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SPEECH BY MR THARMAN SHANMUGARATNAM, MINISTER FOR EDUCATION, AT THE 46^TH ANNIVERSARY DINNER AND DANCE OF THE SINGAPORE MANUAL & MERCANTILE WORKERS’ UNION AT THE NEPTUNE THEATRE RESTAURANT ON FRIDAY, 2 DECEMBER 2005 AT 7.30 PM

Mr John de Payva, President, NTUC

Distinguished Guests

Ladies and Gentlemen

1.            I am very happy to join you this evening for your 46^th annual dinner and dance.

2.           There is reason to celebrate as we approach the festive season.  The Singapore economy has seen good growth this year.  Growth has exceeded what we had expected at the beginning of the year.  It has also meant many more new jobs.  In fact, this year will mark the strongest job creation since the boom year of 2000.  Amidst these favourable developments, let me touch on three significant trends that are taking place in the labour market.   These are trends that will be with us for several years to come.   They are long term trends, not just a short term happening.

3.           First is the shift towards more services sector jobs, which is also where the SMMWU draws most of its members.   While manufacturing employment has remained flat since 1990, that in services has increased by almost 70% and has been the key driver of employment creation for the economy.  Today, services make up seven out of every ten jobs, compared to six out of ten jobs in 1990.  In particular, employment within the financial and business services sector has more than doubled since 1990.

4.           The increased reliance on services jobs is not unique to Singapore.  Other advanced economies are also experiencing this trend.   It is not a mark of a declining economy when this happens.   For example, the US has seen a significant decline in manufacturing jobs over the last two decades, continuing over the last few years.   Only 10% of US workers are in manufacturing, compared to over 20% two decades ago.   But US manufacturing has done very well.   For all the competition from low-cost countries like China, the US is still by far the largest manufacturer in the world.   It accounts for 24% of world manufacturing value added, almost unchanged from 2 decades ago.   Japan is second at about 21%.   China is catching up, but accounts for only 9% of world manufacturing.   US jobs in manufacturing have declined because productivity has gone up, not because of competition from China and other low cost countries.

5.         Another reason why the shift to services is not fundamentally worrying for our future growth is that there are big opportunities for productivity improvements in services.   It is well known for example that the boom in productivity in the 1990s in the US was due mostly to innovations in service industries like retail and wholesale trades, not just high tech manufacturing.

6.         A second major shift in our labour market is the shift towards more complex and higher-skilled jobs in the labour market.  While lower-skilled workers have also benefited from the recent strength in the job market, we are seeing the biggest increase in demand for people with higher skills and ability to do more complex tasks.

7.         The shift towards higher skills is not simply about demand for higher qualifications.   It is a shift in demand towards people who can do more complex and challenging tasks on the job, across the whole spectrum of work – on the production line, in retail, in finance and auditing, in IT and engineering jobs, in marketing, and in management  -  and across the range of qualifications that people have.   It is a shift in demand that affects all of us.   There is greater demand for people who have the skills, judgement and experience to deal with new situations where there are no rule books to follow.   For example, dealing with new customer demands, new technologies, new ways of organising the supply chain.

8.         The same is the case in the most advanced and dynamic economies in the world.   According to McKinsey, in the US about 70% of all jobs created since 1998 have been of this more complex nature  -   requiring high skill, judgement and experience.

9.         These two trends – towards services-oriented jobs, and towards more complex work  -  are going to be with us for many years.   But there is also a third, important trend, and that is that people will have to change jobs more often in their lifetimes.   While higher-skilled workers are in greater demand, they will not be spared the effects of the accelerated pace of restructuring in a more competitive global environment.   This is in fact partly professionals, managers, executives and technicians (PMETs) comprising more than three out of every ten workers retrenched in the first half of this year, compared to just one in ten about 15 years ago, or   two per ten retrenched workers in the late 90s.

10.        This too is what we see in other advanced economies.   I use the example of the US again, because it has been the most dynamic of the advanced economies over the last 2 decades.   Job turnover is higher in the US than elsewhere  -  people change jobs more frequently.   But this has also been a source of strength in the US.   In fact, studies show that a full 50% of the high productivity growth seen in the US over the last 15 years has been due to workers changing jobs  -   moving out of jobs with low demand into jobs where there is growth in demand, and therefore improving the efficiency of the labour market.   In other words, high productivity growth was not due mainly to new and fancy technology or expensive spending on equipment, but due to large numbers of ordinary people looking for better opportunities, and being willing to seize those opportunities when they come.   The opposite has been true in much of Europe, where too many jobs are protected, workers are unwilling to change jobs, productivity stagnates and economic growth is weak.

11.        The lesson in this for us is that we should make sure our labour market is flexible.   We should help people to acquire new skills to take on new jobs, not hold on to jobs where demand is declining.   All of us have to keep adapting, keep learning new skills, and keep taking new opportunities.  That’s how we can keep productivity growing, keep creating new jobs and keep the economy expanding.

12.        Our aim therefore can never be to preserve jobs but to grow jobs.  Our aim should be to provide lifetime employment opportunities  -  not giving everyone the same job for life, but giving everyone the opportunity to find a good job at any point in their working lives.

Education

13.        The Government will continue to do its utmost to create job opportunities for the people, through attracting more investments and growing new industries.   We will also invest heavily in education, because that is fundamental to our future economy.

14.        [Elaborate on education priorities briefly - helping every Singaporean pursue excellence; preparing everyone for a more complex economy.]

15.        [Financial assistance.]  While we focus on creating these opportunities for all, we want to make sure that no child feels unable to take these opportunities, or is denied access, because of financial reasons.  MOE is in fact looking at our existing Financial Assistance Scheme to see how we can reach more low income families.  We are reviewing the existing income criteria, also the specific expenses for which financial assistance is given.  Our aim is to provide support to more families in need, besides the very low income group.

Unions’ Role

16.        The role of the union will also have to adjust with the needs of the workers and the changes taking place in the environment.

17.        In the face of accelerated structural change, unions have been working more closely with the government and companies to equip workers with the necessary skills for jobs in the new economy.  SMMWU has played an important role in helping workers through the adjustments that they have had to make in recent years.  The adjustments have not been easy for many, but are a necessary process, and have paid off in the form of increased competitiveness and sustained growth of the economy.

18.        Although Singapore has been able to buck the trend of declining union membership, the challenge for the unions lies in attracting younger workers to join its ranks.  There is a need to inculcate the culture of adaptability and skills upgrading and retraining in the young.  Furthermore, the youth need to be kept abreast of the developments in the labour market.  With the launch of Young NTUC by PM Lee Hsien Loong in April this year, the focus has shifted to increasing the involvement of the youth today in the labour movement.   Unions need to give greater emphasis to attracting more workers, especially the young ones, to become union members and play an active role.   The existing experienced union leaders therefore have an important role to play in nurturing promising, capable and committed union activists to become future leaders.

19.        The SMMWU has always had a youth committee to focus on the youth members.   They believe that the young members have to be encouraged to join in union activities and experience for themselves what the union is all about.   Hence, the SMMWU’s decision to launch their youth chapter tonight is a step in the right direction.   With leadership renewal in the pipeline, it shows the foresight and seriousness of the Union in this aspect and augurs well for its future.  I am honoured tonight to witness the launch of the youth wing.

20.        As we reminisce on our yesteryears alongside the theme for tonight’s event, let us not let go of the values that the earlier generation of workers had embraced.  Let us continue to possess the same spirit of perseverance, dedication, and adaptability required to meet today’s challenges.  We must continue to retrain, upgrade, and build up on our human capital.  This is our most valuable resource, and one that is critical to Singapore’s future success.

21.         I am confident that with the concerted efforts of the tripartite partners, the SMMWU will continue to play a pivotal role in our economic future while looking after our workers.   I wish the SMMWU a happy 46^th anniversary!