We revisit how SMOU helped its members overcome the 1997 Asian Financial Crisis in the fifth chapter of an eight-part series that celebrates SMOU’s 70 illustrious years of history.
By the early 1990s, Singapore had built a reputation for its leading air and sea ports. But it did not necessarily translate to better wages for local seafarers, who were undercut by availability of cheaper foreign seafarers and the lack of regulation when it came to employment opportunities vis-à-vis foreigners at local shipping companies.
The strengthening of the Singapore dollar made things worse. Local shipowners felt the squeeze – their takings in American currency shrank as a result of the exchange rate.
Then came the hammer blow of the 1997 Asian Financial Crisis (AFC), further crippling the marine sector which was struggling with lower freight rates and escalating costs.
Faced with this triple whammy, SMOU had to play a role in addressing issues of foreign competition, weakening currency and the economic recession.
A key solution was to upgrade the skills of its members through various schemes, but the Union also recognised that more drastic actions were required – including cutting wages.
Internally, this era also ushered in a period of reform for SMOU, led by the three Ps of being “Professional, Productive and Progressive”.
Coping with the crisis
Singapore’s golden years of the early 1990s ground to a halt when the AFC struck, with gross domestic product (GDP) growth shrinking from 8 per cent in 1997 to 1.5 per cent in 1998.
While the destabilising impact of the AFC spread quickly and unexpectedly, it helped that the country – and in turn, SMOU – could tap lessons learnt from the earlier recession in 1985.
At the height of Singapore’s first full-blown economic recession since independence, shipowners were forced to sell, scrap, lay up their vessels, or even go under. Cost-cutting was a priority, as many sought to reduce crew manning numbers and wages, employing cheaper foreign seafarers.
The headwinds continued into 1986, and SMOU lost a third of the ships it once inked Collective Agreements with, leaving hundreds of maritime officers without jobs.
All this, coupled with a slew of changes by the Marine Department to the Merchant Shipping (Deck and Marine Engineer Officers) Regulations[1] that affected job opportunities for several groups of maritime officers, proved SMOU had to do more to prepare its members for challenges – with training. A total of $600,000 was set aside for grants and subsidies for education courses or training programmes under a new COURSE (Courses on Upgrading, Retraining and Skills Enhancement) programme that was aimed at helping members upgrade or find new work in land-based alternatives.