Friday, May 3, 2013

Keeping Singapore ahead of the competition

May 03, 2013

At the May Day Rally on Wednesday, Prime Minister Lee Hsien Loong spoke of the economic restructuring to improve wages and Singaporean workers' lives. Here's an excerpt from his speech.

EVERYTHING we do is about making life better for our people and especially for our workers. We are making progress on our infrastructure, whether it's housing or transportation, we're tackling population issues, including immigration and foreign workers - very sensitive, very difficult to discuss but we have to deal with them because otherwise we are going to have big problems coming to us.

We are strengthening social safety nets, especially in housing, health care and education, and we also have targeted programmes to help vulnerable workers to help themselves.

First, for older workers, we are trying hard to help them to work longer. Many want to work beyond 62... So we have the Retirement and Re-employment Act: Beyond 62, employers have to offer re-employment to the workers for at least another three years till 65.

We encourage employers to do this through a Special Employment Credit so that the Government will subsidise part of the wages of the older workers who are above 50 years old and we spend every year $500 million doing this, and therefore, employers don't find it burdensome to keep the older workers, keep them active, keep them employed, and their employment rate in Singapore is higher than most countries' and improving faster than most countries'.

But 65 is not the end. I know many workers want to continue even beyond 65 and the Government encourages this too.

No "one size fits all" policy

I THINK we should see how the Retirement and Re-employment Act works out, give it some time, settle down and then progressively we will do more. It will depend on the workers' health, it'll depend on the nature of their jobs and on the companies' needs. We can't go for a "one size fits all" policy, just pushing up the retirement age or compelling employers to hire all workers regardless of their conditions.

Some people can work beyond 70, health permitting... but others for various reasons will not be able to. So we can't be "one size fits all", we have to take a practical approach to enable as many as possible to continue working for as long as possible.

On your part, workers need to be flexible, flexible about job responsibilities and status. If somebody else is the head and you are no longer the head, well, accept that, that's part of life. If you have to adjust to a slightly different job, learn new skills, make the effort to do that, go for training, master different skills. Stay fit and healthy so that we can do the work.

The second group we are paying special attention to are lower-wage workers. We'll improve the lower-wage workers' lives too and not leave them behind. We've enhanced Workfare so that when they work they receive a top-up to their pay and their CPF (Central Provident Fund), which is almost 30 per cent, particularly for the older ones. We have Inclusive Growth Programmes to upgrade 100,000 lower-wage workers. We have the progressive wage approach, which we have together with NTUC, to raise salaries, especially of the lower-wage group, by enlarging their jobs, upgrading their skills and raising productivity, including new technology, so that workers will have a more decent starting pay and a wage ladder which they can climb up progressively. We incorporated a progressive model into the Government's regulations for the cleaning sector and we will do that also for the security industry and we'll take the lead in best-sourcing so that we set the example and we establish the market norm and the lower-wage workers can have a decent job.

More attention to PMEs

THE third group is the PMEs (professionals, managers and executives), not low-wage, not elderly, but a growing group and I think we must also pay attention to it. We are making workplaces more fair and inclusive through Tafep, the Tripartite Alliance for Fair Employment Practices. But apart from their employment, I think PMEs also want more support and representation from the unions. And I support this. Traditionally the unions represent rank-and-file workers, and once upon a time, the rank-and-file workers were the majority; two-thirds of our workforce were rank-and- file. Now as they upgrade, the situation is reversing. By 2030, that means about 17 years from now, PMEs will be two-thirds of the workforce and rank-and-file only one-third.

I'm confident that the unions can effectively represent the interests of more PMEs. Today, the PMEs make up about a quarter of union membership. It's not bad but can be better. The tripartite partners are studying how to do this.

Workers' top concern

AT THE end of my lunch with union leaders a few weeks ago, I asked them if there's one thing you want me to say, what is it, in the May Day Rally? And Brother Kumar (G. Muthukumarasamy) of the Amalgamated Union of Public Daily Rated Workers Union (AUPDRW) told me: "The most important thing workers want is just raise our wages."

And that's the single most difficult thing...
And that is why I say we must grow our economy because unless we grow our economy, you cannot raise workers' wages. Otherwise, it becomes a zero-sum game. If I raise this group of workers' wages, I must reduce somebody else's salary. All companies must accept lower profits or the Government must give money, run a deficit and that's not a win-win solution, it's not a sustainable solution.

But if we can grow the economy, produce more, become more prosperous, we can distribute, everybody can have a share and everybody will be better off.

How to grow the economy? Three things. First, we need to attract quality investments, create better jobs. Second, we need to raise productivity, restructure domestic economy. Third, we must invest in our future, in our people.

So, first of all, attracting quality investments and creating jobs... certain investments, higher skilled, higher value-added, less manpower-intensive, less land-intensive, investments which are not just stand-alone projects but which benefit our wider economy.

The Rolls-Royce example

TAKE for example the Rolls-Royce journey. Rolls-Royce has been in Singapore for 50 years, 60 years since the 1950s... Last year they opened the Seletar Campus in the Seletar Aerospace Park and they are producing the latest fan blade for the latest aircraft engines. They're called wide-chord fan blades, very high-tech, very sophisticated work. It's the only factory which Rolls-Royce has outside of their head office in Derby.

They make the fan blades, they assemble and test the engines, the engines are fitted onto Airbus, the new 380s, including SIA Airbuses. They employ mostly local workers, highly skilled ones, pay top quartile of pay. Presently 650 workers, going up to 770 by the end of this year and 85 per cent of them are local. They have trained in Singapore, we make them do training, train in the ITEs (Institutes of Technical Education), in the polys, in our universities. They graduated, Rolls-Royce hired them, gave them further training, took them to Derby in UK, the Singapore Government co-funded their training, they spent months in Derby to learn the skills, they came back, they started a factory in Singapore. They not only applied what they learnt but they improved on what the workers are doing in the UK and they made innovations in Singapore, which Rolls-Royce has taken back and is applying back in their headquarters in Derby. So we are not only at the leading edge, we are moving forward beyond the leading edge and becoming the leaders in this business. And Rolls-Royce is not just doing business for itself, it's generating business for SMEs (small and medium-sized enterprises) which supply the components, for logistics companies which ship the parts from the engines in and out of Singapore.

So investments are important and we have to continue to welcome quality investments like Rolls-Royce. We can do that because our international standing is high with investors.

In New York recently, I had dinner with what they call, the group which calls itself G100 - 100 CEOs (chief executive officers) of companies.

They invited me to speak to them. It was a closed-door session but they wanted to know about Singapore, they wanted to know about Asia, about the region around us, particularly about China. The CEOs admire Singapore. They want to know how we're staying effective, whether we will continue to be attractive to their business - a good place for them to invest and to expand. We can't take our high standing for granted.

Regional competition

THE competition for investments is growing; China is one big destination, Vietnam is another destination. Uweei (United Workers of Electronics and Electrical Industries) recently visited Vietnam. They saw for themselves how hard the Vietnamese workers work. The Uweei group visited the site, visited Ho Chi Minh City and they saw Saigon Hi-Tech Park.

We have a project in Ho Chi Minh City called the VSIP - Vietnam-Singapore Industrial Park. Quite successful, but the Vietnamese are developing their own high-tech park to compete with the VSIP because they will learn from us, but they want to outdo us. And they are attracting high-tech investments and they have good workers who are hard-working, who are hungry, who are bright, who will be attractive if they can get their whole system running. I think there is still some distance to go, but they want to eat our lunch.

So we have to be very careful as we change policy, as we navigate this change, as we tighten up on foreign workers. We cannot have too many foreign workers. We have to manage the numbers but we have to be very careful as we tighten up because business costs will go up, it will become harder for companies to operate here, our competitiveness can be affected, our cost of living can be affected. Because wages go up, costs go up, prices will follow. And we have to make sure that we watch our competitiveness and we don't overdo things. Likewise when we tighten up on PMETs (professionals, managers, executives and technicians), we have to adjust. We need to introduce safeguards for Singaporean PMETs, but if we make it too difficult for companies to get their skills and talents which they need here, they will go elsewhere - and I think that will be disastrous for our PMETs, for our workers, for our families, for Singapore.

Sending the right signals

WE HAVE to stay an attractive place to do business. Investors are watching us closely. When they talk to me, they ask me general questions about the region and competitiveness and our policy on foreign workers. When they talk to EDB (Economic Development Board), they are more direct. They ask EDB, is this tightening of foreign workers a fundamental shift in your outlook, are you still welcoming investments, are you still pro-business, do you still want us to come? Because if not, then let us not waste time talking to one another.

So we must not send the wrong signal that Singapore no longer welcomes business, or that we're turning away talent. We have spent many, many decades nurturing this reputation for reliability, for openness. We have made a name for ourselves; not necessarily the cheapest place but a competitive and dynamic city that's worth paying the premium for. And we must keep that reputation because otherwise we're dead.

Productivity counts

IN THE last few years, productivity has not been that spectacular. In fact, since the financial crisis, it's been mostly flat. But we know that this battle takes time and we know that we can do better. If we compare ourselves with the best countries in the world, the global leaders - Japan, US, Switzerland, Sweden - we are only 70 per cent of where they are now.

And in construction, in food and beverage, we know we are even further behind. But if we persevere and we press on at this, we will succeed.

The Government is supporting this in many ways. This year's Budget has a Quality Growth Programme to help businesses upgrade, create better jobs and share the productivity gains with their employees. We create productivity road maps for different industry sectors. We're building new continued education training (CET) campuses. The two new campuses will be ready this year - the east campus coming up in Paya Lebar and the west campus at Jurong Lake District. These are not office buildings, these are CET centres for training workers to make sure that they can take advantage of the opportunities to upgrade.

So companies and workers must seize these opportunities, join these programmes. It can be done. I give you one example to add to Swee Say's just now.

How one company did it

THIS is a company called Udders. It's a local ice-cream company - Udders. They make artisan ice cream, they make one pot by one pot. You finish eating, I make a new one, just in time. So it's always fresh, always delicious. And they have gila melaka - I think it's maybe gula melaka - and mao shan wang - that's beyond doubt - durian. And we have a problem. It's artisan, it's hand-made, supply cannot keep up with demand. So how to overcome the supply cannot meet demand situation? Every batch of ice cream, somebody had to stir manually to make the ice cream. Very intensive, too slow. So they got Spring (Singapore) and Iras (Inland Revenue Authority of Singapore) to help them. Spring gave them the Capability Development Grant; Iras, they are entitled to a Productivity and Innovation Credit, tax credit. And so they automated the process. They made water-cooled, ice-cream-making machines, they pasteurised. The pasteurisation machine was automated. So now they work at a factory in a kitchen. The staff has gone down by half, the utility bill has gone down and the workers share the gains through a profit-sharing scheme.

The third thing we do is beyond these individual micro company-by-company efforts, the whole economy, the whole society must be dynamic, must be forward-looking. If you become old, if we become like a retirement home, or a holiday village, I think we are finished.

Riding the technology wave

SO, OUR third strategy is invest in our people, invest in the future. Nobody can predict the future, but I think some trends are clear. I think Internet and IT (information technology) will continue to transform how we live, work and communicate with one another. Technology is going to restructure industries and jobs. Robots are getting cheaper, safer and easier to operate. And it's not just the developed countries using robots; even the developing countries are using robots.

Foxconn, Fu Shi Kang, the big outsourcing company which is in China, they have a plan to introduce one million robots in China because even in China, they want to raise productivity and they're running short of workers and they're going to have one million robots. So our competition isn't the Chinese worker, it's the Chinese robot.

And the Chinese robot isn't making just components for iPhones and iPads, it's even making la mian. So it's competition but it's also an opportunity for us to use this technology to raise productivity and improve the lives of our workers... So we must master all this and we're investing in this. So our programme of Future of Manufacturing, we are spending $500 million over five years to develop these capabilities, 3-D printing robotic, to create opportunities for companies and jobs for Singaporeans. So you can be the operators of the robots, you can be the material scientists and to benefit SMEs and the blue-collar workers as well.

Just as previous times when we upgraded our technology, our SMEs and our blue-collar workers moved up and followed the technology and mastered it. In services, we have a programme called the Future of Services, creating new industries like big data analytics and consumer insights.

Big data analytics means you take all the information you have, who you have been SMS-ing, where your iPhone has been going, what you have been ordering online, putting together a picture, making it useful to you, helping you to live a better life, helping to adapt the products to you. And learning about the societies we are in.

Procter & Gamble is doing this. They are building a Singapore Innovation Centre. What are they researching? Asian consumer tastes and needs.

The union movement has to be at the centre of all these changes that we're making. We can't have a strong economy without a strong labour movement. We need a pro-labour and pro-Singaporean Government to protect workers' interest, to foster growth, to make sure that everyone benefits from prosperity. That's what a tripartite partnership has always been about. We must strengthen the trust and understanding that underpin this relationship.

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