Industrial Relations (Amendment) Act



The Industrial Relations (Amendment) Act, 1968, was a piece of legislation that sought to define clearly the management rights of employers over employees through changes to the Industrial Relations Ordinance, 1960.1 The act was passed along with the Employment Act, 1968, which is the key labour law that standardised and regulated the terms and conditions of employment for all categories of workers.2

Both acts were designed to set up an integrated legal framework for regulating employer-employee relations with the aim to attract new investments to Singapore and increase the efficiency of companies.3 With the anticipated loss in national income and jobs resulting from the planned British military withdrawal from Singapore by 1971, creating opportunities for jobs and investments was essential for the nation’s economic survival.4

Singapore underwent exceptional population growth in the post-war years, with total population increasing from 938,000 in 1947 to over 1.4 million by 1957.5 The population boom resulted in growing unemployment, with an estimated 46,000 jobless in 1959.6

Four-year development plan
To deal with unemployment, then Minister for Finance
Goh Keng Swee proposed in April 1961 a four-year development plan aimed at creating more jobs through rapid industrialisation.7 The plan was based on recommendations of the United Nations Industrial Survey Mission to Singapore which comprised an international group of technical advisors headed by Dutch economist Albert Winsemius.8 The mission highlighted the need to establish stable relations between employers and employees as quickly as possible, warning that if stable industrial relations could not be achieved, the whole industrialisation plan would be “a waste of money and waste of time”.9

On the issue of management rights, the mission recommended that an employer should be free to hire and fire workers based on their level of productivity and the economic needs of the company. The mission believed that restricting such freedom would strongly discourage investors from establishing industries in Singapore.
10

Refocusing the industrialisation plan
Following Singapore’s separation from the Federation of Malaysia on 9 August 1965, the focus of its industrialisation programme switched from import-substitution to export-oriented manufacturing industries.
11 The need to speed up the industrialisation drive became more urgent with the 1967 British announcement of the pull-out of its military forces from Singapore by 1971.12

This decision was expected to have a huge economic impact on Singapore as British military expenditure made up approximately 20 percent of the local Gross National Product (GNP). The British military presence also created employment for 30,000 civilian employees and 10,000 domestic helpers. It was estimated that half these workers would lose their jobs by 1971 when the British military withdrew.
13

To deal with the economic impact of the British pullout, the Singapore government announced in May 1968 that it was going to promote greater economic growth through higher productivity. This would be achieved by eliminating restrictive employment practices, preventing exploitation of fringe benefits, and implementing more efficient management practices. The aim was to lower production costs to allow Singapore’s manufactured exports to be competitively priced for more overseas markets. The continuation and consolidation of stable relations between the government, employers and employees were among the measures essential to a conducive investment climate for job creation for the growing population.14

Industrial Relations Amendment Bill (1968)
It was with such economic objectives in mind that the Industrial Relations (Amendment) Bill was first presented by then Minister for Foreign Affairs and Labour
S. Rajaratnam in Parliament on 10 July 1968.15 Its introduction coincided with the second reading of the Employment Bill which dealt with workers’ terms of employment.16 According to Rajaratnam, both bills were an attempt to “rationalise [the] employer-employee relationship with a view to attracting new investments and increasing the efficiency of [Singapore’s] trading and industrial enterprises”.17

Rajaratnam explained that the Industrial Relations (Amendment) Bill in particular sought to “restore the rights of management to the employers”. He noted that trade unions had “unwittingly” challenged such rights when they questioned employers’ decisions to “hire, fire, promote and transfer employees”. He further explained that the government was stepping in not “merely out of a sense of justice and fair play,” but because the restoration of management rights would persuade entrepreneurs to invest in Singapore.
18


Rajaratnam also pointed out that 1,284,029 man-days were lost as a result of work stoppages between 1960 and 1967. Of the 389 work stoppages during that period, about 57 percent were due to disputes over issues such as the recruitment, dismissal, demotion and transfer of employees. He added that the bill was necessary to clarify the specific functions of management and unions, thereby establishing a stable working relationship between the two groups.19

Restoring managements rights
The bill sought to restore management rights to employers through several proposed changes to the Industrial Relations Ordinance, 1960. First, the bill contained an amendment that would prevent any trade union consisting of employees in subordinate positions from representing employees in managerial or executive positions as well. Instead, there would be separate unions for different categories of employees.
20

The second major proposed amendment was to include a list of management functions over which unions would have no negotiation powers. These functions included the promotion, internal transfer, recruitment, retrenchment, dismissal and reinstatement of employees, as well as the allocation of duties and tasks to employees.
21


Third, the bill proposed to amend the duration that a collective agreement would be effective to a minimum of three years and a maximum of five years. This was an increase over the previous duration of between 18 months and three years. The extension was justified on the grounds that the longer time frame would create stability in employment terms, thus producing more efficient management to allow investors to plan further ahead.22

Fourth, the bill sought to limit the employment benefits, including sick and annual leave, which employers of certain approved industries would have to give to their workers. A maximum ceiling for employment benefits would be set based on the provisions found in Part IV of the proposed Employment Act. This limit would apply to all approved pioneer industries starting from 1 January 1968 and would last for a period of five years following the commencement of business operations.23

Fifth, the bill stipulated that the Industrial Arbitration Court would have no right under most circumstances to get involved in disputes over the dismissal or reinstatement of an employee. Instead, the Minister for Labour would review dismissal cases, and where appropriate, order an employer to reinstate or pay compensation to the affected worker. Employers who failed to comply with the minister’s orders would be subject to punishment.
24


Finally, the bill set out the circumstances under which a trade union officer could apply for paid leave in order to carry out his union duties. Paid leave would only be granted if the officer needed time off to attend to matters concerning union members and his employer. This was to prevent an employer from having to pay for the absence of a union officer in cases where the officer was attending to matters that did not concern the employer.25

Concern for workers’ protection
While various members of parliament (MPs) supported the broader economic objectives behind the proposed bill, some of the suggested amendments raised concerns. MPs Seah Mui Kok and Abdul Aziz Karim, both of whom were leaders in the National Trades Union Congress (NTUC), were particularly concerned over the proposals to limit the powers of the Industrial Arbitration Court and to recognise the management’s rights over the hiring, firing, promotion and transfer of employees. Both MPs felt that there were insufficient safeguards in the proposed amendments to protect employees from potential abuses by employers. They also questioned Rajaratnam’s use of statistics to paint a picture of industrial unrest in Singapore. They cited the drop in number of work stoppages in recent years as proof that industrial relations had stabilised after the Industrial Relations Ordinance was passed in 1960.
26

Rajaratnam responded to such concerns by explaining that the bill was drafted based on the assumption that most employers were reasonable people and not “mad caps”. However, he gave assurance that the government would consider further legislative changes if many employers were subsequently found to be abusing employees under the terms of the amended law. On his use of strike statistics, Rajaratnam clarified that the point he intended to make was that the majority of disputes arose over management rights. He ended by emphasising that the bill, together with the Employment Bill, aimed to resolve the serious economic problems that Singapore would likely face following the anticipated British military withdrawal.27

The bill’s second reading and debate in parliament took two days from 31 July to 1 August 1968.28 The bill went to a House committee, was read for the third time, and passed on 1 August 1968.29 The Industrial Relations (Amendment) Act came into effect on 15 August 1968 together with the Employment Act.30

Creating a low-cost and productive workforce
Government control over the labour force was secured following the enactments of the Industrial Relations (Amendment) Act, 1968 and the Employment Act, 1968. The two new labour laws had the desired effect of creating a productive, low-cost and compliant labour force while creating opportunities for investments and job creation in Singapore.  By 1969, the productivity of assembly workers in the electrical and electronics manufacturing sectors in Singapore was equal to those of competing countries like South Korea, Taiwan and Hong Kong. In addition, workers’ hourly wages were lower than those found in those countries and less than one-eleventh of the amount paid in the United States.
31


The number of man-days lost through industrial stoppages also dropped drastically following the enactment of the two acts. In 1968, over 11,400 man-days were lost in four work stoppages. From 1978 onwards, there was hardly any sign of industrial unrest in Singapore.32 Such favourable labour conditions attracted a steady flow of foreign capital into Singapore. Direct foreign investment in the manufacturing sector increased from S$151 million in 1968 to S$1,097 million in 1978.33 By 1971 when British military pull-out took place, the numerous jobs created by foreign investments had resulted in a tight labour market in which 12 percent of the labour force consisted of immigrant workers.34



Authors
Jamie Han and Lim Tin Seng



References
1. Singapore. Supplement to the Laws of the State of Singapore. (1960). Industrial Relations Ordinance, 1960 (Ord. 20 of 1960). Singapore: [s.n.], pp. 164–200. (Call no.: RCLOS 348.5957 SIN-[HWE])
2. Republic of Singapore. Government Gazette. Acts Supplement. (1968, August 6). Employment Act, 1968 (Act 17 of 1968). Singapore: [s.n.], pp. 147–207. (Call no.: RCLOS 348.5957 SGGAS)
3. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 733–734. (Call no.: RCLOS 328.5957 SIN)
4. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 787. (Call no.: RCLOS 328.5957 SIN)
5. Saw, S. H. (2007). The population of Singapore. (2nd ed.). Singapore: Institute of Southeast Asian Studies, p. 15. (Call no.: RSING 304.6095957 SAW)
6. Singapore. Labour Department. (1961). Annual report 1959. Singapore: The Dept., p. 7. (Call no.: RCLOS 331 SIN)
7. Singapore. Parliament. Parliamentary Debates: Official Report. (1961, April 12). Development Plan 1961–1964. (Vol. 14). Singapore: [s.n.], col. 1228. (Call no.: RCLOS 328.5957 SIN); Singapore. Ministry of Finance. (1961). Development plan, 1961–1964. Singapore: Govt. Print. Off. (Call no.: RCLOS 338.95951 SIN)
8. The United Nations Industrial Survey Mission. (1963). A proposed industrialization programme for the State of Singapore. [Singapore]: United Nations Commissioner for Technical Assistance, Department of Economic and Social Affairs, pp. 1–3. (Call no.: RCLOS 338.095951 UNI)
9. The United Nations Industrial Survey Mission. (1963). A proposed industrialization programme for the State of Singapore. [Singapore]: United Nations Commissioner for Technical Assistance, Department of Economic and Social Affairs, p. 117. (Call no.: RCLOS 338.095951 UNI)
10. The United Nations Industrial Survey Mission. (1963). A proposed industrialization programme for the State of Singapore. [Singapore]: United Nations Commissioner for Technical Assistance, Department of Economic and Social Affairs, p. 109. (Call no.: RCLOS 338.095951 UNI)
11. Huff, W. G. (1994). The economic growth of Singapore: Trade and development in the twentieth century. Cambridge: Cambridge University Press, New York, pp. 307–309. (Call no.: RSING 338.95957009 HUF)
12. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 787. (Call no.: RCLOS 328.5957 SIN)
13. Singapore. Parliament. Parliamentary Debates: Official Report. (1967, September 8). Withdrawal of British Bases in Singapore (Vol. 26). Singapore: [s.n.], col. 173. (Call no.: RCLOS 328.5957 SIN)
14. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, May 6). President’s Speech (Vol. 27). Singapore: [s.n.], col. 13. (Call no.: RCLOS 328.5957 SIN)
15. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 10). First Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 463. (Call no.: RCLOS 328.5957 SIN)
16. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 10). Second Reading of the Employment Bill (Vol. 27). Singapore: [s.n.], cols. 470–487. (Call no.: RCLOS 328.5957 SIN)
17. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 733. (Call no.: RCLOS 328.5957 SIN)
18. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 734. (Call no.: RCLOS 328.5957 SIN)
19. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 735–736. (Call no.: RCLOS 328.5957 SIN)
20. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 736–737. (Call no.: RCLOS 328.5957 SIN)
21. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 737–739. (Call no.: RCLOS 328.5957 SIN)
22. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 739–740. (Call no.: RCLOS 328.5957 SIN)
23. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 740. (Call no.: RCLOS 328.5957 SIN)
24. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 761. (Call no.: RCLOS 328.5957 SIN)
25. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 762–763. (Call no.: RCLOS 328.5957 SIN)
26. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 765–780. (Call no.: RCLOS 328.5957 SIN)
27. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 788–790. (Call no.: RCLOS 328.5957 SIN)
28. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, July 31). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 733–740. (Call no.: RCLOS 328.5957 SIN); Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Second Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], cols. 761–790. (Call no.: RCLOS 328.5957 SIN)
29. Singapore. Parliament. Parliamentary Debates: Official Report. (1968, August 1). Committed in Committee, Reported and Third Reading of the Industrial Relations (Amendment) Bill (Vol. 27). Singapore: [s.n.], col. 790. (Call no.: RCLOS 328.5957 SIN)
30. Republic of Singapore. Government Gazette. Acts Supplement. (1968, August 15). Industrial Relations (Amendment) Act, 1968 (Act 22 of 1968). Singapore: [s.n.], pp. 229–238. (Call no.: RCLOS 348.5957 SGGAS); Republic of Singapore. Government Gazette. Subsidiary Legislation Supplement. (1968, August 12). The Employment Act, 1968 (S 237/1968). Singapore: [s.n.], p. 471. (Call no.: RCLOS 348.5957 SGGSLS)
31. Huff, W. G. (1994). The economic growth of Singapore: Trade and development in the twentieth century. Cambridge: Cambridge University Press, pp. 324–325. (Call no.: RSING 338.95957009 HUF)
32. Huff, W. G. (1994). The economic growth of Singapore: Trade and development in the twentieth century. Cambridge: Cambridge University Press, p. 295. (Call no.: RSING 338.95957009 HUF)
33. Huff, W. G. (1994). The economic growth of Singapore: Trade and development in the twentieth century. Cambridge: Cambridge University Press, p. 416. (Call no.: RSING 338.95957009 HUF)
34. Turnbull, C. M. (2009). A history of modern Singapore, 1819–2005. Singapore: NUS Press, p. 312. (Call no.: RSING 959.57 TUR-[HIS])



The information in this article is valid as at 4 July 2014 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

Subject
Politics and Government

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