First, let me wish everyone a Happy and Prosperous New Year!
We have had a good year in 2004. All sectors had recovered, except the construction industry that is still digesting the excesses of the early 1990s in the residential property market. There was strong job creation, and the unemployment rate has fallen to 3.7%.
The shipping sector had a very good year. PSA reported record volumes of cargo handled, and PSA employees are getting higher bonuses. Likewise NOL has reported record profits, a sharp turn-around from just a few years ago when some feared that it might even go under! Someone told me that NOL has achieved a rare feat of making more profits than SIA! According to the newspapers today, shareholders are going to get a very handsome dividend! I assume that employees of NOL would be getting better bonuses as well. What has happened in PSA and NOL reflects what is happening in most companies in Singapore.
That is why the mood has been better. Consumer confidence has returned. Retail sales for the recent festive holidays have been very good. Those who went to Chinatown told me that it was jammed packed with people!
This year we expect the growth momentum to continue. However against the strong growth of last year, the project 3% to 5% growth this year looks low. I met some friends from Europe a couple of weeks ago. They said that if they had our kind of unemployment and growth rate, they would be very happy!
One senior management executive told me over the holidays that the measures that we had taken to cut costs have been very effective. Land costs have come down. Wage costs have come down. In this second area, the cut in employers’ contribution to CPF that we carried out just over a year ago, combined with wage restructuring, has made Singapore more competitive. Our workers should be pleased that the tough policies that they accepted have worked.
Recently, when we briefed our union leaders on the work plans for this year, we informed them that Singapore has moved from a period of high growth to a period of slower growth. This has been the experience of developed countries, and Singapore is unlikely to be much different. Therefore, if we can grow by 3% to 5% each year, it will be a good performance.
So long as we watch our competitiveness carefully, and take the appropriate measures, there is no reason why we cannot grow at that rate. Of course, there are uncertainties that can throw up big problems. The political temperature in North-east Asia, for example, is rising. But this may benefit ASEAN, as investors would not want to place all their eggs there, and ASEAN is a good alternative. New governments have been elected in Malaysia, Indonesia and Thailand, and investors look at the developments favourably. Therefore our region should grow, and that means more business opportunities for us as well.
Notwithstanding this, there is work to be done in some of our sectors to make them more competitive. One sector is civil aviation. Low-cost carriers have arrived with a bang. They exert very strong pressure on the established full service network carriers like SIA. These carriers will need to cut costs. The irony is that the emergence of low-cost carriers has led to a short-term crew shortage. So the tendency is for wages to rise. That would appear to be a happy prospect for unionists! However, if the network carriers are to remain aloft in the long term, then it would be prudent not to push up fixed wages, but to get more in variable wages now. Flight crew in Singapore must keep a keen eye on the wage costs of competing airlines in the region. Management and staff should also be strongly focused on maximizing revenue, through delivering better service, and being more efficient in using hardware.
Then there are those who lost their jobs in the downturn, who have not been able to find new jobs. NTUC and the Ministry of Manpower are working closely to place them in other jobs. This will be done through our programme of job redesign – raising the productivity of the workers so that they can be paid more. We are glad that some employers have been persuaded to join us in this effort, and we intend to bring more in as partners. With close co-operation, I am hopeful that we can bring the unemployment rate down. It is closer to 4% than 3%. My wish is that by year end it will be closer to 3%.
Finally, the other area that requires close tripartite co-operation is to get more of our older people back at work. They will benefit from more years of earnings to support a better quality of life in their senior years.
SMOU General Secretary talks of his 10 dreams in his union newsletter. I have fewer dreams, but I hope they will be achieved soon.
Once again, a Happy and Prosperous New Year!
