Singapore’s employment relationship over the last two decades

Singapore’s Employment Relationship over the Last Two Decades

Prior to the People’s Action Party (PAP) take over in governance; the world knew Singapore as an underdeveloped mosquito-ridden swamp. ‘With no natural resources apart from its deepwater natural harbour and strategic location’, she heavily relied on ‘human capital and resources to generate economic success and wealth’ (Gross, 1999). Therefore, it was critical that employment relations were regulated in an efficient and effective manner. Today, she has transformed her reputation as one of the four Asian Tigers in the Eastern economies and is now ‘leading the pack’ according to Rezny (2010). Leggett’s (2000) research asserts that because ‘collective bargaining and dispute settlement procedures have been standardised; there is little room for the unanticipated.’ The continuing success and harmony of the nation’s industrial relations is dependent on the ‘collectivist culture embodied by the workforce’, but nevertheless the country’s long serving former Prime Minister and now Minister Mentor, Lee Kuan Yew undoubtedly had a significant role to play in formulating Singapore’s framework of policies and regulations. This paper will explore key themes of human capital, collectivism, conflict resolution and changes to the Employment Act with respect to the employment relationship.

With these mechanisms still in place today, and the strong tripartite relationship between the government, employers and labour unions, together they orchestrate a large measure of the behaviour of the actors in Singapore’s industrial relations system. Prime Minister Lee Hsien Loong and his government body continue his father’s legacy, as they seek to mediate the balance of power between employers and employees, striving for the commonwealth of its citizens. Contrarily, a crucial theme in Dr Chee’s book is the need for Singapore to become a more sophisticated and cultured society through the development of the individuals who comprise it. Chee (1994) points to the need for ‘contentious debate’ as opposed to the current convention of ‘forced consensus’. He argues that in Singapore contention is frowned upon, highlighting the fact that debate is absent as the government seeks to maintain control over the country, as it had done so since it became an independent nation.

Singapore is a predominantly Asian Chinese society steeped in traditional value systems and culture, the concept of ‘face’ or in other words, respect, is heavily emphasised in everyday life. Accordingly, psychological contracts are often created between employer and employees to help facilitate this. The study by Morrison (1994) recognised the fact that ‘violations of the psychological contracts are unavoidable given the dynamic nature of today’s business environment, and organisations need to constantly evolve in order to stay competitive and relevant.’ These external circumstances do not allow organisations and their agents to fulfil their promises, often forcing them to ‘violate the psychological contract’ in order to adhere to the organisation’s practices and policies. Thus, leading to the ‘violation of contracts, reduced trust of the employees and shifts in the types of psychological contracts employees have with the organisations’ (Kiat, 2008). Dealing with this clash between the modern capitalist values and traditional value systems has and continues to be a perennial issue in the employment relationship. Nevertheless, supervisors still continue to apply the concept of psychological contracts to workers as a form of motivation and management tool. Rousseau (2000) advocates that because Singaporeans are ‘competent’ and ‘conscientious’ on the job, as ‘evidenced by the consistent top ratings accorded to Singaporean workers by the Labour Force Evaluation Measure (LFEM).’ Workers perceive that they are obligated to their organisations, driving their willingness to do whatever it takes to succeed. Thereby stretching the boundaries of the psychological contract beyond what is required. When it is deemed necessary to change the psychological contract in such circumstances, Rousseau (1996) has investigated that the ‘accommodation’ approach has been more successful in achieving negotiations. It is the ‘preferred choice for change management as it involves changing or modifying terms and conditions within the boundaries of the existing contract.’ Employees therefore feel more ‘receptive’ because the original contract still exists to a certain extent.

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Moreover, Kiat (2008) further discusses that the acceptance of change has been attributed to the Singapore Government’s push for structural change in her economy and has called upon people to change their mindset about employment contracts and relationships in recent times. Talent shortages and an increasing number of institutions setting up operations in Singapore have made workers more aware that for the time being, the ‘level and direction of power symmetry within the employment relationship are being stacked in their favour’ (Strait Times, 2006a). Despite this, Lee Kuan Yew attempts to equalise the powers between the two. He exhorts that “there is no law of nature that provides that life will get better for Singapore next year, we have to work to make it better.” (Rose, 2000). This had resulted in a reduction of reneging as the costs would outweigh the benefits. Morrison & Robinson (1997) contend that it would be more detrimental to the organisation if the employee withdraws his contributions or leaves. It seems that until more working professionals are trained up to meet these demands, employees will have more power in the employment relationship. By constantly discussing and reaffirming the psychological contracts with their staff, managers hope to ‘avoid cognitive dissonance between the two parties’, and further ‘elicit organisational commitment, motivation and reduce intentions to leave the organisation’ (Rousseau, 1994).

Whilst the image of Singapore is seen by the outside world as being structured and a well ordered society in which harmony appears to exist. In many facets, however, Singapore is a society full of considerable contradiction. McKenna & Richardson (1995) assert that the heavily Confucian influenced hierarchical organisations and patriarchal systems in Singapore’s economy do not accommodate for the situation in today’s sense. Everyone in ‘their rightful places’ exercising their due diligence ‘becomes a difficult position to justify’ in business organisations which need to respond rapidly to the dynamic pressures of the business environment. But for the past decade and the time being, it seems that the incorporation of Confucius’ ideas into politics and governance has yielded some results that cannot be ignored. This is evidenced by the data from MOM (2011) as shown below:

This decline in the total amount of workplace disputes over the years can be attributed to the Golden Rule taught by Confucius. “What you do not desire, do not impose on others.” (The Analects). Leadership with virtue and morality at its highest form, if practised and preached, would propagate downwards through the hierarchy, eliciting the innate goodness of it subordinates (The Great Learning). Confucius reasoned that if everyone had morality, then they would not need to be governed as it promotes autonomy. State intervention would then be at a minimum. In spite of this, interpretations of morality and decency fluctuate throughout society according to norms varying across individuals, hence deeming it as a subjective solution in today’s sense.

Additionally, it might also be suggested that for the majority of Singaporeans who work in such organisations may be restricted against the opportunity for contentious debate and therefore impede the potential for creativity and innovation to further improve the performance on that particular company. This circumstance is usually attributed to societal norms which advocate the ‘maintenance of harmony or the appearance of value consensus.’ Furthermore, their studies suggest that the bureaucratic structures that typically operate in Singapore compel employees to ‘conform to rules and regulations’ and at the same time gives rise to ‘policies and procedures leading to rigidity and inflexibility, employee alienation, concentration of power and external user frustration.’ For these reasons that induce employees to strictly adhere to their roles, ‘conflict is often avoided by resorting to intransigence (Bennis, 1966).

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Statistics from the Ministry of Manpower do indicate a gradual reduction in conflicting issues at the workplace, but other industrial matters such as retrenchment benefits and the payment of bonuses and gratuity are still of primary concern. On the surface, it seems that conflicts between employers and employees are resolved by a methodical framework of mediation processes outlined by the Government. Employers and employees are encouraged to resolve conflict with respect to these issues internally before the matter is brought before a conciliator, or for adjudication in the Industrial Arbitration Court when all else fails. “… if there is failure to reach agreement in respect of these, either party may refer the matter for adjudication to the IAC; otherwise the provisions for collective bargaining, conciliation and arbitration of the IRA apply mutatis mutandis.” (Employment Act s49(2)). It is apparent that the open manifestation of conflict is still virtually impossible to this day. Singapore’s Ministry of Manpower (2011) boasts that ‘except for a minor strike in 1986 that was amicably resolved, Singapore has been strike free since 1978, as represented in the graph below: It is largely dependent on the fact that the Ministry of Labour is vested with the authority to make a legal strike in Singapore virtually impossible without the consensus of the Government. This authoritarian approach contradicts the origins of these beliefs in the West. McKenna and Richardson (1995) specify that the prevalent Western view of a conflict situation is that it is supposed to be ‘resolved openly, rationally and systemically, leading to benefits for the organisation and the individuals, groups, and departments involved. But in stark contrast, Sim (2001) points out that Singaporeans are ‘famous for complaining, their dissent is pushed underground and not allowed the opportunity to gain public credibility and mobilise support.’ As a result, dissent that arises from conflict in the workplace may not be able to coalesce and secure legitimacy. Which in itself is a contradiction of what the Government actually labels as ‘harmony’. Presently however, conflicts of tension in Singapore have not surfaced or manifested in other forms as the unemployment and turnover rates shown below (MOM, 2011) do not reveal any significant changes over the past decade.

Instead, the statistics show a decrease in both the unemployment and resignation rate. Thereby suggesting that conflicts in the workplace are being kept at a minimum and being resolved effectively.

A discussion about Singapore’s employment relationship would not be complete without reference to the significant changes that have been made to the Employment Act. For the first time in fourteen years, Singapore’ Ministry of Manpower made considerable changes that took effect on January 1st, 2009. According to Gross (2009) Singapore’s labour climate is renowned for its ‘tenuous boss-employee relationships’. In an attempt to address the changing labour climate, changes that have been made to the Act ‘serve primarily the interests of employee and organised labour’ due to the introduction of more employee benefits and imposition of increased restrictions on employers. This has allowed for more employer-employee contract flexibility and a broader scope for negotiations.

Two major changes have been implemented in regards to who is covered under the Act. Before the change occurred, the Employment Act covered all employees except seamen, domestic workers, public servants, confidential staff and employees in managerial and executive positions. However, amendments to Section 2(1) of the Act detailing the interpretation of ‘employee’ have been changed to encompass those defined as ‘confidential staff’ and ‘junior managers and executives’ who earn a basic monthly salary of $2500 and below will be protected by the Employment Act’s provisions. ‘Traditionally, they were excluded to avoid conflict of interest because some of them dealt with sensitive personnel matters. However, most confidential staff, such as secretaries and HR clerks hold rank and file positions and are seldom directly involved in sensitive matters’ (Ministry of Manpower, 2009)

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Salary ceilings have increased for both non-workmen and workmen. For non-workmen, salary ceilings have been raised to reflect changes in wages over the past fourteen years. MOM (2009) state an increase from S$1600 to S$2000 per month, thereby pushing them past the threshold to now receive the following benefits: overtime pay at 1.5 times the basic rate of salary, receive two days pay for work on rest days, paid annual leave stipulated in the law and the regulation of contractual working hours. On the other hand, the basic salary ceiling of workmen has been set at S$4500 as many employers felt they had little flexibility in setting overtime and rest-day payment rates for the higher-paid. In contrast, this ceiling has been instituted to prevent those earning a higher salary from being rewarded the benefits stipulated under Part IV of the Act. A comparison with the average earnings with the rest of the workforce produced by MOM is given below:

The above shows a general increase in the wages paid out to employees, highlighting that the changes to the Act are primarily serving those of the employees. Furthermore, part time employees have been redefined as those who ‘work less than 35 hours a week’ (Employment Act, s66A) as opposed to 30 hours a week now. MOM’s intent is to ‘encourage more employers to offer more part time opportunities.

Drastic changes have also been made in the employment standards and benefits of all workers. MOM (2009) has made amendments to grant paid sick leave and paid public holiday to all employees covered under the Act, not just those covered under Part IV. The qualifying period for paid sick leave has now been reduced from 6 months to 3 months. (Employment Act, s89(1)) Also, employees are no longer confined to obtaining medical certificates from employer appointed doctors. MCs may now be obtained from public medical institutions for paid sick leave when company doctors are not readily available or during emergency situations. Last but not least, harsher penalties for infringement of the Employment Act now apply to employers. The maximum penalty fines have increased fivefold from S$1000 to S$5000 for first time offenders and S$2000 to S$10,000 for repeat offenders. Composition fines paid to the worker as a form of compensation have also increased from S$200 to S$1000 (Employment Act, s134)

In a demography where the East meets the West, clashes of traditional and modern values are inevitable. While the shift towards a capitalist mindset is developing momentum and the employees are seemingly gaining the upper hand in power over their employers, the future success of Singapore is still at question. Nevertheless, given the economic miracles in Singapore, there is no doubt that the countermeasures which have been put in place are reducing issues in the employment relationship for now and keeping them within a controllable limit. The infusion of Confucianism into governance creates a ‘peace of mind’, with its effects permeating throughout the workforce and the country at large. Furthermore, no matter what situation they find themselves in, the assiduous nature of Singaporeans fuel their desire in a continual strive for excellence. As a result, no job dissatisfaction as well as no overt evidence of conflict is present in Singapore as supported by the statistics.

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