MARKET DISCIPLINE
For Singapore to remain competitive, our economic institutions had to constantly seek to do better, and to do more with less.
An Engineering Industries Development Agency (EIDA), set up in April 1968 with UN assistance, sought to train large numbers of unemployed and lower-skilled Singaporeans.
This proved a major selling point for potential investors but it was also prohibitively costly. Then Finance Minister Dr Goh Keng Swee dryly noted that between 1968 and
1972, EIDA had trained 886 personnel at the cost of about $12 million in government subsidies, and that there were, “obviously, more economical ways of industrial training”.
11 To ensure sustainability, EIDA was converted into a business enterprise that had to survive on its earnings in July 1973.
CREATING INDUSTRIAL CLUSTERS: JURONG ISLAND
For Singapore to remain competitive, EDB announced Singapore’s vision of a “Chemical Island Complex” in January 1990 to reap the benefits of connecting and integrating related industrial activities. This ambitious project demanded close collaboration between a range of government agencies and private partners.
Agencies studied petrochemicals complexes in the United States, Japan, Germany, the Netherlands and Belgium to determine which practices suited Singapore’s context. Their challenge was to convince companies that Jurong Island would offer cost savings and other benefits. Supported by the positive testimonials of companies like Hoechst Celanese which had invested in a plant in Singapore, EDB set out to attract major petrochemical companies. With time, a stream of potential investors came to Jurong Island. One of the land parcels, successfully promoted to a Japanese chemical company, was still underwater at the time.
A THRIVING BANKING SECTOR
Singapore’s intangible but critical strengths – integrity, low corruption, a sound regulatory framework, a reputation for competence and excellent connectivity with the rest of the world – contributed to the rapid growth of the financial and business sectors in the 1990s and 2000s.
Since the early 1970s, the Monetary Authority of Singapore has promoted the growth of the Asian Dollar Market. It set up a Financial Sector Promotion Department in 1997, and later liberalised the banking sector through the Qualifying Full Bank scheme to allow foreign banks more scope to operate in Singapore.
By the end of 2013, Singapore was home to over 200 banks with total assets of almost $2 trillion. Today, it is one of the world’s largest financial centres.
TRIPARTITE HARMONY: A PILLAR OF SINGAPORE’S ECONOMIC RESILIENCE
Stabilising Labour Relations
Singapore has overcome several economic downturns over the past five decades, only to emerge stronger than before. This resilience is due in no small part to the constructive tripartite relationship between employers, unions and the state.
But this was not always the way things were. From 1963 to 1968, Singapore lost some 35,000 to 45,000 manhours each year to strikes. There was a running joke that a new factory established on Monday would have banners protesting the exploitation of workers by Friday. This was highly disruptive to Singapore’s vulnerable economy at the time.
The passage of the Employment Act and Industrial Relations (Amendment) Act in August 1968 encouraged longer collective agreements, and prevented unions from striking on matters regarding promotion, recruitment, transfer, retrenchment and assignment of tasks. It also abolished certain discriminatory practices and abuses. The number of man-hours lost to strikes soon plummeted. A few years later, the National Wages Council (NWC) was set up in 1972 to promote better tripartite relationships.Public Service agencies help maintain a stable environment for businesses and workers. For example, the Ministry of Manpower’s labour relations officers mediate in disputes between employers and workers, failing which cases are referred to the Industrial Arbitration Court.Since 1980, almost no man-hours have been lost to strikes in Singapore.
Tripartite Response to Economic Crises
Over the years, Economic Committees have been convened to address major economic crises. Such Committees have always been tripartite in nature, involving unions, business associations and Government officials. The Public Service, trusted for being fair, impartial, balanced and effective, moderates the diverse and sometimes conflicting interests of different groups.
To bring Singapore’s economy back on track, tough measures have had to be taken – such as the cuts in Central Provident Fund (CPF) employer contribution rates in 1986 and 1998 to lower business costs. While similar wage cuts would have met with strong resistance from workers elsewhere, Singapore’s workers accepted the CPF cuts as necessary to preserve jobs and restore economic growth. This was because the tripartite representatives were able to reach a credible consensus on recommendations that would serve the long term interests of both employers and employees:
The alignment of interests projects a certain cohesiveness and is the biggest contribution of Tripartism to Singapore. It is this alignment and cohesiveness which distinguish us from other countries and which give us the nimbleness and the backing during a crisis to take firm steps and to move towards a generally aligned direction in a situation of normalcy.
– Mr Leo Yip, former Permanent Secretary,
Ministry of Manpower
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