Conference on Organized labour
Responses to the Conference Paper
Professor Chew Soon Beng and
Dr Rosalind Chew
Nanyang Business School, Nanyang Technological University, Singapore
29 September 1998
Trade unionism in Singapore, as explained in our book entitled Employment-driven Industrial Relations Regime, is employment-driven in the sense that unions seek to set wages at levels to maximize employment levels. Thus, wages under the employment-driven framework will not be too high in the first instance and will rise gradually as the country prospers. This is evident form the economic development experience of Singapore. The book argues that unions in many developed countries are wage-driven in that unions seek to set wages at levels higher than what they would be without union intervention. Hence, higher wages are achieved at the expense of employment.
The advantage of having employment-driven trade unions in Singapore is that Singapore is able to compete internationally as trade unions work in cooperation with the management and government to maintain full employment. The main difficulty with this approach by labour unions is that workers can have a free ride as they can enjoy the benefits of job stability without joining unions. Hence, in our book we suggest that workers in Singapore must be enticed by non-collective bargaining benefits to join unions. This can be achieved by first providing access to union membership for workers in non-unionized firms through the structure of a General Union for non-unionized workers, and then by providing substantial non-collective bargaining benefits. These two provisions are currently provided in Singapore. Hence, union membership in Singapore does cover membership in a General Union.
Responses to specific questions:
Union membership have declined in Singapore due to:
1 Known factors such as smaller manufacturing base, smaller public sector and fewer large firms. The Singapore economy, more so than other economies, is moving rapidly towards services in banking, education and healthcare. Unionization in these areas is not easier especially these are very small firms and involve white-collar workers who, as is well known, are harder to unionize. The size of the public sector is getting smaller on two accounts; getting lean, computerization and privatization.
2 Retrenchment. Being an open economy with high labour and land costs, industries in Singapore relocate to other countries when costs are too high. Workers who have no skills or are semi-skilled are vulnerable to such relocation exercises.
3 Better educated workers resulting in a higher proportion of workforce belonging to non-bargaining workforce. Unions are exploring ways to allow supervisors to join unions.
4 Better management-labour relations, which prevent unions from expanding.
5 Anti-union employers who offer higher wages to deter unionization.
On the other hand, the following factors have contributed to increased union membership in Singapore:
1 The deliberate effort of the labour movement to organize membership drives to get more workers to join unions.
2 The setting up of a General Union in 1992 for non-unionised workers and the provision of non-collective bargaining benefits to entice workers to join unions. More importantly, the setting up of the General Union has been able to induce workers to join the labour movement as workers would be always able to enjoy union benefits even if they were to switch to a job in a non-unionized firm. In other words, the General Union has removed the insurance element from joining unions. That is to say, when a person buys an insurance policy, the benefits from the insurance policy may not materialise and depends on the outcome. Prior to the introduction of the General Union, a unionized worker who moves to another job in a non-unionised firm will not be able to remain a union member. But when a worker joins the General Union, he will certainly enjoy the non-collective bargaining benefits so long as he is in the labour market and does not depend on which firm he is attached to. Hence workers would now be less hesitant to join unions in anticipation of future job mobility. This strategy has worked remarkably well in Singapore. Trade union membership therefore has a different meaning for the General Union, as with the General Union, there are no collective bargaining benefits.
The currency crisis has hurt Singapore also. Retrenchment is on the rise as labour cost in Singapore is very high. The B Singapore dollar does not make matters better. However, as unions in Singapore are employment-driven, both the government and the labour movement place tremendous emphasis on maintaining full employment
Indeed, the country as a whole has taken the two-pronged approach, namely training and cost cutting: Firstly, many firms are taking advantage of the recession to train workers. The government has allocated a large sum of money for the training of workers. In the past, all training schemes reimburse only training fees. Recently, some training schemes also compensate workers almost full pay to attend training programmes.
Secondly, labour costs need to be reduced to prevent retrenchment from rising. Indeed, many firms in Singapore by mid-1998 had reduced the pay for all employees by 5 to 10%. In addition, it is expected that there will be a reduction of bonuses for workers at the end of 1998. If the reduction of bonuses is not sufficient, the Central Provident Fund contribution rate, too, will be reduced to save jobs.
It is very obvious that in Singapore, unions and government do not accept the trade-off between employment and pay. In other words, to the government of Singapore, the labour movement and Singaporeans, the job comes first before pay. In 1985, Singapore had a recession. Both the government and the labour movement carried out a painful wage cut of 20% across all employees. The Singapore economy rebounded in 1986 and fully recovered by 1987. Jobs were saved and union membership maintained, and workers were able to enjoy higher pay until 1997. It is hoped that the Singapore economy can achieve the same success, as in the case of the 1985 recession, in reviving the economy with the cost cutting package to cope with the 1997 currency crisis.
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