Challenges - Past & Present
We have faced recessions several times in the past. Each time we faced up to it, adopted difficult measures, and recovered quickly. For example, in 1985-86, we cut the employers' contribution to CPF. The rebound was swift, life got back to normal, and wages rose.
To tackle the Asian financial crisis, we cut CPF again in 1998. The rebound was also swift. But then we were hit by the global downturn of the electronics industry that accompanied the bursting of the dot-com bubble.
Then terrorism dealt us another blow, followed by the Iraq War and then SARS.
It is no surprise that Singaporeans feel somewhat shell-shocked. When will the economy recover? For those hit by the Asian financial crisis, it has been a long time.
There is no easy answer. The trouble is, with the Iraq War ended, even as we deal with the effects of terrorism and SARS, we also have to deal with the new competition from China and India, and all the other countries that now enter the free market.
We face twin problems of low demand, and relatively high costs.
Handling These Challenges
Employers will have to deal with demand. Cutting costs will help. If our prices can be reduced, our products and services will be more attractive. Unions expect Government and employers to trim costs in all areas, and will co-operate in restructuring wages. That is why NTUC has identified 50 companies for a start, to develop working models for others to follow.
Some companies had started before our call for wage restructuring, and now completed the exercise. PSA started recently, and has also successfully concluded. Within 3 months, we expect to be able to share these cases, subject to the agreement of the employers concerned.
Wage restructuring does not mean a wage cut, though in some cases it may be necessary. Wage restructuring is to make the company more competitive, able to secure more orders, earn higher profits. With more of the wage package in variable payments linked to performance, workers may well earn more.
The world of work has changed. More frequent change can be expected. We can also expect forward-looking employers to trim labour even as the companies are profitable, in order to sharpen their competitiveness and succeed. The result is more frequent changes for employees. Younger employees tend to take change in their stride, but older employees find it unsettling. It takes some time for them to get used to it.
Social Safety Net
However, these changes will be easier to accept, if they are provided with an adequate safety net.
It means that the social security provisions should be employee-centred rather than employer-centred.
Currently CPF is employee-centred, and provides for our retirement, housing and part of our hospitalization needs. To keep our wage costs competitive, the contribution rates cannot be high. In fact they should be kept as low as possible.
Therefore we have to set up new provisions for employees who will find themselves in-between jobs more often.
Portable Benefits
The employer-provided medical benefits should therefore be made portable. This way an employee would also have medical cover when unemployed.
The reliance on retrenchment benefits for financial support in between jobs is unreliable. While some may receive generous benefits, others get none. Therefore we should encourage individual savings, preferably with employer support. It is wise to save for a rainy day rather than depend on an umbrella that may be broken.
Skills Training/Upgrading
The best protection is a job. Job change means new skills.
Much of our training programmes are employer-centred. Each year the Skills Development Fund supports over 500,000 training places through employers. The NTUC supports training by employers through the Skills Redevelopment Programme.
What about the forward-looking individual, who sees his future in another job with a different set of skills?
Currently the NTUC and self-help groups act as surrogate employers. So there are some opportunities for the employee who wants to upgrade his skills, when his employer would not do so. The NTUC has a $60 million Education and Training Fund to support union members who take up training.
While the numbers of employees who take up training has gone up quite substantially in recent years, all employees should be doing so. That is why we advocate individual learning accounts, and greater support for the individual who wants to learn.
When employees are properly armed with such an employee-centred safety net, the fear of change should be much less.
These are long-term plans that will require tripartite co-operation to turn to reality. So it may take some time. What about those who are unemployed now? How do we help them?
Job Matching
We help them through job matching/counseling. The NTUC JobLink was set up to help unemployed and retrenched workers find new jobs, many times being the first stop for workers after receiving their retrenchment notices. It succeeds in matching 100 workers with jobs every month.
Through our job-matching work, we have learnt some lessons about the gap between workers looking for jobs, and employers looking for workers. Workers say the offers are not viable. Employers say workers are choosy. NTUC has decided to bridge this gap. We are currently looking for 50 employers in the cleansing, electronics, garments, hospitality, healthcare, agriculture and shipyard sectors willing to work with us to employ Singaporeans. We think we need people to push for changes, to identify and solve the problems to close the gap. For each sector the deputy secretary-general or assistant secretary-general will lead the push for changes. We look forward to employers' support.
Managing Cost of Living
In the meantime, we will continue to help workers manage the cost of living. NTUC, through its family of co-operatives, will continue to hold down the price of goods and services.
Looking Ahead
Finally, let us celebrate this National Day, not only in a reflective mood, but also a hopeful one, as we look forward to economic growth in the 2nd half of the year. Our efforts in maintaining Singapore's competitiveness will lead to the return of employment and wage increases.
I wish you all a happy National Day.
