Ladies and Gentlemen,
Firstly, let me extend my heartiest congratulations to SHRI on its 40th Anniversary and also to the winners of the 2005 Singapore HR awards. SHRI has indeed come a long way since its inception in 1965, with its membership growing from 34 to some 2,500 human resource professionals today.
2 During the pre-independence days, and in the immediate post-independence period, the industrial relations climate was much less harmonious compared to today. This prompted a weekly gathering of local HR practitioners interested in exchanging news in labour relations, which then culminated in the formation of the Singapore Institute of Personnel Management (SIPM) in 1965. The SIPM facilitated workshops and seminars for HR managers, or personnel managers as they were called then, for discussions on common issues.
3 Our industrial relations system evolved, with the Government encouraging tripartite co-operation. The setting up of the National Wages Council, and the inclusion of unionists and employer representatives in various statutory bodies, led to more frequent dialogue between managers and unionists. The then Ministry of Labour provided a conciliation service for management and unionists who could not, on their own, settle disputes between them. If conciliation failed to resolve the disputes, matters could then be referred to the Industrial Arbitration Court (IAC). [Of course, there were also disputes that went directly to the IAC, without any attempt at conciliation at the Ministry of Labour.] The Industrial Arbitration Court was quite busy in the 1970s, and the early 1980s. It was chaired by Mr Tan Boon Chiang, who grew in wisdom and stature as he dealt with the conflicts. He knew that arguments in open court created lasting antagonistic feelings, so he offered mediation before court hearings. Over time the number of disputes fell. Mr Tan Boon Chiang was one of the first to recognise that Singapore had developed a unique system of tripartite co-operation. He sat as a member of the ILO’s Committee of Experts, so he knew how valuable our system is.
4 So, in 1991, Mr Tan Boon Chiang got a group of industrial relations practitioners from the private sector, unions, government and academia to form the Industrial Relations Society (IRS) to exchange ideas, and deliberate issues affecting industrial relations. He believed that our unique system could evolve further if the active practitioners had more opportunities to meet in conducive settings to discuss issues of common concern, and not only when they have to resolve a dispute at hand. Unfortunately Mr Tan, was not able to lead the Society in its formative stage. It was subsequently felt that the activities of the Industrial Relations Society and the Singapore Institute of Personnel Management overlapped. The two organisations were then merged. SIPM was renamed Singapore Institute of Human Resource Management (SIHRM) in 1993 to bring in practitioners from the government and unions. However, the focus gravitated towards human resource development. Industrial relations practitioners from the unions and government dropped out of the new institute. Eventually, it changed its name to what it is known today, the Singapore Human Resource Institute (SHRI).
5 It is a pity that the vision of Mr Tan Boon Chiang for the Industrial Relations Society was never realised by the SHRI. As SHRI shifted its focus, the role fell back to the unions working with the Singapore National Employers’ Federation in a more “them and us relationship”, though never as antagonistic as those in other countries.
6 So the development of our flexible wage system – one of the key developments of the past 20 years – was done by the unions with SNEF and the Government, with SHRI playing a supporting one. In the second half of the 1980s, three key features of the system were adopted: the principle that wage increases should lag behind productivity growth; that part of the annual remuneration of workers should be in the form of a flexible bonus that varies with company performance; and that wages should reflect the value of the job, so the ratio in a wage scale should not be too high, with 1.5 being an average. The Asian financial crisis in 1997 led to the adoption of another feature to allow companies to deal with cash flow problems brought about by sudden changes in the business climate – the monthly variable component.
7 Today the statistics tell us that the adoption of the various features of the flexible wage system is much more widespread in the unionised sector than in the non-unionised sector. This is a telling statistic! Unless there is push from the unions, progress is slow! Logically one would think that it should be the other way around! SHRI may want to ponder how it can help to reverse this upside-down situation!
8 The flexible wage system has enabled companies in Singapore to ride the economic cycles better. Surely it should be the managers, and in particular the human resource managers, who should be driving the implementation of the system.
9 Our wage system is still evolving. Today we are trying to peg wages to outcomes. This means that employers must develop the right key performance indicators. Remuneration should then be linked to these key performance indicators. But the vast majority of companies have found it difficult to derive the key performance indicators! Here is an opportunity for SHRI to enhance your contributions – by teaching your members how to derive the correct key performance indicators. And after you done so, you should teach them how to link rewards to performance so that workers remain motivated to perform.
10 Over the past 25 years, BERI has continuously rated the Singapore workforce as the best in the world. Our industrial relations has also been rated the best by other international comparative studies, such as the World Competitiveness Yearbook. However, our management, though good, is not rated tops. While we view human capital as our competitive advantage, we were only pegged at the 50th percentile in Asia Pacific in an Asia Pacific Human Capital Index survey conducted by Watson Wyatt in 2002.
What else can SHRI do?
11 Although SHRI has offered certifications on compensation and benefits and talent development, conducted workshops with Workforce Development Agency (WDA) and MOM on flexible wage system and strategic HR issues and carried out HR audit to member companies to review their salary structures. SHRI can expand its courses to cover a wider range of HR knowledge and skills to upgrade the quality of our management.
12 We have to understand that HR today is no longer just an administrative function, but plays a key role in influencing business strategies. HR professionals no longer function as an administrative support but are viewed as a strategic partner in the success of a company. HR professionals now focus on strategic issues such as talent development, succession planning and improving employee engagement.
13 HR professionals should also manage a close and productive working relationship with unions and workers to create a harmonious labour environment. Therefore, a good knowledge of industrial relations issues is critical. To equip HR and industrial relations professionals with in-depth knowledge of employment relations, the Ong Teng Cheong Institute is offering a new Professional Diploma in Employment Relations. This is a collaborative effort between the Ong Teng Cheong Institute and the National University of Singapore Extension. The course will also provide another platform to enhance mutual interaction and understanding between HR and industrial relations professionals.
14 There are new challenges before us. For now, I will mention just three – the “working poor” whose incomes are sliding; the middle executives who are being squeezed out by restructuring; and the low effective retirement age. There are other challenges, but I am limiting myself to three this evening.
15 With globalisation, the labour market has also become global. Our workers compete against foreign workers who are not here, but in their own countries. So there is pressure on wage levels. So, companies restructure, outsource. Workers find themselves retrenched, and offered jobs with wages 30%, 40% or even 50% of what they used to earn. It is not a satisfactory situation. One reason is the seniority-based wage system. Another reason is low productivity. Wages can be higher, if matched by higher productivity. So, unskilled workers are the worst hit. That is why wages in the lowest quintile have stagnated, and even dropped. The issue is not about a widening wage gap; the real issue is about the plight of the working poor. How can we raise their income and standard of living? The way to help them is raise productivity, through redesign of jobs. Job redesign is one of NTUC’s key programmes.
16 We are also concerned with the plight of middle-level executives who are squeezed out by business restructuring. This was predicted ten years ago. As the cost of IT fell, organisations became flatter, squeezing out the middle executives. The axe fell first in countries that used IT more extensively, such as the United States. It is now happening here. Where do middle executives go? They cannot scale the next higher tier – in any case there are fewer such jobs at the higher tier. They are not wanted in the lower grades. It has been a difficult choice for them – moving into another job, with lower pay. But they may fit in with SMEs, who are short of qualified talent.
17 The third key challenge facing us is employment for older workers. In an aging society, older workers will form an increasingly key component of our workforce. Employers will have to think through how they can position themselves effectively to leverage on this new workforce profile. In many developed countries, there is an increasing realisation that there is an advantage for companies who become ‘first movers’ in making themselves ‘older worker friendly’. Beyond looking at them as a liability, employers are realising that experience, patience, people skills, loyalty and ability to relate to a maturing clientele are typical traits among older workers and can be a key asset.
18 The older worker of the future, and indeed today, will have fewer children to depend on compared to their predecessors. Their continued employment will reduce the financial strain on their families. Being gainfully employed helps to maintain their quality of life, not just financially, but also in terms of enhancing their sense of dignity and self-worth.
19 Some people think that the solution is to raise the retirement age by legislation. Unfortunately it is not the case. The retirement age here was raised from 55 to 60 in July, 1993 and then to 62 in January, 1999. However, the labour force participation rate above 55 years has not changed much. The change has been more due to more women working, but there has been little change for men. Therefore we should put our minds to bear on the effective retirement age. What happened? Some of them lost their jobs when companies closed down, or restructured. What other reasons? Why can’t they get back into jobs? We have to find out.
20 NTUC has therefore supported setting up a Tripartite Committee to study how we could enhance the employment of older workers. Are employers willing to take older workers and under what conditions?
21 HR professionals can play key roles in these three challenges. As SHRI celebrates is 40th Anniversary, I am sure it will determine what role it wants to play in the future. I hope it will decide to make a difference in these three challenges.
22 HR professionals have a great influence on how their workforce is managed and developed, and create a work environment that is safe, productive, fulfilling and rewarding for employees. The labour movement has enjoyed a fruitful working relationship with the HR professionals and management, founded on mutual trust and respect and we look forward to more good years of co-operation for a prosperous and secured future for all of us.
**********
