Ms Kay Kuok, President, Singapore Hotel Association
Mr Abdul Subhan, President, FDAWU
Mr Tan Hock Soon, GS, FDAWU
Distinguished guests,
Ladies and gentlemen.
Good afternoon.
I thank the organizers of this Seminar for inviting me and for giving me this opportunity to share my views with you.
In conjunction with today’s seminar, 42 model employees will receive the Employee of the Year Award. All of them exemplified excellence in their work and rendered care and services beyond the normal call of duty. In other words, they have truly demonstrated the meaning and impact of productivity. My heartiest congratulations to all our winners.
This year’s seminar is both significant and timely.
Firstly, it has been 25 years since its inception. Now that is proof of a long-term commitment to an important subject.
Secondly, this seminar comes a day after the release of this year’s NWC guidelines, and this year’s guidelines have much to say about productivity and its relationship to sustainable wages, and about how more must be done to enable workers to work longer, and companies to tap the value of older workers.
What I intend to do this afternoon is to paint a picture of how the key pieces hang together, and then to challenge us to use this platform to pursue even more progress.
I would like to start with some statistics to give us a common backdrop to work from.
According to the data given to me, Singapore continues to see an increase in tourism activities over the past two years. Visitor arrivals in 2005 increased 9% from the year before, from $8.9 million to 9.7 million. Tourism receipts increased by 14%, from $10.8 billion in 2005 to $12.4 billion in 2006. The outlook for the tourism sector is very healthy for the coming few years. This will generate increased demand for a whole range of goods and services, and the hotel sector is poised to tap into these opportunities for its share of business.
So on the demand side of things, you have a golden window of opportunity to make improvements.
Next, some information on aging. I am sure that all of us have heard many times now how fast Singapore’s local population and workforce are aging, both because people are living longer, and because they are having fewer babies.
From the company and HR perspective, this also means that the percentage of younger persons in the local workforce will decline, if you don’t count in foreign sources. This also means that for jobs where experience counts, there will be a loss of capability as larger numbers of older workers leave employment. So from both the quantity and quality standpoint, it is important for companies and HR professionals to seriously think about how to optimize their workforce composition, and take concrete steps to make the necessary adjustments. Of course, from the workers’ perspective, the hope is that more can work longer in a sustainable way. Let us not wait and do nothing until the storm hits, and then just shrug our shoulders and shirk our responsibilities. And when I say “us” here, I mean employers, workers, unions, government – all parties. If nothing else, it is for self-interest as each one of us, if we live long enough, will be an older worker at some point.
Having now established that we have a window of opportunity before us, and that it is both our responsibility and in our interest to forge viable pathways forward in the employment and deployment of older workers, I turn to productivity – which I believe will be at the heart of all successful efforts in this area.
Why do I say that? Because to me, success is defined by the willingness of employers to recruit and retain older workers on a sustained basis, and by the willingness of older workers to take on those jobs on a sustained basis. This outcome cannot be achieved by arguing or by some administrative decision. The only way this can happen and be sustained in a free market is when it is Value-for-money for both employers and the older workers. Productivity is just another way of saying Value-for-money.
You see, labour productivity is technically the value-add per unit of manpower. Unit labour cost is the price per unit of manpower. So if the price runs ahead faster than the value-add, then the safety margin will be reduced and eventually wiped out. Worse still, if your competitors are improving their value to cost equation while yours is getting worse, then competitiveness will suffer, business becomes harder to get, paying well becomes more difficult, and some may even have to cut heads.
The NWC hates to see this happen to workers and to companies. This is why it keeps on reminding everyone that for wage increases to be sustainable, productivity must run faster than wage growth. And this is also why we must understand and take productivity enhancement very seriously, so that we can grow the pie, and have more to share, for both workers and shareholders.
Let us now look at what are some breakthroughs that we have to jointly achieve in the area of productivity for older workers, so that we can secure that win-win outcome I talked about a moment ago.
I will keep my list short – 3 things. Seniority-based system and why that kills employability of older workers. Improving Value of the Job is as important as containing cost for productivity improvement, and stepping up efforts to help workers stay healthy.
I believe that the biggest threat to the employment of older workers is the seniority-based wage system. It is quite straightforward. If for the same job and for creating the same value, someone costs more just because he has worked in it for more years, then he will be more at risk of retrenchment.
So let us continue to work on the min-max salary ratios and more resolutely toward arrangements that are age-neutral, seniority-neutral, rate-for-the-job, performance-based and competency-based.
Then someone will surely think – if that is the case, then my pay can never really go up, and my family will have a hard time hoping for a better standard of living. Right? Wrong!
First, with rate-for-the-job, companies will become more competitive, and the pie will be helped to grow. If the wage system is performance-based, workers who perform well will be rewarded according to their value, and can earn more. Whether this comes through wage increases, variable bonuses or profit-sharing is for different companies and their union to work it out. The point is this – if it is done right, and the sharing is transparent and fair, the company will gain a competitive edge over its rivals, and its workers stand to earn more from the growing pie, and will be motivated to align their thinking and efforts as such.
Second, productivity is value-add divided by cost. So it is equally important to make sure that value-add grows as fast as possible. In this area, there are an infinite number of ways to increase the value of a job. Examples include:
more efficient organizing of the work process,
creating a variety of job types to give flexibility to both company and workers to tap value-for-money opportunities,
training and enabling workers to use more efficient and user-friendly tools and technology,
improving customer acquisition and retention through excellent quality of service that taps the skills, positive attitudes and experience of workers,
matching the right person to the right job to fully tap his strengths,
enlarging the scope of work, and so on.
The challenge is for management, working with the union and workers, to accelerate value-creation and innovation to push up productivity.
Finally, a word about workforce health – both physical and emotional health. I speak on this not to do justice to my other portfolio, but because it is important. An aging population will see more and more workers entering middle age and begin to experience difficulties with health. For example, more people may suffer from chronic diseases such as diabetes, hypertension, high cholesterol and stroke. In an increasingly face-paced society and economy, stress and pressure will also mount.
I am sure that no company will want a sickly, stressed out workforce. Such a workforce will do the company harm and no good.
At the same time, I am also very sure that no worker will want poor health because he knows that that would cut his productivity and employability faster than anything else. He knows that if he remains sickly, his prospects and his employment will be affected. And even if he has the pay, he would not have the health to enjoy life.
On the other hand, a healthy, well-adjusted, motivated workforce, like a well-trained, well-equipped and disciplined army, will put the chills into the spine of any competitor. And each worker in that workforce also carries himself with full confidence, vigour and zest. That is productivity for life.
So I hope that as we continue this journey together toward higher productivity, we can focus on these 3 areas and score concrete successes. That would be a truly productive use of our time.
Thank you.
