Comrades, ladies and gentlemen, a very good afternoon to you. I am happy to join you at this Tea Reception for the Public Sector.
We live in challenging times. Companies are constantly trying to find ways to reduce costs – not as a matter of choice but for their very survival. Many companies find themselves divesting and outsourcing non-core functions. In 2003 alone, Temasek has divested its stakes in 12 companies. Temasek companies themselves have outsourced some of the work they used to do themselves. The Civil Service, too, is facing budget cuts this year and the pressure to keep lean on finances. At the budget debate this year, DPM Lee gave a foretaste of what he wants the Civil Service to do – ensure value for money in public spending.
First – “Best Sourcing” will be the way forward for the Civil Service. What is “Best Sourcing”? It requires them to compare the cost of providing their in-house services against cost of having the same services provided by the private enterprises. If it is more economical to use the private sector providers, then that’s the way we should do things. In the past, only low-end jobs such as cleaning used to be out-sourced. But these days, even IT services, business investigation, enforcement and procurement are prime candidates. This is happening in a big way in other parts of the world. When the UK wanted to build a new line in the London Underground, they turned to Bechtel in San Francisco. Remember 911? Even for the design of the highly symbolic new World Trade Centre, the Americans turned to Berlin after initially considering London or Tokyo. A new opera house is being built in Beijing – and the architect is French.
Such is the way of a vibrant economic world!
Already, MOH, URA and HDB have benefited from using “Best Sourcing”. Last year alone, the savings to our country’s budget was some $1.8m. This is important, considering that the budget is in deficit. This is an encouraging beginning, but only a start. Some of you will ask: why do we need this exercise at all? The aim is not to cut expenditure arbitrarily but to foster a stronger sense of “value for money” mindset in the public sector. I say, the way to meet future challenges and afford new programmes is to get more out of every dollar we spend.
Of course, some affected employees may feel hard-done by it. The employers must make sure that they are suitably re-deployed or released with appropriate recompense. Many politicians elsewhere have capitalized on the unhappiness generated by out-sourcing. Smelling blood in President’s Bush's unsteady grip on the US national economy, many Democrats agitate for laws barring companies that “outsource” from government contracts at home, calling the Republicans “unpatriotic”. As an argument, it plays well politically: The US economy is growing fast but the benefits are not coming to American workers but to Chinese or Indian ones. Republicans in turn accuse Democrats of protectionism. Both sides of the political divide know that this is a hot issue in certain states whose voters may swing the votes to determine the next resident in the White House.
So….., what's the Real Reason behind this so-called “jobless recovery”? US productivity is soaring at a rate of 5% a year because the technological innovations of the late 90s are bearing fruit or at least profits. The automation of the 90s transformed services, be it automated banks or e-ticketing for planes. In 2003, the big losers of jobs were manufacturing, departmental stores, telecommunications and hotels. These are not the industries which had been out-sourced.
Economists have said that following strong productivity growth there will be higher demand, and this will translate into more demand for workers. It would appear that there is now job growth in the United States.
Workers who lose their jobs can’t wait. So, what can we do?
As a union movement we can’t just leave the affected staff behind. For those affected - What do we do?
It is no use lamenting that employers are less caring, and more demanding. It is no use lamenting that the pace of change is too fast, too furious and too much. That would be wasting valuable time.
We should instead spend our time focusing on helping our workers find their way. The best way is for workers to recognise that we are responsible for our own employability and earning capacity. We are responsible for seizing opportunities to upgrade our skills and employability. We should save-as-we-earn for medical coverage, for old age and for risk of unemployment.
SRS in Civil Service
Let me now turn to the subject of the Special Resignation Scheme or SRS. Some of you may be asking - why is the alignment with the Tripartite Guidelines necessary, and why now? The Tripartite Committee on the Extension of Retirement Age had accepted the guidelines on the payment on retrenchment benefits since 1997. NWC endorsed it.
When the retirement age was raised to 62, employees get 2 more years of work, 2 more years of earnings. The employers’ obligations regarding retrenchment benefits ended at the age of 60. Therefore they should not be obligated to pay the same type of retrenchment benefits when they agree to continue employing workers beyond 60. The representatives of the unions on the Tripartite Committee considered this fair.
At the same time, the issue of what is a fair amount of retrenchment benefits was surfaced for discussion. The purpose of retrenchment benefits was examined. Principally it was to tide the worker over the period of unemployment, before he finds a new job. Statistics show that most find new jobs within a few months. The cap of 25 years to be used for calculating retrenchment benefits was therefore deemed fair. This cap compares favourably with the benefits that are provided in welfare states.
The re-alignment of retrenchment benefits in the public sector should have been carried out in tandem in 1999 when the retirement age was extended to 62. So the alignment has been late by 5 years. Now that it has been done, what can unions do to help workers affected by the change in payout? The best way is to focus on helping them re-train, find a new job and secure some form of medical coverage to tide them over.
We are living in a competitive world. We need to embrace changes like a captain of ship. He has to change tack when the wind changes, otherwise he may end up on the rocks. We've got to pull together, alter the sails, steer the ship, navigate and chart the course to our destination.
Thank you.
