Mr John De Pavya, President, NTUC

Mr Lim Swee Say, Secretary-General, NTUC

Mr Lim Boon Heng, Immediate Past Secretary-General, NTUC

Comrades, Ladies and Gentlemen,

1.            Very happy to join you this morning for the NTUC National Delegates Conference 

Economic Outlook

2.            Let me first talk about the economy 

3.            Outlook is generally upbeat

a.            Economy is doing very well

i.              Growth in the first half of this year was 7.6%

ii.            Advanced estimates for third quarter – 9.4%

iii.          Forecast for the whole year – 7-8%; I think we can achieve the higher end of this range

b.            With good growth, labour market has tightened

i.              114,000 jobs created in the first half

ii.            Wages grew strongly by 7%

iii.          Many reasons for unionists and workers to cheer

4.            But we continue to watch for signs of trouble

a.            One concern – turbulence in world financial markets

i.              Started with sub-prime mortgage troubles in the US

ii.            But impact has been much wider, because markets had been over-confident and over-due for a correction

iii.          Will this cause a US recession? Maybe

iv.           If so, how will it affect Singapore? It must

v.             Fortunately fundamentals for Asia remain strong

(1)         China and India continue to grow rapidly

(2)         Our links with them will help us to weather a US slowdown

b.            Another issue – property market in Singapore

i.              Two segments – prime office space and residential

ii.            Acute shortage of prime office space because of strong growth

(1)         Govern­ment is taking steps to increase supply

(2)         Inject more office space into the market over the next 2-3 years

iii.          Also watching residential property market

(1)         MND has just withdrawn the Deferred Payment Scheme for property purchases – help to dampen excessive speculation 

(2)         More fundamentally, we are committed to keep housing affordable for Singaporeans

(3)         Hence HDB is building more flats

(4)         Also Government is releasing more land for Executive Condominiums

iv.           Will continue to monitor trends closely and take further action if necessary

v.             Make sure that the property market stays in balance over the long-term 

5.            Overall we are in a strong position

a.            Others are noticing

b.            Long piece in last week’s The Economist magazine

i.              Singapore is “booming, bustling and bursting at the seams…a developed country that grows at developing country rates”

ii.            Sustained growth through “unusually clean and efficient government and…one of the world’s best education systems”

Why Are We Here?

6.            How did we get to where we are today?

a.            Not by coasting along with the status quo

b.            But through difficult adjustments and changes over the years

i.              Sacrifices by workers (CPF cuts and salary adjustments during the downturn); upgrading and restructuring of companies

ii.            A succession of major government policies – this year alone, three major packages

(1)         Budget – introduction of Workfare, increase in CPF contribution rates, GST increase, income tax cut

(2)         After the Budget – public sector salary revisions to maintain the quality of Government

(3)         NDR – another round of CPF reforms to ensure financial adequacy for old age

c.            Hence stayed competitive, ahead of other countries, and prospered

7.            Why have we been able to make these changes?

a.            One major reason – strong support of the labour movement

b.            Your understanding of our challenges and longer-term interests

c.             Your hard work in championing the cause of workers and persuading them to support policies which bring long-term benefits

d.             Not easy for any union movement to do this

e.             Singa­pore is fortunate to have a strong and responsible union movement led by NTUC

f.               For this, we are grateful to you

8.            Besides serving workers directly, our unions play an important role in the process of Govern­ment policy making

a.            Every time we introduce a major policy, enormous amount of quiet groundwork is already done beforehand

i.              Consulting union leaders, getting your inputs, improving the design of the policy

ii.            So when the changes are announced, they are much easier to explain and sell

b.            e.g. Budget and NDR packages this year

i.              Both times involved union leaders in the process

ii.            I met them to discuss ideas, and test out their reactions

iii.          They gave me good advice

iv.           Helped to shape both the substance and its presentation

v.             So in the Budget and NDR speeches, there were no surprises

vi.           Afterwards, we could count on the support of union leaders to get message to workers

c.            Latest changes to the CPF system are major

i.              Not easy for people to understand – we had to make a special effort to reach out to the public

ii.            From the reactions so far, I am reassured that the message is getting through  

iii.          Basic message is a simple one

(1)         Work longer

(a)         From 62 to 65, and then to 67, with higher Workfare for older workers

(b)         Possible now because people are much healthier and fitter.  And employers are more open to employing older workers and treating them fairly

(2)         Earn more on CPF savings – extra 1% interest

(3)         Draw down their savings later, and make them stretch longer  

(a)          Lim Pin’s National Longevity Insurance Committee is working this out 

(b)         Three union leaders on the Committee (Seng Han Thong, Terry Lee, G Rajendran)

(c)         They understand the issues, and I am sure will help the Committee arrive at good recommendations

Challenges Ahead

9.            Going forward, Singa­pore must keep on adjusting and adapting to change to stay ahead. This way we remain competitive, create jobs with good pay

a.            There will be more major policies and initiatives necessary from time to time

i.              e.g. MOT is working on the Land Transport Review  

(1)         Improving our public transport system – everyone will benefit from this

(2)         Also keeping our roads free flowing – which means painful measures like ERP and COE are necessary

(3)         Nowadays it is not just bosses who drive cars, but also many unionists and workers

ii.            e.g. MOH is working systematically to ensure good and affordable healthcare – many initiatives are being rolled out

(1)         Healthcare concerns every citizen, and unions too as we move towards a Portable Medical Benefits System

(2)         In particular, need to target subsidies at the lower-income group who need them most

(3)         Lower-income Singaporeans should get more subsidy than higher-income group: means-testing is necessary to achieve this.  We have already done so in nursing homes.  We should now implement it for hospitals too

(4)         MOH is studying the idea carefully so that it can be implemented fairly and simply, without making hospital care unaffordable for the middle-income group.  MOH will consult the unions when it has firmer ideas of what to do 

b.            On all these major issues, Govern­ment will keep in close touch with unions

i.              Even before we consult any union leaders, Lim Boon Heng and Lim Swee Say in Cabinet will give us their views, from the workers’ perspective

ii.            Ministers get lots of practice, preparing to answer objections that workers will raise!

Staying open and flexible

10.        Beyond these specific policies, have to keep our eye on the bigger picture and plan ahead for the longer-term

11.        Key to a strong economy is to stay open and flexible

a.            Be prepared to face competition from abroad

b.            Be prepared to adapt and re-adapt our economy, our policies, our companies and ourselves

c.            e.g. opening up to foreigner workers

i.              In slow economy – concern for jobs for locals

(1)         Must explain to our workers that if we keep out foreign workers, the jobs may also leave, instead of staying here and being taken up by locals

ii.            In a strong economy – still some worries

(1)         More than 500,000 foreign workers are here

(2)         Problems of social adjustment

(3)         Many Singa­poreans do not like to see them living near their housing estates 

(4)         But without foreign workers, we cannot have our IRs, Business and Financial Centre, petrochemical plants, or Punggol 21 Plus

(5)         So we have to be accommodating and understanding

12.        Grateful for union support for openness and flexibility

a.             Even when policies are painful in the short-term, unions are supportive because you have seen the long-term results and benefits

b.             e.g. recent project by Norway’s Renewable Energy Corporation (REC) to build potentially the world’s largest solar manufacturing complex here

i.              This is a major project

(1)         Investment of S$6.3 billion

(2)         Will create 3,000 jobs

(3)         Will boost our efforts to develop a new solar energy industry

ii.            EDB reported that competition for the project was intense

(1)         REC looked at 200 locations around the world

(2)         CEO (Mr Erik Thorsen) visited Singapore in August. I met him, and told him:

(a)         Singa­pore could not be the lowest cost location, or the most generous government with grants, but when all the factors were taken into consideration, Singapore would usually fare well

(b)         We would do our utmost to make sure that his project succeeded

(c)         And the unions would do their best too, because the Sec-Gen of NTUC was a former MD of EDB, so he understands

(d)         He should visit the NTUC to confirm this for himself

iii.          Eventually REC decided on Singapore. Why?

(1)         Quote CEO: “Singapore does not have the cheapest land, labour or electricity, but it offers the best combination of such factors, along with things like access to technology centres and research programmes, market access, stability and security.”

(2)         i.e. overall policies have given our workers an edge

(3)         But REC also found our quality workforce a key plus factor

(a)         They are prepared to pay higher wages in Singapore because our workforce is skilled, adaptable and reliable – which are critical for this world scale plant.

(b)         Skilled, to operate the equipment efficiently

(c)         Adaptable, to be retrained quickly to use new production methods

(d)         Absolutely reliable, to minimise downtime which can cost the company millions of dollars a day in lost business

c.            This is what job creation is about

i.              Without a strong NTUC supporting sound government policies, Singa­pore would not have such a workforce, and our workers would not have such job opportunities

ii.            Having promised REC and other investors that we will support them, and they having believed us and come here, better make sure we deliver on our promises to them!

Spreading the Benefits of Growth Widely

13.        Going forward, must make sure that all workers benefit from the growth and vitality of the economy 

a.            Cannot assume that this will happen automatically; requires special attention and action

b.            Look at the US experience

i.              Strong growth, but benefited only those in the very top tier

ii.            For other workers, incomes have stagnated, and in many cases, fallen

iii.          Hence no popular support for globalisation, and more protectionist pressures

c. &nb, s, p;          In Singapore, our incomes are also stretching out

i.              As I explained in NDR, this is the result of global forces

ii.            Cannot stop or reverse this global trend

iii.          But the Government will do its utmost to ensure that the benefits of growth are shared widely

14.        What can the Government do?

a.            At the top, people are doing very well

b.            Should not hold them back or levy higher income taxes

i.              Wealth and talent can move easily

ii.            In fact, worldwide trend for income taxes is downwards

iii.          e.g. Donald Tsang recently announced cuts in Hong Kong’s personal and corporate tax to 15% and 16.5%

c.            Therefore solution is not to raise taxes, but to improve life for the mass of Singaporeans

15.        Government has been working on this

a.            For the vast majority of Singaporeans

i.              Better education lead to better paying jobs

ii.            HDB home ownership and upgrading programmes, like Punggol 21 Plus

(1)         High-quality public housing that is attractive and affordable, not just for the poor

(2)         An asset that will appreciate in value as the economy grows

b.            For the middle-income

i.              Low taxes, hence light burden on professional families

ii.            Developing Executive Condominiums to cater to them

c.            For lower-income

i.              Institutionalised Workfare this year

ii.            This is a major move – effectively a permanent negative income tax 

iii.          Very generous, and the right scheme

(1)         Older workers above 60 can receive payouts of 20% or more of their salary – in cash and in CPF

(2)         Help you build up your income and savings

(3)         Encourage you to work 

(4)         Encourage employers to hire you

iv.           Self-employed and informal workers also benefit

(1)         Contribute to their Medisave (we have made the contribution rate very low, at less than 3% of their earnings), and claim Workfare benefits 

(2)         On top of that, we now have a lucky draw – some call it Medisweep!

16.        These are major steps we can take in Singapore

a.            To level up our society and give everyone a stake in the nation’s success

b.            Strong reasons for the labour movement to uphold and strengthen the tripartite spirit that has served us well

Strong Labour Movement

17.        To keep all this going, we need a strong labour movement

a.            You are our partner in development and nation building

b.            You must remain a strong and effective partner

i.              As reflected in your vision – a labour movement for all collars, all nationalities and all ages of workers

ii.            In particular need to stay updated and relevant to the needs of a new generation of workers

(1)         Find new ways to strengthen your links to the ground

(2)         e.g. Young NTUC and neBo Club

(a)         Reaching out to younger workers as well as teenagers who are our future workers through sports, performing art, community work, and other interest groups

(3)         e.g. NTUC Fairprice

(a)         Continually upgrading its stores and introducing new higher-end products to meet changing lifestyle and customer needs

(b)         Very happy with megastore at Ang Mo Kio Hub – sure many other HDB towns are hoping for the same

c.             To achieve this, need capable union leaders    

i.              Fortunate to have had good and dedicated union leaders who rose up the ranks like Paul Tan (AUPE), Nithi Nandan (UPAGE), Swithun Lowe (STU)

ii.            Need to get more leaders to replace them

(1)         From the rank and file

(a)        Pay more attention to identify and nurture those in their 30s and 40s

(b)        Several are contesting seats on the Central Committee this time round – a good sign

(2)         And from outside, grafted in

(a)         Like Lim Boon Heng and Lim Swee Say 

(b)         Also younger leaders with the potential to grow

iii.          Able to do so because the unions have high standing 

(1)         Young people are keen to work in NTUC

(2)         Bring in more people to join the NTUC family

(a)         As full-time staff with NTUC Departments

(b)         Over time, exposed to industrial relations work and union leadership

(c)         Like Josephine Teo who started in NTUC as Director HR and is now ES of SISEU and a labour MP 

(d)         Like Cham Hui Fong who started in NTUC as a IRO and is now Director of Industrial Relations and a Nominated MP

(e)         NTUC Cooperatives is a good potential path too, attracting people who are business savvy and yet passionate about serving the labour movement

iv.           Thus reinforce the team, and prepare a new generation for union leadership 

Conclusion

18.        Government will continue to support the labour movement fully, as you strive towards Labour Movement 2011

a.            We are united in our objectives and our tripartite relationship is strong 

b.            Together, we will overcome any difficulties with confidence

19.        We have a winning formula

a.            Let us build on this formula, broadening our reach, and deepening our trust

b.             Keep Singapore in a strong position, always one step ahead of the competition

c.             Then we can offer a better life and a brighter future for all Singaporeans