Your Excellency Mr Allan Collins, High Commissioner of British High Commission
Participants of seminar, distinguished guests,
Ladies and gentlemen,
Good morning!
Introduction
First I must commend the High Commissioner for organizing this seminar. It is timely because the reliance on the free market, the lowering of international barriers to trade, and globalization have led to excesses, causing hardship and severe losses to individuals throughout the world. In these two days, many examples have been mentioned by both leading speakers as well as participants. The call for corporate social responsibility by NGOs is a reaction to such excesses.
When Mr. Allan Collins invited me to speak at this seminar, I gladly accepted as this is a topic close to my heart, but little did I realize that I was to speak after all the other distinguished experts! Indeed a challenge! But I accept it as this is a golden opportunity for me to share with you the government and also the labour movement’s perspectives on Corporate Social Responsibility (CSR). CSR is certainly relevant to the labour movement as well as the government as both parties play an important role in shaping and defining the on-going debate about a more ethical and sustainable form of capitalism that is tempered with social missions in mind. While the concept of CSR appears to be new to Singapore, we have nevertheless adopted some of its key features. We can build on them going forward.
Business, Labour, Society and Ethics
There is no doubt that businesses are the primary sources of wealth creation, innovation and employment. However, we must bear in mind that the framework of “ethical capitalism” is built upon the strong belief that businesses exist to contribute to the development of the communities in which they operate. They have social responsibilities to fulfill. Businesses serve not only shareholders, but also stakeholders. Stakeholders include: employees, customers, business partners and the community. This concept of business is not new. The “Qaker companies” operate on a set of values, and have not been less successful. So also Matsushita. When I joined the NTUC, I read up, to find what should be the balance between employer and employee, and came across the view of the founder, Konnosuke Matsushita. He said his company exist not to make money for shareholders, but for the benefit of stakeholders – shareholders, employees, suppliers, customers and the community.
By creating wealth and generating profits, businesses help to bring the economy and the society as a whole to greater heights. Workers will in turn get better wages and bonuses. Both workers and businesses, in return, pay more taxes which benefit the society. As such, the relationship among businesses, workers and the society are deeply intertwined and interdependent. Although businesses serve society by making profits, we must remember that profit is the means, not the end.
NTUC Co-operatives
Let me first touch upon the unions and NTUC Cooperatives focus on CSR. [What is NTUC? It is the National Trades Union Congress. It is not only a trade union movement, but it is also the key player in the co-operative movement in Singapore.] NTUC Cooperatives feature CSR highly in their agenda on top of their drive to make profits. In terms of CSR, I would like to highlight two main areas in which our Cooperatives contribute. One is that NTUC Cooperatives play an important role in moderating price increases and helping workers stretch their hard-earned dollar. NTUC Cooperatives operate in sectors such as insurance, housing, supermarkets, childcare, health and dental care. The NTUC co-operatives have made a real difference in improving the lives of workers by ensuring that workers get the best value for their money and getting real increase in purchasing power and not just nominal increases.
For example, NTUC Fairprice has as its operating mission to keep the lowest or one of the lowest prices on 400 basic food and household items and to step in to moderate prices and supply during abnormal situations. It has been described as a supermarket operator with a heart. For example, Fairprice intervened to moderate vegetable prices and ensure adequate supplies during the SARS period in Mar 03 when the wholesale market was closed, keeping the old prices when most would have taken the opportunity to raise them; NTUC Choice Homes accepts lower margins on condominium projects so that home buyers get a lower price and Choice Homes also plows back some of its profits into the sinking fund for the condominium projects. NTUC Choice Homes was started at the time when housing prices were fast rising, and Singaporeans, especially the younger ones, saw their dreams of owning private property slip beyond their reach. Now when prices are down, the role seems irrelevant, but who knows when it may have to be called upon to play a moderating role again? NTUC Income started off providing insurance for rank and file workers when no insurance companies wanted to insure. Income continues to provide one of the lowest premium products in the market. These situations are similar across the other NTUC Cooperatives such as Healthcare, Childcare and Eldercare. Today we have many childcare centres, but NTUC Childcare is the pioneer, subsidizing the cost of operations until the market of childcare took root, and the industry took off. Today it remains a significant player, setting benchmarks in price and service.
The second significant area of contribution to corporate social responsibility by NTUC Cooperatives is the direct expenditures of NTUC Cooperatives to the community. For example, by Aug 2003, the NTUC co-operatives have given out a total of S$78 million to soften the impact of the economic crisis and GST increase on workers. Here I am referring to the period since the Asian financial crisis.
From Jan 2004, the NTUC Co-operatives have put together a $20.8 million relief package to cushion the impact of the increase in the Goods and Services Tax (GST). The package covers the daily necessities for most households, from the supermarket to food centres, long-term medication for ailments such as diabetes and heart conditions, to general insurance products and services, and even simple recreational activities such as chalets at Downtown East. There is also additional help for the lower-income families dependent on childcare services. The value of the co-operatives measures lie not just in the amount of GST absorbed – it has influenced the pricing decisions of for-profit enterprises.
The NTUC cooperatives remain committed to their social objectives, maximizing stakeholders’ value and to help workers build a better life for themselves and their families. The nine NTUC co-operatives have pledged their commitment to constantly assess the economic situation to see if any assistance, whether in terms of financial, social and community programmes, needs to be implemented to help workers tide over tough times. Corporate social responsibility is embedded into the mission of all of NTUC Cooperatives.
NTUC co-operatives have done their work quietly most of the time. However, to ensure that they remain true to their mission, we have been developing a social report card that they should publish annually. They will know how they have performed, and the public will also judge them on their performance, and push them to do better.
In the era of the free-market, I firmly believe that co-operatives can act as a counter-weight to the for-profit enterprises to ensure that stakeholder interests are balanced.
In the New Year 1998, an official of the ILO, Kari Tappiola, passed through the region. He knew how unionists in the US and Europe felt about globalization. He wanted to know how Asians view it. On 2 January 1998 under the auspices of the Finnish Ambassador we had a lively discussion of how to deal with the excesses of the free market and globalization. I told him how our co-operatives provide that balance, operating in the same environment, not to maximize profits, but to deliver the best value to customers, earning a small profit to keep going. I told him that we did not invent this tool – we learnt it from the Nordic countries and Europe. You remember that co-operatives played an important role in your communities before, though they may not be so significant now. I was happy that subsequently the ILO discussed the role of co-operatives at its annual International Labour conference in Geneva.
Unions as social partner
The unions also have a role to play in Corporate Social Responsibility. According to the Canadian Business for Social Responsibility in Vancouver, 10 steps were recommended for social responsibility. I would cite two of them which unions in Singapore have played a significant role. One is to create opportunities for employee ownership and profit sharing. The second is to institute open performance management practices. Singapore’s tripartite guidelines on wage restructuring specifically tackles these two aspects. And our unions have been deeply involved in trying to push for wage restructuring. Making wages flexible via increasing the variable components, not only creates profit sharing to the workers, but also motivates workers to work harder to benefit the company and ultimately the shareholders too. And these profit sharing targets are linked to specific performance triggers that promote open performance practices. In a downturn, the ability of the company to trim its wage costs enables the company to keep its employees rather than to retrench them.
In addition to wage restructuring, NTUC and the unions have also pushed for enhancing our social safety nets. In an era when there is constant change, and when even a civil service job is not permanent, employees will face unemployment. We are not adequately geared to meet their needs. There are systems in place, but not adequate. We have to improve the safety nets. One area is how they can meet their medical expenses, and we want to develop portable medical benefits. Another is how do they support their families and themselves? We do not have unemployment insurance or unemployment benefits. We rely on retrenchment benefits, a wholly unsatisfactory system. There are companies that pay good retrenchment benefits, but there are companies which retrench when there is no money left. And we must not forget that the best welfare we can provide for a worker is a job. That means a lot of things, creating the environment for investments, but also helping workers acquire the skills needed for new jobs through training and retraining.
All these efforts are in line with the framework of Corporate Social Responsibility as the labour movement aims to build a better life for workers through helping companies stay viable amidst the volatile business environment. Only then, businesses can continue to generate wealth and provide employment to workers, and allowing both to contribute to the society.
Government
There is something that happens very often in Singapore. When there is an issue, people are quick to ask: What is Government doing about it.
The government has a significant role to promote CSR. In this, the Singapore government has implemented many significant policies and plans to nudge corporates in areas of CSR. It would not be possible to list them all but let me highlight some notable ones using the same framework as recommended by the Canadian Business for Social Responsibility. Allow me to re-iterate the other 7 steps amongst the 10 steps recommended, 2 of which I have mentioned earlier. The other 7 of them include; Developing an employee volunteer program; Practice the 3Rs of Reduce, Reuse and Recycle; Donate a percentage of profits to community; Develop a ethical purchasing policy; Work in partnership with community groups to achieve mutual goals; finally Audit social and environmental performance.
Employee Volunteer Program & Working in Partnership with Community Groups
I am sad that the Ministry of Community Development and Sports had to take the lead in encouraging volunteerism. It should have come from the people. The Ministry of Community Development & Sports has embarked on nationwide drive to enlist and encourage people to volunteer their time to assist those less unfortunate. In fact, the National Volunteer & Philanthropy Centre (NVPC) was created in 1999 as the national coordinating body to promote volunteerism and philanthropy in Singapore, working in partnership with the public and private sectors.
As of 2002, Singapore's volunteer participation rate, in terms of current volunteers who had volunteered over the past 12 months, has increased 60% from 9.3% in 2000 to 14.9%. This is indeed heartening but it also means there is a lot more room to grow. I believe corporates can support their employees to volunteer for community programs to develop healthy and meaningful interests outside of work. I would put to you that a well rounded, personally satisfied employee with a diverse range of interests will be able to offer a more innovative perspective at work, provide alternative viewpoints and probably better motivated.
Reduce, Reuse and Recycle
On recycling, again it is unfortunate that it had to be the Government taking the lead. There have been views expressed to the contrary at this seminar, that Government has not protected the environment.
If there is anything that distinguishes Singapore in its industrialization drive, it is the importance it has given to protection of the environment. Within the space of a small country, we have to live, work and play. Polluting industries will certainly lower the quality of life. For this reason, high anti-pollution standards have been set right from the beginning of our industrialization drive. If anything there are complaints that these high standards jack up the cost of doing business.
I must also mention that SPRING Singapore, previously known as the Productivity and Standards Board, had propagated the ISO14000 among industries. We promote the standard, not to add to business costs, but to help companies keep down costs.
The Ministry of Environment in 2002 launched the Singapore Green Plan 2012 and one of the specific programs focused on waste management. The key thrusts in the action program on waste management centered on reducing waste, recycling and developing a market for recycled products. This is critical for a small country like Singapore. Over the past 30 years of our industrial development, the amount of solid waste generated by our industries increased by six times. While incineration helps to supplement landfill, it is still insufficient as incineration ash also takes up landfill space. Hence recycling is critical. According to my colleague Mr. Lim Swee Say, Minister for the Environment, since the launch of the National Recycling Programme in 2001, the number of households in HDB estates and landed estates taking part in recycling has more than doubled. By mid 2004, we expect the participation rate to reach 50%. Similar efforts at recycling were directed at the industries. In the early 90’s, recycling accounted for about 40% of industrial waste. Today, the proportion of industrial waste recycled has gone up to 60%. With the strong support of the industry, the amount of industrial waste being recycled has increased for major waste streams. For example, recycling of food waste and used copper slag has increased by three-fold, horticultural waste by two-fold, and plastic waste by about 40%.
Donate a percentage of profits to community
I know that there is a view expressed at this seminar that corporate donations don’t count for corporate social responsibility. Maybe it is not at the core of CSR, but certainly it is the attitude that is important. For a long time, the Singapore Inland Revenue Authority of Singapore allowed single tax deductions for corporate contributions to charities. However, as of 1 Jan 2002, in recognition of the social role corporates play when making donations to charities, IRAS allowed double tax deductions. This I believe sent a strong signal that the government welcomes and would like to encourage corporates to also focus on social responsibility to the community in addition to their profit making objectives. More important than this tax measure, however, is the signal that was given by our Prime Minister, when some years ago, he proposed a voluntary “1/2 percent Club”. The concept is simple, let like-minded individuals or corporates get together in informal groups, and pledge among themselves to donate half per cent of their earnings to the community. Several such informal clubs exist. In the true spirit of giving, they seek no publicity for themselves.
Conclusion
Looking ahead, we would require innovative solutions, boldness in CEOs visions and wider perspectives from shareholders about capitalism. Corporate Social Responsibility does not mean that financial returns are sacrificed and that catering for social goals diverges from making profits. In fact, truly global companies that are there for the long haul realize that their long term existence is dependent on co-existing with the communities in which they operate. Hence, ensuring the sustainability of the community ensures the company’s long term survival and prosperity too. Lastly lest any of you are wondering what is the last step as recommended by the Canadian Business for Social Responsibility, in fact it is to be profitable! Not so different from what most stakeholders desire! Therefore, CSR is really good business sense and benefits all stakeholders involved.
Finally, the concept of CSR is really very simple – Do to others what you would others do to you. If you are an employer, do to your employees what you would like your employer to do to you. Do to your suppliers what you would the company whom you supply do to you. Sell to your customers products at the price and quality you yourself would expect as a customer. Do to the community what you, as one living in the community, would like corporates do for your community to make it a better place to live in.
