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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 the 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 address the 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 learned 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.
[1] In April 1986, the Marine Department announced changes to the Merchant Shipping (Deck and Marine Engineer Officers) Regulations, in compliance with the Standard of Training, Certification and Watchkeeping Convention (STCW) Convention. The STCW, a convention that establishes international standards of training, certification, and watchkeeping for seafarers as a means to promote safety at sea, had entered into force two years earlier, in April 1984. While SMOU had been consulted on the proposed regulations previously, the finalised set of rules in 1986 came with major revisions that severely impacted certain groups of maritime officers.
To survive this downturn, SMOU knew skills upgrading was equally paramount. It expanded on the COURSE programme by setting aside S$1.5 million to beef up members’ skills through marine-related courses, among other initiatives.
While the COURSE programme was targeted at the officers on foreign-going vessels, local trade officers were also facing challenges with the availability of cheaper labour from the region. In 1997, SMOU unveiled the Alternative Career Scheme to address this concern. Instead of teaching skills related to seafaring, it offered 19 courses for members to pick up new skills that would increase employment opportunities. The union subsidised 70% – 90% of course fees for SMOU seafaring members at risk of losing their jobs. These trained them for other jobs, such as bus and taxi drivers as well as real estate agents.
SMOU had to take this dual-pronged approach of helping members upgrade both marine- and non-marine-related skills as the maritime sector took a hit from the crisis, with Neptune Orient Lines suffering a massive interim $240.8 million loss in six months in 1998, while Thong Soon Lines went bankrupt.
Besides focusing on skills, the Union also believed that companies should be supported to prevent further job losses. Thus, SMOU made the difficult decision to back a government proposal for a 10 percent cut in the employer’s Central Provident Fund (CPF) contribution.
It was not the first time the Union had done this. Back in 1986, SMOU was among the first unions to throw its support behind the government’s move to slash employer contributions to the CPF from 25 per cent to 10 per cent, among other cost-cutting measures. The cut was painful but necessary—and it had met with much more resistance then.
This time around, SMOU again adopted a similar stance as it saw massive layoffs in other industries.
“The bottom line for the Union, given the present scenario, is to preserve jobs,” read an editorial in the April 1998 SeaVoices issue. “Pressing for higher wages at this point would be suicidal. The priority now is preserving jobs, and if cutting wages is necessary, then we will have to bear with the lesser pain compared to job losses.”
These moves eventually proved a lifeline for many SMOU members during the AFC. Such a bold strategy could only be backed by firm foundations of tripartism that had been built up through the years.
Foundations in Place
Warm tripartite relations were a key conduit through which SMOU pushed the agenda for seafarers and the wider maritime sector. Central to this were conversations on the green.
In the 1990s, SMOU representatives would be at the Orchid Country Club at the crack of dawn every Wednesday, not just for a golf game but also to discuss the labour issues of the day with tripartite partners like the Government, employer groups, along with the National Trades Union Congress.
Away from the golf course, the first-of-its-kind Tripartite Shipping Committee was set up in 1992 by the Singapore Maritime Employers’ Federation, with support from SMOU. The Committee was a platform for unions to engage with key players in the industry such as the Marine Department and the National Maritime Board.
On top of tripartite efforts, SMOU also enhanced its corporate governance. Over the years, it became evident that a rock-solid corporate culture, incorruptible leadership with integrity, and thorough account-keeping were vital for the Union to thrive.
This led to a new mission statement that was introduced in 1991, when the union turned 40. It read: “Towards a more Professional, Productive and Progressive Organisation”, or the 3Ps for short. The 3Ps were introduced as good values for workers to possess that would improve their employability and competitiveness in the labour market.
Several initiatives were started, from upskilling to digitalisation. To raise professional standards within the organisation, its leaders went back to school, with their studies financed by the Union.
SMOU also invested in digital infrastructure. In 1992, the Union spent $150,000 to install a computer network with the latest Windows operating system that included customised software to capture data such as membership, industrial relations, welfare, and education. This built on the efforts in 1988 to set up SMOU’s computer system and a customised database system for $40,000.
This was followed by a productivity drive. In 1994, SMOU sent all its staff to a training course on service quality run by the National Productivity Board. It was the same programme that trained staff from Singapore Airlines.
In line with its 3Ps motto, SMOU members were also expected to be professional, progressive, and productive—and the same aspiration holds until today and beyond.
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