NTUC Social Enterprises (SEs) were started by the Labour Movement (LM) to help workers stretch their hard-earned dollars, and to meet the under-served needs of their families.
At the 1969 Modernisation Seminar, the Labour Movement collectively decided to make a difference for working families beyond collective bargaining for better jobs and pay. We set up social enterprises to help workers stretch their hard-earned dollars, in areas where their needs were under-served. Now, the Labour Movement has 12 social enterprises.
Over the years, NTUC Social Enterprises scaled up their efforts to support working families through two key strategies.
First, the NTUC Social Enterprises serve as a countervailing force to keep the free market in check:
The Labour Movement set up the first cooperative, NTUC Income, in 1970 to offer insurance to low wage workers, so that they could become more adequately insured against life’s critical contingencies. Commercial insurers prefer to sell insurance to high net worth individuals, because the margins are higher.
Today, NTUC Income continues to care for the under insured, lower income and elderly: Income’s Value Pack is the most affordable life and health coverage plan available in the market today.
NTUC Welcome (now FairPrice) was set up during the oil crisis in 1973 at a time profiteering by rice merchants was rampant. Its mission was to stabilise the prices of essential commodities. FairPrice continues to stay true to its mission.
During the 2003 SARS crisis, FairPrice held the supply and prices of eggs and vegetables stable. During the 2008 period of high inflation, FairPrice was the last to raise prices of rice in their stores when rice suppliers increased prices; and the first to drop them, when rice suppliers reduced prices.
Both FairPrice and Income are able to continue to influence prices and ethical practices in their respective industries because they are competitive, and have adequate market share. Their participation in the market as social enterprises serves as a countervailing force to free market forces, and benefit all consumers, not just their own customers.
Second, NTUC Social Enterprises took on a pioneering role to plug gaps in the market place by committing to long-term investments which were not always commercially viable at the start. I will cite two examples:
In the late 1970s, NTUC set up a department to operate childcare centres to support mothers to return to work, and to supplement the family income. NTUC took over the pilot childcare centres started by the Ministry of Social Affairs. Incomes were low then. Yet, we had to invest in quality curriculum and train teachers. Why? Because we felt that we should not be offering just baby-sitting services, but a child development service. For many years, NTUC, SLF and unions raised funds to subsidise fees for parents. Childcare services only became financially sustainable in the 1990s, when demand reached critical mass, and the government increased grants to parents.
In the early 1980s, NTUC set up a department to offer training to help workers overcome their fear of computers and to learn basic English to boost their productivity. No private companies provided these programs because they were not profitable. These programs were heavily subsidized by unions and government grants. Today, we continue to provide such training under NTUC LearningHub.
The Labour Movement takes a long term view. Over the long term, the Social Enterprises must be financially sustainable so that they can scale up and serve more people. However, in the short term, they could incur losses. The Labour Movement then find ways to fund the losses, for example, by seeking donations.
As part of the SE2015 vision, NTUC Enterprise is set up to support NTUC Social Enterprises to scale up sustainably to meet needs.
Singapore workers and their families continue to have needs which are currently under-served in the market. Under the collective SE2015 vision of the NTUC Social Enterprises announced in 2011, we aim to scale up rapidly to meet the needs, and enable working families to have easy access to products and services which are affordable and of quality. (Please see Annex 2: information on SE2015 Vision)
Today you visited our Eldercare and My First Skool Centres. Families’ need for support to care for their young and old is expanding rapidly as families become smaller, and are dual-income ones. My First Skool has 93 centres now, and expects to open another 8 new centres and 4 extensions to existing centres in the next 6 to 7 months.
Working families are also concerned about cost of living, for example, in the areas of cooked food and basic pharmaceutical products. For example, Foodfare is going to expand its $1.99 economy rice offering to 100 locations in the HDB heartlands.
To better support the family of NTUC Social Enterprises to scale up, the Labour Movement has set up NTUC Enterprise. NTUC Enterprise is a new holding co-operative that has been formed by NTUC, SLF and unions affiliated to both NTUC and SLF. This holding co-operative will own shares in the individual NTUC Social Enterprises.
It is important and timely to set up NTUC Enterprise because the environment the NTUC Social Enterprises are operating in is increasingly more complex:
Consumer needs are expanding, and they have higher expectations.
Technology is changing rapidly; competition for talent is keen.
To support the NTUC Social Enterprises, NTUC Enterprise will focus on two key priorities.
First, NTUC Enterprise will work closely with individual Social Enterprises to deliver greater social impact, by i) sharpening existing areas of social impact, and also ii) identifying new areas of needs.
For instance, while the roles of FairPrice in price benchmarking and Income in honest insurance are quite apparent with the public, the social role of the other NTUC Social Enterprises does not come across so clearly. We will work harder to sharpen their social role, and to also communicate it better.
NTUC Enterprise has initiated a group-wide task force made up of directors from several Social Enterprises to recommend how we can deepen and broaden our role in the area of health and community care: how to support elderly to age in place; how to scale up day facilities and homecare for elderly; how to scale up support for those with chronic illnesses; how to support those who need interim rehabilitative/nursing care after being discharged from acute care in hospitals?
Second, NTUC Enterprise will focus on the group-wide development of financial and talent resources to enable the Social Enterprises to scale and meet needs under SE2015, and beyond.
NTUC Enterprise has set up two group-wide task forces made up of directors from several Social Enterprises, one to develop strategies for greater financial resilience and the other to develop strategies on how to better attract, nurture and retain core management talent.
For example, NTUC Enterprise is working closely with NTUC LearningHub to headhunt senior executives to review training needs of rank-and-file and PMEs workers in specific industries. NTUC Enterprise is also supporting LearningHub to raise new equity for these investments.
Past success is no guarantee for future success. NTUC Enterprise will step up the developmental work that NTUC used to do for the Social Enterprises through a small department of 10 officers. NTUC Enterprise will have a board made up of directors nominated by NTUC, SLF and the unions. NTUC Enterprise will also put in place a professional management team of about 20 executives. (Please see Annex 1: NTUC Enterprise Co-operative Board of Directors)
Each of the Social Enterprises will continue to be led by its own Board, CEO and senior management team. NTUC Enterprise will provide inputs and support to the individual Social Enterprises as an active and engaged long term shareholder.
NTUC Enterprise institutionalises the strategic partnership between NTUC, SLF and unions to step up collective effort to serve the needs of working families.
NTUC Enterprise is formed by NTUC, SLF and unions transferring all their existing shares in the NTUC Social Enterprises to NTUC Enterprise. In exchange, NTUC, SLF and unions will own shares of NTUC Enterprise. This share swap does not involve any cash; and is in accordance to the Cooperative Act and cooperative principles.
The three groups of shareholders of NTUC Enterprise have committed to the development of the NTUC Social Enterprises from the very beginning:
NTUC: NTUC is the largest shareholder of NTUC Enterprise. NTUC mooted the ideas and founded all the individual NTUC Social Enterprises. NTUC leads by example and helps instil confidence in the viability of the Social Enterprises by owning shares in the Social Enterprises from the start. By doing so, NTUC could then convince other shareholders to also own shares in the Social Enterprises.
SLF: The Singapore Labour Foundation (SLF) has supported the NTUC and unions to develop the NTUC Social Enterprises through providing capital by subscribing shares, and supporting capability development through grants. This is in line with SLF's mission to develop the Labour Movement and its Social Enterprises. In fact, SLF was set up with initial financial contributions from NTUC and unions. SLF will continue to support the development of the NTUC Social Enterprises through its participation in NTUC Enterprise.
Unions: Unions affiliated to NTUC and SLF owned shares in the Social Enterprises from the start, so that they could contribute resources to help meet the needs of union members. In fact, unions also provide manpower resources to help set up Social Enterprises. In the early years of FairPrice and Income operations, union leaders and staff helped to pack rice and also sell insurance products.
The two other groups of shareholders of the individual NTUC Social Enterprises continue to own shares, with no change:
The individual members who are shareholders in 4 of the 12 Social Enterprises (Fairprice, Income, Unity Healthcare and First Campus) can continue to own the shares directly. They joined these Social Enterprises for specific reasons, usually because they are loyal customers of the specific Social Enterprises. They can continue to enjoy benefits such as affordable prices, discounts, link-points or rebates.
Social Enterprises who own shares in other Social Enterprises will also continue to do so. eg FairPrice owns shares in a number of smaller Social Enterprises.
With this share swap, NTUC Enterprise will be about 39% owned by NTUC, 31% owned by SLF and 30% owned collectively by the unions that have already decided to join. To date, 97% of all SE shares available for the share swap have been approved swapping. We are still in the process of engaging the unions for the remaining 3% of shares.
NTUC Enterprise will become the long term institutional and single largest shareholder of the 12 NTUC Social Enterprises. NTUC Enterprise will own at least 20% share in all 12 Social Enterprises; and at least 50% in 7 of them.
In summary, NTUC Enterprise institutionalises the strategic partnership between NTUC, SLF and the unions to support the NTUC Social Enterprises to do even more for working families. This is in line with the NTUC SE2015 vision to scale up NTUC Social Enterprises rapidly to meet social needs. NTUC Enterprise will steward the long term development of the NTUC Social Enterprises, focusing especially on developing greater social impact, and the financial & human resources required.
The spirit of solidarity and the heart for workers within NTUC, SLF and unions continue to be strong, in 1969 when we first mooted the idea of Social Enterprises and now, when we come together to form NTUC Enterprise. NTUC Enterprise and the family of Social Enterprises will be working even more closely together to realise the SE2015 vision and Do More Good!