Singapore Government Press Release

Media Relations Division, Ministry of Information, Communications and the Arts,

MITA Building, 140 Hill Street, 2nd Storey, Singapore 179369

Tel: 6837-9666

SPEECH BY PRIME MINISTER LEE HSIEN LOONG AT THE NTUC MAY DAY RALLY ON 1 MAY 2007

Introduction

1. I am happy to be here with you today for this May Day Rally

2. It has been another good year

a. Strong momentum has continued

b. Looking ahead, prospects are good

3. We will continue to distribute the fruits of growth to every segment of society

a. Give the lower-income an extra leg up

b. Maximise opportunities for all Singaporeans to succeed

Transforming Singapore

4. Many signs

a. 180,000 new jobs last year

b. Wages increased by nearly 5% (the fastest in six years)

c. University and polytechnic students in demand – some are getting hired 6 months before they graduate

d. Jurong Island is full

e. International schools too

f. Running out of office space, in sharp contrast to 2003

g. Unionists are smiling

5. Growing confidence and buzz

a. Whole city being transformed

b. Distinguishing ourselves from the rest of the region

6. How did this come about?

a. Not by settling for the ordinary or coasting along with the status quo

b. But by looking ahead, anticipating problems, devising creative solutions and pursuing the right policies

7. Not everything government did has been popular

a. Reforming CPF

b. Restructuring of companies, e.g. PSA, SIA

c. Opening up to foreign workers and foreign talent

d. Developing the two IRs

e. But we don’t go for instant popularity or results

8. Instead, take a long-term view, and do what is in the best long term interests of the people

a. Built new economic capabilities

b. Changed international perceptions of Singapore

c. Making Singapore a hub for companies and talent

Formulating Good Policies

9. None of this happened by itself

a. Many people worked hard to make them happen

i. Result of creative ideas and careful planning

ii. Also effective implementation and attention to details

b. Share three examples

10. Worker training

a. Every country talks about adult worker training, but few have done it well

b. In Singapore, lifelong learning is one of our top priorities

i. Because as the economy changes, what we learn in schools and in our current jobs become outdated

ii. We built a first-class education system for students

iii. Now we are building a first-class CET system for adult workers

(1) WDA and NTUC are working with ITE, polytechnics, universities and industry associations to set up institutions for adult training

(2) Institutions will:

(a) Equip Singaporeans with relevant skills

(b) Deliver courses that lead to national qualifications and thus make workers more employable

c. This CET system will help workers to upgrade and prepare themselves for new job opportunities

d. Workers must take full advantage of it

i. e.g. Max Chan, 36

ii. Always had problems coping with English

iii. Worked as a glass artist after completing his N-levels

iv. After 10 years, as the glass industry declined, he switched to delivering kuehs for a living

v. But continued to pursue his passion and took up a part-time Diploma in Multimedia Production

vi. Realised that he still lacked professional skills, and went for a 3D animation programme run by WDA and MDA; no problem with the course despite his poor English because it is skills-based

vii. Now works in a local 3D animation production house; doing a digital animation film, which company plans to bring to Cannes later this year to find a distributor. If successful, Max’s work could be shown all over the world

viii. Max is here this afternoon

ix. Hope there will be many more like Max, going for re-training, pursuing their dreams, and striving to succeed

e. With the vibrant economy, we expect many new jobs to be created

i. No shortage of jobs for Singaporeans

ii. In fact, we will not have enough Singaporeans to fill all the jobs, and will have to bring in foreign workers

iii. e.g. two IRs in Marina Bay and Sentosa will create a total of 60,000 jobs (30,000 each)

(1) IRs will create a whole range of jobs, e.g. chefs, conference organisers, hotel managers, waiters, retailers etc

(2) We are making a special effort to prepare Singaporeans for these jobs – have put in place training programmes for all of these different fields

(3) But most important of all, IR operators tell us that they need workers with a good service mindset

(a) Specific skill sets, they can train in-house

(b) But they need people with the service spirit – willing to serve others and make them feel at home

iv. We are incorporating service skills in all our training programmes, but ultimately, good service starts with the right attitude and mindset

(1) Take pride in your job

(2) Have passion for what you are doing

v. We want all Singaporeans to have this mindset, and take full advantage of the opportunities to excel in their own vocation

11. Workfare

a. By 2000, we saw that income gaps were widening, especially after the Financial Crisis

i. Formed study teams to see how to tackle this

ii. Started to experiment with schemes like the People for Jobs Traineeship Programme (PJTP)

iii. Last year – piloted Workfare Bonus as part of the Progress Package

(1) 300,000 workers received the second payment of their Workfare Bonus today

iv. This year’s Budget – instituted Workfare Income Supplement (WIS)

(1) Not just giving away money

(2) A lot of effort went into designing the scheme, and working out every detail

(a) Who should receive the WIS?

(b) Should we top-up wages or savings? Pay into cash or CPF?

(c) How do we take care of the self-employed and informal workers?

(d) Should we require them to make out-of-pocket contributions to get Workfare benefits?

(3) Thus came up with the WIS scheme – details are quite complicated, but there is a clear philosophy and good rationale behind every detail

b. Workfare is a crucial 4^th pillar of our social security system

i. Powerful tool to encourage older, low-wage workers to get a job, stay employed and save for the future

ii. Going forward, will continue to evolve and improve this tool

iii. Review the WIS scheme after three years

(1) Get economists to study the experience

(2) Adjust the scheme to better achieve our goals

12. Wage Reform

a. We foresaw this problem 20 years ago, in 1985

i. Lim Boon Heng was then in the unions

ii. I was in MTI

iii. Started pushing for wage reforms

b. Have made steady progress since then

i. Introduced profit-sharing

(1) Link individual rewards to company performance

(2) When the company does well, workers are rewarded, e.g. SIA and PSA

ii. Moved away from seniority-based wages

(1) We have narrowed the salary max-min ratio over time

(2) From average of 1.85 some 10 years ago to 1.68 today

(3) But should still go down further – aim for 1.5 or lower

(4) Even at a ratio of 1.5, I still worry

(5) See what’s happening in the US

(a) Typical worker in his early 60s earns about 50% more than a worker in his 30s, i.e. ratio of 1.5

(b) Yet US companies are retrenching older workers just to save costs

(6) Our older workers face the same problem

(a) When retrenchments happen, they are most vulnerable

(b) e.g. in banking sector, in the 90s, senior clerical officers were earning up to $2,500 a month

(c) Banks realised that they could not afford to continue carrying this burden

(d) In 2001, UOB retrenched more than 400 clerical officers – many of them had worked for more than 25 years, and were at the top of their salary ranges

(7) Must get wage structure right

(a) Try to bring ratio down

(b) Job-based, competency-based and performance-based

(c) Move towards paying the rate for the job

(d) At any rate, do not do anything to make ratio worse

(e) The more flexible our wage structure is, the more resilient our companies will be to changing market conditions, and the easier it will be for our people to find jobs and stay employed

Preparing for Future Needs

13. Similarly, will plan ahead for the long-term challenge of an ageing population

a. Not an immediate problem

b. But can see the demographic trends looming ahead – must do something now

c. Spoke to one UK expert

i. He said that logically there are only three possibilities:

(1) Work longer and retire later

(2) Contribute more to your pension while working

(3) Accept a smaller pension after you retire

ii. All are tough choices – this is why pension reform is such a politically difficult issue all over the world

d. In Singapore, the CPF system provides a basic retirement income for the vast majority of Singaporeans

i. Must uphold and strengthen this

ii. CPF contributions are compulsory for all employees

(1) But concerned about growing number of contract workers, as more and more companies outsource their non-core services

(a) Feedback that when companies outsource, their service providers do not pay CPF for the contract workers

(b) If their numbers increase, this will erode the CPF base, and undermine the system

(c) So MOM will step up enforcement, especially against major employers of contract workers who are not paying CPF

(i) When SATS started to outsource, unions realised that the contract workers were not getting their CPF; so MOM and NTUC worked with SATS and the contracting companies to ensure that they complied with CPF requirements

(ii) Doing the same now for Town Councils, NEA (outsourced hawker centre cleaners), NParks (outsourced landscaping workers), HDB (outsourced Car Park attendants)

(2) Also concerned about self-employed and informal workers

(a) Hence required them to contribute to their Medisave, in order to claim Workfare benefits

(b) We will have to do more to encourage them to join the CPF system

(i) Introduce a Medisave Contribution Draw to encourage people to contribute to their Medisave

(ii) Don’t want to encourage gambling

(iii) But we will have a lucky draw as incentive – no harm having a flutter

(iv) The tripartite partners are now discussing other ways to ensure that low-wage workers save for their CPF. Those who work must not be deprived of benefits

e. Best solution is for Singaporeans to stay employed longer

i. Then they can continue to support their families and save more for their old age

ii. Lim Boon Heng and his committee are studying this issue carefully

Best Team for Singapore

14. To tackle these and other long-term challenges, we need a good team in charge

a. People who are capable, competent

i. Have mastered the issues over many years, not just rotating in and out

ii. Can come up with the best solutions to tackle our problems

b. Also people with the right values

i. Heart for Singapore, and for ordinary Singaporeans and their families

ii. Commitment to improve the lives of all

15. We need such leaders in every segment of society – in government, unions and companies

a. Our system has produced this quality of leadership

b. One major reason why we have a whole system of governance that works and delivers results

c. Relate Lim Swee Say’s story:

i. Government officials from one Southeast Asian country lamented to the NTUC that they wished that their unions could be as constructive as the NTUC

ii. So NTUC leaders told their union leaders, “Look, your government hopes that you can be as constructive as the NTUC.”

iii. Their union leaders told our people. “You please tell our government that the day when our government behaves like the Singapore government, that is the day we will behave like the NTUC of Singapore.”

16. Therefore crucial that we maintain a first-class leadership team

a. To keep our system going

b. To consolidate and strengthen our tripartite partnership

c. To work together for the overall good of our nation

Conclusion

17. Singapore is on a winning track

18. But must never think that we have arrived

a. Quote EDB’s International Advisory Council: “while Singapore has done very well in her economic development, this must not lead to conservatism, stagnation or complacency”

b. Our competitors are hungry – they are working harder, smarter and are determined to catch up

c. We must continuously find new ways to keep Singapore special and unique, and create prosperity for a new generation of Singaporeans

19. This depends on our courage and spirit

a. to change and adapt

b. to strive and work hard – never give up, never say die

20. Let us look forward with confidence in our common future, and work together to build a better life for all