Rethinking tripartism

The Singapore economy is restructuring towards becoming one that is services weighted.

The fastest-growing sectors in recent years have been financial and business services, whereas more traditional sectors such as maritime and manufacturing are slowing significantly and consistently.

In parallel, the labour supply has also been changing. Singapore is producing more graduates today than a decade ago and is on track to hit a target of 40 per cent of each cohort of students being graduates. The overwhelming majority of these graduates will fall into the labour category known as PMETs - Professionals, Managers, Executives and Technicians. The PMET share of the resident labour force is more than 50 per cent - more than double what it was a decade ago.

Manpower Minister Lim Swee Say said recently in Parliament that last year, the service sector had the largest employment footprint in the entire economy. It employed 1.225 million people in 2015, of which 772,000 were Singaporeans while another 181,000 were permanent residents.

Services are highly sensitive to economic shock as by nature most of these industries would be human capital rather than fixed infrastructure intensive. Many of these sectors are also highly relocatable, meaning that the capital invested is non-sticky and highly responsive to changes in the competitive landscape. Thus, while a shift to a services-weighted economy does reflect a move to higher-value-added economic activities, it comes at a trade-off of greater investment volatility and weaker long-term job security. Mr Lim also noted that the unemployment rate among PMETs was higher than the national average.

The union movement, traditionally centred on blue-collar workers, is weakly represented in the service industries. These industries have typically been dominated by professional societies and associations, such as the Law Society, the Institute for Singapore Chartered Accountants, the Singapore National Employers Federation (SNEF) and Association of Small and Medium Enterprises (ASME).

That has led to a situation where the Tripartite model - where government, employers and labour work together to secure common ground towards achieving economic progress - is in need of a fundamental rethink.

Employers in the services sector, particularly multinational corporations (MNCs), are wary of unions. SME owners with small workforces are suspicious of activist workers while MNCs prefer a frictionless labour market which allows them to compete to select the best talent from global sources.

PMETs may also have a bias towards perceiving themselves as "professionals" rather than workers. However, as the secular slowdown in the economy - coupled with periodic volatility - makes PMETs feel more vulnerable, they should be more willing to recognise that they are the "workers" of the 21st century and can benefit from some organised labour representation.

Traditionally, the main attraction of union membership has been and remains collective bargaining. Collective bargaining gives labour a mechanism to negotiate with employers , who control capital, and the Government , which makes rules. Tripartism has been about guiding collective bargaining towards constructive rather than disruptive ends, such as strikes and stop-work actions. However, with a GDP wage share of just 43 per cent, Singapore has one of the more disadvantaged labour reward structures among advanced economies. It is thus questionable how strongly the collective bargaining tool has been used by unions in recent decades.

The value proposition that unions can offer PMETs has to be rethought. PMETs are concerned with income security and professional mobility. The National Trades Union Congress or NTUC should look into how best it can provide support in these areas and as a consequence make itself more relevant to PMETs. There is a need to revitalise the NTUC's membership rolls to ensure that collective bargaining is an effective mechanism, and then to judiciously use that mechanism to ensure that there is upward wage mobility for PMETs. There are several steps which the NTUC could consider.

First, put in place unemployment insurance for PMETs in the services sector - which is not only the largest employment sector but also where PMETs are most represented. A membership pay-in scheme to provide a safety net to PMETs at risk of unemployment, from either structural adjustments in the economy or sensitivity to dynamic global economic events, would be a positive step in drawing in PMETs. Such a scheme can be run independent of government policy or funding if enough PMETs decide to participate. It should also be targeted at the large central mass of PMETs, rather than the small tier of elite PMETs.

Second, ensure that programmes such as SkillsFuture provide realistic and relevant programmes for professional mobility and are easy to access. That would be a big step to ensuring that PMETs take advantage of opportunities to upgrade. Currently, the monetary incentive offered by SkillsFuture is marginal, compared to the costs of professional upgrading courses for PMETs. The NTUC can supplement SkillsFuture with its own programmes or work with industry and institutes of higher learning to ensure that the menu of options is appropriate and provided in a structured way to take into account the pressures of a PMET's work schedule and specific requirements of industry or profession.

Third, collective bargaining needs to be rethought so employers are not inadvertently alarmed by the idea of PMETs on their payroll becoming unionised. NTUC should reach out to employers in the service sector and to graduates before they enter the workforce as PMETs, to educate them on the benefits of union membership in the Singapore context and to raise awareness of the role of collective bargaining in the next stage of economic development.

What really needs addressing is the shifting upwards of the wage share of GDP. If NTUC is seen to actively advocate for such a shift, it will gain greater credibility in the eyes of PMETs.

Singaporean workers in the 21st century are better educated, more professional and more exposed to global economic and labour action. As they have evolved, so too must the NTUC and the wider union movement. For tripartism to continue to be the framework for ensuring industrial harmony, it must make itself relevant to the challenges of the times.

This article was first published on February 19, 2016.
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