Speech By Mrs Josephine Teo, Senior Minister of State for Finance and Transport, At The Singapore Directors' Conference 2013

Mr Willie Cheng, Chairman, SID
Ambassador Linda Tsao
Distinguished Guests
Ladies and Gentlemen

1. Good morning. Thank you for inviting me to the SID Directors Conference 2013.

Creating Value for Companies

2. In my previous role as Assistant Secretary-General of the NTUC, my colleagues and I shared a common belief. As a labour movement, NTUC values every opportunity to speak up for the workers and to advocate on their behalf. As a membership body, it seeks to provide a wide range of benefits such as discounts at FairPrice supermarkets and access to affordable insurance. But the labour movement also believes that the best welfare for the worker is a job, and the best protection for our workforce is full employment.

3. I visited companies often to discuss union matters. Whenever I met nervous employers, I would reassure them that our union understood how important it was to help the company succeed. After all, while the union could offer membership benefits, only the companies could offer our member jobs. Unless a company was doing well, there was little more it could do for its employees, our members.

4. Some companies, like Wing Tai, inspired confidence by living up to their stated corporate values. My contact at that time was Mr James Lee, who was then Finance Director. James was one of Wing Tai’s first employees when the company set up shop in Singapore in 1963 to take advantage of textile quotas. In the late 60s, to foster good relations with the workforce, Wing Tai initiated the formation of a union for its employees. As most the workers had little education, Wing Tai set up a library and learning centre to improve their English and Mathematics skills.

5. At the time, Wing Tai had a large pool of women employees. To be more accurate, most were young girls in their late teens. In the 1970s, when many of the young girls became young mothers, Wing Tai introduced baby crèches in their factories. This was long before childcare centres became common in Singapore, and certainly not at the workplace.

6. In later years, Wing Tai decided it needed to change course and exited the garment manufacturing business. But it made real efforts to help its workers through the transition. Some of them were not well-educated at all. But they were re-deployed, re-trained and remain loyal employees in Wing Tai’s retail and property businesses. Their stable jobs helped them raise their families, which in turn nurtured a new generation of citizens who could make their own contributions to society. In a way, Wing Tai created value not only for its shareholders, but also for their employees and society at large.

7. There were many companies in different businesses that valued their workers like Wing Tai. But, there were also others whose behaviours left much to be desired. I remember one which insisted on withholding information about an impending mass retrenchment until a few days before Chinese New Year. The timing worked best for the company, but it was devastating for many of the workers – imagine spending Chinese New Year worrying where your next pay check would come from. What can you say to your parents and children?

8. There was also the company whose CEO took no interest in the safety and well-being of his staff. The factory floor was dilapidated, the machinery out-dated and the orders becoming irregular. The workers had no proper resting place and the pay was often overdue. And yet in the company’s driveway, the CEO’s brand new sports car sat shining in the sun.

9. Sadly, the workers, mostly in the 50s, were fearful and did not want the union to raise any issues with the company in case they got fired. They lacked confidence that they could find new work. The management was incompetent and indifferent. The directors did not seem to know what was going on. The company was clearly failing and I shuddered to think of the consequences for the workers and their families.

10. These contrasting examples provide much food for thought. What is a company? For what purpose does it exist? To whom does it owe a responsibility besides its shareholders? To what extent is it a part of community? Of what value is it to the community? Can it help to advance society? How? Should it help to advance society? Why? Why not?

11. A few weeks ago at the National Day Rally, Prime Minister Lee Hsien Loong outlined a strategic shift in our approach to nation-building, towards one where the Government and the community play a bigger role to support individuals. In my view, an important contributor to the nation-building effort is in fact the business or corporate community.

12. As citizens, we are either employers or employees, or both. In business, we are very often customers and suppliers at the same time. We each provide goods and/or services, and procure goods and/or services. We transact with one another. But more than that, our relationships are intertwined. Business is part of society and how business is conducted reflects our society’s values.

13. Take for example, how businesses deal with an ageing workforce. When my parents were born in the late 30s and early 40s, the average life expectancy then was probably 60 odd years. But we achieved something worth celebrating in Singapore. With better incomes and healthcare services, our parents’ generation is living much longer, well into their 70s and 80s. However, not all of them will have enough for retirement. Some need to work longer. Others want to work longer to stay active and contribute to society.

14. There were a few ways the Government could address this. We could have mandated raising the legal retirement age but chose not to. Instead we have done three things. First, we introduced the re-employment legislation. Employers must offer a person reaching 62 continued employment but it need not be in the same job or at the same pay. This gives employers greater flexibility. Second, we introduced a Special Employment Credit^[1] where employers receive from the Government 8% of the salary paid to every Singaporean employee above the age of 50 earning up to S$3,000 per month. The SEC, which benefits about 73,000 employers employing 350,000 older employees, costs the Government about S$470m per year and effectively lowers the cost of hiring mature workers. Third, we introduced a multitude of grants and incentives to help businesses re-design processes, re-tool workplaces and re-train older workers to adapt to changing business needs ^[2].

15. But Government efforts will not by themselves be enough. We cannot succeed in including mature workers in our workforce if employers routinely reject job applicants above 50 years old. We cannot make the transition if employers do not value their mature workers, do not honour their past contributions, and do not care about helping them age with dignity and grace. We need businesses that see their bigger role in society and to play a part in helping Singaporeans age successfully.

16. There are other areas in which Singapore is in transition and where businesses play an important part. We need, for example, to uplift wages at the lower end. It is one thing for the Government to provide the Workfare Income Supplement and more support in our housing and healthcare policies, so that all citizens can benefit from our country’s progress. But we also need companies and businesses to value every worker. We need businesses to be willing to re-look their business models, raise the job and skills content of the work done in Singapore, pay better wages, and offer their workers a chance to move up.

17. Likewise, we want to see Singaporeans advance to senior positions, even as their companies draw from the widest pool of international talents. We can provide our citizens with the best of education but we need the companies to also invest in their development, expose them to opportunities in key areas of growth, and be alert to practices within the company that may inadvertently prevent Singaporeans from advancing.

18. As members of the board, directors are influential leaders in your organisations. You can help by asking the right questions. Many of the directors I know are persons of great knowledge, competence and integrity who care deeply about the company and the business. They take their roles very seriously, but even they are sometimes not aware of the business practices that discriminate against older workers. They are sometimes surprised to learn of the pay that their most junior employees earn, the long discontinuous hours these workers clock at work and are unaware of the dissonance caused by their changing employee profile.

19. Businesses thrive not only when the economic ecosystem is in good shape but when the social ecosystem is also functioning well. I urge you as directors to take an interest in the affairs of your companies beyond the financial statements and the management reports. Beyond your fiduciary responsibility, you can exercise your influence on the way your business relates to your employees, the community and how you discharge your social responsibility.

20. Besides acting in the service of your shareholders, I hope you are willing to steer your companies in service of society. Robert Greenleaf, who wrote about “Servant Leadership”, challenged all leaders to think more deeply about the impact of our actions on those we are supposed to serve. He asked “…Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? And, what is the effect on the least privileged in society? Will they benefit or at least not be further deprived?”

21. I know many of you appreciate fully the role of business in society. When we harness the abilities and efforts of our business sector, I have no doubt that Singaporeans can make further progress as a society and forge a new way forward, together.

22. I wish all of you a fruitful conference.

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^[1] Enhancements to SEC announced in Budget 2012
^[2] ADVANTAGE! Scheme