Speech Mr Lim Swee Say National Trades Union Congress Secretary-General at the Labour Movement Charity Dinner 2008 held at The Ritz Carlton, Millenia Singapore
In my National Day Message, I highlighted two concerns.
First, the growth of the global economy could slow from 4.9% last year to 3.5% or less this year, lower than the growth forecast of 4.1% by the IMF at that time.
Second, the world may be heading for the worst of both worlds – low growth combined with high inflation; and even stagflation for some countries.
Two months have passed. Today, I am afraid both these concerns could turn out to be true. Let us look at what has changed in the last two months. The Economist keeps track of the performance and forecast of 56 economies on its website - “Economist.com”.
Out of the 56 economies, 26 have revised downwards their GDP growth forecast for 2008. The list includes Britain, France and Germany from Europe; Denmark, Sweden, Norway and Finland from Scandinavia; Japan, Singapore and South Korea from Asia. At the same time, 34 economies had revised upwards their inflation forecast, with 23 of them revising both – lower GDP growth AND higher inflation rate.
Some of them are edging closer to the threshold of stagflation. Italy – 0.2% growth with 3.5% inflation; Denmark – 0.8% growth with 3.5% inflation; Ireland - -0.5% growth with 4% inflation; New Zealand – 0.7% growth with 4.1% inflation. Another 19 countries now have inflation-GDP growth ratio of more than 2:1.
The global picture today is not looking good. And the worse is not over yet.
The financial crisis in USA has dimmed the outlook of the global economy. There is fear that USA and some European economies could go into recession soon, if not already realised. Just yesterday, the IMF revised its growth forecast for the global economy, down from 4.1% to 3.9%.
Indeed, the world we are in is now going through a nervous time caused by the “3 Cs” factors. Namely:
The loss of confidence in the financial markets; the tightening of credit thereby choking business growth and expansion,and the drop in consumptionthereby weakening the export markets.
As an open economy, we are already affected. We are one of the 23 economies listed on Economist.com with downward revision of GDP growth AND upward revision of inflation rate. And we can expect to be affected by the global downturn for a few more quarters.
Going by past experience, I will not rule out the possibility that our economy may grow slower than the global economy in 2008, as was the case in the slowdown years of 1985, 1998, 2001 and 2003.
However, the silver lining this time round is that we are much better prepared to weather the storm.
First, our job market is still active. Several major projects are coming into operation in the next 1-2 years. Some industries and businesses still face a shortage of workers.
Second, the level of retrenchment has stayed at a manageable level, at least for now. Even though overtime has come down, we are encouraged that companies are re-training and re-deploying workers instead of releasing them at the first sign of business slowdown. It shows that our economic foundation is still strong, and there is confidence in our financial systems and our real economy.
Third, our efforts in recent years to minimize structural unemployment have not gone to waste. The various measures needed to reduce the mismatch between jobs and job seekers are now firmly in place.
On the supply of jobs, we now have an employment engine that not only creates new jobs, but also re-creates old jobs.
On the supply of skills, we now have an employability engine that upgrades the hard skills and soft skills of our workers – from employability camps for the long term unemployable,to employability skills systems for the less employable, job re-design for the low wage workers, flexi-work for the back-to-work women, re-employment for the mature workers, and professional conversion for the PMETs.
Because we have not been sleeping in the past three years when the global economy was growing strong, we are now in a much better position than most other economies in coping with the challenges of a slowing global economy and rising unemployment.
What we need to do now as a labour movement, together with our tripartite partners, is to rally the ground to act in unison on three fronts.
First, tighten our belts and make good use of every dollar. Cost of living is up, and bonuses for this financial year may be down compared to last year. So better to spend wisely.
Second, tighten our shoelaces and run faster to save jobs. A slowing global economy will affect every country, but not to the same extent. We must do better than our competition - cut waste and improve productivity to reduce cost, be more flexible and more adaptable. We must work together, do our best to help our companies and businesses to survive and upgrade during the current downturn, so that we are ready to grow again when the global economy is back on its two feet.
Third, hold our hands tightly together and support each other. Some of our workers and union members will be affected much more than others by the global slowdown. As a caring labour movement, we are committed to do more to help.
We have already stepped up our Care & Share efforts.
Last year, we supported our lower wage workers with $7m worth of direct financial support. This is on top of the $71m worth of discounts, rebates and social assistance provided by our network of social enterprises.
This year, we will increase our direct financial support for our members quite significantly, from $7m last year to $13.1m this year. This is an increase of more than 80%.
To help our union members stretch their hard earn dollars at a time of high inflation, we launched the $4m U-stretch vouchers in May this year offering discount of 5% to 20% at participating Cooperatives.
And now, in response to the recent increase in electricity charges and public transport fares, we will increase the total value of U-stretch vouchers by $1m, up from $4m to $5m. About half of these $5m worth of U-stretch vouchers will be used as utility vouchers and public transport vouchers.
Also, to help more parents cope with their year-end spending for their children's education, we will double the Back to School funding from $2.5m last year to $5m this year. We will expand the scope to assist 40,000 students, up from 25,000 last year.
We are able to quickly step up our support and assistance to our workers and members at a time of high inflation and slower economic growth because we have strong alignment within the labour movement; as well as strong support from our social enterprises especially NTUC FairPrice with its special donation of $3.5m to mark its 35th anniversary.
Our special thanks to SLF too, for increasing its funding support for NTUC Care & Share efforts from $4.3m last year to $5.7m this year, an increase of 30%.
And not forgetting our generous friends and partners, many of whom are present tonight.
With your strong support, we manage to raise $1,300,100 from the Charity Dinner tonight and Charity Golf held a couple of months ago. This is more than 20% higher than the $1m we raised last year.
On behalf of the labour movement, I thank you all.
During good times, we often remind ourselves that we must not be complacent because good times never last forever. Likewise, as we go through this challenging period, there is no need to be disheartened because bad times never last forever too.
Working in unity with our tripartite partners, we will take on the challenges ahead of us in our stride - Tighten our belt; Tighten our shoelaces; and hold our hands Tightly together.
The global slowdown will not go away quickly.
According to the growth forecast by IMF, the global growth will slow from 3.9% this year to 3% next year, which will be the slowest pace in seven years. This is not unexpected as it will take time for the global economy to regain the 3Cs - confidence, credit and consumption. Until then, we will help our workers under the 4M framework we have worked hard to establish in the past few years.
For those who are unemployed, we will help them Move Intonew jobs.
For those who become under-employed, we will help them upgrade and Move Upto higher value jobs.
For those who are retrenched, we will help them Move Acrossto other companies in the same industry.
For those whose industry is downsizing, we will help them Move Overto other new job sectors.
We believe this 4M approach in Singapore is the best way for us to counter the 3C crisis the world faces today.
In closing, we have overcome one crisis after another as tripartite partners. This is not the first time. And it won’t be the last time. We have succeeded in overcoming many challenges in the past, because we know and we accept that without short term pain, there will be no long term gain.
It is the same this time round. Getting through the current challenging period will not be painless. However, with a whole lot of determination and unity, I am confident we will emerge stronger to secure long term gains for our workers, our businesses and our economy. Thank you and have a most pleasant evening.
