Commentary: What do we expect NTUC to do for PMEs?
With NTUC updating its constitution to cover PMEs, NTU’s Professor Chew Soon Beng discusses the benefits the move offers.
SINGAPORE: The National Trades Union Congress (NTUC), Singapore’s labour movement, is a social organisation.
As the term implies, the labour movement as a social movement is all-encompassing and aims to represent and benefit each and every citizen. There are various social campaigns in Singapore such as the Speak Mandarin Campaign or the campaign to promote Graciousness in Singapore.
NTUC is distinctly different from all these social campaigns in two ways: First, NTUC is a fee-paying organisation. To be a union member, workers have to pay a monthly fee.
To understand why NTUC charges a fee, one has to understand its goals and dynamics.
The nature of the labour movement is such that it is imperative for NTUC to have a strong base of union members. If NTUC has a small membership base, it will not have enough bargaining power to rally workers to improve productivity and exercise wage constraint in exchange for continued employment during a recession.
This need for a strong membership base creates a dilemma for NTUC. As a social movement by design and by implication, NTUC produces a public good – better employment conditions for workers and employment stability for employers. But because of its public good nature, NTUC needs to provide exclusive financial incentives for its union members to get their buy-in on tough measures.
These exclusive financial incentives are the union benefits that NTUC has the sole power to bestow on members without relying on employers. These union benefits may be likened to country club benefits - joining NTUC is like joining a country club.
NTUC needs substantial financial resources in order to provide country club benefits sufficiently significant to sway workers to join the labour movement.
The Government is more than willing to help NTUC to provide such country club benefits because NTUC helps the Government to achieve full employment.
The close relationship between the NTUC and the Government has the support of a strong foundation because the leaders of both the labour movement and the Government come from the same political party.
NATIONAL VERSUS LABOUR INTERESTS
The second way NTUC differs from other social movements is that it puts national interests above its own narrow labour interests.
If you do a Google search of the term “corporate social responsibility” (CSR), you will learn that a firm's implementation of CSR goes beyond compliance and statutory requirements. A firm which engages in CSR engages in “actions that appear to further some social good, beyond the interests of the firm.”
In my writing, I have started using the phrase “union social responsibility” to describe the Singapore labour movement because NTUC puts the national interest above its need to attract workers to join the Union. NTUC has enjoyed substantial success as a social organisation and, at the same time, rising union membership because NTUC has played her cards well and has not politicised labour issues.
NTUC, with the assistance from the Government, has been able to help low-wage workers benefit from higher wages and help Singaporeans with little educational qualifications to get jobs. But these are low-hanging fruits, which are relatively easy to pluck.
This is because NTUC has some form of monopoly power over some contractors in some sectors to enforce a minimum salary for workers, such as the cleaning industry. It has protected this group of workers against low pay because it is an efficient organisation and a social movement with strong support from both the government and the employers.
This kind of tripartism can easily produce good results as all three parties have non-conflicting goals.
COVERING PROFESSIONALS, MANAGERS AND EXPERTS
Technological developments in recent years have led to disruptions that cause many PMEs to lose their jobs. These PMEs need assistance – but they are more educated than workers that NTUC already covers, and their high paying jobs are not around anymore.
As per its mission, NTUC will work tirelessly to extend the same assistance to help PMEs to be employable. But there is a big difference compared to the case of the cleaners.
To enhance PMEs’ employability, we need to train and re-train them. But – as detailed in the discussions of job market squeeze these days – it is not easy to figure out what are the skills needed to make PMEs employable. The Government solves this problem by contracting training institutes to reimburse the training fees when their trainees are employed.
In tandem, NTUC works with established industry partners to promote industry acceptance of various training initiatives to increase trainees’ employability.
This task of skills-matching and negotiating with employers, employees and training institutes is made all the more difficult as technology is changing and there is little margin to protect PMEs from foreign competition.
NTUC also encourages PMEs to find work abroad. Again, the right kind of training is necessary to acquire appropriate new skills in this context. NTUC can add value to this social mission because some PMEs can relate better to the labour movement than to the Government or to employers.
PMEs who especially need assistance now are those who cannot compete with their peers in more productive, innovative firms or are in industries that have been disrupted significantly. Where average wages rise, these PMEs do not get a share of the gains but fall behind.
NTUC need to help these PMEs find jobs, not because they are union members but because NTUC takes union social responsibility in its stride.
PMEs who find new jobs find that their new pay is lower than their initial salary because they have to “downgrade” in their career moves. Skillsets from one company to another aren’t 100 per cent transferable, especially if one changes sector, with lower wages arising as a consequence.
Worse, downgrading may not be a one-time occurrence but a continuous process given that PMEs change jobs every few years and mid-career switches are commonplace. Preventing this downgrading from becoming a continuous process will be a key challenge for NTUC.
I believe that the labour movement can also strengthen its efforts to protect PMEs from unfair employment practices. Some employers and some top executives may have a preference for foreign executives not because the unit labour cost is lower for these foreigners – and sometimes it is even higher – but because of personal preference.
The policy of looking for local employees first for the first two weeks before they are allowed to employ foreigners should be rigorously enforced.
So it seems NTUC has its work on PMEs cut out. Whatever the initial reason for NTUC to broaden its coverage, it has a tough road ahead in meeting this new mandate.
Chew Soon Beng is professor of economics and industrial relations at Nanyang Technological University.