.

Our second broad strategy is raising labour productivity. As we learn to operate with a leaner workforce, our workers will have to work smarter. In this labour-constrained environment, it is mainly through productivity gains that both profits and wages can grow in a sustainable manner. Last year, we set a target of 2 to 3 percent productivity growth per annum in the coming decade – this is a challenging task.

Since then, we have put in place the infrastructure to help us realise this target. Last year, the National Productivity and Continuing Education Council, or NPCEC, was established to spearhead and coordinate our productivity drive at four levels:

·First, at the economy level, we want to grow our top-line through restructuring efforts. This involves bringing in emerging growth sectors such as clean technology, and helping existing sectors move up the value-chain.

·Second, at the sectoral level, we are developing, if not already implementing, sector-specific productivity roadmaps for 12 priority sectors. The 12 sectors were selected based on their potential for productivity gains, contribution to GDP and employment size. They include Electronics, Precision Engineering, Hotels, F&B and Retail.

·Third, at the company level, we have introduced fiscal incentives to encourage firms to undertake productivity-enhancing projects such as automation and R&D.

·And, fourth, at the worker level, we are strengthening our capabilities in Continuing Education and Training, and making our CET courses more accessible, so that each and every worker can continually upgrade his skills and knowledge.

Role of Employers and Unions

Employers and unions have an important role to play in these two inclusive growth strategies I have just outlined. As close tripartite partners, the Government, employers and unions have to work closely together to assure workers of our commitment to retaining a Singaporean core in the workforce. We also need the support of employers and unions to encourage workers to upgrade their skills. This will enable companies to move up the value chain and help workers fill the jobs that are created as a result.

Role of SMMWU & Partner Employers

In this regard, SMMWU has made a significant contribution to our national productivity drive. I am heartened to learn that the union works closely with employers to improve the skills and salaries of low wage workers, under the auspices of the $40m Inclusive Growth Programme administered by NTUC.

The union’s hard work has yielded results. Through its efforts, maintenance company Summer Pond & Landscaping received a 50 percent subsidy to purchase four battery-operated carts. The carts have removed the need for Summer Pond’s workers to move refuse bins manually using push trolleys – cutting the operating time by half. This has translated to significant wage gains for workers. The salary for workers at one of Summer Pond’s work-sites has increased from 1,200 to 1,600 dollars.

I would like to congratulate both the union and Summer Pond on this initiative. To Summer Pond, you are an excellent role model for other employers. Sharing productivity gains with your workers is the best way to incentivise them to improve their skills and do better for you.To SMMWU, we look forward to hearing more of such success stories in your efforts to engage companies and up-skill your 85,000 members.

Conclusion

To conclude, we have reasons to be cautious yet optimistic about our longer-term growth prospects. Despite the uncertain near-term outlook, the Asia growth story remains intact for the decades to come.

But whatever the economic scenario, we must remain committed to our fundamentals – Tripartism and Inclusive growth.This will serve as the foundation on which we restructure our economy, capitalise on the opportunities offered by a rising Asia, and achieve our growth potential of 3 to 5 percent per annum in the coming decade.

With that, I congratulate SMMWU on its 52nd Anniversary, and wish you many successful years ahead. Thank you.

[1]On a year-on-year basis, NODX to the US and the EU slid by 51 and 31 percent respectively in October 2011. These figures were published by IE on 17 Nov 11.