Mellanie Hewlitt
Singapore Review
8 March 2003
“Layoffs are not all bad.” At a time when Singaporeans are enduring rising unemployment rates, the latest comments by Prime Minister Goh Chok Tong, in the 8 March 2003 edition of the Straits Times, might strike many as highly insensitive, if not down right offensive.
Mr Goh went on to elaborate that “if there are no retrenchments at all, then I worry for Singapore. It means that we are actually offering an iron rice bowl to every employee.”
Mr Goh’s reference to an “iron rice bowl” is understandable as Singapores civil service and State Owned Enterprises (GLCs) have been attempting to shed this image for many decades. It was only in these recent months that the effects of the protracted recession finally filtered through the many layers of government bureaucracy and red-tape, unveiling the hidden redundancies and deficiencies that were part and parcel of daily “government administration”.
According to PM Goh, but for the retrenchments, “Singapore agencies could, in time, become like the financially ailing state-owned enterprises in other countries.” His remarks follow a phenomenon some businesspeople call the “Singapore squeeze,” where job losses are mounting at big state-controlled concerns like Chartered Semiconductor Manufacturing Ltd., PSA, and HDB, that play major roles in the island nation’s economy However, one also wonders whether such harsh medicine came too little, and far too late.
After all, these are not new issues, as questions of viability, transparency and accountability have surrounded the operation and management of Singapores State Owned Enterprises and GLCs for decades. Until recently, these issues have always been brushed aside in a cavalier manner by the Singapore government. Whilst the effects of the protracted recession may be one reason for the sudden and drastic change of management style, another reason is the FTA.
Indeed, the ‘G’ – for government-linked – word featured prominently in a discussion on the US-Singapore FTA (USSFTA) recently, organised jointly by the Institute of Policy Studies, the American Chamber of Commerce in Singapore and the Foreign Correspondents Association.
According to United States Ambassador Franklin Lavin, it’s an issue for American firms trying to get into the government procurement business, and must be tackled under the upcoming free trade agreement (FTA) between Singapore and the US.
And there is a tight date line since the target is to get both houses of Congress to pass the implementing legislation before they break for the summer vacation in August. If they pass it in 2003, the USSFTA can come into force on Jan 1, 2004. This is a relatively small window for the Singapore Government to clean up the grime and dust that had accumulated after several decades of administration.
The task can be a mammoth one, if Singapore Incs Senior Management were really serious about changing management style to facilitate increased transparency and accountability, and ensuring that State Owned Entities and GLCs operated in an economically sustainable and profitable manner. Some of these lumbering vehicles have been in existence for decades. Indeed, two decades of virtually continuous high growth has allowed the PSA, and many Government-linked companies (GLCs), to function as near-monopolies in a protected environment, well insulated from market forces, and allowed them to sustain a “no retrenchment” policy.
Many GLCs and State Owned Entities in Singapore have grown so complacent in the “outplacement” department, they have not even factored retrenchment policies into their planning. Of the 1,000 collective agreements in force today, about one-fifths have no retrenchment-benefit clause. (See previous review from Lycos Asia, Surviving A Shipwreck 24 February 2003).
The handsome benefits accorded in recent retrenchment exercises for some State Enterprises have also raised further questions. In the HDB for instance, retirement packages were being given not only to the 900 or so who choose to leave the housing board, but also to a larger number, some 1,800, who were staying behind but will be transferred to a new subsidiary called HDB Corp. (See The Business Times, 27 Feb 2003).
Mr Lee Han Shih of Business Times noted that If all this sounds generous, it is. Giving benefits to transferred employees is unheard of in the private sector. After all, retirement benefits are given to those who no longer draw a salary from a company. If employees get to keep their job, is there a need to give them the same benefit? Perhaps there is more substance to PM Gohs words when he says that “Layoffs are not all bad.
In all, some 2,700 will leave HDB proper. Their departure will cost $100 million or more, including an estimated $450,000 per head offered to a few senior staff.
With retrenchments and pay-cuts rampant all over the island, and the city state caught in the grips of a pro-longed recession, the latest move by HDBs Management can best be described as baffling.
It again underscores the need for transparency and accountability in the management of public funds. This is a significant issue as there is an estimated USD100 billion approx in foreign exchange reserves and public funds, which are at the beck and call of the PAP. And these are not subject to any known process of audit, disclosure or independent scrutiny/review.
In the mean time, until a turn-around in the US economy offers some respite, Singaporeans will again have to bare the brunt of these retrenchments and lay-offs. PM Goh further urged Singaporeans to be more enterprising, citing the case of a university graduate who fried chestnuts to earn some money rather than running straight to an MP for help.
It is ironical that while the Prime Minister urges Singaporeans to shed the mentality of an “iron rice bowl”, to accept lower paying jobs, retrenchments and pay-cuts, the “Senior Management” of Singapore Inc continue to be well insulated from the brunt of the economic downturn.
Indeed, it is life as usual for Singapores Ruling Elite and there have been no formal announcements of review of the remuneration packages of what are some of the most highly paid government officials in the world.
And what is Mr Goh’s final comforting comments to all this? “Things had not hit the bottom yet,” he said. Well, that’s Singapore Politics in a nutshell for you.