1. In the early 1980s, when the National Wages Council met, each of the tripartite partners – employers, unions and government – separately tabled their reports. The unions’ report consisted of how the settlements in the past year had been, and tended to paint an optimistic picture of the coming year. And if inflation was high, the unions argued for higher NWC wage increases. The employers’ report also covered the wage settlements in the past year, highlighted the high cost of doing business in Singapore, and argued for wage moderation. The Government report was the most authoritative, containing many facts and figures. The Chairman, Prof Lim Chong Yah, an economist, then led all parties through the discussions to arrive at a common understanding of what the balanced picture was. Then the bargaining began on what wage increase to recommend for the year. The recommendations were actual quantitative figures.
2. In 1985, I felt very uncomfortable. Employers were saying that the situation was bad. After the 3-year wage correction policy of 20% annual wage increases, the wage settlements had been very high in the years following what should have been the end of “wage correction” and a return to normal wage increases. Singapore had lost its competitiveness, the employers said. Armed with statistics provided by its agencies, Government maintained that Singapore was still competitive, and projected positive growth. I felt very uncomfortable because unionists on the ground had told me that the situation in the factories was very bad – a rise in shorter working hours and temporary lay-offs in the manufacturing sector. With the positive picture provided by Government, what were we unionists to do? The NWC negotiations concluded with a recommendation for wage increases. But soon after, what happened in the factories began to be captured in Government statistics – there is a time-lag. What I had heard from union leaders on the ground were real-time information; what the Government data showed was what happened perhaps up to 3 months ago. The situation was indeed bad. We fell into recession. Concurrently the Economic Review Committee had been working, and came to the conclusion that we had over-shot the wage correction policy, and made ourselves uncompetitive.
3. It was a deep recession. With mounting job losses as MNCs transferred work to lower cost plants elsewhere, how were we going to recover? The NTUC boldly asked all unions to forgo the NWC increase. It was easy enough to persuade union leaders from the manufacturing sector, but quite a different matter with the service sector and the public sector. However, the NTUC called on everyone to abide by the spirit of solidarity among all workers, and carried through the initiative.
4. Forgoing the NWC in 1985 was not enough in itself. It meant no further wage increase, but the wage cost was too high. Wage cost had to be cut. Some employers called for the CPF contributions to be cut. In the years of high wage growth, part of the wage increases were put into higher CPF contributions – to diffuse inflationary pressures, and to enable workers to save more for the future. To the employers, cutting CPF contributions was logical. To unionists, the CPF was something to be defended at all costs. Government was unwilling at first, but through cool rational deliberations, concluded that the CPF sacred cow had to be slaughtered. Employers’ contribution to CPF was to be cut from 25% to 10%. Government convinced NTUC leaders of the need for this drastic measure, and together both social partners persuaded the ground.
5. The recovery was quick. Investor confidence in Singapore soared. New investments come in, and unemployment swiftly fell.
6. When the economy recovered, the employers’ contribution to CPF was gradually restored, but up to 20% and not 25%. It was agreed that it was unwise to go beyond 20%.
7. While the NTUC leadership carried the ground with these difficult measures, not every union leader was convinced they were right. They had bad experiences with some employers. To them, the NTUC had become too “pro-employers” and “pro-Government”. And unfortunately there were bad employers. One would have thought that with what the unions did - forgoing wage increase and cutting wages - that all employers would readily accept unions as partners. But, no. One such employer, Hydril, had set up business in the off-shore oil exploration boom, pinching workers from competitors with high salaries. When the boom collapsed, the company suffered from its high costs. Instead of laying off workers by paying retrenchment benefits, it engaged a “union-buster” from the United States, and forced workers out for failure to meet unrealistic targets. The company refused to discuss with the union, and even refused to meet with the union at the then Ministry of Labour. The NTUC supported the union’s decision to go on strike – after one last attempt at the end of December 1985 to get the management to the negotiating table under the auspices of the Ministry of Labour was again rebuffed. On 2 January 1986 the union went on strike, and I joined the picket line for part of the time. The management quickly came to their senses, and agreed to talk, after 2 days.
8. The NTUC leaders’ ability to carry the ground depends on the trust union members have of them. It was necessary to demonstrate that the NTUC would support a union using the strike as a weapon of last resort. I am glad that we did not have to go on strike since 1986, although we came close to another strike a few years ago.
9. After the wage freeze and CPF cut in 1985/86, a tripartite committee was formed to review the seniority-based wage structure, to make it more flexible. The NWC would no longer issue quantitative guidelines. The principle recommendations of the tripartite committee included accepting the principle that wage increases should lag productivity growth. The seniority wage system should be revamped, to bring the seniority element down to a sensible level. A variable bonus was introduced so that wage costs could be adjusted according to the performance of the company. The annual wage package of the employee would be 80% fixed, and 20% variable.
10. How to get the recommendations implemented? Many workshops were organized. The NTUC organized workshops for union leaders while the SNEF did so for employers. There were some joint workshops as well.
11. One of the most chronic cases of distorted wage systems was in the banking sector. The negotiations on how to implement previous NWC wage increases led to a situation where those at the top of the salary scale or range were paid four times a fresh recruit. As the banking sector was protected, the banks did not run into losses to justify retrenchments. The banks, though, did retrench some workers through “restructuring”, but the key problem was not dealt with. It was not sustainable. The year after the tripartite recommendations on wage reform were published, four persons attended the June International Labour Conference in Geneva – Jeffery Wee of the Singapore Bank Employees’ Union, Tan Peng Boo of the Singapore National Employers’ Federation, Ong Yen Her of the Ministry of Labour, and I. After attending each day’s meetings of the Conference, we had nothing to do. The daylight hours were long, so we walked along the shores of Lake Geneva. We talked about how to restructure the wage system in the banking sector. We agreed that with such a chronic disparity between top of the scale and starting wage, it could not be done overnight. I recommended that it be done over 3 collective agreement negotiations i.e. over 6 or 7 years. Jeffery Wee then steadfastly worked on it, and I assumed that Tan Peng Boo briefed the bank management. And if anyone from the union or management should seek the opinion of the Ministry of Labour, Ong Yen Her knew what we had agreed upon during our walks in the evenings along the shores of Lake Geneva. After 3 renewals of the collective agreements, the ratio of 4 came down to about 2.5.
12. Ladies and Gentlemen, I relate these stories to explain how tripartism works in Singapore.
13. Firstly there is regular dialogue among the three social partners, in formal organizations like the National Wages Council, in statutory bodies, and in ad-hoc committees dealing with specific issues. The regular interaction builds relationships and trust.
14. Secondly, the union leadership must maintain the trust of the members. When difficult measures had to be adopted, workers must be assured that there is fair play. So, when a company does well, workers should get their fair share.
15. Thirdly, there must be trust and mutual respect among the tripartite partners. Key players must know how to work with one another.
16. It has been extremely helpful that some of the key players in our practice of tripartism have been in their respective positions for a long period of time. I have known Stephen Lee and Ong Yen Her since the day I joined the NTUC. We do not agree on everything, but we all work for the same objective – to keep Singapore competitive so that workers will continue to have jobs.
17. We have established such deep common understanding that we work easily together.
18. Ong Yen Her had worked for several years in the NTUC (on secondment) before he returned to the civil service to join the Ministry of Labour. We knew each other well. His in-laws lived on the same street I did at the time. After he joined the Ministry of Labour there were a few occasions when the negotiations at the National Wages Council became difficult, so he popped over to my house to discuss possible solutions.
19. When Stephen Lee was appointed Chairman of PSA Corporation in 2002, he spoke to me about what he thought had to be done. I agreed with him, and then drew on the trust and goodwill I had with the Singapore Port Workers’ Union leaders and the Port Officers’ Union. And it was I, not the PSA management that broke the news in January 2003 that retrenchment had to be considered to turn PSA around. Stephen Lee and I steered the negotiations, with Ong Yen Her in the Ministry of Manpower keeping a key and necessary link. We know today that the restructuring in PSA has been successful, and its employees have benefited from the performance of the company. This year, Stephen Lee and Ong Yen Her received well-deserved National Day Awards from the President.
20. But time is not on our side. We have to pass on to younger hands, while we are still around and able to provide advice in the background.
21. There are many issues ahead – structural unemployment, rising contract work, the widening income gap, an ageing population. The tripartite partners may need to strike a new social compact. One fundamental principle will remain critical – that wages should be determined by productivity.
22. How can we ensure that our practice of tripartism remains Singapore’s secret weapon of competitiveness? We have been pondering this question. Lim Swee Say will spell out some of the key challenges facing the tripartite partners as we strive to grow our economy and narrow social divides. For a start, should we not set up a Singapore Tripartism Forum, to facilitate the active players in our industrial relations system coming together regularly to exchange ideas, seek common understanding, develop relations and build trust? I hope that the conference today will endorse the establishment of the Singapore Tripartism Forum. Working together, we can keep strengthening tripartism in Singapore to ensure that we will be competitive as an economy and inclusive as a society for a long time to come.
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Chung Sang Pok
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National Trades Union Congress
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Email chungsp@ntuc.org.sg
