Why is the NTUC involved in the running of businesses?
Someone asked me yesterday: “Over the years, NTUC has ventured into several businesses, from childcare and insurance to supermarkets and golf course management. While several of these businesses benefit Singaporeans in general, some seem to cater mostly to the high-income group.”
How do such businesses tie in with the labour movement’s aim of protecting ordinary Singaporean workers?
Fairprice, Income, Foodfare, First Campus and so on, have become so synonymous with Singaporean lives. We always refer to the supermarket chain as “NTUC” and we’re conditioned to say “eh you go NTUC help me buy some bread can?”
However, these businesses we talk about actually come under the umbrella of “NTUC Enterprise”. NTUC Enterprise is a holding company that has under its charge the various social enterprises NTUC has. These social enterprises are called “co-operatives”.
Profit that is earned by co-operatives get channeled back firstly to the 800k union members as cash rebates and the 59 unions that have a share with them. The unions and the NTUC uses this money to conduct their operations, which include a variety of welfare and assistance program as you’ll see often in press reports:
Labour movement launches $3m training grant to help PME members
NTUC UCare Fund donates $1m to help the elderly
FairPrice Foundation donates $1m
and also via various NTUC Programs:
U Stretch vouchers
U Care Back to School vouchers
NTUC Gift Group Insurance
SLF Hardship Grant
Individual unions have their own programs to tide members over tough times, members who face financial difficulties, retrenched members and many others.
Any organization that wishes to help many people, has to be in a very strong financial position itself.
The social enterprises, especially FairPrice, has come under great criticism for being “too big”, “too strong” and making “too much money”.
Have a look at this data:
The Dairy Farm Group in 2013 made profit at US$480m
The Sheng Shiong Group made over $158m
In the same period, Fairprice’s profit was $139m
Fairprice may be big and visible, but not as big as the other for-profit giants out there.
However, it has to grow and is forced to compete. The company is in no position to help union members, let alone have the financial muscle to fight profiteering and blackmarkets if it didn’t have corporate muscle.
When you swim with sharks, you better arm yourself with a weapon – or you’ll be chewed to death by them.
Then you can also beget the question: if the purpose of Fairprice is to reduce cost through scale, why are the prices of (some) goods so high?
The intent of Fairprice is never to be the cheapest in the market. The corporate world will never allow you to be the cheapest. Look at all the supermarkets that have come and attempted to be the cheapest… look at what has happened to Econ Minimart, or of late, Carrefour? They have been slaughtered by the larger companies who have staying power.
So whilst it is not possible to be the cheapest, it is possible to be fair. Fairprice does keep certain products as low as it can, but as for others it has to fluctuate together with the rest of the market.
The aim of Fairprice is not (always) to reduce cost.
It is reasonable that in peace time, it must turn a profit for the benefit of the entire Union network. it is famously said, it is “fair price” not “cheap price“.
However in times of emergency (such as the recent haze, egg crisis and SARS emergencies etc) the co-operative has acted to prevent profiteering and to stop blackmarkets from forming. The even larger goal is to make prices stable, and not fluctuating wildly. Don’t forget that Singapore produces very, very, very little of the food stuffs we consume. We are at the mercy of exporters around the globe.
It is the same for all the other social enterprises: they are formed for the benefit primarily of union members first, and for Singaporeans.
It is quoted in the papers that, “At my workplace at MBFC, the Marina Bay Financial Centre, we do have an NTUC Foodfare. And despite the high rentals at that area – I think that’s one of the premium office locations – NTUC Foodfare (does provide) cheaper and affordable food. For example, a cup of coffee there costs 90 cents.”
These social enterprises are just one part of the picture. It is not the NTUC’s core business. The NTUC true work is that of a confederation of trade unions and they’re in the business of industrial politics. They exist to act as a counterweight to the powers that employers have. To protect and negotiate on behalf of its members.
Now, should the entire mechanism of the NTUC only help its members? The quick answer is: yes. Members pay $9 a month for this privilege. Members of unions pay not just for these lifestyle benefits, but mostly for negotiation and protection.
If you’ve paid $X for membership to a pasta restaurant, you’d expect a certain amount of exclusivity.
Then you could also argue “well, if it is so important…then don’t pay at all, make it free!”
But money and funding has to come from somewhere. If it was not from members, then government would have to pick up the tab. If government picks up the tab, then it has to do so by raising taxes.
Bear in mind though this “government picks up tab” argument is only applicable today when the NTUC is closely aligned with the Government. Traditionally, unions are never at peace with the government – always quarrelling, disputing and rocking the country through their protests and strikes.
Just today, the British Trades Union Congress said: “It’s only because health workers showed that, if necessary, they were prepared to take industrial action that ministers agreed to come to the negotiating table. No wonder the government wants to make it harder for unions to ballot for strike action.”
(TUC is the UK’s version of NTUC)
The network of unions is a very complex machinery. Yes, there is a lot of money flowing through the system. Yes, NTUC is very visible and appears to be very strong. But the question one needs to ask is: why?
It is a fact that retrenched workers get direct help with money matters and to secure a new job. It is a fact that through Collective Bargaining that members manage to secure better pay and benefits. It is a fact that the NTUC has pushed for national programs to lift the wages of low wage workers.
All this is made possible through the existence of the social enterprises.
So although your bottle of milk powder and diapers may not be the cheapest in Singapore, it does go into helping the single mother who got retrenched. It goes into helping the cleaning aunty get a better pay and it goes into helping a low income family whose sole breadwinner got disabled in an accident.