Allianz, a Swiss insurer, is buying 51% of NTUC Income, a Singapore insurer. So far ‘so good’. But the reason why this has created lots of debate is that NTUC Income was born as a co-operative, and still has the aim “to make insurance accessible, affordable and sustainable for all”. Value, not profit, is maximised for customers.”(1) I think most people would agree that this is not really what Allianz is known for, hence the fear that the social side of the insurer; and probably even more, a decline of the role of trade unions in Singapore. And this is a big topic (2), but more on that later.
When I was
younger, I was not in favour of unions, but as I started work, I realized that
exploitation is real and there are enough informational inequalities that
maintain the balance of power against workers. So, I am not in favour of unions
losing power, I believe they exist for a reason and have proven their
usefulness over time. If you think your ‘40hr’ week, paid holidays, sick leave
were unilaterally given by kind employers looking after the welfare of their
workers, think again.
In fact, in
the USA, president Biden, on labour day, said: “Wall Street didn’t build
America… the middle class built America… and Unions built the middle class”(3)
Even in arguably the home of capitalism, unions are valued. So why is Singapore
apparently selling off a crown jewel of the union movement?
To me, the
debate surrounding NTUC Income is not restricted to just insurance, but is seen
as symptomatic of the change in the role of the unions in Singapore.
This is
especially relevant to Singapore, given the role that the Union movement has
played in the transformation of Singapore from third to first world in the span
of a few decades.
Unions
at the core of the Singapore success story
When the
father of Singapore wanted to decide the trajectory he would place Singapore
on, he turned to Dutch economist Albert Winsemius. The latter’s concise and
precise advice was two-fold (4):
“Number one is: get rid of the
Communists; how you get rid of them does not interest me as an economist, but
get them out of the government, get them out of the unions, get them off the
streets. How you do it, is your job”
“Number two is: let [the
statue of Stamford] Raffles stand where he stands today; say publicly that you
accept the heavy ties with the West because you will very much need them in
your economic programme.”
NTUC (National
Trades Union Congress) was created in 1961 to stem the threat of communism and
give workers a disciplined voice in the development of Singapore together with
employers and the government “the promotion of good industrial relations for
the benefit of workers, employers and the economy.”(1).
As part of
this mission, NTUC started creating co-operatives: NTUC Income (INsurance COperative COMmonwealth Enterprise
Ltd) with the declared aim to ““to make insurance accessible,
affordable and sustainable for all”. Value, not profit, is maximised for
customers.”(1). To make transport more
accessible and protect the rights of drivers, NTUC Comfort (CO-operative coMmonwealth FOR Transport Ltd) and NTUC
Welcome now Fairprice to “FairPrice has kept the cost of living
affordable for ordinary workers by offering basic necessities at lower, stable
prices.”
For the
sake of brevity, I will focus on the changes that have been happening in NTUC
Income and NTUC Fairprice to show how the labour market is planned to change
going forward.
NTUC is
slowly but surely changing
NTUC
Fairprice is changing
My mother-in-law
often used to laugh that we shopped at NTUC Fairprice, stating things are often
more expensive in Fairprice (that was before the new and more budget friendly
supermarkets such as ShengSiong). And after getting nagged enough, we found out
she was right. Instead of assuming that NTUC Fairprice would be worker friendly
and price friendly, we should have checked. So, to put it simple, NTUC
Fairprice is probably not (no longer?) the more budget friendly supermarket in
Singapore.
A second
point I would make to show how NTUC Fairprice has shifted in its approach is
the self-service. I have mentioned before that I am not for business shifting
costs to consumers – such as supermarkets asking customers to scan and bag
their purchases themselves rather than paying professional people to help
customers. However, NTUC’s self-serve has a unique approach among supermarkets
in Singapore. I call it the ‘no-trust’ approach.
When you
use the self-serve counter at NTUC, every item you take in your basket and
every item you bag is weighed. Any discrepancy in weight is flagged and a human
has to verify you are not cheating and has to override the system, allowing you
to continue. Even shifting your own bag as you arrange the items you bought is
likely to alarm the system. Other supermarkets do not use weight as a critical
parameter. Hence my description of the system as a ‘no-trust’ system.
Singapore is
a country where some people leave their wallets in public on tables to reserve
their slot, but where it seems NTUC Fairprice
believes supermarket items will be stolen, or maybe that’s what they think of
their customers specifically.
Thirdly,
apart from pricing and trust, I would like to highlight the leadership changes
in NTUC Fairprice. Since April 2022, NTUC has hired a CEO who previously used
to be Pizza Hut International President (5). To me this suggests a more ‘professional’
‘profit-based’ approach, quite a far cry from the ‘basic necessities as lower
stable prices’ concept. It would seem the mantle has been taken over by
ShengSiong instead.(6)
You may
find it odd that I highlight the change in leadership, but as you will see
next, leadership changes in Singapore, or at least government influenced NTUC are
not random.
NTUC Income’s
change is even more obvious
As
mentioned earlier, NTUC Income was created to make insurance accessible,
affordable and sustainable to all in Singapore. To follow up on the idea of
leadership as a guide to direction, let us look at the leadership of NTUC
Income. The longest serving CEO is Mr Tan Kin Lian, from 1977 to 2007.He
started as an insurance clerk, becoming an actuary, and joined NTUC Income in
1970 (6). If you look into his background (7), “throughout his
30-year term as CEO, Tan flew in economy class, even on long haul flights. This
management style clashed with some of NTUC Income's board members, who
preferred the company to be run on a more commercial or professional basis, and
even advocated it to be privatised. The board asked Tan to step down after
completing his 30-year term at the helm.“(8), you can understand he is very attached to the principles that NTUC
Income embodied right from the start.
He was
replaced by Mr Tan Suee Chieh, who stayed in post until 2013 when he moved to
NTUC Enterprise.(9) He had run Prudential before and was also an actuary as was
Mr Tan Kin Lian. He had served on the board of NTUC income since 2003 (10), the
same board that had clashed with Mr Tan Kin Lian. His appointment facilitated
the move of NTUC income towards more professional agents for example.
He was
replaced by Mr Ken Ng, who was previously chief actuary of NTUC Income (11),
who then also moved to NTUC Enterprise to make way for the current CEO, Mr
Andrew Yeo who previously ran a business line, not the actuary function (12).
Mr Tan Suee
Chieh wrote an open letter to the MAS (13) where he highlighted his own role in
major changes that took place in NTUC Income. From 2015 to 2020, NTUC Enterprise
(the group) injected capital into NTUC Income, getting shares at the
co-operative’s par value of $10, while diluting the shares of other
co-operatives and owners of shares in the co-operative from 70% to 30%, with
NTUC Enterprise effectively controlling the fate of NTUC Income. He, himself, assured
the other share owners that NTUC Enterprise would hold these shares for ever. “I
was the Group CEO of NE at that time and played a significant role in assuring
and persuading NTUC Income’s independent directors of NE’s commitment, that NE
would not redeem its capital (NE shares would be permanent). The purpose of NE
making this commitment was to safeguard the social mission of NTUC Income in
the long term.”
The next
major change in NTUC Income’s journey was when, under the CEO Mr Andrew Yeo, it
was incorporated in 2022, no more a co-operative. According to Mr Tan Suee Chieh,
he asked for assurances about the NTUC Enterprise’s (NE) commitment to hold the
shares of NTUC Income as he himself promised earlier “I expressed my
concerns about the corporatisation of NTUC Income (see my previous letter to
MAS of 13 February 2022). I also previously quoted in that letter to MAS of 13
February 2022 from the letter sent to me by NTUC Income on 10 February 2022: “You
have raised two further points in your latest letter. First, you mention the
reference in our 19 January letter to NE’s majority shareholding in
Newco, and ask after the permanence of this… On the first issue,
NE has publicly expressed
its commitment to Income. It
has confirmed that, notwithstanding the corporatisation, it will continue
to be the majority shareholder of Newco”
However,
fast forward to 2024, NTUC Income plans to sell 51% of its shares to Allianz.
You can read more about the controversy, since Allianz is not known for looking
after “accessibility, affordability and sustainability” but rather profits.
You can
read the reactions of Mr Tan Kin Lian (14)(15) and Mr Tan Suee Chieh (16)(17)(18),
previous actuaries and NTUC Income CEOs to Allianz being asked to buy a
majority stake in NTUC Income.
Whether you
like the fact that Allianz will take over NTUC Income or not, you should be
able to understand that this wasn’t a move done in haste. CEOs have been
removed, moved to group (NTUC Enterprise level), business focused CEO
appointed, corporatization, and now sale.
One thing
you can never accuse Singapore of is not planning 😊
My point is
that NTUC as a co-operative, with aims of a Union co-operative is losing its
sheen, and a group that focuses on profits for shareholders rather than social
goals is an outcome you could reasonably expect.
So, what
does this mean?
Before I go
there, let me highlight 2 more changes happening in Singapore in 2024.
30,000 subsidised courses
Firstly,
30,000 new courses have been added to the list of approved government subsidized
courses (19), yes you read correctly, 30,000 subsidised courses are available
(or will soon be) to Singaporeans to learn new things, or deepen their knowledge
in their areas of interest. And yes, there are some about analytics, of varying
quality of course, given the number of courses.
Unemployment
benefits
Yes, you again
read correctly, announced during the new PM’s national day speech, Singapore is
going to provide unemployment benefits (20). This is a very different direction
from what most people would have assumed Singapore is taking, given the
history.
The
founding father of Singapore, Mr Lee Kuan Yew stated “We are mindful of the
dangers of high welfare and unemployment benefits, watching the consequences of
this compassionate policy on the job seeking habits of the unemployed. Visiting
the major cities of the industrial countries, I am struck by this curious
phenomena of high unemployment and yet a shortage of waiters, cabdrivers,
nurses and garbage collectors. Some jobs are not worth doing, as a result of
welfare benefits. Whatever principles may be applicable in highly developed
industrial countries, for a resource-poor country like Singapore, hard work and
high performance amply rewarded, is the best way to attract capital and technology
into the country to generate wealth.”(21)
Mr Lee Kuan
Yew PM of Singapore even from before independence, 1959 to 1990, he was
followed by Mr Goh Chok Ting from 1990 to 2004, and Mr Lee Hsieng Loong, Mr Lee
Kuan Yew’s son from 2004 to 2024, and the new PM who announced the unemployment
benefit is Mr Lawrence Wong who took over this year. Another change in
leadership; what does this herald?
So, what
does it mean???
To me, it is quite simple:
- Singapore doesn’t do things randomly
- As seen in NTUC Fairprice, NTUC Income, and even the Prime Ministership, changes at the top show major changes in policy direction
- The concept of collective bargaining/unions is not as strong in Singapore, as shown by the leaders who run businesses even amidst the Union Enterprise
- The new subsidized courses and unemployment benefit point to a new direction by the new PM
- The direction is that of personal responsibility.
- Forget the iron rice bowl (or even the aluminum one), you will probably be involuntarily unemployed sooner or later, and may be more than once, and the responsibility to get yourself back on track is yours.
Singapore
has basically decided that the Union ship has sailed. Going forward, each
individual’s career is that individual’s own responsibility. There will be no
established collective organization to support ‘workers’. It will be each
creature for itself, with the government providing rope ladders for those who
wish to climb or change the course of their lives, and small safety nets for
those who fall overboard and are stranded.
What
does this mean for the middle class then?
“The middle
class will be made up of self-reliant people who rely on themselves to forge
and stay in the middle class”. To catch you when you fall, the government is
instituting some temporary safety nets. But do not over stay your welcome, else
you will not be middle class for long.
Which
ideology do you favour, for you, for your parents, for your children?
In Sum
I started
by saying that I understand the importance of Unions, and I still do. However, I
can also see what Singapore seems to be trying to do.
If I
restrict myself to my field, Analytics/Data World, I do not disagree with the
concept of personal responsibility for one’s own career.
I have
argued before that organisations do not really need full time data scientists (22
– wah! That was 6 years ago!) Add to this the fact that Analytics is constantly
evolving, knowing where your strengths reside (23) and keeping in touch is
necessary. Add to this the advent of GenAI, if your ‘analytics’ job is repetitive,
be afraid, be very afraid.
To me,
Singapore is actively encouraging organisations to automate, use robots(24)(25)(26),
use GenAI as much as possible, with Singapore leading the world (27)
To add to this, pressure on workers residing in Singapore does not come only from technology but also from workers from outside Singapore, with the recent 2024Q2 numbers showing growth in employment driven solely by employment of non-residents: “Resident employment fell by 600 while non-resident employment grew by 12,000, with the latter accounting for all the increase in Q2.” (28) and the latest population numbers 6.04m on 730 odd sq.km (29)
Hence, to
me, Singapore has cast the dice, much earlier than the rest of the world,
unions are going to be something of the past, and personal responsibility with
some help from the government is the way forward.
What do you
think of this cast of the dice?
My view
To me, the
critical piece is informational asymmetry and interesting statistics used for
decision making.
I mentioned
information asymmetry earlier as a reason for the importance of trade unions.
Whether horizontal (role based) or vertical (industry based), unions are very
well informed of the conditions their individual members are in, and by the
power of collective bargaining are thus able to pressure organisations to be
fairer in rewarding employees. Unions have full time employees, and some of
them spend time and effort to collate real data.
Without
unions, this would be very hard for individuals. Sure, there is Glassdoor to
try and crowd source information, but I believe unions have an edge. Add to
this, individual workers would have to develop negotiation skills, not everyone’s
boat would float with the tide anymore, to each his/her own. (Plug for
analytics and negotiation courses!)
Another
concern is data used for decision making. In Singapore, most people eat at
hawker centres or coffee shops. However, according to official data, price of
food has only risen by 6.1% last year (30), I had my doubts. I am an avid local
kopi-o-kosong guzzler, and have seen the price rise by much more than 10%. And I
am not alone (31). Furthermore, portions are shrinking (32), therefore, the
items in the basket used to calculate the consumer prices are different; is
like comparing ikan bilis to garoupa (anchovies to grouper), simply bad maths (and
horrible analytics).
Given the
direction I believe Singapore has chosen to go, it is crucial for the government
to provide clear information to bridge the information gap so workers are not
exploited as per the times before unions, and do something about profiteering,
may be look into oligopolistic tendencies in the market that allow prices to
rise way beyond costs. Kamala Harris has described this as price gouging (33)
and it is not only in the USA, my kopi-o-kosong attests to that.
1 https://www.nlb.gov.sg/main/article-detail?cmsuuid=189c5b78-e21f-442d-8f93-c8ee64b1b515
2 https://www.youtube.com/watch?v=qIgzqaCqTho
4 https://www.emerald.com/insight/content/doi/10.1108/PAP-06-2018-002/full/html
5 https://www.ntuc.org.sg/uportal/news/FairPrice-Group-Appoints-New-Group-CEO/
8 https://en.wikipedia.org/wiki/Tan_Kin_Lian
9 https://tansueechieh.com/about/
11 https://www.icmifasiaoceania.coop/wp/?page_id=2557
21 https://www.nas.gov.sg/archivesonline/data/pdfdoc/lky19780225.pdf
22 https://thegatesofbabylon.blogspot.com/2018/05/should-you-hire-data-scientists-on-gigs.html
23 https://thegatesofbabylon.blogspot.com/2019/04/some-pointers-on-how-to-plan-your.html
28 https://www.channelnewsasia.com/singapore/mom-labour-market-employment-jobs-non-resident-4611556
32 https://www.reddit.com/r/singapore/comments/18r6kfp/anecdotally_how_bad_are_you_experiencing/
