Severe Acute Respiratory Syndrome, SARS. Since the outbreak of SARS, I have started my speeches at many of the Delegate's Conferences speaking about the problems brought about by SARS. I am glad that there is something positive to include in the speech today. We know that Singapore has been lifted from the World Health Organisation's list of SARS affected countries. In fact, Singapore was given the clear sign a day earlier than expected. This is good news for us. It shows that Singapore is a place that can get things done. We should give ourselves a pat on the shoulder.
We have won one of the battles. However, the war with SARS is by no means over. We still have to remain vigilant. Toronto was lifted from the list of affected countries before Singapore. Just as the Canadians thought that life was to back to normal, another wave of outbreak struck the city of Toronto. I hope the Canadians would be able to fight this second wave of outbreak and contain it quickly. This is not a race. There is no winner in who can get their names lifted out of the list first. As long as there are still hotspots in the world, the risks of the virus sneaking back into our borders remain. We still need to be careful. I believe that good personal hygiene and a strong sense of social responsibility are what we need, if we are to be able to contain SARS in the long term. Every Singaporean must take personal hygiene seriously. We should continue to take our temperature twice daily. Everyone must be committed to being socially responsible.
Forces of Globalisation
The first cases of the disease were detected in Guangzhou, China. Within a short period of time, it spread rapidly to Hong Kong, Singapore, Toronto and Vietnam. More countries were affected after that. The consequences are felt all over the world. Why was the virus able to spread so quickly around the world? There are a number of reasons. The characteristics of the virus have a role to play. Another important reason is the intensity of air travel. People are moving around the world much more often than they used to. This is an effect of globalisation.
The topic of globalisation is not a new one. The SARS outbreak has reminded us that globalisation is not something that concerns the only the governments and companies. The SARS outbreak has shown us that the forces of globalisation are affecting everyone in more than one way. It is causing shifts in the way we work, the way we live and the way we compete.
Globalization has resulted in a greater openness of markets and a rapid flow of finance, technology, information and labour. Few societies can insulate themselves from the global commercial markets nowadays, although not a few desire to. Rapid movements of goods, and interactions of finance and information, have created porous borders, limiting nation states' ability to determine the fate of their economies and that of their peoples. When there is an outbreak of infectious disease in one corner of the world, there is a good chance that the consequences would reach the other end of the world. SARS is one very good example.
The world economies are getting increasingly twined together. Within a period of ten years from 1990 to 2000, the ratio of Foreign Direct Investment to GDP in the developing countries went up from 7% to 21%. This is a three fold increase. This means that foreign investments are growing much faster than the growth of GDP in developing countries. [In case you are wondering what the figures mean, let me explain. In 1990, for about every $14 or so you find in a developing country, $13 is what they themselves produce in goods and services, and $1 is from incoming foreign investment. By 2000, for every $14, $3 is from incoming foreign investments.] These investments produce goods that are traded. Total world trade is estimated to have grown by 67% within the past ten years from 1992 to 2002.
Challenges for the Unions
Globalization and the rise in international trade and investments are fundamentally altering the employment relationship and presents unions with challenges in at least two areas. First, an increase in job volatility. We have to change jobs more frequently. Second, an increase in demand for deeper and broader social safety nets because we are unemployed more often.
First, globalisation means companies have a higher ability to substitute workers. If the workers in one country can give higher output for a lower or even the same cost than another country, companies would consider moving their operations out. Similarly, there is also a greater ease to shift capital out of the country. When it becomes cheaper to make disk drives in China or Indonesia, companies move out of Singapore to these countries. This increases the volatility of jobs for workers. Workers are more likely to face job loss or a fall in wages as a result.
Second, while capital has become more mobile, labour especially low-wage labour, has not. On the other hand, those who have the skills required by the global economy will be able to move to where their skills are required. They would be able to get a premium for the skills they have. When this happens, the income gap widens among different skill levels. Some economists estimated that trade contributed to between 10 and 20 per cent of the wage differential between high school dropouts and other workers in the 1980s. Such insecurity leads to greater demand for both broadening and deepening social safety nets.
Many trade unionists around the world see only red flags and threats for the workers when they talk about globalisation. They start to advocate protectionism of jobs, better welfare schemes and even a minimum wage.
We must be mindful of the lessons from history. Unions elsewhere often saw their roles eroded and marginalized. In adopting a narrow view of what made up workers' interests, union leaders sometimes missed the woods for the trees. They put up a militant front and pressed home a tactical advantage, but only to lose the larger battle. John L. Lewis led his coal-miners' union, the United Mine Workers of America into a coal-miners' strike in 1943, rebelling against the wage freeze imposed during World War II. He refused to heed pleas by President Roosevelt, whom he had supported throughout the 1930s, to heed the national interest and call off the strike. "The President of the United States is paid to look after the national interest. I am paid to look after the interests of the miners." What Lewis had chosen to ignore was that the war economy was fueled by coal and the country could not afford to lose even one day of production. Lewis won the strike. But public opinion turned against him and the union. The strike marked the beginning of the decline of unionism in the United States.
To fight globalisation is futile. It will be like trying to stand firm in front of a main water pipe. Once the tap is turned on, the ferocious jet of water will knock you off your feet in no time. We will stand to lose more than we can gain if we bury our heads and ignore the realities of globalisation. In Singapore, our approach is not to fight globalization, but to ride its waves. The domestic market of Singapore is small. We need to tap into the global markets to grow the pie. When the pie becomes bigger, we will all be able to enjoy a bigger piece of it. Our workers will be able to enjoy a higher standard or living.
Response by the Unions
What should we do? Do we want to stand in the history as the ones who helped our workers secure a better future and or as the ones who crippled our workers ability to tap into the opportunities of the global economy? How should our unions respond?
First, we should not put up layers and layers of barrier to try to protect employment. This will only make us inflexible and our competitiveness will be weakened. The reality is this. Job will become volatile, union or no union. Companies will need to restructure to compete.
Instead, we will promote employability. We will do we can to make sure that our workers are able to get on to the next job easily if they lose their current one. This is why we have been pushing for skills upgrading and for re-training. The Skills Redevelopment Programme was set up to achieve this aim. The new statutory board for Continuing Education and Training will further strengthen our efforts towards making our workers more employable. Job matching is another programme we run to help workers get back into the job market quickly.
We want to make the wage structure competitive so that our workers are able to remain employable in their current jobs. A wage structure that is based strictly on seniority is not sustainable. When times are good, it is not much of a problem. However, the competition will intensify. If the wage structure is out of whack with productivity and performance of the company, the company will become uncompetitive. Jobs stand to be lost. We need a more flexible wage structure. That is why we have been pushing for competitive base-up wage structures and a stronger component of variable component. These are to improve the ability of workers to keep their jobs.
Second, we will push for a deeper social safety net, not by demanding more benefits that simply raise the cost burden of companies and government, but by advocating for restructuring of benefits that help workers cope with job volatility.
New safety nets have to be put in place to deal with the very real pressures that globalization brings to workers. There is only so much that governments can do, especially as they face budget constraints as their ability to raise taxes becomes more limited. If taxes become too high, no one would to do business in Singapore and there will be no incentive to work hard. Individuals, families and the community must do their part to save and set aside earnings for periods of unemployment that will become inevitable. Rather than thinking that more money will solve the problem, we should be strategic and focus efforts on what will offer practical help.
The key lies in creating a support infrastructure that smoothes workers' transition between jobs. As far as social benefits go, this means making health and retirement benefits portable, rather than tied to the employer. We have been pushing for portable medical benefits towards achieving this aim. It also means establishing saving scheme for those retrenched or out of work. This will also help tide workers over periods of unemployment. The savings scheme for taxi drivers launched recently is an encouraging move towards the correct direction.
Conclude
The measures and programmes that I have mentioned here are not new to you. They should not be. However, I hope you will be able to see that the programmes are put in place to help our workers respond to the challenges ahead of them. They are there to help workers cope with globalisation and not become victims of it. We have achieved varying degrees of progress in the programmes. I think we can move a bit faster, especially in improving the competitiveness of our wage structure. If we had moved a bit faster on restructuring our wages, we might have been able to deal with the impact of SARS more effectively.
As union leaders, we have an important role to play in steering the ship forward. It is always easy to be a popular leader pandering to the wants of those we serve, although we know that it is not in the long term interest of our workers. If we do so, we would have failed those who had trusted us to lead them! The challenge for you is to recognise the danger signs and act in a decisive manner to steer the ship away from the danger.
Let me wish you success in your Delegates' Conference and a day of fruitful discussions!
Thank you.
