While Singapore’s economy could do better this year than last year, the unemployment rate is expected to creep up further as the economy matures, said Prime Minister Lee Hsien Loong in his May Day Rally speech on Labour Day yesterday. Below is an excerpt from Mr Lee’s speech, in which he outlined how the Government will be working to help businesses create new jobs, get displaced workers re-employed, and train employees to develop in their current jobs.

With global growth looking up, I am cautiously optimistic about the Singapore economy this year.

Last year, we grew 2 per cent, better than expected.

And what is even more encouraging than the number is that our productivity was improving.

Last year, we got 1 per cent productivity growth, much better than in 2013, 2014 and 2015, when it was almost zero.

What does that mean?

That means (that) with productivity, the economy can continue to grow, even though my workforce is not expanding. Even though I do not have more workers, I can produce more. I can be more prosperous. And my workers can earn more.

The challenge is to keep this up, to continue innovating, to continue raising productivity, not just for one year, but for many, many more years to come. Some sectors are already doing that; others, not yet.

For this year, the growth forecast is officially between 1 and 3 per cent. But I think there is a good chance growth this year will exceed last year’s 2 per cent. It is uneven still. Not every sector is doing well, and some sectors, like retail, are still struggling a bit. But overall, I think we are improving.

Restructuring is a continuing process — and it is not a painless one.

Last year, redundancies went up. This year, even with better growth, I expect we will see a steady trickle of redundancies.

It is inevitable: Because companies have to continue to restructure, and as they do, some workers will be displaced.

And that is why our unemployment rate has crept up a little bit and reached 2.3 per cent. Two point three per cent is a bit high for us, but it is much lower than unemployment in all the other developed countries.

In other developed countries, the unemployment rate is typically between 5 and 10 per cent, much higher. And if you look forward and ask me what I expect, I would say, honestly, I think our unemployment rate will gradually begin to creep up.

We are feeling the same pressures as the other developed countries. The industries have to continue restructuring. Our workforce is getting older, and older workers who lose jobs tend to take longer to find new jobs and get back into the workforce. So if it all adds together, I think the tendency will be that our unemployment rate will gradually go up.

We have to understand this trend, but at the same time, we have to work hard to resist it, to keep our workers in jobs. But how are workers actually feeling on the ground?

Every year, before May Day, I invite union leaders and U Associates to have lunch, to get a sense of how things are going in the different parts of the economy. This year, after talking to them, I decided what they said deserved to be heard by more people.

So I interviewed some of them and posted the video on Facebook. Most of the unionists were quite upbeat, although they were not sure how long this momentum will last.

Last year, the mood was gloomier. I still remember last year Sister Jessie Yeo from Singapore Port Workers Union telling me there was one working day, during two out of three shifts, there were no ships at all at Tanjong Pagar Terminal and all the “giraffes” — the quay cranes — their necks were up for almost the whole day. So this year, when I met Jessie and Brother Arasu, I asked them how things were doing in the port. And Jessie said things were looking a lot brighter. The port is handling more volume and she expects things to be busy for the rest of the year. I said, but when I drive past the Tanjong Pagar terminals, all the cranes are up. She said: “Yes, that’s true, but it is because we are moving from Tanjong Pagar Terminal, consolidating and shifting to Pasir Panjang.” Pasir Panjang has more capacity, is more efficient and high-tech.

For example, they are testing AGV — automated guided vehicles — which move around in the container yard by themselves without drivers.

But most importantly for workers, when they shifted to Pasir Panjang, all jobs were kept, no jobs were lost.

Workers were retrained. Quite a few of them had to take on new roles in Pasir Panjang.

So I asked: “How are the workers feeling?” She said: “Last year, workers were worried that they had nothing to do. This year, workers are worried they may have too much to do.” But what about beyond this year? They said that realistically, they are not quite certain because there is competition. There is Tanjung Pelepas, Port Klang, Malacca is building a new port, and they also have to worry about competition farther away, like Yangshan in Shanghai.

And the other ports are also automating.

So PSA and their workers have to continue to raise their productivity. But they have a plan. The long-term plan is to build a mega port in Tuas and consolidate everything in Tuas, starting in 2021. Tuas will be even more advanced, even more efficient, even more competitive.

But moving there is going to be a complicated business. The workers will have to adjust. So Jessie and Arasu asked me: Can the government help us, for example, build the MRT line to get there faster? I said I will try my best, but we will make sure we will solve the problems and make sure that Tuas port is a success because that is critical not just for PSA, but for Singapore too.

The PSA management, workers and union have the right attitude. Never take things for granted. Be alive to the competition. Prepare well in advance and stay ahead. They have been through many ups and downs together over the decades. But because they have stayed together, we still keep our position as the top maritime capital in the world.

We are there. We stay there.

But we know that we are not automatically floating down there. We have to work hard to be there.

There are always competitors looming. Someone is always trying to steal your lunch and we have to guard our lunch. So long as our unions and management maintain this drive, and work closely with one another and with the government, Singapore can stay in the game.

I talked about the port because the port is important to us, but also because what the port is doing, all the other industries in Singapore also can do and should do.

Today, I would like to explain some of what we are doing to continue to prosper.

It comes down to three things — jobs, jobs and jobs — but three different ways of thinking about jobs. One, creating new jobs by bringing in new businesses and investments, and expanding existing businesses; two, finding replacement jobs for workers who have lost their jobs, are out of work and need work; and three, jobs for future workers, training students, training workers to grow in their jobs to do something different, bigger, more productive in future.

First of all, we are helping businesses to create new jobs, which means new companies, new investments, upgrading and expansion of existing companies.

That has been our winning formula for 50 years because if we don’t have new companies, if we don’t have a business-friendly environment where people want to come, there will be no new jobs.

The EDB has been working hard at this, to get multinational corporations to come into Singapore. I will give you a sample of projects this past year. In electronics, Micron invested more than S$5 billion to expand its plant in Woodlands, creating 500 jobs.

In IT, Google opened a campus in Mapletree Business City — 1,000 Googlers there. One thousand people working there, important for our IT sector, but also training 1,000 small and medium-sized enterprise (SMEs) business leaders on how SMEs can go digital.

In chemicals, it is a mixed picture. Some plants consolidated, but others (are) expanding, investing and we are still getting new projects. For example, Evonik broke ground for a second plant in Jurong Island. They produce raw material for animal feed — an S$800 million investment, 150 jobs.

So every job we create is a few million dollars of investments.

At the same time, we have been helping SMEs upgrade themselves, go overseas, expand and get new capabilities. Not just high-tech companies but even traditional ones can reinvent and do new things.

At one National Day Rally, I talked about bak kwa in Ginza and how we helped a Singapore bak kwa maker navigate the Japanese bureaucracy and rules, so that it can import the materials and make the bak kwa and sell it in Ginza, which turned out to be very popular.

Today, let me tell you about another Singaporean company. It’s called Grandluxe. They started 75 years ago — in 1942 — as a book-binding workshop along Mohamad Sultan Road.

In the old days, we used to produce reports … papers, they come in little bits. We accumulate them and we bind them together into volumes. Like Parliamentary reports, Hansards, they come, each session one little pamphlet, and then you bind them together, neat volumes. This is the work done by companies like Grandluxe — sometimes hardbound, sometimes even leather-bound, and all done by hand. Grandluxe did well. They expanded into the printing business, set up a factory in Jurong, printing stationery and notebooks. But slowly, the world changed.

Today, the reports do not come in little pamphlets any more. They come in one link in an email. You click and the PDF file comes. You want to see one from 10 years ago, you search Parliament’s website, you can find (it). So there is nothing to bind together. You cannot take all these links together and put a volume around them.

Even diaries and notebooks — we carry a smartphone, you put everything down there … you share it on WhatsApp. You do not buy diaries any more. So Grandluxe’s old business was shrinking. But they decided to reinvent themselves and change their business model. They turned bookbinding into a premium craft. They started a new company. They gave it a new name Bynd Artisan — not just a printing and binding factory, but now it is a retail experience.

A customer goes to the shop, you pick the materials ... and the skilled bookbinders will personalise a beautiful leather-bound notebook for you.

You can watch them at work and admire their skills. So now, the company is doing well and selling to the world. This has given long-time employees like Ms Tan Buay Heng a new lease of life. Ms Tan worked with the company for 40 years. She started as a production operator, binding books. Now, she has become a craftsman, personalising leather notebooks for customers, conducting workshops and training younger craftsmen. And she is now also managing a retail branch. So even as a mature worker, you can still learn, you can still change.

What Bynd Artisan did, Spring and IE Singapore are helping many other SMEs to do. Not every SME can become a retail boutique, book-binder, but they can reinvent themselves, they can find new niches in which they can grow. Ms Tan’s story — from production operator to a retail branch manager — can become the story of many other workers.

So firstly, we need to create new jobs. But secondly, we also need to help workers who lose jobs find alternative jobs, especially the professionals, managers, executives and technicians (PMETs). Because the businesses have to restructure to survive, and technology is disrupting everything, so redundancies will continue even as our economy grows. We are particularly concerned about sectors which are not doing so well. We have expanded several schemes under Adapt and Grow — Professional Conversion Programme (PCP), Career Support Programme for PMETs, and enhanced work trial support for the rank-and-file. So many programmes, so many names — it is a whole alphabet soup. Brother (Lim) Swee Say is trying all sorts of things, different approaches and many of them will work. Let me illustrate what we are doing with actual examples, told to me by union leaders and U Associates.

Brother Mah Cheong Fatt (Executive Secretary of Shipbuilding and Marine Engineering Employees’ Union) is from the Offshore & Marine industry. The industry is experiencing tough times now. Three years ago, it was doing well.

The oil price was US$100 (S$140). I visited Keppel then, and they told me order books were full for the next five years. Workers were getting 12 months of bonuses or more. Unfortunately for the industry, the price of oil fell sharply, and now it is about US$50. So oil exploration, oil production have slowed down. Drilling has stopped. There is overcapacity. The orders for the drilling rigs have been either postponed or cancelled. For the past two years, there have been no new orders.

Since the last peak, the shipyards, offshore and marine have lost about 30,000 workers. If they were Singaporeans, we would have a big problem. But most of them were foreign workers, and so our own workers did not have to bear the brunt of the redundancies.

But some workers who are Singaporeans were also displaced.

Last year, about 1,000 were retrenched. This year, we expect a few hundred more. The foreign workers — they can go back to their home countries. But for Singaporean workers, this is home. These are our brothers and sisters. What do we do for them?

Our first priority is to help them find another job. With the Offshore & Marine industry as it is, it is very difficult to find a replacement job in another shipyard. But there are other industries which are doing well, and require the skills which the engineers and the technicians from the shipyards have. Like transport, like aviation. And if we can marry them up, take the technicians and engineers from Offshore & Marine and train them, adapt to work in transport and or in aviation, I think it is a win-win. So that is in fact what we are doing.

So Sister Sylvia Choo, who is the executive secretary of SISEU (Singapore Industrial & Services Employees’ Union), is working on this.

And Brother Edwin Khew, who is the president of the Institute of Engineers in Singapore, is working with Brother Mah Cheong Fatt to organise job fairs to help Offshore & Marine workers find new jobs in aerospace and transport.

It is a bold move for workers to go and do that. It is not so easy. You have to go outside your comfort zone but if you make the effort, you train, you can do it and some have already done that. This is not just about schemes and programmes, but also about walking with workers every step of the way. We organise job fairs, we set up stalls, we give out pamphlets. But we go beyond that.

Brother Desmond Choo told me about a recent job fair which he organised at Our Tampines Hub — very successful. At the fair, he noticed one person walking around the stalls for some time, looking lost. He went three rounds, did not stop anywhere. So Desmond went up to him and asked: “What is the matter? You have not stopped anywhere.” The man said he was lost and did not know what job will fit him. So Desmond counselled him, found out he was a shipyard material handler and matched him with a laundry operator. What Desmond did for this worker is what we want to do for every displaced worker. Each one is an individual, a Brother or a Sister, not a statistic.

And this is why the labour movement is what — as the secretary-general says — an “unusual labour movement”. It takes care of those who have jobs — helps them to keep their jobs. For those who have lost their jobs, NTUC helps them get replacement jobs. For those who are still in school, NTUC works with the Government and with businesses to keep this economy going so there will be jobs for them when they come out of school.

Unions elsewhere do not think about the jobless, and especially the young who have yet to enter the job market, because their members are the ones who are working. In many countries, after the financial crisis, youth unemployment went up and has stayed up. It is a very serious social problem. And even those who are working are often underemployed. You see this in Europe, in Spain, in Italy, even in France.

In Asia, we see it in South Korea and Taiwan. Lots of people going to universities. Graduates cannot find work, (they are) hanging around, underemployed, very unhappy. But in Singapore our youth unemployment rate is low. Once you graduate, whether from ITE, polytechnics or universities, you can find a job within not a very long time.

It did not happen by accident. It is because we make sure our schools prepare the young properly for the job market, and they emphasise on-the-job training, and work with employers to tailor the curriculum to what the market needs. And they work out internship programmes so that we prepare the workers even before they graduate.

Similarly, we are creating opportunities for all our workers, young and not-so-young. Whatever age you are, do not stop trying. But please be open, be flexible. Be willing to try something new — not just new jobs, new employers, but new careers in different industries. Take up courses, reskill.

We also need employers to come on board. Do not just recruit new graduates. Give mature workers a second chance. Older workers bring with them maturity and experience. The public sector is leading by example. We are expanding our Adapt and Grow scheme. Our agencies have been hiring mid-career PMETs, including mature workers. We have launched several PCPs to convert mid-career workers. And we will do more. So I urge employers: Work with us. Unions are doing their part; so must you.

MOM (Ministry of Manpower) can develop PCPs for both entry-level and mid-level jobs. We will support employers with reskilling programmes. The Government actually pays a good portion of the wages of the workers you take on during the trial period. So give it a try.

If the tripartite partners work together, we will transform together, adapt together and grow together.

Protecting our cheese

The third point is to upgrade all workers and supporting them in their existing jobs. We have to take worker upgrading very seriously. In other countries, workers know they need to keep on learning to keep their rice-bowls; they are hungry.

Brothers Hock Poh and Arasu, and Sister Jessie recently discovered how hungry the Chinese workers were when they went to Chengdu to visit smart factories. They saw highly-automated plants, not sweat shops, not lots and lots of workers slaving over machines. But one worker in a big factory with 20 machines. He’s not operating it — he’s supervising it, troubleshooting it, monitoring it. It’s Big Data, Industry 4.0, IT, organisation, management, skills and discipline.

That left a deep impression on them. The Chinese workers — what are they like, are they well educated? No, not all. But they work hard and train hard. They built a dorm for 11,000 of them, all the facilities are there. The workers live in the dorms. At night, they log on and take e-learning modules.

I am reminded of the Korean workers who used to come to work here to build structures. At night, in the dorms, nothing to do, they go and pump iron to get strong to work the next day.

And that is how Korea got strong. Now they don’t do it anymore. The Chinese are now at that phase, and their workers are hungry.

We may not be at that stage of development. But unless we are as hungry as them, and as determined as them, upgrade ourselves, and willing to put in as great an effort, I think, our cheese will be stolen.

We have to make that effort, we have to strive and we have to keep our position. That is why we have been working hard on SkillsFuture. The good news is we have a good head-start. The IMF (International Monetary Fund) has been monitoring these programmes all over the world and their assessment is that SkillsFuture is one of the most comprehensive of such programmes they have seen.

These are our plans to transform our economy and grow our jobs. At the centre of this effort are our Industry Transformation Maps (ITMs). They were a major recommendation of the CFE (Committee on the Future Economy). We are going industry by industry, working out what specific things we need to do in that industry, to upgrade, to adapt, to make it competitive and putting it all together into a plan for that industry.

Through ITMs, we can stay competitive and create the jobs. The logistics industry is one of the ITMs. It is a big contributor to our economy; together with transport, it employs 250,000 workers.

And there are good prospects because you can use technology, robotics and data analytics. We are in the right place in South-east Asia for logistics.

We hope to create another 2,000 PMET jobs in logistics in the next five years. So there’s a plan, there are resources, we will make it work.

That means everybody has to play their part. Employers, to invest in technology and train up workers. Unions, to work with employers, identify where the new jobs will be and help the workers get new skills. And the Government, to support the companies to adopt new technology and the workers to get new training.

This is tripartism in action. Logistics has an ITM. But we have 23 ITMS for all the different sectors of the economy, covering 80 per cent of the economy.

Last year we set up a tripartite council, the Council for Skills, Innovation and Productivity. It was chaired by DPM Tharman (Shanmugaratnam), who was leading the SkillsFuture effort.

Since then the CFE has completed its report. It is a comprehensive plan to take our economy the next step forward. Now we need to implement the CFE’s recommendations, to make the transformation happen.

I have asked Brother (Heng) Swee Keat to take over from DPM Tharman as chair of Council. We will rename it the Future Economy Council. It will also have other ministers, especially the younger ones. Swee Keat will work with them to implement the CFE recommendations, make sure the ITMs work, are implemented and make a difference. I am putting them in charge of this strategic effort. It is a deep transformation. It will take time. It will extend beyond this term of government. It is an opportunity for the younger ministers to work closely together as a team, strengthen their bonds with employers and unions and with each other, and show Singaporeans what they can do. It is their generation of leadership who will have to work with Singaporeans to take the country to new heights.

Our unique tripartite partnership is the secret why we have been able to transform our economy over and over again. Starting from our nation- building years when we began to industrialise, through the British withdrawal from their bases here in 1971, when we faced the prospect of tens of thousands of job losses.

Through the first major recession in 1985, when we had to cut the CPF drastically in order to reduce costs and become competitive again. Through the Asian Financial Crisis, SARS, the Global Financial Crisis. Each time, although the challenges seemed daunting, we pulled together, adjusted course, made sacrifices, helped each other, and came out ahead, stronger.

I have no doubt we will face further challenges ahead, even serious ones.

But if we strengthen the tripartite system, and remain united, if the labour movement remains strong, takes care of our workers, and makes them co-owners of our system, if all our segments of society — workers as well as employers, managers and professionals as well as foremen and the rank-and-file — sacrifice equally when sacrifice is called for, and share in the fruits of success when things go well, then I am confident we will overcome the challenges and emerge stronger.

Each one of us, with one another, for one another, for Singapore. That is the way we make sure that every May Day, we have good reason to celebrate. And that’s the way we can make good things happen and create a bright future for our children.