We will do more for middle-income PMETs: PM Lee

22 February 2009

22 Feb - At the Singapore Tripartism Forum, PM Lee said the government will do more to help middle-income professionals and executives who lose their jobs, including programmes for upgrading within the same profession, even as CDCs collaborate with recruitment agencies and training providers.


NTUC President John de Payva,
Secretary-General Lim Swee Say,
SNEF President Stephen Lee,
Comrades, Brothers and Sisters, Fellow Singaporeans,

We are here today for a dialogue on a very serious issue - how to save jobs and create growth at a time of a global downturn.  This is the most severe economic crisis that Singapore has experienced, that the world has experienced, in 60 years.  It is a global problem, and every country has been affected.  It is sharp, it has happened suddenly, and it is deep.  The plunge is something which we have never seen and it is the worst since the Great Depression in the 1930s.  And it is not just a cyclical dip - where things go up, things go down, things go back up again. There are fundamental structural problems in the developed economies and in the world’s financial system, which are going to take quite a long time to resolve.

Asia did not suffer the same structural problems.  In fact, we had hoped that this time, Asia, being further away from Ground Zero, will be able to get off more lightly.  But we were mistaken. Despite Asia’s rapid growth, in China, India and all over Asia, it has turned out that nobody in the world is immune to this crisis.

All the Asian countries have been badly affected.  Japan, which is the second biggest economy in the world, is now facing its worst recession in 35 years.  We had hoped that China and India would be able to generate some steam and help pull the rest of Asia along, but their exports have tumbled and their economies have slowed down.  Their governments, particularly that of China, are very worried about keeping their own economies going.  They are likely to face serious unemployment problems, not tens of thousands of people, but tens of millions of people in China.

The closest parallels to Singapore are South Korea and Taiwan because they are export-oriented, quite industrialized, and quite advanced economies. In January this year, their exports both went down by one-third, same as Singapore’s.  Their economies have also been shrinking, similar to Singapore’s. South Korea in the last quarter of last year shrank by six percent year-on-year; Taiwan by eight percent year-on-year.  We were about four percent year-on-year. We have been hit because we have nowhere to hide -- we are completely open, and our trading partners are all down.  All sectors have been hit.

When exports go down by one-third that means our manufacturing goes down by almost one-third.  We do not consume the disc drives we make here; we do not use all the chips we make here; we do not burn all the fuel we refine here or the petrochemicals we produce here.  They all go overseas.  Manufacturing is one- quarter of our economy.  One-quarter times one-third is one-twelfth of our economy, which may go missing if the drop in exports is sustained.  Exports down also means PSA and shipping is down.  Business is so slow that containers can go from China to Europe for free. You only have to pay for the fuel and the insurance, while the boat they will throw in for free.

I was talking to Ameer Hamzah, who is General Secretary of the Port Workers Union, just before the Budget. He has worked 38 years in the port and he says it is scary.  He has never seen it so bad.  Even during the worst times in the past, we could sustain our volumes and business was still there.  Even when Maersk moved out, we still sustained our volumes and we were still okay.  But this time, the volumes have gone down.  You look at all these quay cranes at PSA.  There are 150 of them, and sometimes 100 of them are up.  Up means no ship, down means they are operating - raising and lowering containers.  So, sometimes two-thirds of the capacity is standing around.

SIA has also been hit -- tourism is down, retail and hospitality are affected.  SIA has cut its capacity by eleven percent, decommissioning 17 planes. 

This is a very serious problem for us. We have forecasted GDP this year to be minus-two to minus-five percent.  It could be worse if the global economy worsens.  Even less than five per cent is possible. Retrenchments have already gone up last year in the fourth quarter and unemployment is creeping up.  Not very high yet but in every report we get, the percentage goes up by another few decimal points.

Why is all this happening?  The Ministers and I discussed it.  Boon Heng had a very vivid explanation of this. He said before Christmas last year there was one report of American parents coming together to write a letter to toy producers to tell them: please do not advertise your toys because if you advertise your toys, my children will see the advertisements and ask me to buy them.  I have no money to buy them toys, and this brings a lot of stress. That is America. What does it connect to?  The next report comes – in China, of 9,000 toy-exporting manufacturers, half have closed.  Tens of thousands of people, maybe hundreds of thousands of people are out of work because the Americans have no money and are in no mood to buy toys, even during Christmas time.  And in Singapore, we are upstream of this.  Our exports to America are down.  We also sell to China, and we were hoping that exports would keep up, but they are also down. Why?  Because the chips we send to China go into these Barbie dolls and computers which are sent to America.  They are re-exported. So when the Chinese are down in their exports, we are down in our exports. 

This is what we mean when we say globalisation.  We are all connected together. For us to come back up, the rest of the world has to come back up.  The US has to recover, Europe has to stabilize and recover, and that is not going to happen quickly.  Meanwhile, while the world is in trouble, we have to look for opportunities ourselves.  We have to find niche areas where we are good in, where we have the advantage, where there is a chance to quietly go in and make some progress.

This is a challenge which the tripartite partners have to face together and we have been active.  Last year in November, we launched SPUR - the training programme to upgrade workers’ skills, make workers more employable and let those who lose their jobs strengthen themselves.  If you lose your job, we can help to find a new one.

In January this year, the NWC convened again.  It is usually one meeting per year, but this year, the NWC had to do “extra work”.  The meeting recommended that companies should cut costs and either freeze or cut pay to stave off retrenchments.  It sent a clear signal to everybody that this is not business as usual.  And in case there was any doubt, the Government brought forward the Budget by one month to January.  It was not an ordinary Budget.  It was an extraordinary Budget for extraordinary times.  We implemented a large Resilience Package.  We tapped on past reserves and one of the key items which we used the past reserves for was the Jobs Credit Programme.  This is S$4.5 billion to try our best to keep companies viable to save jobs. 

It is still early days yet.  The Budget is barely a month ago, but the response so far has been good.  Under SPUR, already 350 companies have taken part and 22,000 workers are going to be trained on the programmes.  The Budget itself has had a very strong and good response from both employers and workers. Naturally, people have said a little bit more would have been even better, but in all honesty, they have acknowledged that the Government has produced a decisive Budget, and given a large dose of medicine which will have an impact, and a fast impact. 

Workers are already benefiting from the Jobs Credit Scheme.  Companies are using it for different things, some to upgrade their workers and to make themselves more competitive.  Some are sharing the Jobs Credit with workers, either avoiding wage cuts or giving workers a small wage increase where this is justified. Some are deferring retrenchment, or if they already have retrenchment plans and it cannot be helped, are adjusting their plans and reducing the number of workers who have to be retrenched.  And some companies are using it to compete for additional business, against their competitors or even within the same MNCs, because in these times when the business is tight and MNCs must decide where to cut back, each production plant, each location is actually competing against the other branches.  With SPUR, with the Jobs Credit, theSingapore company can say: “Leave me alone.  I have a different relationship here with the workers, with the unions.  We understand what we are doing, and the Government is helping us.  Let this be the place which can continue to do business even when you have to trim back somewhere else.”

The Budget has been very important in our response to this crisis.  But despite all of these measures, we have to be prepared for a very difficult year ahead.  I think we would be misleading people if we said that with the Budget done, we will be okay for this year. You cannot be sure because the global economy has not stabilized. And indeed it may get worse, in different ways. 

In America, problems in the banks and financial institutions have not been sorted out.  The Government has spent hundreds of billions of dollars, but the problems are still there.  There are toxic assets still inside the system, and more assets are turning bad.  The US Government is now stress-testing the financial institutions. That means let us look at their books, let us imagine that things get worse by another 10, 20 percent.  Will the banks be viable or will they be dead?  And if there is chance that they will not be viable, then the Government will have very difficult choices on its hands.  Either you can let them die though you do not know what the consequences are.  Or you can put in some more money, which is politically very difficult because Congress will be very unhappy and the American public will be very upset.  Or you can say I nationalise the banks and the government takes over, but that is a very big step to take.

As long as the US banks are in this sick state, they cannot lend, business cannot be done, and the USeconomy cannot recover.  And the US is the biggest factor.

The next biggest factor is Europe, which is also in difficulty.  Western Europe has its own problems.  The economies of Britain, Spain, Germany and France are all in similar difficulties as America.  Their banks have similar problems as America, and they are probably less advanced in tackling these problems than the Americans.  So more dirt and more bad assets have to be sorted out.  And they have one more problem which is Eastern Europe.  The Eastern European countries -- Ukraine, Hungary, the Baltic countries, Romania -- these countries borrowed a lot of money, borrowed in foreign currencies, and borrowed from foreign banks. This is okay as long as the banks are happy to lend, as long as their exchange rates are stable, as long as confidence is there.  All three factors are not very strong.  If the banks pull back, the economies may crash.  It is a big problem for Eastern Europe.  It is also a big problem for the European banks, which are exposed toEastern Europe.  And it is a problem for Asia too because these same European banks are very active and big lenders in Asia, and all over in Southeast Asia.  If they pulled back their business, then this is another instance where something happening far away in the world comes to impact on our part of the world.

We have to be prepared for this.  The Resilience Package will minimize job losses, but there will still be retrenchments, and unemployment will still go up.  I think there will be some hardship.  The Budget package will prevent damage to our economy during the downturn, but we cannot cure the problem because fundamentally, the sickness is not our sickness.  It is a global sickness and we have to wait until the US picks up, and Asia picks up with it.  That is going to take some time.  So, let us prepare for a very tough year ahead and let us be psychologically ready to think in terms of several slow years after that.  Not going back to 2004, 2005, 2006, 2007, where things were just blooming and we effortlessly achieved seven, eight percent growth each year.  Over the next four to five years, if we can get two, three percent growth, I think that is not bad. Three, four per cent growth, I would say we are lucky. The next two quarters will be especially tough and let us fasten our seat belts.

Through the Resilience Package, SPUR and Jobs Credit, the Government is doing its best to buffer Singaporeand Singaporeans from these problems. Because we have these schemes and we have reacted decisively, we have so far avoided the massive job losses already being seen in some other countries. The question is – as the downturn bites deeper, what more can we do about it?  I would say a few things.  Firstly, more programmes to help unemployed workers to find jobs.  We already have SPUR, and we are spending a lot of money on these programmes and expanding the capacity.  But as unemployment numbers go up, the demand for these programmes will rise.  When this happens, we will scale up further.  We will make sure that if people need training and are willing to go for training, we will have it available to help them.  

Secondly, we will do more for middle-income workers, for PMETs - the professionals, management, executives and technicians.  I know that PMETs sometimes say the Government always takes care of the lower-income group.  They say, we are not poor but we also need help.  I think it is right that we should not neglect them.  We have already been quietly doing more in the CDCs to help the PMETs.  I was briefed by Central Singapore CDC a few days ago.  They gave me a rundown on their programmes.  They are holding PMET workshops, and they are collaborating with the recruitment agencies and training providers.  They are working with the people who need help.  But the feedback they give us is that sometimes, it is difficult because a lot depends on the PMETs themselves.  They have to be willing to be flexible, and they have to be willing to consider changing careers or learning new skills.  If they want to do what they used to do, that is tough because the old jobs may not be there anymore.  But other jobs are there and if they are willing to be flexible, then something can be done.  But it is a psychological problem and we can understand the sense of dislocation, of confusion, of distress, of loss when somebody who has been working all his life suddenly finds no work, and starts asking “what do I do?”  It is not just having no income, but suddenly you are not sure where to go and what to do with yourself.  

The CDCs have been organising support groups, and getting counsellors and PMETs together to talk over their problems and talk through their problems. Gradually, they make the adjustments and they are more willing to come to terms with where we are and to move ahead.  The CDCs tell me the programmes have been quite successful because of the PMETS who are willing to go for these support groups, 80 percent were later able to find jobs.  It is not bad.  We will help the PMETs more.  We have already quite a number of programmes, but I think we need to pull them together, enhance and expand them and put them under one umbrella.  This is what MOM has done and the new scheme which they have worked out to help the PMETs is called the PSP, or Professional Skills Programme.

We have right now got programmes for conversion from one profession to another, but we do not have programmes for upgrading within the same profession.  We will now introduce programmes to upgrade people within the same profession, within the same industry.  We will hold programmes also for tertiary upgrading.  That means Masters courses, graduate diploma programmes; specific programmes which will be helpful for professionals to find new jobs.  We will fund them and encourage them to participate.  This PSP will come under SPUR.  Gan Kim Yong later, if he has the chance, will tell you a little bit more about it.  But we will do more provided the participants - the individuals who need help - will themselves do more.

We will also do more to help the unemployed and those who are needy.  We have already got the Comcare Self-Reliance Programme.  CDCs are administering this.  The help given is quite generous and it is given out as long as those people who are unemployed and need this help are trying their best to help themselves.  As long as you are making the effort, as long as you are looking for a job, as long as your children make the effort in school, we will help you.  As long as you are prepared to make adjustments, put your kids in childcare, your elderly parents for some sort for eldercare and you go to work, we will help you. But one thing we cannot do is to make the assistance unconditional.  In other words, you are entitled to it -  you just come, and you say, “I have no work”, you put out your hand and it automatically fills up with a hongbao.  Once you do that, people lose the incentive to work, and we have a problem.

There is always a risk.  Sometimes, if you make it too easy, you do not investigate the cases properly, you may not be helping the people who most need the help.  And I get stories - people come to the MP and they say, “I am a middle-income household, what schemes have you got to help me?”  Or another case where somebody went to the MP and said, “I spend S$4,500 a month.  If I am out of a job, what will you do to help me keep my lifestyle?” I think the first thing is we will help you to try and adjust to the new situation and make an effort to help yourself in that situation and provided you do that, we will be there for you. But it is important that you make the effort to look after yourself.

One more thing which the Government is regularly requested to do but has not done, particularly in a downturn like this, is to send back foreign workers, chase them out and keep the jobs for Singaporeans.  We have not done it because we think this is the wrong thing to do.  It is going to do harm to us, now and in the longer term.  The numbers of foreign workers will go down naturally.  The construction sector is still strong, so foreign workers are still employed.  But for manufacturing, we can already see foreign workers being let off, contracts not being renewed and the new applications for work permits down.  I can see that the work permit numbers are coming down gradually month by month.  But it is unwise for us to chase out the foreign workers and send them back and say we keep the jobs for Singaporeans.  Some countries are doing this. Workers have gotten emotional, and made protests.  Unions have also gotten emotional, and agitated against foreign workers and immigrants.  Even in Britain, there was a project in eastern England where they were bringing in Polish workers, and the local Britons got very upset and there were demonstrations and all kinds of problems.  I do not think it is helpful for them.  Certainly, if we do this, it will not be helpful for us.  If we send off the foreign worker, it does not mean that Singaporeans will get the job.  If the Singaporean is not available, or if Singaporeans are not willing to do the jobs or the cost is much higher, the company may close, the employer may say, “no, I cannot do it - no workers, I will move elsewhere”.  Or he may just decide to close down and the result will be less business for Singapore, and fewer jobs for Singaporeans.  Right now, for every foreign worker, you must have one Singaporean employed in a company.   If the company goes, that Singaporean’s job will be missing as well.

I know some companies do not really have the Singaporeans working there.  The Sunday Times had a story on how some of them are just pretending.  MOM has some people whose job is to find out who are the ones who are pretending.  If you know of any, you might want to let MOM know.  But we need to keep ourselves open, and we need to be rational.  Emotionally, I can understand it, because people find it very difficult to accept foreigners here in this difficult period. “I'm out of a job, why do you let him in?”  But the reality is if I chase them out, more people may be out of a job in Singapore.  And that is very difficult to explain, but that is the truth and we have got to get Singaporeans to understand this.

The right thing to do is to make Singaporeans more employable.  With SPUR, with Jobs Credit, we can reduce the cost of hiring Singaporeans, and give them more skills so that they can be more productive.  If the Singaporean worker is keen to learn, to contribute, to work, to be valuable to the employer, then the employers would want him, and then we will have jobs in Singapore.  

Everybody has got to work together to pull us through this.  The Government will implement the Resilience Package vigorously.  We will continue to monitor what is happening in the economy, monitor what is happening in the world.  As the situation changes, as we see the need to do more, we will do more.  I do not think we need to do more immediately because the Resilience Package is a very big package and we took some time to think it over before we made this decisive move.  Let us follow through and make this work. Then we evaluate.  Later on, if the situation changes, we can adjust, and we have more ammunition ready. But do not think in terms of every few weeks, another move; every few weeks, another package or hongbao. Hongbaos only come once a year, during Chinese New Year.

Management have to be pro-worker, and cut costs to save jobs.  As Swee Say says, “cut costs to save jobs before you think about cutting jobs to save costs”.  Make use of flexi-wage and flexi-work arrangements so as to save jobs.  Take advantage of what the Government has - SPUR, Jobs Credit - and turn your excess manpower into training investment.  The Government is actually helping you to pay your worker’s salary when you send him for training.  So if you do not do it, you are really missing out on a good thing.  Be innovative and think of new ways to do business. 

Workers and unions also have to be active and pro-business. Go for the training, accept the wage freeze or even wage cuts, take flexible wages or other flexible arrangements, like shorter work weeks.  Remember, if the businesses do not survive, then the workers cannot keep their jobs. But apart from being

pro-business, there is another very important thing and that is for workers to be flexible in looking for work. Be realistic in your salary expectations, be willing to adapt to different working conditions, for example, working under younger supervisors.  I spoke just now about PMETs needing to be flexible, but I think generally, all of us need to be flexible whatever our jobs are.  We should take up the jobs which are available and there are still good jobs which are available. 

Thirty years ago, one generation ago, jobs were not quite so plentiful in Singapore.  Life was not so rosy, people were happy to get a job, any job.  Parents would teach children that every dollar earned through honest effort is a dollar to be proud of, no matter what job you are in.  Do the job well, earn the money and you would have done the right thing and you would have earned your pay and more.  And that was the attitude which built Singapore.  But as the economy prospered, in good times jobs were so plentiful that even some good jobs became undesirable.  I am not sure these industries will be happy if I mention them, but I am not telling you a secret -- construction, very hard to find Singaporeans; marine, very hard to find Singaporeans.  All our supervisors in the shipyards are 45, 50-plus years old.  Who are going to be the next generation of supervisors manning our shipyards?  Shift work is also not popular with Singaporeans.  The factories which are here on three shifts -- first shift, Singaporeans, second shift, half Singaporeans, third shift, all foreigners. You want to send home the foreigners?  The company will be gone.  All these jobs became undesirable because Singaporeans had plenty of choices, but now with fewer choices, the jobs are still there. Take them when they are available and make the most of them. 

The unions have to be pro-worker and at the same time pro-business -- help workers who lose their jobs, and help companies which are struggling to cut costs.  You have to explain to Singaporeans what this crisis is about, what the Government and NTUC are doing to help, what they can do to help themselves.  You have to rally the workers to do what is necessary to come through this.  I do not want to make light of what you have to do because you actually have a very difficult job on the frontline.  Even one company retrenchment is tough to handle.  In 2003, when PSA had to retrench, I think eventually 300, 400 workers, it was a wrenching experience.  The union leaders who had to handle it broke down and wept.  You will have to steel yourselves for the task ahead.  The Government will back you fully and give you all the resources which you need.  We are gearing up the government agencies and all the set-ups like e2i to help.  The key people in the Government responsible for this - the ministries as well as the officials - are here today. They know exactly what we mean.

I know the unions are also working on this.  Yesterday, Swee Say launched the U-Care Fund to give transport and utility vouchers to needy union members and their families.  It is part of the Care-and-Share Programme through which they are hoping to raise S$20 million this year and I think they will succeed.  The unions are critical to this and if you have any other ideas on how you can help, what you can do, what we can do for workers, let us know.  We will follow up.

The way we can work together - unions, employers and government in a tripartite partnership - to deal with the crisis like this is a unique strength for Singapore.  Nobody else in the world can quite do this.  We take it for granted, but in most countries, the employers and the unions have an adversarial relationship.  Even between the employers and the Government, they do not always see eye-to-eye.  To get the three together in one room and have a dialogue, never mind to work out a solution and achieve a good outcome, is almost impossible.  We have it. Others admire it.  But they cannot emulate it.

A few months ago, I had a visitor from Latin America, their President.  I gave him lunch and he said he was interested to know how we do it in Singapore.  “What is the secret to Singapore’s success?”  Swee Say was at my table, so I said, “Look, here is Lim Swee Say.  He is Secretary-General of the NTUC, elected by the unions, and he is also a Minister in the Prime Minister’s Office, appointed by me.” He looked at Swee Say, he looked at me, and he said, “Is that really true?”  He could not imagine it.  Then he called his minister who was seated across the table, and he said to him, “You look at this, this is how they do it in Singapore.” And he said it was going to take a very long time before he could do anything like that in his own country.  So, this is one advantage that people can see and admire, but it is not so easy for them to do it.  We have to keep this and we have to make the most of this in this downturn. 

We can be confident in our future because of our tripartite strength, but we also have other strengths.  Our reserves are an important strength.  We have accumulated them over many decades, and they will tide us over this period.  We can tap on them for good programmes which we need to, when we need to, like the Jobs Credit and the Special Risk-Sharing Initiative in the Budget.  That is what the reserves are for - a very rainy day.  At the same time, the reserves give confidence to investors that the economy has resources.  TheSingapore dollar is strong and nobody would be tempted to try to push the Singapore dollar down, unlike some other currencies which are getting pushed around.  That means your CPF savings are safe. 

A third strength we have is that the Multinational Corporations (MNCs) believe in Asia’s long-term growth and they want to be part of this growth.  They look around Asia and they say, “If we are present in Singapore, when the region picks up, we can pick up with the region.”  They will be using Singapore to do business in the region.  Even now, in the downturn, we are quietly getting investments into Singapore.  Rolls-Royce is moving its marine business headquarters from London to Singapore. This was in the news.  Abbott Laboratories - this is a pharmaceutical plant - will open a US$300 million nutritionals manufacturing facility in a few days’ time. In March, Neste Oil, which produces biodiesel, is going to begin building a new plant to produce the world’s cleanest renewable diesel.  The projects are coming in and there are a few more in the pipeline.   EDB is working hard to bring them in.  They are not quite ready to be announced yet, so I cannot tell you.  But I assure you that we are working at it and the flow is there. 

Provided we keep on doing the right thing and we work together in Singapore to tackle this crisis, then we will strengthen confidence in Singapore.  And we will emerge ahead of the competition, as we have always done from previous crises. We have had many previous crises before.  When we became independent, that was a big shock to the whole system.  When the British left in 1967, there was great fear over where our livelihood was going to come from.  During the oil shocks in the 1970s, during the deep recession in 1985 when all of a sudden, we went from eight percent growth to zero percent in one quarter and we had to do drastic things and cut CPF, we pulled through.  We had the 9/11 recession, and we were okay.  SARS, we were okay. Today, in this global financial crisis, we have to be okay.  We could overcome the previous crises, particularly the earlier ones, because older generations stayed united, did what needed to be done, took the pain and made it.  This crisis is a test for our generation and if we pass this test, which we must, we will be strengthened for another generation.  Then we will have a Singapore which has the toughness, and a people with that unity which will see us through for many, many more years to come.  So, let us brace ourselves for the year ahead and let us see it through and make a success of Singapore. 

Thank you very much.