Shaping labour policies that work

PHOTO: Shaping labour policies that work

SINGAPORE - The review of the Employment Act, for which public inputs are being sought by the Government, should not be viewed merely as an exercise to enhance the rights and benefits of workers periodically at the expense of employers. The aim should be to strike a healthy balance between economically vibrant practices and socially progressive standards that best serves the nation.

There are good reasons to be wary of a gradual accretion of overly protective regulations that over time might make employers petrified about adding extra workers because of perceived onerous obligations that follow. Nowhere is this more evident than in Europe where bosses, weighed down by rigid labour laws (as in Italy and Spain) and high taxes, sometimes prefer to forego business expansion opportunities rather than hire new workers who might prove difficult to shed during a downturn. In some cases, as seen in France, foreign investors have fled after facing political pressure over pay and retrenchment issues that had an impact on their business competitiveness.

At the other end of the spectrum, Corporate America might have no qualms in freely scaling a business up or down as it sees fit. But as much as employers need sufficient operational flexibility, workers deserve adequate protection. The dynamic is influenced by economic conditions and the socio-political ethos of a nation. Denmark, for example, swears by its "flexicurity" model, which has helped it gain high scores for labour market flexibility in international rankings while preserving social peace.

In Singapore, the needs of small and medium enterprises (employing seven out of every 10 workers here) have to be borne in mind as they will have to bear the brunt if rules become too onerous. At the same time, if employment standards are set too low, the code would be out of sync with the times.

Policies have to also take into account the changing profile of the workforce. The proportion of professional, managers and executives (PMEs) has grown to a third; and more are engaged in contract work, self-employment and outsourcing. The law should not leave them out in the cold.

Should salary ceilings be raised and the Act extended to at least half of the 630,000 resident PMEs here, as argued by the National Trades Union Congress? Discussions will benefit from details from all stakeholders on how work arrangements have changed in a tight labour market, demands on staff as quality and productivity expectations rise, widening gaps in wages and staff benefits, and the impact of fluctuating business cycles. A holistic approach can better assist policymakers to rebalance interests of both sides in a fair and workable manner.

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