EFFECT OF DEVALUATION OF STERLING ON THE STABILITY OF LABOUR AND CAPITAL IN PIONEER INDUSTRIES

3.48 p.m.

Mr Ho See Beng (Bras Basah): Mr Speaker, Sir, much has been said about the Sterling devaluation the last couple of weeks, since the United Kingdom Government announced the devaluation of the Pound. Apparently, the devaluation of the Pound by nearly 15 per cent with its broader economic consequences did not seem to be a matter of great concern to the people of Singapore. Instead, the half a million workers and businessmen were more concerned about the depreciation of the old Malayan currency by 15 per cent. This was the main concern.

Little or no attention was given to the effect of the devaluation as a whole, on the future earnings of the Singapore workers. Sir, some have expressed gleefully, "The British-made cars would be cheaper by 15 per cent." So may it be. But the fact that no one seemed to be worried about the effects of devaluation on the broader economic front, including its effects on labour, indicates a possible complacency on the part of the Singapore workers. This may be understandable. More than 1,200 motor-cycles or scooters are registered every month. This is a clear indication that the workers in the lower and middle income groups have benefited from the economic expansion over the last five years. Can this rate of economic expansion be maintained and can the workers of Singapore as a whole continue to increase their earning capacity at the same rate? One may wonder what the devalued Pound has to do with it.

Singapore is an island-State with no natural resources, and the value of the new Singapore dollar in terms of purchasing power depends entirely on how much Singapore-made goods can be exported, and how much foreign exchange we can earn thereby. There is a great possibility that our export may be affected adversely one way or the other. For example, Hong Kong, which devalued by 4.3 per cent - originally Hong Kong devalued by 14 per cent - would be in a better competitive position in the international markets in terms of price, as Hong Kong-made goods would be cheaper than Singapore-made goods of similar kind, as Singapore did not devalue. Mr Speaker, Sir, some of the pioneer companies may use this as an argument to deny any wage increase.

Some of the Commonwealth countries have devalued equally with the Pound. Singapore, therefore, would theoretically be at a disadvantage in pricing by 15 per cent in competing with those countries which have devalued 15 per cent. Can our goods, therefore, remain as competitive as before? This may be possible if the two parties concerned in the manufacture of export goods, employers and unions, preserve good sense and not take advantage of each other by using the devaluation issue as an excuse.

Labour in the manufacturing companies, particularly the pioneer industries, must be prepared to exercise restraint for at least one or two years on increase of wages. This should apply more specifically to those pioneer companies where the unskilled workers are being paid at $3.50 and above. Labour as a whole at all wage levels in the export manufacturing industries should seek to increase their productivity by 15 per cent, in terms of greater efficiency, by cutting costs, for example. On the other hand, the pioneer companies must be prepared to recognise the greater efforts put in by labour and grant reasonable increases to those who are in the $2 to $2.50 bracket up to a maximum of $3 to $3.50. The Government has given added incentives to export manufacturing companies. Similarly the pioneer companies themselves on their own volition should grant incentives for increased productivity to the workers. Both the management and union leaders must be prepared to appreciate the difficulties encountered by each other. The workers in the pioneer companies have a greater responsibility than just irrationally increasing their pay packets. By 1971, at least 10,000 Singapore citizens would be seeking employment due to retrenchment in the British bases. Owing to the devaluation of the Pound, Britain may possibly accelerate the withdrawal of the bases. To add to this, we have an unemployment figure of 52,000, not counting the school-leavers seeking employment in the labour market.

Sir, with restraint of wage increases for unskilled labour at the $3.50 mark and above, accompanied by an increase in productivity of 15 per cent, the reputation of the Singapore workers would induce overseas investors to bring in capital to start new companies. The greater the investment from overseas, the more manufacturing companies set up, the smaller would be our unemployment problem. By reducing the unemployment figure, the workers can have more for themselves in the long run.

A practical solution must be found if we in Singapore are to overcome any possible adverse factors that may arise as a result of devaluation which may restrict our effort to export more. One way is to set up a tripartite council, consisting of management and labour representatives together with the national productivity centre representing the Government, to investigate the effects of devaluation on our export industry and to seek solutions. A tripartite council was set up a few years ago. This council represented all employers and labour at the national level. The council was inaugurated with a lot of fanfare, but where is this council today? No one hears about it today. It is completely dormant, sleeping. Let us not make the same mistake again. A tripartite council, as I have suggested earlier, with special functions must be initiated. The emphasis would be on increased exports, higher productivity with quality and lower costs, and industrial peace with justice which will be the responsibility of the Council. All grievances between employer and labour could be investigated and solutions arrived at, to the satisfaction of all concerned. If concrete results are to be obtained and the fate of the first national tripartite council avoided, the persons nominated to this council must include persons who are directly connected with the export industries.

Sir, the functions of this council I would envisage to be:

(1) To educate the workers and instil in them the importance of increased productivity.

(2) To instil into employers the importance of recognising the efforts put in by workers for increased production which should be compensated reasonably.

(3) To investigate into complaints from employers or unions on all matters affecting production, quality and industrial relations.

Sir, since increased export is the overall aim and is of vital importance to Singapore as a whole, I would suggest that the Government appoint a public servant as secretary in the Council. I would even go further and suggest that full publicity by posters, advertisements and talks be given to drive home to all concerned about the vital role they are requested to play in boosting the economy of Singapore.

Assuming that by the efforts of this Council production is boosted, what should the Government or the employer do about finding the overseas markets? To what extent should employers finance the setting up of trade missions in every large city in the world? Sending trade missions overseas once in every six months is not good enough. Singapore must have super-salesmen posted in every capital in the world. The employers should be willing to bear some of the expenses of these trade missions which would be manned by people with expert knowledge of the various industries.

Mr Speaker, Sir, businessmen alone cannot be expected to have governmental contact overseas. I think the Ministry of Finance is obviously the department which should initiate and lay the foundation of setting up various trade missions throughout the world. Otherwise all efforts made in Singapore to produce quality-made goods at reduced cost and all the incentives offered to the export industries would be in vain.

I suggest in all seriousness to the Minister for Finance that the campaign to achieve the target should be tackled with the same vigour that the Government is tackling the problem of family planning (so that we need not have to legalise abortion) and the "eat more wheat" campaign. Sir, I would go further and recommend to the Minister for Finance to plough back the 4 per cent tax on export earnings, or at least some portion of it, to the setting up of trade missions in those countries where Singapore-made goods have or have not found a market, or in countries where businessmen find difficulty in establishing contacts. I will be failing in my duty as a trade unionist if I do not emphasise that the workers alone cannot he expected to practise restraint as part of their role to boost the economy of the State. The Government and the employers too must play their part. It is the co-ordination and co-operation on the part of every one of the three parties concerned that can herald a new and bright phase to our industrial growth - to borrow the phrase of the Finance Minister in his Budget speech.

4.03 p.m.

Mr Teong Eng Siong (Sembawang): (In Mandarin): Sir, I fully understand the contents of the speech made by the Member for Bras Basah. He has touched on the undesirable effects arising out of the devaluation of the British Pound. He has proposed several suggestions in his speech, and I agree with some of them.

My first point is about those workers who are getting wages of between $2 and $2.50 - their claims for a wage increase should be considered favourably by employers by reason of the fact that daily-paid workers who are receiving between $2 and $2.50 per day are finding it difficult to maintain their own livelihood and that of their families. We all know that they are poor families and out of this meagre sum of $2 and $2.50 per day they have to make ends meet. This is an almost impossible task. We also know that low pay may have bad effects. Firstly, because of poor income, the food may not be nourishing enough. As a result, the health of the workers will be adversely affected, and it will in turn affect their productivity. Secondly, the workers themselves may have family problems, and this will affect their whole attitude towards their work. And this too will affect their productivity adversely.

My second point is that we should make use of the tripartite council to look after the interests of the country as a whole, labour and capital in particular, and to avoid any hindrances or undesirable influences or results which might be at a disadvantage to any of these three; the country, labour and capital. So the tripartite council should take up its responsibilities and implement the tasks that are assigned to it as suggested by the Member for Bras Basah.

Sir, I would like to stress that our currency is very strong because we have a backing of 400 per cent in reserves, in fact, the currency in Singapore is trusted by many. Not only do the people of Singapore have confidence in it, but many other countries also have full confidence in it. For instance, our Deputy Prime Minister recently passed through Bangkok, and according to him, the people there are using our currency. From this we can see the strength and prestige of our currency. Sir, because our currency is backed by 400 per cent in reserves and also because we are maintaining our currency at its face value, our people can buy more goods than before.

4.08 p.m.

Mr P. Govindaswamy (Anson): (In Tamil): Mr Speaker, Sir, from what my friend, the Member for Bras Basah, has said, I think we should pay a great deal of attention to economic measures. Although I do not wish to speak at length, I wish to offer some suggestions to the Government. For production, raw materials are most essential. These raw materials are imported from abroad. Local businessmen sometimes buy these raw materials at high prices, and then manufacture them here in this country. Thus the prices of our manufactured products rise. There should be some measure of control over imports of raw materials. Take a glass factory, for example. The raw material is imported from abroad. The businessmen in those foreign countries and the businessmen in our country get together, and the raw material prices are pushed up. These prices naturally are reflected in locally-manufactured products, if this trend continues, in what way will we be able to increase our exports to foreign countries? We ought to look into these matters. If our country is to gain strength, particularly because we do not have raw materials, we should as far as possible import them from nearby countries. If this matter is rectified, perhaps we will be able to maintain competitive prices. I think Government should look into this matter - from what countries we should import and at what prices. These are worth investigating. If these prices can be controlled or reduced, then both our export industry will thrive and our currency will gain strength. Therefore, I suggest that the Finance Minister should investigate these things and take suitable steps.

4.10 p.m.

Dr Goh Keng Swee: Sir, I am afraid the Member for Anson has got it all wrong. People do not import raw materials at high cost. They try to import raw materials at the cheapest cost, otherwise they will go bankrupt because they cannot sell the finished products anywhere. So, far from Government introducing any form of control on imports of raw materials, I think Government is well advised to let the businessmen do their own buying. I am not quite sure whether the interpreter did a correct job of interpreting what the hon. Member has said. I must confess I cannot make much sense out of it.

The Member for Sembawang says that it is wrong to pay workers $2 and $2.50 a day because they cannot maintain a family at that wage. He must remember that these rates are really rates paid not to workers as their normal wages, but are rates of pay given mostly to girl workers during their initial period of training. Of course, these girls are unmarried, and this really means paying them money while they acquire skills which will enable them to earn more when they have completed their training.

I now turn to the speech by the Member for Bras Basah. I think this is a very well thought-out piece. Obviously the Member has spent a lot of time and a lot of thought on it. He has made many valuable suggestions which deserve to he seriously considered not only by Government but also by unions and employers.

I would not like to comment in detail on the various useful suggestions he has made, except perhaps to say that his speech, I think, deserves to be produced and printed in a special booklet for circulation to interested parties. I will give him a firm promise that I will look into the two suggestions he has made, i.e., to establish a new council which will be concerned with educating workers on the need to improve productivity and the methods of so doing; and the need to educate employers on how greater productivity should lead to greater pay; and also the possibility that this new council can formulate some system whereby they can investigate complaints, presumably either from workers or employers.

The Member, of course, has long experience in trade unions and I think what he says on the subject should be taken seriously, as also his proposal that we should set up trade missions in our export markets, a subject which I have dealt with in my Budget speech at some length. I think the hon. Member can rest assured that the coming year will see important developments in this field.

For the rest, I only want to say that I am very glad that he has made the remarks that he did. And if this kind of spirit permeates through the whole of the labour movement in Singapore, I have every confidence that we can surmount the difficulties ahead and I do not fear that we will not be able to succeed in competing in our export markets with all corners.

Question put, and agreed to.

Resolved,

That Parliament do now adjourn.

Adjourned accordingly at Fifteen minutes past Four o'clock p.m. to Thursday, 14th December, 1967.