Mdm Ho Geok Choo, CEO of HCS
Distinguish fellow panelists
Ladies and gentlemen
Introduction
1 In 2008, a few months before I left the WDA to join NTUC, I started to discuss with Mdm Ho Geok Choo on the possibility of building up an institute for human resource practitioners. It had to be something that was not available in the market – modular training rather than long programmes, practical and competency based rather than theory and academic based, and with strong involvement of the HR community. We wanted the institute to contribute to Singapore becoming a human capital hub, and at the forefront of modern HR practices.
2 Geok Choo accepted the challenge, and worked tirelessly towards that goal. WDA provided the initial seed support. Today, Human Capital Singapore stood as a proud institute for the HR community in Singapore. It has delivered 4,400 training places, organized numerous Community of Practice sessions, and nurtured a network of 50 corporate partners.
3 Today, HCS broke new grounds again, through this inaugural HCS Conference 2011. HCS, I think, has great potential to be an institute that the HR profession can be proud of. It is where experienced HR practitioners can deposit your knowledge for the benefit of younger professionals. It is also where you can share best practices. I think Geok Choo and her team deserves a huge pat on the back, and I wish them all the best.
‘Spectre of Stagnating Incomes’
4 HR issues are becoming very complex. Modern HR practitioners have to manage an efficient HR administration system, recruit the best talent, groom and nurture people, manage staff across geography, embrace diversity, etc. But since I am from the NTUC, today I will focus on what I think will be a key HR issue in the coming decade, which is how to lead and motivate the general workforce.
5 By general workforce, I am referring to the mass of quiet workers - technicians, operators, tradesmen, service staff, reception staff, drivers cleaners, cooks, security guards, etc – that keep the company ticking. Collectively, they are often the engine of the company and represent the body of expertise of organisations.
6 For a manufacturing plant, the best production line still has to be maintained by the skilled technicians. For transport companies, the best vehicles with a perfectly planned network still need skilled drivers. For service companies, customer satisfaction is greatly dependent on the quality of the front line service staff.
7 However, workers all round the world have been going through a fairly tough time. Several months ago, I participated in a discussion forum at SMU as a panelist. One student indignantly asked ‘Why are workers’ wages as a percentage of total national income falling?’ I was dumbfounded. I knew it is happening around the world, but at the moment I could not answer why. I blamed it on the recession in 2009/2010, but the young man was not convinced. And neither was I.
8 An article I came across in the Financial Times shed some useful insights. It cited how real wage of fork-lift truck drivers in Britain in 2010 was expected to be 5% lower than in 1978; in the US, median real earnings for males had not risen since 1975; average real Japanese household incomes fell in the decade to mid-2000s; and those in Germany had been falling in the past 10 years. In Singapore, real wages have been rising. But for the bottom 10-20%, the increases have been modest.
9 With top talent commanding better international pay, and the workers at the bottom facing stagnating pay, income gap has been rising across advanced economies. Even fairly egalitarian societies like Denmark and Sweden are not spared.
10 The key driving force of this phenomenon is the influx of hundreds of millions of cheaper labour from the Eastern European countries and China in the past two decades. As the Berlin wall fell and China started to open up, their huge populations became part of the global workforce.
11 Local industries felt the pressure immediately. If a country lets in the cheaper foreign workers, it will lower business cost, but also exert downward pressure on wages. If a country does not let them in, industries simply move abroad to where the cheaper labour is, resulting in rising unemployment and lower wages too.
The Turning Point
12 Many economists are now of the opinion that reprieve is in sight. China is finding itself running out of cheaper labour. Production plants at the coastal areas are finding it hard to find workers amongst its 1.3 billion population. Wages in China are rising fast – what economists call the Lewis turning point - when a labour abundant developing economy runs out of labour. Industries are moving to the Western provinces or back to advanced economies, like the US and Germany. Singapore too is attracting more than its fair share of high value added, job creating foreign investments.
13 We are therefore likely to be at a turning point of history, from labour glut to labour crunch. This presents a whole new challenge to industries in the medium term – how to find enough workers and continue remain competitive? HR professionals are at the centre of this problem, to which I like to offer five suggestions:
Five Suggestions
14 First, improve labour productivity through technology. Short of a sharp recession, the extra workers organisations yearn for are not going to be there. This means companies have to produce more and better quality products and services, with the same manpower they have today. Companies cannot expect workers to rush through their work to produce more, because quality suffers. Persistent overtime is neither sustainable nor humane. So a key solution is to adopt better technology – be it better machines, equipment or IT solutions.
15 These need not be very fancy technology. I came across many companies that are finally installing bar code scanners for their warehouses. Several hotels are finally using IT to link up reception counters, house-keeping and other departments. Restaurants are contemplating to equip service staff with hand held devices to process credit card payment. That way, the staff can process payment at the table side, instead of running to and fro the table and the cashier. McDonalds is introducing cashless payment so as to make fast food even faster, and revenue grow further.
16 Second, raise the skills levels of workers. This cannot be addressed by the education system alone, because the education system can never totally simulate actual working environment, and the system covers only new entrants of the workforce, and not the existing workers. The key pillars of skills training must lie in organisations themselves, through their in-house and on-the-job-training systems. For organizations that do not have the scale and size to institute an in-house training system, perhaps the industry should come together to set up a common training facility for hands-on, practical skills. Government agencies like the WDA will be able to help. Workers too must play their part, to have the wherewithal to stay in their job, deepen their skills, and see the rewards.
17 Third, share the rewards of productivity improvement. What is essential for our productivity drive to succeed is that organizations must be able to measure productivity improvement, and reward workers for the improvement. Some organizations are of the view that if they invest in expensive equipment and machines, the rewards must therefore go to those who invested, i.e. the owners and shareholders. I have a different view. The best equipment still has to be operated by workers, who are important stakeholders of the company. The cost of high skilled workers to operate expensive equipment must be taken into account as part of the life cycle cost of a technology investment. That way, we include workers in the reward system, and create a virtuous cycle of rising productivity, better returns for owners, better rewards shared with workers, and further support for productivity improvement.
18 Fourth, have a more flexible HR system. I understand the challenge of recruitment, where job applicants can sometimes be picky, do not turn up for interviews, or do not turn up for work after being hired. But this is not representative of all jobseekers. At NTUC, we still see some very well qualified jobseekers. They are either unemployed, or looking for a better career. Often they are prepared to be flexible with their salaries, and willing to take the plunge to move into another industry. Yet some of them are unable to find jobs, and they inevitably held the perception that they were discriminated. On the other hand, organisations are screaming for talent and manpower. There is a certain mismatch that needs to be addressed. As manpower becomes scarcer, it would make sense for the HR community to take a hard look at its systems and processes, to ensure it is open and flexible, so as to consider every willing and able candidate for every position.
19 Finally, pay special attention to the low income. In every organisation, there will always be workers at the lowest rung. They may be cleaners, the tea lady, the dispatch rider, the office attendant, the gardener, etc. There are many organizations that have set a good example, by not insisting on paying these workers market wages, but a decent wage and a living wage. They justify the higher wage by training them, giving them proper tools and equipment to do their jobs. I think such an approach shows that the organization has compassion, cares for its workers, treat them as part of the family. Corporate Social Responsibility today is a buzz word, and I think it should start at home, from the way the organization treats its workers at the lowest rung. This is a source of motivation and inspiration for the whole organisation.
Conclusion
20 These are challenging times for the HR profession. Manpower crunch is a reality. Raising productivity is an imperative. I have given some suggestions on how to address these emerging issues. Some came from the head. Others came from the heart. I look forward to a fruitful discussion with you. Thank you.
