Sugar-Spice-Home

My appreciation to the official from the Ministry of Manpower, who preferred not to be named, for providing me valuable information and insights on the employment relations, and the labour laws and legislation of Singapore.

Singapore, a tiny island with a population of about four million, has enjoyed rapid economic growth and prosperity. In fact, it is one of the fastest growing countries in the region in terms of development. The crux of its success owes much to the careful planning and execution of infrastructure building, economic reforms and labour transitions laid out in the mid-50s and 60s. The employment relations policies in Singapore has also managed to maintain an outstanding and efficient workforce to complement the success story of Singapore’s economic development.

With an intense and committed government, and a malleable and obedient work force, Singapore has made itself a magnet to foreign investors, and used their capital investments to effectively and efficiently modernize and industrialize the nation. Singapore’s present achievement is due partly to historical accident and partly to a small, united group of farsighted yet authoritarian leaders.

By the 1870s, Singapore has grown into an export centre for various commodities like rubber, tin, sugar, tea and spices that were produced around the region. The earliest factories in Singapore were constructed to process these commodities, which laid the groundwork for future industrialization. Soon after, Singapore was developed into an important entrepot for the import and export of commodities to countries like Europe, India and China. Before long, the entrepot had become the initial building block to substantially assist in the country’s economic development. Based on this brief historical background, Singapore slowly developed its excellent international trade links, which were pivotal to the country’s success (Deyo 1981:24).

From 1942 until 1945, Singapore fell under the harsh occupation of the Japanese. The poor living conditions and turmoil then remained until the late 1950s. At that time, the island nation was overcrowded with extensive slums. Poverty rate increases quickly and something had to be done.

The legitimate political and social force within Singapore evolved only from 1954. The People’s Action Party (PAP), one of the active political parties at that time, was founded by a core of Communists and Leftists. In 1955, a total of two hundred and seventy five labour strikes launched primarily by the Communists, had erupted. Social unrest continued and in the year 1956, rampant rioting on the island virtually places the nation into despair. It was obvious that a stable government was badly needed. Eventually, in 1959, the first general election saw PAP rising into victory against the other political parties, and Lee Kuan Yew goes on to become the first prime minister of Singapore (Le Poer and Leitch 1991:52).

The newly formed PAP then was facing some political and structural problems, especially due to their internal conflicts between the radicals and conservative members. By 1961, Lee succeeded in driving out all of the party’s pro-Communist elements, which he had so strongly opposed (Wornoff 1992:123). With the biggest threat removed, Lee began to develop Singapore with a group of radical pioneers into a politically stable and economic hub.

The development of Singapore practically started from scratch. The pro-business administration was comprised of a select group who had achieved high level of formal education, mostly in Britain. This is probably the reason why the initial employment relations framework of Singapore and all other social, political and educational systems were initially developed based on the British system. In 1959, shortly after the first election, the PAP began to work on the housing development, which the nation so badly needed, and also industrialization strategies to ameliorate the high rate of unemployment.

Singapore’s rapid development has been nourished by the uninterrupted rule of the PAP since 1959. So much so that within a span of less than forty years, the island slum had eventually evolved into a newly industrialized country. Of course, the economic development of Singapore was made easier by the political stability, which ultimately leads to a strong and yet controlling government. Lee’s authoritarian administration supported and fostered the economic development by instituting a comprehensive set of interlocking policies. One of their first political objectives was to have a clean, honest government, and they achieved this by paying all government officials as much or more than the private business sector, to eradicate the temptation for corruption. Of course, one of the policies set by the PAP government was the law and legislation governing the employment and industrial relations framework of Singapore.

Singapore is an immigrant society. Each ethnic group is able to retain their own culture, religion and language identity. Approximately seventy-five percent of the population is Chinese, fifteen percent Malay, seven percent Indian and the rest are a mixture of other ethnic origins. The government has set a policy of maintaining this population ration, in a bid to maintain any adversities that may be caused by ethnic tensions.

The development of human resources in Singapore was one of the objectives that the PAP government had drawn up. With nearly three million citizens and no natural resources to speak of, other than one of the best-known ports in the world, Singapore made the most out of what they had – human resource. The PAP government initially concentrated on controlling labour. This was done by de-registering all labour unions, which was finally completed by 1963. All political activities by labour parties were forbidden (Chen 1983:46). The government also realized the definitive importance of the ‘people assets’, stressed knowledge, proper attitudes and behaviours, and was certain that the English language would help citizens attain better jobs for a better life. More significantly, the English language will become a key factor in drawing foreign investors to the shores of Singapore. The investment by the government to foster education on its citizens eventually paid off. Today, Singapore has a literacy rate of about ninety-five percent (Singapore Department of Statistics 2006).

One of the earliest union bodies was established in 1951 called the Singapore Trade Unions Council (NTUC), which was supported by the Labour Front, one of the political parties of that era. However, the government of the Labour Front’s chief minister, David Marshall, was short-lived due to political labour unrest. This gave way to the new administration of Lee Yew Hock. Subsequently, in mid-1960s, the National Trades Union Congress (NTUC) was established by the PAP and was formally registered in 1964, which overruns the leftist’s Singapore Association of Trade Unions (SATU) (Leggett 1993:99; Leggett 1993:224-225).

During the reign of the Labour Front’s administration, some of the important labour legislation was passed, which included the employment ordinances, the Central Provident Fund Ordinance of 1955 and Criminal Law (Temporary Provisions) Ordinance of 1955 (Leggett 1993:225).

The official forming of the NTUC observed a marked increase of union membership from a mere 18,673 in the year 1946 to 157,050 in the year 1964 (Leggett 1993:225). The Ministry of Labour (Renamed to Ministry of Manpower in 1998) had established a Labour Research Unit in 1962. This unit specializes in the negotiation process, which was meant to assist the unions in industrial relations proceedings. The Trade Unions (Amendment) Act of 1967 was the legislation that constricted and made strikes illegal, and at the same time, broke up the public sector manual unions. These actions have managed to reduce the number of work stoppages from a high of 928 between the years 1960 and 1964 to a low of 58 between the years of 1965 and 1969. There are, however, certain side effects to the Ministry’s actions. Union membership fell after the year 1966 (Leggett 1993:226).

The legal framework of Singapore’s employment industrial relations was initially modeled based on the British system. This initial system, however, was transformed by discarding most part of the British system, once in 1960 and again in 1968. The 1960 transformation saw the enactment of the Industrial Relations Ordinance of 1960 and the Industrial Arbitration Court (IAC) (Leggett 1993:99; Gough 1996:48). The IAC was established to possess the powers of compulsory conciliation and arbitration. In 1968, changes to the British system passes to the enactment of the Employment Act and the Industrial Relations Act (Gough 1996:48).

Singapore’s development in the 1960s involved mobilizing the very few resources that the nation had. The land was developed to provide an efficient infrastructure. There were the efficient housing and educational systems that raised the nation from the slums. With all these development successfully implemented, Singapore was able to develop a compliant labour relations that would eventually provide a workforce that is attractive to foreign investors.

So far, Singapore has been able to offer an uncorrupted and efficient government along with social stability and an educated, strike-free labour force. But all these development also lead to high cost of living and high wages. In view of this, the government created a National Wages Council in 1972 to prevent any disruptive events that may be caused by the rapid rise in wages. Wage changes have since been closely regulated and guided by the government. Nevertheless, labour shortages and the rising standards of living have continued to push wage costs up.

Another problem that Singapore faces is the scarcity of land. Together with the problem of increasing wages, Singapore’s competitiveness laid in jeopardy, and these drive labour-intensive investments out of Singapore into other cheaper neighbouring economies. Singapore was careful not to price itself out of the market by allowing costs to get out of hand. The government further laid a strategy to invest heavily in labour force training in order to raise the limited workforce level to a higher value-added ad more sophisticated workforce.

In order to enter the high-technology and high value-added service and manufacturing industries, Singapore must relinquish some of its traditional low-cost, low-technology production and assembly (Leggett 1993:97). This was done by setting up joint industrial training centres with the many multinational corporations in Singapore that needed the higher caliber workforce to sustain and remain competitive in their respective industries. In this way, the government has been able to keep its citizens’ skills on par with demand, and at the same time, enable the multinational corporations to have a steady supply of well-trained workers to suffice their needs.

In support with this new strategy, Singapore developed the Skills Development Fund in 1979. The Skills Development Fund basically provides the necessary programs and financial assistance to employers for their participation in training the Singapore workforce to achieve a higher skill level that is relevant to the economic development of Singapore.

With Singapore’s higher paid, higher educated workforce taking over higher skilled jobs, a gapping hole that comprise of labour-intensive, low-skilled jobs was left behind. In view of this, foreign labour from other lower economies had to be brought in to fill up this gap. Of course, there are also enterprises that moved their labour-intensive operations to other low-wage nations in the region. Nevertheless, this was something that the government had anticipated for developing a higher skilled workforce. Reacting to this circumstance, the government imposed a ratio for employers who import foreign labour to support their operations. Employers are allowed to import up to five foreign workers for every local worker that they employ. Local worker here includes both Singapore citizens and permanent residents of Singapore.

The Singapore government has also set up a Central Provident Fund (CPF), which is a mandatory contribution scheme for retirement. The CPF was created by legislation in 1955 for the purpose of protecting the workers’ financial needs after retirement (Leggett 1993:103). Every worker must pay a predetermined share of their wages into the CPF, with an equivalent share being paid by their employer. Upon the retirement age of 55, the worker can withdraw part of his/her CPF savings including interests that have been earned. This scheme is, however, not popular with ever worker, especially for those who desire to have their money for current consumption. And because of this discontentment, new foreign employees and their employers are exempted from contributing to the CPF as of 1st August 1995.

During the mid-1980s, job-hopping and high turnover of staff within the Singapore workforce were troubling the government. One of the reasons that the authorities gave for the high turnover rate was due to the tight labour market that was created by the rapid prospering of the Singapore economy (Begin 1995:77). An investigation by the task force set up by the Ministry to find out the causes of the high turnover rate reveals that the problem lies within the boundaries of the Industrial Relations. These parameters included low salaries, poor regard to employees’ welfare, limited job advancements, poor supervisor-worker relationships, poor working environment, unsatisfactory work schedules, lack of job security and employment status. Besides making recommendations to improve such industrial relations problems by encouraging worker participation in their jobs through productivity drives like quality circles and ensuring their job security, the task force also recommended more women to take up part time work to supplement the tight labour market (Begin 1995:78).

The Ministry of Manpower has been monitoring employment practices prevalent in the construction industry and has identified some areas of concern. One concern was foreign workers being abandon by their employers who defaulted on payments of the foreign worker levy. These employers who received commissions from employment agents for employing the foreign workers, subsequently defaulted on the levy payments and eventually abandoned the workers without any jobs, compensation or accommodation. The number of such foreign workers left stranded by their irresponsible employers has been on the rise. It has been recorded that about two to three hundred of such stranded workers per month had approached the Ministry of Manpower for assistance to place them on alternative employment (Ministry of Manpower 1998). In an attempt to address all these abuses, the Ministry has worked out a string of measures to eradicate such dishonest practices.

Firstly, the procedures for applications for foreign workers that are submitted by sub-contractors have been tightened. Currently, sub-contractors require the main contractor’s endorsement for approval to bring foreign workers into Singapore. As of 1st of April 1998, the Ministry implemented a new allocation system whereby foreign worker entitlements will be given directly to main contractors who will then manage the allocation of these entitlements amongst their sub-contractors. This puts the pressure on the main contractors to carefully administer the employment of new foreign workers. This, in effect, is an attempt to weed out those labour suppliers who masqueraded as sub-contractors to apply for foreign workers and subsequently re-supplying them to contractors for a profit.

Furthermore, main contractors are also held responsible to provide accommodation for any foreign workers who are abandoned by their sub-contractors. They are also required to look for alternative employment in the construction field for such displaced workers. The main contractor may absorb these abandoned workers under their employment or assign them to their other sub-contractors. If the main contractor fails to fulfill this obligation, chances are the main contractor and sub-contractors concerned may be debarred from bringing in any more new foreign workers in future.

Besides tightening the work permit procedure for employment of foreign workers, a second measure was applied. The employer must secure every foreign worker employed with a $5,000 security bond. This security bond shall be forfeited if the employers are found to have abandoned their workers.

An additional security bond of two thousand dollars per worker will also be imposed for employing foreign workers. This part of the security bond is to assure that employers do not default on levy payments.

There has also been a substantial increase in the number of employment disputes involving foreign construction workers. The number of cases lodged with the Ministry of Manpower in the year 1996 was one thousand. That is more than double that for the year 1995, which was logged at four hundred and ninety (Ministry of Manpower 1998). Most of these claims submitted by foreign construction workers involved infringement of the provisions of the Employment Act by their employers. To counter this problem, the Ministry will debar employers who blatantly and repeatedly flout the Employment Act from employing new or renewing foreign workers’ work permits. Furthermore, offenders will also run the risk of prosecution under the Employment Act.

The Labour Relations Department, a sub-division of the Ministry of Manpower, administers the laws on labour relations. The department enforces the following laws:

The Employment Act was enacted in 1968 to provide for the basic terms and working conditions for employees in Singapore. It also provides employees with ways of seeking redress against employers who do not comply with the law. However, this Act does not protect against employees who are employed in the managerial, executive or confidential positions. Employment protection for seamen and domestic workers are also not included in this Act (Leggett 1993:104).

The Industrial Relations Act was enacted in 1960 to provide a legal framework for the prevention and settlement of industrial disputes through collective bargaining, conciliation and arbitration by the Industrial Arbitration Court.

The Singapore Labour Foundation Act was enacted in 1977 to improve the welfare of union members and their family members. Its other purpose is also to further the development of the union movement in Singapore.

The Trade Unions Act regulates the activities of trade unions including the proper management of union affairs, safe custody of funds and the free election of union officers. It basically defines and protects the right of workers to become union members. This Act was enacted in 1940.

The Trade Disputes Act, enacted in 1941, regulates the conduct of industrial actions, strikes and also lock-outs. All industrial disputes between employers and employees and their representatives are considered as trade disputes, and are defined by the Trade Disputes Act (Leggett 1993:109).

The Retirement Age Act was enacted in 1993 to provide for a legal minimum retirement age. Currently, the legal minimum retirement age is sixty-two and may be changed as prescribed by the law.

Besides administering and enforcing the above laws, the Labour Relations Department also promotes and maintains industrial peace and stability in Singapore. This is done by balancing the interests of employers and employees and providing the legal framework to achieve this balance. The department also formulates policies on industrial relations and reviews labour and employment laws regularly to ensure their continued relevance to both employers and employees. There are basically, four main types of services provided by the Labour Relations Department. They are:

The Labour Relations Department serves as an official counsel for providing advisory services to employers and employees in relation to working out the necessary terms and conditions of employment in employment contracts. The department also investigates claims and complaints on salary matters and other terms and conditions of employment in respect of all employees. It should be noted that seamen, domestic workers and employees in the managerial, executive or confidential positions are not given this privilege. Employees of the government sector and statutory boards who are not covered y the Employment Act are also not included. The Labour Relations Department also provide assistance to employers and employees in both the unionized and non-unionized sectors to resolve trade or employment and salary disputes amicably through conciliation with the view to promote harmonious labour management relations. For employment disputes which cannot be resolved amicably through conciliation may be referred to the Labour Court for adjudication. Only claims which satisfy the certain conditions can be adjudicated by the Labour Court. These conditions include:

Employees’ contracts of employment are regulated by the Employment Act. Based on the labour law, a termination clause may be included in the contract of employment to determine the cause for termination. However, if dismissal of an employee is executed without just cause or excuse, the employee may seek redress by appointing a union representative to represent the case up to the Minister of Manpower, who will have the power to execute a reinstatement order or financial compensation order (Leggett 1993:104).

For those who do not qualify for protection under the Employment Act, the employee will need to negotiate the employment contract with the employer. Any violations in the contract could then be fought in courts. While this works in theory, there are actually cases where taking the employer to court might not be worthwhile. This is because, even if it is proven in court that the employee is unfairly dismissed, for example, the damages received may not be worth the trouble of going to court. The sum award may only be as much as if the employee had been given notice for termination, which by law can be a maximum of only one month.

The National Wages Council, which is run by a tripartite authority, has set a minimum salary requirement for the employment of workers. It comprises of a tripartite body of the government, the employers and the union representatives. Its main objective is to formulate guidelines on wage adjustments in line with Singapore’s long-term economic and social development. These guidelines, if and when accepted by the government, will serve as a basis for negotiation between the employers and employees and /or their unions. The primarily concern of the National Wages Council is fair wage or salary payments to workers. If ever there is a dispute over the minimum wage, the Commissioner of Labour may investigate and if the salary payment is found to be less than the notified amount, the Commissioner may order for just payment. The decision of the Commissioner is of the same capacity as that of the District Court, and she or he has the provision to appeal to the High Court. For disputes of such nature, neither of the party is allowed to be represented by lawyers or paid agents during the proceedings. However, an employer may be represented by her or his employee and the disputing employee may be represented by a trade union (Leggett 1993:107).

The Workmen’s Compensation Act of 1975 protects employers by insuring against their liabilities for any loss of earnings on the part of any employees who suffer from injuries or contract any diseases, as well as fatal injuries due to work. The Workmen’s Compensation Act is administered and enforced by the Labour Relations Department under the Ministry of Manpower, and the Commissioner of Labour has the authority to act on any such disputes. The privileges of this Act are not, however, given to workers earning less than 1,250 dollars (Now revised to $1,600), casual workers, domestic workers and those that are excluded by the Ministry of Manpower. An injured employee who intends to sue the employer under the common law for damages is also not allowed to claim for any compensation through this Act (Leggett 1993:109).

All collective bargaining processes are regulated by the Industrial Relations Act. The Industrial Relations Court that was established by the Industrial Relations Department under the Industrial Relations Act, is primarily used for conciliation and arbitration of any industrial disputes that are emanated from collective bargaining (Leggett 1993:109).

Negotiation in an Industrial Relations Court must be done through a registered trade union that is recognized by the employer. The employer is obliged to recognize the registered trade union if the union is supported by the majority of the employees in the bargaining unit through a balloting system held by the Ministry of Manpower (Leggett 1993:111). The bargaining unit consists of all bargainable employees, regardless of whether they are union members or not.

The Industrial Arbitration Court is empowered to certify collective agreements. A non-certified collective agreement is considered as null and void. All terms and conditions in a certified collective agreement are binding on both parties (The employer and the employees) for a period of two or three years. Awards stipulated in the agreement cannot be changed within this period without the approval of the Industrial Arbitration Court. Usually, the collective agreements are anthologized to the interest of the development of the community and especially the economic development of Singapore (Leggett 1993:111-112).

If industrial disputes are not settled through conciliation, the matter may be referred to the Industrial Arbitration Court for a resolution. This may be done in three ways. First, the registrar of the Industrial Arbitration Court may submit the case on the request of both parties concerned. The second way is for the case of dispute to be submitted to arbitration under the order of the Minister of Manpower. The third way is the involvement by the president of Singapore to refer the dispute to arbitration, if the president feels that it justifies under the public’s interest. Once the Industrial Arbitration Court acknowledges the dispute, no one is allowed to take any industrial actions in regards to the dispute (Leggett 1993:112).

Awards to any trade disputes by the Industrial Arbitration Court is generally determined by considering it to the best interest of the development of the community, the economy of Singapore and to wage recommendations by the National Wage Council (Leggett 1993:113).

If the Minister of Manpower perceives that certain matters cannot be regulated satisfactorily through collective agreements or awards, she or he is authorized to set up a Board of Inquiry to privately or publicly investigate the matters and propose solutions. Reports of the findings from the Board may be brought up in parliamentary meetings or published by due consideration of the Minister of Manpower (Leggett 1993:113).

In January 1998, the Parliament of Singapore has affirmed that tripartism has managed to play a key role in ensuring Singapore’s success in the workforce. An example of tripartism is the National Wages Council of 1972, which entails the government, employers and unions to work together to ensure that wage increases are in line with the economic and productivity growth of the country, while at the same time, enables the workers to get a fair deal for their contributions.

The labour laws set out the rights and responsibilities of employers and workers. These laws ensure that workers receive fair wages, and terms and conditions of employment. At the same time, the laws promote an environment conducive for foreign investment. These laws lay the ground rules for employment, labour-management relations and collective bargaining. In Singapore, industrial actions are only taken by the unions as a last resort. Singapore has been free of strikes since 1978, except for a two-day strike in 1986. Industrial disputes are resolved within the legal framework of collective bargaining, conciliation and arbitration. For years, the good labour-management relations have, so far, brought about industrial peace and harmony, and the rapid and sustainable development of the economy.

The recent global economies have been hard hit by the financial turmoil. Singapore’s close link with its region and globalization is not spared from the economic turbulence. The global financial crisis poses a big challenge to Singapore and its workers. Employers and employees must brace themselves and lower their expectations to face the difficult times ahead. While the overall economy will slow down, not all sectors will be affected equally. But, for companies that are affected by the economy, they will face tremendous pressure on keeping their establishments alive. To remain viable and competitive, companies may have to restructure and improve their productivity. Reducing operational costs and increasing productivity are a couple of ways to remain competitive in the market. This means that it will ultimately affect the employment relations of Singapore, hence, the government, employers and employees and their unions must continue to work closely together to achieve these goals without heavy job losses. At the same time, it is imperative that workers are re-trained to ensure their viability and survival in the job market in the future.

Overall, Singapore still remains attractive to investors due to its efficient infrastructure, productive workforce, harmonious industrial relations, and conducive business and investment environment. Unfortunately, the recent economic downturn has inevitably caused a major breakdown for many companies, which has increased the number of job losses to a substantial figure that is worse than the 1985 and 2001-2002 recessions. Many companies, especially the small to medium-sized enterprises, have been terminating employment of employees using organization restructuring and downsizing due to the economic situation as an excuse to retrench workers without cause and benefits. Unfortunately, employees from most of these small and medium-sized organizations are not unionized due to their limited staff strength and discouragement from the Management. Hence, there are no collective agreements for these employees to protect them against retrenchments. Furthermore, the Singapore employment relations legislation does not protect workers, whether blue or white-collared, against retrenchments. Although it may be a little too late, but it is definitely time for the government, the industrial relations body and the respective unions to work out some form of legislation to protect workers against discriminative termination of employment.

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