DPM Lawrence Wong at the National Wages Council 50th Anniversary Dinner

PM Lawrence Wong | 28 September 2022

Speech by Deputy Prime Minister and Minister for Finance Lawrence Wong at the National Wages Council 50th Anniversary Dinner on 28 September 2022.

 

Chairmen and members of National Wages Council, National Trades Union Congress, Singapore National Employers Federation, past and present
My Cabinet and parliamentary colleagues, past and present
Distinguished Guests, Tripartite Partners, Brothers and Sisters,

Congratulations on NWC’s golden jubilee. I am delighted that we can celebrate this milestone today, with COVID-19 in a much better position than before, with mask-off, with everyone embracing it and in a much better mood now.

NWC is 50 years old this year. Coincidentally, I will be 50 this year too. In the biblical and Jewish tradition, the jubilee year is a year of rest. Unfortunately, there is no rest for NWC. I think all of us have been working hard in the last two-and-half years of the pandemic.

It was a difficult time for all of us. I know that many had to adjust to the changing rules and restrictions. Many livelihoods were deeply-impacted too. I want to thank everyone for your cooperation and forbearance, and for working together with us in getting through this last two-and-half years. By working together, we have emerged stronger and we are today in a better position than before. Thank you once again for your cooperation.

In particular, I want to acknowledge the contributions by the NWC during this period. As Peter mentioned just now, during the heights of the pandemic, the NWC broke with convention and met twice in 2020 and 2021 to review its wage guidelines.

You recognised how massive and repeated disruptions caused by the pandemic and the consequent public health measures were impacting the economy and labour market. And you provided timely, even-handed guidelines for employers to stabilise the situation, and to minimise the impact on workers as much as possible.

Some recommendations were certainly not easy to make -- for example to implement wage cuts to save jobs. But fortunately, the NWC’s guidelines were taken in the right spirit by stakeholders. And because we kept faith with each other and worked together, we were able to weather the economic crisis.

This is a testament to the deep reservoir of trust and goodwill that has been built up over the last five decades. And also the confidence of NWC to balance the interests of tripartite partners. Tonight, let us once again pay tribute to everyone in the NWC and all partners here for getting us through the pandemic.

NWC truly is an indispensable institution in our unique system of tripartism. In this milestone year, it is useful to reflect on how far we have come, as Peter shared just now as well. As all of us know, back in the 50s and 60s, labour relations were adversarial. Industrial disputes and strikes broke out frequently.

Following our Independence, we also had to confront the British withdrawal of their forces. We had to adjust quickly to the shock. NTUC too embarked on a revolutionary transformation of the trade union movement, beginning with its epochal 1969 Modernisation Seminar.

United by a common purpose, Government, employers and employees realised we couldn’t carry on as before – snarling at each other across negotiating tables or picket lines. Instead, Government, unions and employers resolved to work together to grow our economy and improve the lives of Singaporeans.

The fact that the leadership of the ruling party, the PAP, and the NTUC, arose from the same movement helped. Better industrial relations brought in more investments and our economy started to take off.

Then, we faced a different challenge. With Singapore’s rapid growth and labour shortage, there was real risk that wages would spin out of control, and undo the progress that we made in attracting investors. So, the idea of a wages council was mooted by tripartite partners, as well as the then-Minister for Finance Hon Sui Sen. And so the NWC was born in 1972.

The establishment of NWC has contributed to a much more stable and progressive approach to labour relations. Through its annual recommendations, NWC has ensured that wage increases in Singapore are orderly and market consistent – that they move in tandem with productivity and economic performance.

More importantly, this is achieved through a tripartite approach underpinned by cooperation and mutual understanding. In good times, NWC brings employers and unions together to ensure the fruits of growth are shared by all, by rewarding workers with wage increases and higher variable payments. In times of crisis or recession, NWC react swiftly to come up with recommendations and measures to save jobs.

It may sound quite straightforward, but what is not so well-appreciated, even by Singaporeans today, is that this uniquely tripartite approach has strengthened trust amongst all the stakeholders. Because we are able to discuss and negotiate in good faith, to find common ground, and to seek win-win solutions that benefit all parties.

And when everyone sees that this approach works and produces results, it spurs them to continue engaging one another and building consensus. As they say, trust is built painstakingly, Peter said this just now, drop by drop. But trust can be lost very quickly, in buckets at that time. We have had to uphold that collaborative mindset and the quiet building of trust year by year. That is the secret to our success. That is why very few countries can replicate what we do. And the outcomes speak for themselves.

If we just look at the last 10 years, mean gross monthly income from work grew by an average of around 2% per year after accounting for inflation, which translates into a steady increase in the standard of living. Crucially, this wage increase has been broadly matched by productivity growth over the same period. We should not sniff at this, nor should we take this for granted. Very few countries at Singapore’s level of development have been able to achieve this. In fact, almost all the developed countries over the past decade have experienced stagnant wages or stagnant productivity or both. So we should certainly take pride in the achievements that we have been able to accomplish together.

All this is possible only through the hard work of generations of tripartite partners, brought together by NWC. I am glad that tonight we are joined by the past and present Chairmen of NWC. Prof Lim Chong Yah, who took up the challenge of setting up NWC with no precedent to draw from. His contributions as the pioneering Chairman for almost 30 years allowed NWC to be a force for change and laid the foundation for harmonious tripartite relations. Thank you, Professor Lim.

Prof Lim Pin, under whom the NWC initiated significant wage reforms to bring about more flexible salaries based on performance and productivity, and began recommending minimum built-in wage increases for lower-wage workers. Thank you for your contributions too, Professor Lim Pin.

Current Chairman Mr Peter Seah, whose steady leadership especially through the COVID-19 has cemented the NWC’s integral role in our nation building, and renewed the trust between tripartite partners. Thank you, Peter.

And of course, we have many tripartite partners here tonight, including Minister Tan See Leng, Minister Josephine Teo, Minister Chan Chun Sing, NTUC Secretary General Ng Chee Meng, Mr Khaw Boon Wan, Ms Mary Liew, Mr Robert Yap, Mr Stephen Lee, Mr John De Payva, Ms Diana Chia, and Mr Lim Boon Heng to name just a few.

Tonight, I am honoured to be celebrating NWC’s achievements with all of you, as one big tripartite family.

Looking ahead, the NWC will continue to play a key role to ensure Singapore’s continued success and prosperity. We all know the one immediate challenge we face is rising inflationary pressures, and a potential global economic slowdown ahead. Fuel and food prices have been increasing worldwide, worsened by the war in Ukraine. Inflation in Singapore has already reached its highest level since 2008.

Our economy is still growing for now, but there are worrying signs of slowing growth momentum across all the major external engines – be it US, EU or China. In these times of heightened volatility, it is getting more difficult to predict the economic outlook; we have to brace ourselves for more turbulence ahead of us. In other countries, we have already seen the resurgence of adversarial relations between employers and workers.

In Singapore, I say let us stay united and work together as tripartite partners to ride through the stormy weather ahead. More fundamentally, the golden age of globalisation we enjoyed over the last 30 years has likely come to an end.

Countries and companies are no longer operating on just-in-time efficiencies and lowest cost. Now everyone is looking for greater resilience and paying more for just-in-case precautions. These changes are also shaped by rising geopolitical tensions. And we all know that worsening US-China relations are very worrying and can lead us to a more fractured and dangerous world.

All of this will certainly impact Singapore. How do we respond to these challenges and ensure we can continue to move forward together? First, we must continue to ensure that wage increases are in line with productivity, and manage the risks of a destabilising wage-price spiral, where higher wages feeds directly into higher prices.

All the employers here know that we are now experiencing a very tight labour market; many employers having difficulty filling jobs. For every 1 unemployed person in Singapore, we have more than 2.5 job vacancies1. One reason for this is that, despite the relaxation of our border measures, non-resident employment has not caught up to pre-pandemic levels. Wage increases are inevitable in such a situation. But we cannot afford for wages to increase too quickly, which will cause us to lose our global competitiveness. If this happens, this will hurt both employers and employees, and it will be the most vulnerable workers who will ultimately bear the brunt of the impact if companies cannot sustain themselves.

Second, while we keep wage increases sustainable, this could mean that wage increases may not keep up with the higher costs of living faced by many workers in the short-term. The Government will do our part to close this gap and help cushion the impact of higher prices, especially for the lower and lower-middle income workers. We have already provided a comprehensive suite of relief measures for such workers as well as businesses. Some of the measures we announced earlier are still being rolled out. We are monitoring the situation closely and we will provide more help if necessary.

Third, we must continue to help businesses and workers transform. In the face of increased technological advancement and disruption, we have to redouble our efforts to encourage skills upgrading and productivity improvements across all sectors of the economy. This is the only way to secure sustainable wage increases and improve the well-being Singaporeans.

We are doing this in a deliberate and systematic manner, through both a macro approach, and a bottom-up approach. At the macro level, we have developed the Industry Transformation Maps (ITMs) to drive transformation across every industry.

Take for example the Food Services ITM. Industry, unions, and government have been working closely to chart out the different strategies available to businesses for them to grow and transform. For food manufacturers, this has meant increasing productivity, such as though new machines to automate raw food processing; For cooked food providers, a shift to central or even cloud kitchens to reduce costs; And for local food brands, it would mean exploring ways to expand their businesses overseas.

All of this is complemented by SkillsFuture, to help workers acquire new skills and new career opportunities. But it is one thing to articulate these strategies and have it all written out nicely. The point is every business must think through what applies to them, and chart out their own concrete action plans on how to embrace new technologies, transform their business processes and reskill their workers.

So we have a deliberate bottom-up approach too, where we engage individual firms, work with them and help them to transform. NTUC does this by engaging employers to establish Company Training Committees, to help translate broad transformation strategies into concrete action plans at the firm level. The Government will do our part by helping companies on this journey through a wide range of grants for automation, productivity improvements, job redesign and skills upgrading, a whole range of schemes that we have.

I hope NWC will play a strong leadership role here too and encourage employers and employees to commit to more structured training and innovation at the workplace.

Finally, we should continue to uplift lower-wage workers and reduce income inequality in our society. We must ensure that wage gaps across our society do not move too far apart. That is why we focus our efforts on uplifting the wages of those at the bottom 20th percentile. We do this by increasing the Workfare Income Supplement, expanding Progressive Wages to more sectors, and raising the Local Qualifying Salary which companies must apply to all their resident workers when they hire foreign workers. These are our three strategies.

In fact, in the last 5 years, the real wages of the 20th percentile worker have already grown faster than that of the median worker. So we have made progress but we want to do more. Through these three strategies that I’ve just described, we aim to continue this trend, so that all our lower-wage workers will enjoy higher incomes in the coming years.

I am glad that the NWC recognises how critical an endeavour this is. Last year, it made an important recommendation for the wages of lower-wage workers to grow faster, and gain ground with the median worker. It also expanded its wage recommendations for lower- wage workers to cover the bottom 20% of workers. These recommendations send a strong tripartite signal that we can all do more to pursue inclusive growth in Singapore.

At the heart of our efforts to ensure sustainable wage growth and reduce income inequality, is a fundamental desire to uplift workers and improve lives. It is about building a stronger, more inclusive and more cohesive Singapore.

We must never allow wages to stagnate and income gaps to widen in Singapore. If this were to happen, people will lose hope and grow resentful with a system that they feel does not serve them, or only benefits the few. Trust will very quickly break down and social cohesion will rupture.

Let us all do our part to prevent such a scenario from happening here in Singapore. It requires all of us to chip in for the collective good. Workers must be open to adopt new ways of doing things and training themselves. Employers must reward their workers adequately, especially in sectors where there is limited scope for productivity improvement for lower-wage workers. And as consumers and taxpayers, we must be prepared to share the costs too by paying a little more, to help those less advantaged earn more and be valued for their work. And together, we can build a society where no one is left to fend for themselves, and where every worker can secure fulfilling and dignified lives.

This is why we have launched an ongoing Forward Singapore exercise so that we can continue to pull together as one united people to take Singapore forward. Through this exercise, we will seek feedback and ideas on our policies; also seek to forge consensus, and rally society around our shared aspirations and ideals. So I welcome participation from all our tripartite partners.

More than ever, NWC will have an important role to play in bringing partners together to champion fair, inclusive, and sustainable growth for all. In these challenging times, I am sure that our instinct to cooperate and to find consensus will see us through.

To conclude, the NWC has cemented its place as a central institution in Singapore’s economic infrastructure. It has truly been instrumental to our nation’s success over the past 50 years. I have every reason to believe that, with the support of all of you, all our tripartite partners, NWC will continue to be a forward-looking and unifying force in our country and in our society. NWC will continue to guide Singapore on its journey through the next 50 years and more. Thank you very much.


 

[1] As of June 2022


TOP