MM LEE ON WAGE ACCORD
Straits Times, 16 Sept 2004
Pilots' pay deal just the start of more changes.
Mr Lee says global competition is forcing the pace of change and SIA staff must be prepared to make more adjustments.
By Rebecca Lee
THE wage deal reached by Singapore Airlines (SIA) and its pilots is only the beginning of more adjustments that SIA staff will have to make to ensure the national carrier stays on top.
Minister Mentor Lee Kuan Yew made this point to SIA pilots in a letter to Air Line Pilots Association Singapore (Alpa-S) president Mok Hin Choon.
Mr Lee said he was making the letter public 'in order that all unions and managements will bear in mind that Singapore's economy is undergoing major restructuring pressured by powerful competitive forces of the global market'.
Stressing the need for Alpa-S and SIA management to work together, Mr Lee said the Government could not allow any union to 'derail' Changi's air hub ambition and unscramble what Singapore had achieved.
'We have evolved a harmonious and productive labour-management relationship.
'It is these special, out-of-the-ordinary principles and practices that have enabled Singaporeans to achieve First World standards,' Mr Lee said in his letter dated Monday.
He was replying to Capt Mok who wrote him on Sept 9, informing him that the pilots had reached an in-principle agreement with SIA on its new collective agreement.
Captain Mok thanked Mr Lee for his 'kind assistance and wise counsel' and said Alpa-S was 'committed to the healing process' that it started when his executive council took office last December.
The union's new wage pact, which makes more of pilots' pay variable, came after months of private and public wrangling, prompting Mr Lee to step in personally. He had meetings with both Alpa-S and management and urged both sides to start anew and rebuild trust.
In his letter to Capt Mok, MM Lee said he was 'relieved' to hear that they had sealed a deal.
He said that the pact was only the beginning of a series of adjustments that SIA and its employees, including the pilots, must make for the airline to remain competitive.
He noted that as the aviation landscape undergoes radical change, with the entry of low-cost carriers and new long-haul aircraft, SIA and terminal operators Singapore Airport Terminal Services and Changi International Airport Services must relook the way they operate.
MM Lee laid down three principles on which SIA must operate to remain competitive:
• First, SIA must pay competitive wages to attract good pilots and other staff. But it should not set benchmarks 'mechanically' based on other airlines without regard to Singapore's 'special limitations'.
• Second, SIA must loosen work rules so that pilots can be rostered to fly more and earn more in productivity pay to raise their total income.
• Third, SIA must have flexibility in recruitment practices. In a global market where pay and allowances of foreign pilots change frequently, SIA cannot be locked into collective agreements which are fixed for three years.
'In short, we must remove all uncompetitive rigidities,' he said, lest SIA went the way of US airlines, many of which have filed for bankruptcy protection.
MM Lee also urged Alpa-S to abide by National Wages Council recommendations, which are arrived at through tripartite consensus, and follow precedents set by other unions. These have created a climate for business to thrive, benefiting workers and employers.
He pointed out that by not being affiliated to National Trades Union Congress, the umbrella body for most of Singapore's unions, Alpa-S 'suffers from a disconnect to the rest of Singapore'.
'Because pilots travel widely, rubbing shoulders with pilots of airlines of major countries can subconsciously lead them to assume that they should be similarly treated.
'But this is not sustainable in the Singapore context,' he said.
Mr Lee also cited port operator PSA as an example of how management and union fought back to retain its hub status after losing two major shipping lines.
Turning to the broader picture, MM Lee noted Singapore's unique situation. It is competing in the first league but its small population and area, and lack of natural assets qualify it for only a place in the third league.
'To remain in the First World we have to observe the principles and practices that have enabled us to climb out of the Third World.
'We have to be hard-headed, realistic, pragmatic and ingenious to make up for our lack of size and weight.'
He noted how several up-and-coming airlines were working hard to achieve SIA's standards, but with a much lower wage and other costs base. They were also hiring retired SIA staff so that they could absorb SIA's culture and compete.
'SIA has to work on a different formula: the lowest fixed component in wages and the highest in profit-sharing allowances and bonuses.'
Mr Lee also noted how Singapore was now at a turning point in its economic development, with countries such as China, India, Malaysia, Thailand and Indonesia having learnt the lessons of their past policies. Many, including faraway Dubai, had studied Singapore's success and were adopting many of its practices, such as having world class infrastructure and raising educational levels.
He said for Singapore to stay ahead: 'We must have the will to devise ways and means to compete and win. And win for our workers as much as for our investors, foreign and local.'