Tripartism and Industrial peace in Singapore

Trust and the commitment to fairness

Tripartism has given us years of industrial peace and prosperity, but trust must work both ways
By Eugene K B Tan, TODAY 4 Nov 2011

The current economic uncertainty has generated a lot of angst, anger and anxiety in labour relations across the globe.

Greece, for example, is in the throes of a social upheaval over the austerity measures demanded by the euro zone partners as part of its debt rescue package.

Closer to home, the extraordinary decision last Saturday of the Qantas management to ground its domestic and international fleets most vividly demonstrated that it is in economically challenging times that labour relations are stress tested. That fateful management decision, the full implications of which are still unknown, has done tremendous damage not just to the Qantas brand name but to Australia as well.

The Gillard government had to apply to the industrial court to stop the industrial action. Trust between Qantas, the unions and the Australian government, already in short supply, is now almost non-existent. The three Qantas unions do not trust the airline's repeated claims about its financial viability. Ironically, the unions' attempt to secure job security (an issue tied in with outsourcing and sending jobs overseas) has made the central issue even more challenging - in that Qantas employees' job security is now even more uncertain given the severe reputational damage to Qantas.

Industrial peace in Singapore has been attributed to our unique model of tripartism. This involves the trade unions (led by the NTUC), employers and the Government. Predicated on the fundamental need to create good jobs for Singaporeans, tripartism has ostensibly helped to create trust among the three key stakeholders at the workplace. It also espouses a deep commitment to fairness, taking a long-term view of issues and a practical approach to problem solving.

This approach has enabled Singapore to cut costs and respond swiftly to changing economic conditions, including the Central Provident Fund (CPF) cuts during the 1986 recession and 1999 Asian financial crisis, as well as retuning the CPF in 2003 to maintain cost competitiveness. The state of harmonious tripartite relations engendered is a competitive advantage that Singapore enjoys.

As the income gap has grown in Singapore as well as concerns over whether Singaporeans remain at the core of the workforce, questions have naturally arisen over whether our tripartite model of industrial relations is weighted in favour of employers and the Government.

There is the perception, accurate or otherwise, that workers bear a disproportionate burden during economic downturns, while corporate entities reap a disproportionate share of the benefits when things turn around.

Critics have pointed to how quickly wages are cut and that wage restorations take so much longer. A common gripe is how employers' CPF contribution rates have not been fully restored to 20 per cent. The abiding concern with competitiveness has meant that a premium is placed on harmony at the workplace. For the government, harmonious industrial relations have facilitated the creation of a conducive environment for job creation.

Coupled with a more competitive political landscape, it is not surprising if NTUC's 50-year symbiotic relationship with the ruling People's Action Party will come under greater scrutiny. Can tripartism retain its relevance if the perception is that the economic pie is shrinking or that one tripartite stakeholder is doing the heavy lifting?

There may be the view that some edginess to industrial relations would do tripartism and the workers, in particular, some good. It could be argued that tripartite partners would be kept on their toes and not take the workers and industrial peace for granted. Industrial peace is not pre-ordained - if one stakeholder is always giving in or having to bend backwards, then all bets are off that tripartite trust can be maintained.

While the tripartite partners have subscribed to tripartism, the possibility remains that they can differ on what is needed of each stakeholder to maintain industrial peace. In short, the high principle of tripartism does not necessarily mean that the partners will subscribe to the same policies and outlook on what is needed for workplace harmony.

Take, for instance, this week's announcement of the enhancement of the Tripartite Guidelines on Fair Employment Practices to ensure that "Singaporeans remain the core of the workforce".

It was reported that tripartite partners agree on the principle of an "open and diverse employment market" as being critical to the twin symbiotic goals of Singaporeans having good jobs and career prospects and for businesses here to compete and grow well in a competitive global environment. Yet, the application of that principle has resulted in quite a few instances of businesses preferring non-Singaporeans and a general reluctance to develop the skills and expertise of Singaporean employees.

The need for the enhanced guidelines is a stark reminder of how corporate zest and the imperative for profits and quick solutions can shortchange the Singaporean workforce.

But such a market practice reflects how some employers have forgotten their social responsibilities even as they benefit from the system. The usual litany of business complaints of the high cost of doing business here ignores the positive externality of industrial peace in Singapore and the sacrifices of workers.

It is deeply worrying that some Singaporeans have been discriminated against in their own country; it is even worse if Singaporean businesses are discriminating against Singaporeans. The enhanced guidelines notwithstanding, workplace discrimination is very hard to prove, and the asymmetric power of the employer to defend themselves against such charges may mean that few employees will pursue the matter.

The media release on the enhanced tripartite guidelines opted to talk about the "interests" of Singaporeans and businesses. What about ethics? After all, fairness at the workplace comes down to ethical and socially responsible practices at the centre.

Perhaps talking about "interests" is preferred because that is often the "bottom line" of what motivates people to do things. Talking about ideals seems too abstract. But the reality is that ideals matter immensely in trust and confidence-building, and we ignore them to our peril.

Eugene K B Tan is assistant professor of law at the Singapore Management University School of Law where he also teaches ethics and social responsibility.

Why tripartism works in Singapore

TRIPARTISM has no legal basis. Yet, despite this lack, tripartism has thrived and worked well in Singapore. It has delivered results for all the three parties - the Government, unions and employers - and is a distinct comparative advantage for Singapore. What is the recipe for this success?

By Halimah Yacob, Published 15 May 2008, The Straits Times

TRIPARTISM has no legal basis. Yet, despite this lack, tripartism has thrived and worked well in Singapore. It has delivered results for all the three parties - the Government, unions and employers - and is a distinct comparative advantage for Singapore. What is the recipe for this success?

To begin with, there is a consensus among the three parties that economic growth and job creation are common goals. And they can be achieved only if there is industrial peace and if the gains from growth are fairly distributed.

Employers want profits, unions want a better life for the workers and the Government wants a conducive environment for investments. These are not mutually exclusive goals but are interdependent.

Employers can remain profitable only if they take good care of their workers so they give their best. Singapore's workforce has been ranked the best by Washington-based Business Environment Risk Intelligence (Beri) for many years.

Workers cannot expect to earn higher wages and better bonuses if there are no jobs or if their companies are not doing well, particularly in a globalised world where capital is very mobile.

And the Government cannot grow the economy if employers and unions are constantly at loggerheads with each other. The Government has an important role to play in maintaining industrial peace and in ensuring fairness through a mixture of persuasion and legislation.

Because of the high degree of confidence that exists between the Government and unions, unions are included in major decision-making processes. This is of crucial importance: In many countries, unions are excluded from policymaking and hence have to resort to confrontation in order to be heard. But here unions sit on major statutory boards and are involved in committees looking into key social and economic issues.

As a result, unions here have eschewed strikes and industrial action as a means of settling disputes. Instead, they have opted for negotiation, conciliation and arbitration, as provided for under the Industrial Relations Act.

Indeed, this is the second most important pillar in maintaining industrial stability in Singapore, after tripartism. Our dispute settlement mechanism is simple and inexpensive but effective. The best outcome would be if the parties, unions and companies, can settle disputes between themselves, as they know the issues well and would be in a good position to find solutions. If this fails, then conciliation by the Ministry of Manpower (MOM) would kick in at the request of either party.

Every year, an average of about 300 disputes from the unionised sector are referred to the MOM for conciliation. If conciliation - a voluntary referral system - fails, then the parties have the option of referring the dispute to the Industrial Arbitration Court. The beauty of our arbitration system is that the court's decisions are binding and final.

Confidence among employers and unions that the system of collective bargaining, conciliation and arbitration works, is a key factor in the parties' willingness to make use of the system and avoid confrontation.

The third key ingredient of industrial peace is the equitable distribution of the gains from growth. Indeed, the ruling People's Action Party has campaigned on the platform of 'industrial peace with justice' as the way forward from the strike-ridden days of the 1960s. Workers have enjoyed steady improvements in their wages and lives.

We need only to compare ourselves with our parents' generation. Mr Veloo, aged 51, a member of the Amalgamated Union of Public Daily Rated Workers who works as a mechanical foreman at the Senoko Incineration Plant, captures this progress. While he is a daily rated worker with not much education, his three children are doing well. His elder son is studying in the Nanyang Technological University, his daughter is at an American university and his younger boy is in a junior college.

Life for each successive generation has become better through education and skills upgrading. Mr Veloo himself is not standing still. He has undergone many skills upgrading programmes. He was a welder; he is now a foreman.

The big question now is whether this model is sustainable. There is no reason for it to fail, provided all sides understand how it works. Also, workers must see the benefits of cooperating with, rather than confronting, employers and the Government.

A visiting professor from a developed country once asked me a pertinent question: Why, if indeed tripartism is a comparative advantage for Singapore and it is clearly a win-win strategy, are there still employers who resist unionisation? A good question to which I have no satisfactory answer - except that there are employers here whose experience of unions elsewhere has not been positive and therefore they continue to be wary of unions.

Also, we cannot ignore the fact that some employers continue to be unilateralist in their management of workers. To them, nothing must come between them and workers, and pluralism, what the unions stand for, is not appealing.

We have a healthy tripartite relationship, which is the envy of many countries and is acknowledged by the International Labour Organisation as a useful model, particularly in the Asian context. We have much to celebrate in this month of May which is typically marked around the world by protests, demonstrations and sombre reflections on how much workers have lost in a period of rapid, unbalanced globalisation.

Singapore is among the few industrialised countries where union membership has not declined.

The writer is deputy secretary-general of the National Trades Union Congress.