I am happy to be here with you tonight to celebrate the 40^th anniversary of SMMWU. Since its establishment in 1959, the SMMWU has come a long way to become one of the top 3 unions in Singapore with a membership of 24,000.

Union anniversaries are joyful occasions, celebrating the achievements of the year and looking forward to better performance and rewards in future. And indeed, we meet tonight in a much more cheerful mood than a year ago. The region is stabilising. Our property and stock markets are up. Our economy is picking up strongly. Job vacancies are surging, particularly in the services sector where about 3 in 5 job openings were recorded in the last quarter.

Our immediate task is to manage the recovery from the crisis. We had cut our costs very drastically last year to strengthen our competitiveness. We now have to gradually go back to a normal throttle setting, putting things back in trim as the economy recovers. The restoration of 2 percentage points of employer’s CPF contributions next April is a first step.

The worst of the storm is over, but life will not go back to pre-crisis days. The next phase of our economic development will present new and bigger challenges for Singapore, the government, companies and workers alike. Our economic restructuring is speeding up. Despite good growth this year, we expect to see 16,000 retrenchments, fewer than the 30,000 we experienced in 1998, but far more than the 10,000 in 1997, before the crisis struck us. We cannot afford to relax on competitiveness, skills upgrading and economic repositioning.

The key reasons competition is getting tougher are globalisation and technological advances. Companies are under tremendous pressure to shave costs to the bone, whether they are manufacturing companies making disk drives, or banks processing mortgage loans. Because of information technology, market conditions are changing much more rapidly, and companies are scrambling to keep up. Companies are fundamentally restructuring the way they do business, and changing their approach to managing and rewarding staff.

These trends will profoundly affect the way employment is structured, and industrial relations are conducted. In the past, most people were engaged in full-time, lifetime employment. Both employers and workers enjoyed long term, stable employment relationships. Now this is weakening.

With the furious restructuring of companies, many jobs are being lost, even while new jobs are being created. Workers will have to change jobs five to six times in their working life, compared to perhaps once or twice in the past.

Developed countries are experiencing what their unions call the "casualisation of workers". At the upper end of the spectrum, educated, highly skilled workers are in great demand, especially in the IT industry. They do not feel the need to join any union, because they are confident that they can negotiate better employment terms as "free agents" to meet their own specific needs. They have the bargaining power, and the skills to take care of their own interests. These skilled workers are not worried about a long term, stable employment relationship. They seek jobs that offer "cool" workplace environments, employment terms and job content. Their attitude is that their skills are in high demand, so if their current jobs are not right, they will just find a new job in another company on their own.

At the same time, companies are employing lower skilled workers, on shorter-term contracts, with fewer privileges than permanent employees. Often these temporary workers are not even on their payroll, but are hired by employment agencies. Companies prefer such temporary arrangements, because they are looking for more operational flexibility to keep up with the fast changing environment. Companies are also outsourcing for support services they need. For example, they are replacing dispatch riders by the services of courier companies. They are subcontracting out IT programming, to people who provide the same service at some fixed fee.

Such arrangements give companies precious flexibility. If the market changes, they can simply cut back on the number of temporary workers or stop buying from their sub-contractors. They do not have to worry about retrenching workers or paying retrenchment benefits.

These trends present us with new challenges. We do not have all the answers yet, but the Government, employers and unions will have to think hard how to respond. How can we look after the welfare and interests of our workers, in this global environment?

Our response must be creative and constructive. During the recent WTO Ministerial Conference in Seattle, NGOs who opposed globalisation and free trade rioted in the streets. They included American trade unions, who wanted to link free trade with labour standards, because they feared that free trade would mean fiercer competition for American workers, which would weaken their influence and hurt their members. The demonstrations had an effect. The conference failed to agree on launching a new round of trade negotiations. The Democratic Clinton Administration decided that it could not afford to offend American trade unions, because Vice President Al Gore needs their support in his campaign to become the next US President. Now the AFL-CIO have announced that they oppose China’s admission into the WTO, and will persuade the US Congress to vote against the deal.

Even for American trade unions, it is questionable whether this is the best way to respond to globalisation and technology. America’s prosperity and global influence depends on its economic strength, which comes not because it is self-sufficient and protectionist, but because it is open and internationally competitive. But resisting and rejecting globalisation will certainly not help Singapore to meet our challenges. We are wholly dependent on exports to earn a living for ourselves, and heavily dependent on foreign investments to bring technology, create jobs and open markets. We will not stop competitors, or strengthen our own competitive position, by taking to the streets in militant demonstrations, or by refusing to trade with other countries which can produce better, cheaper products than us.

This is why the issues of globalisation and technology, and our response to them, were a major focus of discussions in NTUC’s recent corporate planning seminar. NTUC will hold further discussions in January, and debate the matter again in their Triennial Delegates’ Conference in April. We must get every union leader and worker to understand what is at stake, so that everyone can respond intelligently, to safeguard our long term prosperity.

Manpower training and upgrading remain a key strategy. We must make as many of our workers as possible become knowledge workers, with skills that are in demand, and with the ability to keep on learning new skills all their lives. Without skills that are current, they may still find jobs, but they will not find well paid, secure jobs.

Besides training and upgrading, I would like to highlight three issues which we need to address, and which I know NTUC has been discussing.

First, as workers change jobs more frequently, we should consider how to make basic benefits more "portable", so that workers have adequate protection as they move from job to job. One good example is employer medical benefits. As a worker grows older, he will need more medical services. If he has developed some medical condition, it becomes especially harder for him to change jobs. It does not matter whether he himself wants to move on, or whether his employer is retrenching him. A new employer will be reluctant to hire him, and take on the burden of his medical expenses. At most, the new employer will offer him limited medical benefits, less than those he enjoyed at his old job.

Medisave and MediShield are portable benefits, and do not suffer from this weakness. In the public sector, the civil service has since 1994 paid an extra 1% of Medisave contribution, which is a portable form of medical benefits. If a civil servant leaves, he takes with him any extra contributions which he has not spent. And if he has signed up for schemes like IncomeShield provided by NTUC Income, then he can pay the premiums out of his Medisave, and continue to be covered even if he changes jobs after falling ill.

But in the private sector, many workers receive employer provided medical benefits in kind, which are not portable, over and above Medisave and MediShield. Not many have signed up for IncomeShield – so far only 177,000. Two years ago, a tripartite committee had recommended that the private sector adopt schemes similar to the civil service, which would be more portable. But implementation has been very slow.

We should study the current medical benefit practices, and see how we can encourage employers and workers to adopt more portable forms of medical benefits. We must ensure that older workers do not lose out on employment opportunities or adequate medical cover. At the same time, we must be careful that employers do not have to bear a significantly higher burden for older workers compared to younger ones.

Second, as workers move from job to job, they will have periods of unemployment in between jobs. Currently, only those who are employed can join a union and enjoy the benefits of being a union member. But retrenched and unemployed workers are in even greater need of union support, such as the NTUC Education and Training grants, NTUC FairPrice rebates and insurance coverage.

We should study whether somehow union members can retain their membership, or at least enjoy union support and assistance, when they are retrenched and become temporarily unemployed. The NTUC already provides support to both union members and non-members, though of course it does more for union members. For example, the Skills Redevelopment Programme, which was piloted by NTUC, is now a national scheme benefiting both union and non-union members. SRP is already available to retrenched workers. It helps workers to upgrade their skills, and retrain them for jobs they will do in the future. Also over the past year, when retrenchment was high, NTUC has been directly helping retrenched workers to find new jobs, whether or not they are union members. Unions should find more ways to help unemployed workers in the process of switching from one job to another.

Third, we will have to think through the issue of "casualisation of workers". "Casualisation" is a highly emotional word in the developed countries. Unions represent mainly full-time permanent workers whose pay and benefits are better because of union negotiation and pressure. But the growing group of lower end "casualised workers" are not represented by unions. The unions are seeking ways to organise them, both to press for better treatment for them, and also to prevent them from undercutting union members who have permanent jobs. Disgruntled temporary workers in Microsoft, for example, recently took the company to court to demand for fair treatment.

This is symptomatic of the broader trend in developed countries of the changing employment structure and the declining role of unions, particularly in protecting workers at the lower end. We want to avoid such a situation in Singapore. We want as many of our workers as possible to be skilled, not casual workers. Also unions play an important role in our economic development. They look after the needs of workers, buttress the social safety net, and work with employers and the government to meet economic challenges confronting Singapore. They are a valued and essential partner in economic progress, a key contributor to our stability and flexibility. We should find ways to strengthen them, and adapt them to the new environment. This is not only a union problem, but an issue which unions, employers and government have to tackle together as we move into a knowledge economy.

The challenges ahead are formidable, but we have every reason to meet them with confidence. Globalisation and technology are inevitable. They hold great promise to improve the lives of Singaporeans, provided we prepare ourselves intelligently and proactively for them.

Our unions are responsible and competent. They know that the way to safeguard worker interests is to work closely with employers and the government, to make a realistic appraisal of the trends and respond rationally to them. Our employers also understand that it is in their best interests to look after the welfare of their workers. And the government remains committed to its role in the tripartite partnership. We will work together to ensure that Singapore is well prepared for the new millennium.