PM Lee Hsien Loong at May Day Rally 2009

This is the most difficult May Day that we have ever celebrated. On the top of everybody’s minds is the economy. How can we see through this global financial crisis? Or as the NTUC puts it, how can we upturn the downturn? I will answer this by talking about four questions:

i. What is our situation?
ii. What are we doing about it?
iii. What can each one of us do about it?
iv. And how can we, Singa­poreans, stay united under stress?

First of all, what is our situation? Today, the world is facing very serious economic problems. All the developed economies are in recession. The Asian economies had hoped to dodge the crisis. People talked about decoupling, Asia going ahead on its own but we found that we could not decouple from US and Europe. So all affected but Singapore has been hardest hit, because we are the smallest and the most open economy, and the most dependent on world markets.

In the first quarter, our GDP shrank 11.5% year on year. Our latest growth forecast for the whole year 2009, is between minus 6% and minus 9%. We had never had to make such a bad forecast.

Some private analysts even think that the government is being too pessimistic, but I believe this is a realistic estimate. Better to bring out the facts, be honest about what challenges lie ahead and prepare people for what we have to do together.

At last year’s May Day Rally, I warned that our economy was going to go into a recession. We could see the problems in the developed countries and it was a matter of time before they come to Singapore.

The only question was whether we are going to have a V-shaped recession, a U-shaped recession or an L-shaped recession. At that time, there was still hope for a V-shaped recession. But things have turned out much worse than anybody has expected.

There is no V-shaped recovery. Now, the optimistic scenario is a U-shaped recovery. But it is going to be a deep U and a fat U. If we are lucky, we will gradually recover from the later part of this year or early next year. But, if we are not lucky, it could be an L-shaped recession: after a while the economy does not shrink so fast, gradually stops shrinking but stays at the bottom a long time before slowly picking up again, with no growth or poor growth for several years to come. It depends on what we do. But it also depends on the situation worldwide and especially in American and in Europe, on whether they can fix their financial problems.

America is critical, because it is such a big market for Singapore and for the world, and because its banks are such major players in the world financial system. The Obama Administration has taken major steps to fix this crisis. They have stabilised the situation, bolstered confidence, but major problems still remain. For example, the banks still have toxic assets, and they probably will need more government money, which the US public and US Congress are very reluctant to give because they are so angry with the bankers for getting everybody into this mess. But if they get angry with the banks and the banks are not put right, then banks cannot lend, which means the businesses cannot borrow, cannot invest and cannot expand. If the US economy cannot grow, then Singapore and other economies in the world will all have difficulties. What do we do without the US market? And this is a major problem which has not yet been solved.

Apart from the US response, we also need international cooperation to tackle this crisis. Globally through the G20 meeting, but in Southeast Asia, the countries also need to work together. The ASEAN leaders and our partners - China, India, Australia, Japan, South Korea and New Zealand met in Pattaya two weeks ago and were supposed to discuss regional initiatives to tackle this problem and help ourselves.

But unfortunately, the meeting was disrupted by red shirt demonstrators and had to be postponed. I was there, we spent two days there but the meetings could not be held and we had to come home. The incident was a setback not only for Thailand, but also for ASEAN because the pictures of the disrupted meeting were shown everywhere by the world media. The disruption is not good for ASEAN’s standing. It is not good for Singapore either.

ASEAN will have to persevere with economic cooperation, and also try to rebuild our credibility and our effectiveness.

 But Singapore at the same time must understand that these are the problems in the region. These are the limits to what we can do together, so we have to distinguish ourselves from the region. We have to show that we still offer opportunities and are still an outstanding place to do business. We still have the best workforce in the world. And we are going to be able to offer opportunities even if other places do not look promising.

Overall, the world situation has somewhat stabilised, but the outlook is still troubled. In the US recently, you may have read a lot of talk about “green shoots” - people looking on the ground, hoping to see things popping out from under the snow, seeing early signs of recovery. I hope these are real but we know that there are serious problems which are not solved yet and which are not going to disappear by themselves. And now we have a new problem which could be serious – swine flu, which is going to affect the economy and push growth down further. It is more trouble for the world.

So, it is better for us to plan on the basis of a prolonged downturn, prepare for a long slough ahead. And if in fact the green shoots burst forth, treat that as a bonus. But it is not time to relax or celebrate yet.

We have to respond to this global situation. We are a small open economy, so we cannot generate growth by spending money, unlike the US or China.

But we can do something. We can help companies to save costs and to help employees to stay employed. We know how to do it, we know that is where we need to focus, and we have put our resources and energy on saving jobs.

So we launched the Jobs Credit and SPUR schemes as two key measures. They have been effective and are showing good results. The Jobs Credit has helped to lower the cost of employing Singaporeans and get companies to explore many alternatives to retrenchment. You have read about some of them and just now you heard some of them when Minister Lim Swee Say spoke.

SPUR has also been useful because it is not just a scheme but supported by a whole system comprehensively – WDA, e2i, CDCs, Continuing Education Centres - all the infrastructure which we have been building over the last few years so that we would be ready for a crisis like this.

We have involved employers. They have helped us to identify the training needs and develop the courses so that the training is useful to them. The companies have therefore responded well. There are more than 1,300 companies on SPUR, who are going to train more than 80,000 workers. It is a successful scheme and what we should do is to make it better.

In the light of experience, MOM has some ideas to improve the SPUR scheme. And let me just outline three things we are going to do.

We will do more for the middle-income earners. Many are PMETs – professionals, managers, executives, technicians, who are also affected by this crisis. Their pay is generally higher so when they go for training, the absentee payroll needs to be higher. Hence we will raise the absentee payroll cap from $6 per hour now to $10 an hour, which would support training for PMETs. I think this would be a help to PMETs as well as employers.

Secondly, we will also launch a Professional Skills Programme traineeship scheme, to encourage companies to recruit new graduates, PMETs, and build new capabilities in growth sectors. Many students are coming out from universities and polytechnics this year. I know that they are very anxious, wondering where their jobs are going to come from, wondering how they are going to start working. We have this traineeship scheme to encourage companies to employ them, train them, run them in. It is like an apprenticeship as they acquire skills valuable to the companies, then the companies take on the responsibility for them. This is something we have done before and EDB has done similar things. We have adapted our old schemes, improved them, and we are going to roll them out this year.

Thirdly, we will introduce a new scheme called SPUR-JOBS. It will co-fund companies’ efforts for on-the-job training, job redesign and productivity improvements. And it will encourage companies to recruit, retain and upgrade the local workers.

These are ideas we have come up with after several months of operating SPUR. I think they will be of help. MOM will announce details later on, and we will take it forward and make sure that as many people as possible benefit from them.

Keeping jobs and training workers are what Minister Lim Swee Say calls midfield and defensive play. But we have also been playing offensive, creating new jobs and capabilities. The IRs are starting to recruit and they are building steadily. Previously, I talked about the IR at Marina Bay. I mentioned that I drive past regularly and could see that it is almost completed. Yesterday I received a report about the other IR at Sentosa. I do not drive there quite so often, and they wanted to show me that they have done good work. They are also well on target, well on time, and recruiting.

So jobs are coming there. EDB has been working hard, bringing in new projects and getting existing companies to expand. Almost every week there is some new plant opening, or doing ground-breaking. Abbott – it is a pharmaceutical plant, Baxter – medical equipment and pharmaceuticals, REC - making solar cells, and so on. Every week the MTI ministers are opening one thing or other. Lim Hng Kiang is there, Iswaran is there, Yi Shyan is there. There are so many plants that I also chip in to do one or two.

This shows that the jobs are still available and if you are prepared to make the effort, there are many opportunities to help yourselves. I have been meeting investors and potential investors. EDB has been bringing them to meet me so that I can help EDB to persuade them to do more in Singapore. And I can understand from them how their business is, what more they would like us to do to help them. They tell me that they are confident about Asia’s prospects, they are impressed with how our government and our people are responding, and they see Singapore playing a bigger role as they do more in Asia. Many of them have specific plans to invest here, or are in fact, recruiting here, even now.

So on offensive, we are playing quietly and scoring goals. Day by day, the score goes up. I am often asked what more the Government can do to deal with this crisis. I think we were right to focus on jobs in the Budget “Resilience package”. It has helped us to buffer the sharp drop in GDP. First quarter GDP went down 11%, a huge fall. But our unemployment went up from 2.5% to 3.2%, only a small increase. We had retrenchments, but not massive retrenchments, and not a sharp rise in unemployment as we have seen in America and Europe and so many countries.

We have held the position in the first quarter. But now, we have to hope that output will pick up, so that we can get more orders and keep our factories and production lines busy. Otherwise companies will have to trim back and we will have to expect more job losses. But even now, with some jobs being lost, other jobs are waiting to be filled and are still unfilled. The e2i and the CDCs have 20,000 jobs in their job bank. And the list is still growing. Why is it growing? Because they are filling the jobs available, and at the same time going round to identify more opportunities to add to the list, and more opportunities are coming in than people are taking up.

So in this environment today, four months after the budget, I believe the right emphasis is still to focus on jobs - getting our people ready for the jobs, marrying up people with the jobs and helping them to help themselves.

That is what we are doing as the Government and as a union movement, but what can individual Singaporeans, individual workers and union leaders do about this? I think each one of us has to do our part. If you have a job, hang on to it. Do your best to keep the job, do not decide to resign, go on holiday, and then think of something else. Make sure you keep your feet steadily on the ground and preserve your position before you look for another possibility. Work hand in hand with employers to cut costs and to save jobs. Be flexible. Accept shorter work weeks, compulsory time off, wage freezes and wage adjustments if they are justified. Management will take the lead and workers must do our part. Go for training, upgrade your skills and keep your jobs.

For those without jobs, make every effort to get employed. Take the job even if it is not your favourite one or your ideal one, because having work is much better than having no work. You may hope to land something better later on, but nobody can say whether the economy is going to be better or worse later on, whether there will be more or fewer jobs later on. Better take what is available now, and be willing to go for training, to adapt and try something new. If you need help, go to e2i, CDCs, or the CET Centres.

For the union leaders, work with the employers and the Government to cut costs and save jobs, upgrade productivity and create growth. Help the workers understand what is happening to our economy and what we can do to help ourselves. Encourage workers to make themselves more employable and more productive during these very challenging times, and work with the NTUC Learning Hub, e2i and the CET Centres.

I visited the e2i and CET Centres recently to see for myself what they were doing. I met many people there, young and old, PMETs and rank and file. I was cheered because they were willing to make a serious effort and train themselves. It is the first, crucial step to help themselves and it has boosted their chances of getting work. For example, the day I was at e2i, Marina Bay Sands was recruiting workers. They told me that those workers who have gone through e2i training and prepared for this, do better when they go for the interviews. This is because they have learnt service skills - how to present themselves, how to dress, how to address one another, how to carry themselves, how to serve, how to speak. I went into one class to see what they go through. The class was doing catwalks, and they told me “You sit at the end, do like Simon Cowell.” The students came in one by one, walked up to the front, turned around, walked to the back of the class, and made a one-minute presentation, “Why you should recruit me for your IR.” They were very good! After that the classmates critiqued them: speak louder, speak slower, speak more clearly, more eye contact, relax, put your hands down, and do not be so nervous. You feel a little bit embarrassed if you are criticised, but you learn, and when you go for your job interview, your chances improve. So with proper preparation, we have 1,800 applications, of which 1,300 were successful. That is a 70% success rate. Not bad!

There is a lot which individuals can do to help themselves. But unfortunately there are still some job-seekers doing wait-and-see. I think sometimes people can try harder. e2i held a job fair with 450 vacancies. They invited job seekers who were suitable and only one-third of those invited actually turned up. That is risky, because having been trained if you do not get a job promptly and practise your skills, you will lose those skills and they would be wasted. So take the jobs which are available, even if they are not your first choice. Join the more than 10,000 workers who have already found their jobs through WDA and e2i, and you can find many opportunities and build successful careers.

We have to work together and we have to work individually. But under stress, Singapore must stay united. How do we do that? All countries are under stress in this period. All face similar problems, but the way Singapore has responded, as one team, effectively, rationally, decisively, has helped us to stand out as “Singapore United”. The critical question in the downturn is not whether we want to stay united but how can we do it. We are going to come under stress, the stresses may get stronger and we have to unite cohesively as the economic pain deepens. Can we do it? Singaporeans ourselves want to know the answer and investors also want to know the answer.

Recently I hosted the board of one American MNC to dinner. They brought their whole board and top management to spend one week in Singapore. They wanted to see Asia and EDB persuaded them that Singapore is a good place. Over dinner, we had a Q&A. One of the board members stood up and asked me directly. He said, “What are the stress lines that you expect to see in your society during this downturn?” Because every society comes under stress. Where are your problems and what are you going to do about them? I told him honestly that there are three potential divides in our society which we have to overcome.

Firstly, between Singaporeans and non-Singaporeans. Because in hard times, Singaporeans think that non-Singaporeans are taking their jobs away from them. It is a mistaken view because the MNCs need skills and workers from all over the world. Non-Singaporeans will expand the pie to create more jobs for Singaporeans. If we did not have the non-Singaporeans here working alongside us, the jobs may not be there in the first place. And the IRs are a good example. We have not had any casinos before. At least, I do not know of any casinos which we have had before. So very few Singaporeans have any experience working in one. To work the casino, you need foreigners to run some of these operations. And that is why Sands has to bring in people from overseas, and so does Genting. Genting has to bring in people, some from the Philippines. The Philippines newspapers have reported this and there was a bit of a reaction in Singapore.

But it is a reality. When I went to e2i, they were interviewing Singaporeans for the casino. The lady in charge of recruitment operations did not sound quite Singaporean, so I asked, “Where are you from?” She said, “I am Shanghainese, working in Macau.” Even Macau needs foreigners working there. Many of her interviewers who were interviewing the Singaporeans for the jobs come from Macau also. The interviewers need to have experience in casinos so they have a sense of the candidates, whether they have the right skill or the right touch, whether they can be trained to work in casinos. You need some foreigners, but the majority of the IR jobs will go to Singaporeans, otherwise we would not bring the IRs here. We need to explain these facts to workers and in a downturn, we need to work harder and explain it even more persuasively.

The second stress line we have to manage is between the successful Singaporeans and the not-so-successful Singaporeans. In the last ten years, our income gap has widened. It is a problem worldwide, and it is happening here. We have talked about it before. The Government has done a lot to help the lower-income Singaporeans - we have CPF top-ups, we have many programmes - the Work Incentive Scheme, we have HDB additional housing grants, etc. But in a downturn, we must make sure that the less well-off Singaporeans do not feel left behind, do not feel neglected and do not feel they are bearing an unfair share of the burden. Therefore, the more successful Singaporeans must take the lead in belt-tightening. Companies imposing austerity measures must start from the top. Lead by example, cut earlier, cut deeper for the senior management. In the Government, we have led by example. For senior civil servants and the political appointment holders, the ministers, when the economy turned straightaway salaries were cut 20% automatically. Because there is a formula, and when GDP went down, bonus went down. This year, bonus is zero. That is the way it has to work. In the Resilience Package, we have also weighted the benefits heavily towards the lower- and middle-income groups.

The third stress line is between the different races and religions in Singapore. Race and religion are permanent fault lines. In a downturn, we are concerned that the minority, non-Chinese workers will be more affected, because larger proportions of the Malay and Indian workers have lower skills, and lower-skilled workers are more vulnerable. It happened in the last recession, and it will likely happen in this recession. We must make a special effort to get these lower-skilled workers trained and ready for the jobs which are available.

We also have to remind employers to hire fairly and retain fairly, based strictly on merit and performance. When you are under stress, having to decide who to keep, who to drop, you have to be completely fair, otherwise we will have big problems in Singapore.

This is as far as the economy is concerned. But we also need to continue to build trust and confidence between different religions, to enlarge the common secular space that Singaporeans share. And that way, all groups in Singapore will have maximum freedom to practice their faiths in their private spaces.

These are the real stresses and strains which we face and have to deal with. I gave the board members of this MNC a very frank answer because he needs to know I am not bluffing him. I am telling him the truth, sharing our worries with him. Singaporeans have to share our worries with ourselves, address these real challenges openly, honestly and effectively. If we can manage them well, we will emerge a tempered and stronger society, and we will be more united and resilient. And we will have a reputation which will bring in investments and jobs from all around the world.

There is a new threat to us that has come up since I met this MNC Board, and that is swine flu. We have not had any confirmed cases in Singapore so far. We have the scanners outside this hall, and I do not think anyone was turned away this morning. We have set up checks at the borders but we cannot catch all of the cases because thousands of people come into Singapore every day and not all the cases will show symptoms. This is different from SARS. At some point, we must expect some cases in Singapore. In fact as Minister Khaw Boon Wan says, maybe there are already some cases here that we do not know about. This flu is different from SARS. Once it is in Singapore, it is going to be harder to keep it confined, to isolate the infection and prevent spreading. So we are taking all the precautions. We have raised our alert status to orange yesterday and hospitals are all on full alert. Yesterday, I spoke to one of our MPs who is also a doctor, and he said, “Yes, we had to choose which hospital you are operating in and stay in that hospital. We should not move from hospital to hospital and spread bugs around.”

Singaporeans also have to do their part. Keep good personal hygiene, and wash your hands regularly. Avoid crowded areas. If you are ill, stay at home. If your child is ill, keep him or her at home, do not send him to school or playschool. If you have to go out when you are unwell, wear a mask. If you have been overseas recently, especially if you have been to Mexico or the US, be extra careful. If you have been to Mexico, I think you are on home quarantine for a week. And if you are sick, please see your doctor immediately and follow his advice. The flu is treatable, there is medicine and we have enough stocks of the medicine. See a doctor, get medical care. This is different from SARS, but our experience from fighting SARS will help us fight the swine flu. We have been preparing for a pandemic for five years, since 2004, but still we cannot be complacent. If we are socially responsible, if we do our preparations and our plans are well implemented, we can pull through this outbreak with minimum casualties.

We look at the economy and we feel gloomy, we look at swine flu and we feel anxious. But if we stand up to these crises, look at the broader picture, look at how Singapore got here, what successes we have had, then I think we have reason to be confident.

It is 50 years since we gained self-government in 1959. The elections were held on 31 May 1959. The PAP won and formed a new government on 3 Jun 1959. We adopted a new national flag and Majulah Singapura became our national anthem. Over this half-century, we made tremendous progress. But we have also gone through many difficult patches. Each time, we have pulled through, strengthened ourselves and moved ahead. We survived and we prospered, because we educated our children, developed our economy, made a first-class healthcare system, built HDB homes for all, kept Singapore safe from crime and drugs, built up the SAF and the Home Team to keep us secure. The reason we could score in all these areas is because underpinning everything, we had a good team of leaders working for Singapore, and we had a sound political system which enabled responsible leaders to form an effective and a stable government.

We should take quiet pride in this. But we also have to sustain and reinforce what we have built. Renew our leadership team so we can continue to have capable leaders for another generation. Keep our political system up-to-date and well adapted to our needs to deal with a more competitive world and to achieve our more ambitious goals. Then, we can continue to grow and prosper for many years to come.

This is the 50th anniversary of Singapore’s self-government. It is a significant milestone. Those who are my generation will remember 1959. Those who are in their 30s, if you ask them what happened 50 years ago, they have to think back to their National Education classes in order to remember - 1959 is on the way to independence. We must not let this anniversary pass unnoticed, even in the midst of a recession. Not just to look back on what we have done, but to look forward to what we want to achieve together. Even now, even in the middle of a crisis, we have many projects underway to build a better Singapore. We are renewing our city, we are upgrading our infrastructure, we are enhancing our education system. So let us commemorate this anniversary through all these projects over the next one year. But the most meaningful way to celebrate these 50 years is to renew our dedication to build for the next 50 years and beyond. Then many years from now, we can look back with satisfaction on how in the midst of a global crisis, we in Singapore dedicated ourselves to building a better home for ourselves and a brighter future for our children. A place we are proud to call our home, our future, our Singapore.

Thank you very much and a very happy May Day.