Deputy Prime Minister and Minister for Finance Lawrence Wong delivered his 2023 May Day Rally speech at Suntec Singapore Convention & Exhibition Centre on 1 May 2023.
Prime Minister Lee Hsien Loong,
President and Secretary General of NTUC, Sister Mary Liew and Brother Ng Chee Meng,
President of SNEF, Dr Robert Yap,
Brothers and Sisters,
I am very happy and proud to join all of you today at this May Day gathering. To all our Muslim friends, Selamat Hari Raya Aidilfitri!
Last year, some of you might remember – Brother Chee Meng invited me to say a few words at the Rally. This year he has invited me to speak again, but not just to say a few words, but to give the entire speech. I thank Brother Chee Meng and NTUC for this opportunity to speak to all of you.
After fighting Covid for three years, this is our first Rally together, under DORSCON Green. So it’s good to see all of you in such high spirits.
We all came under tremendous stress over the past three years – union leaders, workers and your families.
But we never lost our nerve. We came through. We survived. We emerged from the crisis a better people – stronger and more united than before.
NTUC and its unions too are better and stronger. You responded quickly to support our workers in many ways. You reached out to the self-employed and freelancers, administered the SIRS scheme for them, and provided them with a much-needed lifeline. When workers lost their jobs, you complemented the government’s Jobs and Skills package with personalised support, helped them with the NTUC Care Fund and you enabled them to find new jobs quickly.
So I’m proud to stand before you at today’s Rally. To pay tribute to each and every one of you. To all who rallied together and pulled Singapore through this crisis of a generation – I’d like to say a very big “Thank you!”
I hope we have put the worst of Covid behind us. And I wish I could tell you today that the economic outlook will be rosier. Unfortunately, that is not so.
The world today is in dire straits. I know many are worried about Singapore’s prospects in this new environment. But just as we found a way through the pandemic, I am confident that we will survive the coming storms. That’s provided we stay united, and uphold the same can-do, never-say-die spirit and daring gumption that has seen us through so many previous crises.
Today, I will share more about the grim economic landscape before us – how we will respond to these challenges, and why it’s so important and so urgent to strengthen our social compact and our compact with every worker. And I will highlight the importance of strengthening tripartism and the partnership between NTUC and the PAP – for that’s the foundation of our economic growth, and of the fair and just society we have sought to build over the last six decades.
New Challenges in a Troubled World
Let me start with the increasingly dangerous and troubled world we live in.
PM Lee described the multiple global storms in Parliament recently – we have hot war in Europe; risk of conflict in Asia Pacific as a result of growing US-China tensions; as well as protectionism undermining the multi-lateral trading system.
I won’t go through each in detail. But I want to explain how these developments will impact us – make it harder for us to compete, grow our economy, create jobs, and to earn a living.
First, the rules of trade are changing. Everyone knows how important trade is to Singapore. Fortunately for us, over the last few decades, countries lowered tariffs and pursued win-win trade deals. So there was a rise in trade flows globally, and small open trading economies like Singapore prospered.
Now things are changing. Countries no longer talk about win-win cooperation in trade. Many are thinking: “I don’t want to become over-reliant on you, just in case relations turn sour”; Some go even further, they think: “I not only want to win, I want you to lose”. The value of our trade is more than three times our GDP. We will be hurt if more countries become protectionist and flout trade rules.
Second, investment flows are also shifting. Global foreign direct investment or FDI flows grew strongly in the past decades, as companies established footprints all over the world. They found the best places to do business and linked them up into global supply chains.
Singapore has benefited tremendously from this; we built our economy around such global investments. But now this too is changing. Geopolitics is re-channelling FDI flows.
Countries talk about “near-shoring” or “friend-shoring” – basically it means countries are putting their factories and critical supplies closer to them; or in friendly countries they trust. So global FDI flows will slow down, and will become more concentrated amongst countries that are geopolitically aligned.
Third, the advanced economies are rolling out massive subsidies to build up their own domestic production, especially in strategic industries like semi-conductors and clean energy.
There is considerable irony in this. Because not so long ago, these very same countries were complaining about what they call harmful tax competition – that governments around the world were undercutting one another with more and more generous tax incentives. So they pushed for a global agreement to stop this tax competition. It’s called Base Erosion Profit Shifting (or BEPS), it includes a global minimum corporate tax of 15%. Around the world, everyone sets a minimum corporate tax – 15%.
But before this can be implemented, the major economies – the US, EU and China, for example – are already rolling out huge subsidies for key projects and investments.
Now, if you think about this, tax incentives and subsidies are all public funds. So it’s highly inconsistent to say no to tax incentives, and yes to subsidies. What’s the logic? But unfortunately we are now in a world where rules are shaped not by logic or principles, but by geopolitics and security imperatives.
And Singapore is already feeling the impact. Because when we talk to MNCs here about raising our effective corporate tax rates to 15%, they tell us: “yes we understand this is happening worldwide. Singapore’s incentives used to be “best in class”. But if your tax rates go up, then Singapore will become less competitive compared to other places. Besides, my home jurisdiction is offering such large subsidies for my next investment. So please tell me what Singapore can offer to persuade my HQ to locate the next investment project here”. It’s logical for them to say this, because if back home their governments are offering such large subsidies, they will certainly ask us “please match, if not why should I put my next investment project here?”
So, what this means is that competition will be much tougher. I hope all our union leaders understand this, and help to explain this to your members.
The major economies are mobilizing very large sums of money to build their own strategic industries. Let me just give you one example: Germany is negotiating with Intel to establish a large semi-conductor plant in Eastern Germany. The deal involves S$10 bn in financing support. S$10 billion for just one project. S$10 bn is almost double what MTI will spend this year to grow our entire economy!
Imagine just one project – and the subsidy promised is double what MTI spends in a year! Can we afford to outbid the big boys – not just the Germans, but also other the Europeans, the Americans, the Chinese, the Japanese? Outbid all of them for the investments we want?
Some politicians go around telling Singaporeans, don’t worry, raise corporate tax to 15%, you will have lots of revenue, and anyway we also have lots of reserves. So we can merrily spend more. Unfortunately, they don’t understand the magnitude of the challenges we face. So let me tell you plainly: we cannot afford to outbid the big boys, just to get the MNCs to invest here.
We won’t have enough money to match the competition.
But what we must have enough of are ingenuity and innovation; guts and gumption. That’s the only way we can and will prevail, even when the odds are stacked against us.
Seizing Opportunities and Growth
This is not the first time we’ve had to respond to such grave challenges. We had a big shock shortly after independence, when the British announced in 1968 that they were withdrawing from their military bases here. We’ve experienced many other economic shocks since then – from oil crises to financial crises.
We survived each of these critical moments. We turned every challenge into new opportunities. We have no water in Singapore? We develop NEWater. We have no natural resources? We become a hub for energy and other critical supplies. We don’t have enough land? We reclaim land from the sea, and we make the most of our limited space with innovative urban solutions.
Each time we were pushed to the limit, we did not fold and crumble. Instead, we gritted our teeth, worked even harder to defy the odds, and bounced back stronger. That’s how we built today’s Singapore, and that’s how we will keep on making it better!
Covid-19 has further enhanced our international reputation as a reliable and trusted hub for business. We must now seize this window of opportunity, to make ourselves more competitive and relevant to the world.
One strategy is to continue investing in our connectivity infrastructure. That’s why we are pressing ahead with the Changi T5 and the Tuas Port projects. These will significantly enhance our capacity and reinforce our status as a business and logistics hub.
Because of these moves, in fact more MNCs are choosing to anchor their regional and even their global supply chain operations here.
For example, VF Corporation, a global apparel and footwear company, has relocated its Asia Product Supply Hub to Singapore. You may not have heard of VF Corporation, but I am sure you are familiar with some its brands like The North Face and Timberland. With this shift, more than 70% of their global supply is now managed in Singapore.
UPS, the global logistics company, recently announced the expansion of its Changi hub facility by 25%. It has also invested in its cold chain infrastructure, so that it can manage more healthcare shipments like vaccines through Singapore. This will allow UPS to serve more customers in the region. Hopefully all of us will benefit too and get our packages much faster!
Another important strategy for us is to deepen our capabilities for innovation, especially in our areas of competitive strengths. That’s why the Government is continuing to invest heavily in R&D and innovation, and we are doing this with leading global companies.
For example, Procter & Gamble, the global consumer goods company, has been here for 35 years. They have deepened their presence here by growing their innovation centre to be one of Singapore’s largest corporate research facilities. If you use products like Pantene – it’s a hair product, or Pampers for babies, you can take pride that these were innovated right here in Singapore.
Take another example: in semi-conductors, we talked about this just now, we can’t compete head-to-head with the major economies for the most cutting-edge fabs, because all the big boys want to have the most cutting edge plants right in their home countries. But we can still find the right niches to operate in and carve out a space for ourselves. That’s why United Microelectronics Company is building a new fab here in Singapore for the chips needed in smartphones and electric vehicles.
This is happening across all sectors of the economy. I recently met the CEO of a global financial institution. They are re-evaluating their footprint in Asia and they want to do more out of Singapore. I asked him which area are you looking at; he says that it’s not just about 1 or 2 areas, but he wants to make Singapore the hub for knowledge and technology in Asia for his entire institution. This means a sizeable expansion of his headcount in Singapore, which in turn will create more jobs and more opportunities for Singaporeans.
So despite the dark clouds around us, I say: never fear, and never lose heart. Singapore may be small. But this little red dot is shining brighter than ever.
If we can keep it shining bright, businesses and investors in the region and beyond will continue to want to come here. The Singapore brand can continue to be a calling card for our people venturing abroad, and for local companies expanding into overseas markets. If we continue to focus on our strengths and capabilities, and find ways to provide value to the world, we can continue to earn a good living, and prosper and thrive together.
But please remember one thing: we cannot take all this for granted. The challenges before us are grave. Yes, we have tremendous assets. But we must continue to be able to work harder and work smarter than others. We must always have that something special that convinces the world that we are a better bet than most, and that Singapore can always be relied upon to deliver.
Forward Singapore & our Compact with Workers
As we grow the economy, we will also fight the ills of inequality. As I said in Parliament recently, Singapore must never succumb to the kind of harsh inequality we see in so many other countries. However treacherous the terrain ahead, so long as Singapore continues to progress, all Singaporeans must continue to progress – no one must be left behind. This is the only way to keep our country together.
That’s why we are undertaking the Forward Singapore exercise. A key aim of this exercise is to refresh and strengthen our compact with workers.
The Labour Movement has this motto: Jobs are the best form of welfare. I agree fully with you. But we must expect jobs to change over time. New technologies and more productive ways of doing things will happen, and existing jobs will be made obsolete. But new jobs will be created, and these will be more productive and higher value added jobs.
That’s why in our Forward Singapore review, we are studying how we can invest more in every worker – to help them take ownership of their own careers, to continuously reskill and upskill, and take up better jobs and opportunities throughout their working lives.
We have been working on this for some time under SkillsFuture. But we will shift SkillsFuture to higher gear, and make skills training and lifelong learning a key pillar of our refreshed compact with every worker.
We will pay special attention to those in vocational and technical roles, and especially our ITE and polytechnic graduates. We will help them deepen their skills through different pathways, so they can secure better salaries and career paths in the professions they have trained for and have the aptitude for.
Take the example of Brother Dickson Tong. I think he is here with us today, in this room. I met Brother Dickson recently, he has been working at Hitachi as a lift technician for the past 25 years. Throughout this period, he has been continually honing his skills to excel in his profession. Recently, he took up a work-study diploma programme.
It was not easy for him to go back to school after more than 20 years, while working at the same time. But with hard work and determination, he attained his diploma and was also promoted to a supervisory role in the company. Dickson received the Model Worker award last year, and has been nominated for the Comrade of Labour award this year. Congratulations Dickson!
PMEs too will have to reskill and upskill themselves, especially with rapid technological advancements. For example, look at what’s happening in AI. Some of you may have used ChatGPT. I asked ChatGPT: what should I say in my May Day Rally speech? It didn’t give me a good answer, so I had to write my speech myself.
But in time to come, the AI algorithms will only get better and more versatile. And ChatGPT is just one application of AI. Many more are on the way.
Integrating new technologies like AI into our work will bring sweeping changes, including for highly-trained workers. We must expect more human tasks to be taken over by machines. Some existing skills will no longer be so useful, but new skills will be needed. And that’s why we must continually reskill and upskill.
One example is Mdm Aminah Mohamed Lah, she is someone who has taken the plunge to learn new IT tools. After 20 years working in administrative roles like finance and procurement, she enrolled in a 9-month programme to learn about coding, data science and data visualisation.
This was something completely new for her and she struggled with it initially. But fortunately, her children were also taking up courses in computing and data science at the same time. So she could discuss and get some help from them! This is the circle of life – when we are children, we learn from our parents, as we get older, the young ones will teach us. Through her hard work, she has now embarked on a new career as a business analyst at one of our banks. Well done Aminah!
Dickson and Aminah are both inspiring examples – we salute them for their passion in lifelong learning.
We want many more workers to follow their lead. But we also know it’s very hard to juggle work and family responsibilities, while studying at the same time.So we will reduce the costs, and lower the barriers to training. We will work closely with NTUC, and all of you, as our key partners in this endeavour, and support every worker in your journey of lifelong learning.
There are other issues we are looking at in our Forward Singapore review. Some are issues that the NTUC has been championing. There are also feedback and ideas from the NTUC’s “Every Worker Matters” Conversations, as the Sec-Gen (of NTUC) said just now.
For example, what more we can do to uplift our lower-wage workers, professionalise skilled trades, and ensure dignity and respect for every job and every worker.
How we can provide more support for those who lose their jobs – to reduce the strain on their finances, and at the same time, help them upskill and get back into work, and bounce back stronger.
How we can enable all workers to meet their retirement needs, and enjoy peace of mind in their golden years, as well as many other issues you can see from the booths outside where they have a Every Worker Matters showcase, around career guidance for young people, caregiving, support for platform workers, and many other issues.
We’re looking into all of these issues, and working closely with NTUC on possible solutions, so that we can provide good jobs and opportunities, and better assurance to all our workers.
Of course, I understand workers are concerned about other things besides careers and jobs. In particular, many worry about the cost of living.That’s why I have implemented comprehensive support measures, including in this year’s Budget. These measures will help to cover the inflation-induced spending, in other words the increase in spending due to inflation, for lower-and middle-income households.
Some support has already been given out, like the CDC vouchers. I think some of you will say (these are) already spent, used up completely already. But don’t worry, more help is on the way. These are already announced, but it’s worth reiterating because people forget. We have top-ups for children later this month; utilities and S&CC rebates every quarter; and for all adult Singaporeans, cash payouts of up to $2000. So in other words, everyone, adult Singaporeans will get something, but the more vulnerable groups, especially our seniors and lower-income individuals will receive more. We have done everything we can to lessen the stresses and strains that people feel on the ground, and we will continue to do so.
One specific concern that people have is housing. The main problem we face today is insufficient BTO flats – because our supply was impacted by delays caused by Covid. We are steadily catching up on the backlog – ramping up supply and building more BTO flats. This year alone, we are completing 20,000 flats. We will get this done and we will deliver the results.
Despite these efforts, some still worry about the affordability of HDB flats. I met one union leader who told me: in the 80s, a 4R flat was only $40,000.But now BTO prices are more expensive. So he said: if this trend continues, how will my children afford their own homes in the future?
I explained to him why he doesn’t have to worry, so let me do so here again with all of you. In Singapore the Prime Minister has to be a real estate agent, so I’m learning and brushing up my skills and I will use this occasion to practise.
When you think about affordability, please don’t just look at the headline price of the BTO flat; also consider how the price relate to income, as well as the proportion of income that’s needed to service the housing loan. Then, you have a complete picture of affordability.
In 1980, the price of a 4R BTO flat in a new town at that time indeed was around $40,000. But back then, the median household income was around $900. The typical household would use about a quarter of their income to service the loan.
What’s the situation today?
Look at the price of a 4R flat in a non-mature estate like Bukit Batok, recently launched. It’s about $350,000, so prices have risen nearly ten times since 1980. But the median household income has risen ten times too, from $900 to $9,000 today. So BTO flat prices have in fact moved in tandem with incomes.
What I’ve described does not even include the housing grants because we give up to $80,000 for first-timers, which make the flats more affordable for them.
So if we do a proper comparison, a fair comparison, BTO flats remain affordable. The typical household now continues to use less than 25% of their income to service the loan, like in 1980. And the vast majority of our first-time homebuyers today service their housing loans through their CPF contributions, with very little or even no out-of-pocket cash. This is what we are doing today and this is what we will continue to do in the future to ensure affordable public housing.
So, brothers and sisters, affordable and accessible public housing – like access to first rate education and healthcare – will always be a key part of our social compact in Singapore.
We have done this in the past. We’ve created the world’s best public housing. You go anywhere in the world: name me any country that has the same quality of public housing that we do – there is none. Now, we are continuing to provide affordable and quality public housing to Singaporeans. And as long as the PAP remains in charge, we will ensure quality public housing that is affordable and accessible for our children and future generations.
This is what we stand for. The Government will always strive for a fairer and more equal society, and for the well-being of every worker – that conviction is in our DNA; it’s in the DNA of both the PAP and the NTUC.
So long as we continue to work together and keep faith with one another, we will achieve our shared goals.
Strengthening Tripartism & Symbiotic Partnership
This brings me to my final point – which is the centrality of tripartism and the PAP-NTUC partnership.
Tripartism – that’s our secret recipe, our secret formula. It is one of our greatest and most sustainable competitive advantages. I mentioned just now the S$10 billion subsidy Germany is offering Intel to invest in the country.
We cannot afford to match them, we can’t afford the same scale of subsidies. But we have something worth even more – a tripartite structure that is in working order, and effective. That’s worth many times more than S$10 billion. So let’s cherish and guard this precious inheritance and make it even better.
Just look at what’s happening in so many other developed first-world nations, where industrial relations have broken down. In France, there have been riots and strikes since January this year, because of anger over the government’s plan to raise the retirement age. In the UK, unions went on strike to protest slow wage growth and it’s affected a lot of public services.
I’ve cited two examples in two countries; but you can see similar labour action in many other places. Businesses and governments will push back, fuelling deep divisions in society. It becomes a vicious cycle, because once trust is lost, it’s very hard to recover. We must never allow this to happen here.
Fortunately, Singapore is on the right track. We have a lot going for us. Our tripartite approach ensures that Team Singapore has the best chance of overcoming challenges and seizing new opportunities.
The basis of tripartism is the symbiotic partnership between NTUC and the PAP. We are sibling organisations – we originated from the same movement. We share the same objectives – to improve the lives of workers and Singaporeans, promote economic growth for all, and ensure social cohesion and stability.
That’s why through good times and bad, workers and unions have supported the PAP. The PAP, in turn, works closely with the NTUC to implement pro-worker laws and policies, and ensures that NTUC has the resources to look after our workers.
That’s why in our rallies, we participate in each other’s rallies, you have in the May Day Rally our comrades from the PAP, and in a PAP rally our brothers and sisters from the unions. And when we come together for rallies like this, we affirm this special relationship when we say together in one voice: Majulah NTUC, Majulah PAP, Majulah Singapura.
At a personal level, I’ve had the joy and privilege of working closely with many brothers and sisters in the Labour Movement.
My own ties with the union started more than 15 years ago when I was at EMA. I engaged our union leaders at UPAGE regularly, and got to know many of them, including the late Brother Nachi, and the present leaders Brothers Samad and Seng Chye.
Since then, I have gotten to know many other union leaders. I deeply appreciate and thank all of you for your friendship. To all of you, and to all our brothers and sisters in the Labour Movement, I want to tell you that you can always count on my support and friendship as we chart our new way forward together.
In these dark times, this is my promise to you. The 4G team and I are fully committed to look after our workers, to protect your interests, and help you earn a better living and live a better life. The 4G team and I are fully committed to our partnership with the NTUC and Labour Movement: to work closely with you, and to secure sustained growth and good jobs for all Singaporeans.
Come what may, we will always be there with you, for you. We will always have your back.
Solidarity Forever and Happy May Day everyone!
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