Unions and Union Benefits As Part of The Inclusive Growth Strategy: The Case of Singapore

Singapore has been able to achieve full employment, and her actual rate of unemployment is often quite close to her natural unemployment rate (Groenewold and Tang, 2004). The island country has been able to achieve this because her wage costs are fully flexible. During periods of growth, the country enjoys wage increases, and during periods of recession, wage costs are permitted to fall to protect employment. However, business cycles are becoming shorter and more extreme. Singapore needs more and more foreign workers to act as a buffer for employment. Consequently, the low-income workers in Singapore suffer even when there is full employment because the higher cost of living during such periods is exacerbated by depressed wages brought about by the presence of foreign workers. Low-wage workers also suffer in periods of recession because their take-home pay is significantly reduced. In other words, Singapore does not have inclusive growth. Hence, the government has to increase public spending in order to help the poor. The strategy of relying on foreign workers, combined with increasing globalization has caused the Gini coefficient in Singapore to rise. Singapore needs an additional instrument to enable her to look after the welfare of the low-income workers. Her labour unions can play a role in this regard. This paper presents a scenario which shows that, in addition to the wages and worker benefits that are provided by employers, the labour movement can help to mitigate the hardship caused the strategy of relying excessively on foreign workers by providing union benefits to workers and union members alike. These union benefits are like country club benefits in the sense that workers decide on joining the union in much the same way as deciding to join a country club, as the laour union is like a big country club. The paper will present evidence of the country club benefits provided by the unions to the workforce in Singapore as part of the inclusive growth strategy.