Here's the true color of this initiative...
Posted by theonlinecitizen on April 11,
2008
Leong Sze Hian and Andrew
Loh
The National Trades Union
Congress just announced a $4 million worth of assistance for 80,000
low-wage workers under the new discount vouchers scheme.
According to the Straits Times report, “NTUC’s $4m gift to less
well-off workers”, the ST says:
“In all, about
80,000 lower-income union members can apply for these vouchers from
NTUC.”
It goes
on:
“Each voucher
gets them a 5 per cent discount for every $10 spent at six NTUC
cooperatives, including its childcare centres and
pharmacies.”
Now, before we all start
cheering the ostentatious generosity of the NTUC, read the report
closely. You will notice that :
One, the report couched it
as a “gift”. Is it really so, or is it a blatant attempt by the
NTUC at self-promotion – and to generate even more revenue for
itself? (Read on and judge for yourself.)
Two, the headline says
“less well-off workers” without mentioning that it is
unionized members only who
qualify for the vouchers. (Read on to discover how much one has to
pay NTUC to be a member before enjoying the “5 per cent
discount”.)
Three, “each voucher gets
them a 5 percent discount for every $10 spent”. In other words, for
every $10 you spend at NTUC cooperatives, you get 50 cents
discount.
Why give discount instead
of cash?
A 5 per cent discount
voucher may not help the needy as much as giving the equivalent
amount to them in cash. What the needy needs most now may be to
mitigate the rising cost of basic food items.
For example, Fairprice
raised the price of one of it house brand rice (5 kg bag) by 13 per
cent, from $4.70 to $5.30 in March. Cooking oil and dairy products
have also clocked double-digit gains.
Thus, giving them say $5
cash may be better as they can use it all to buy rice or milk
powder, instead of just getting a 5 per cent discount when the
price has already risen by double-digits. If prices continue to
rise, discount vouchers also become lesser in actual
value.
As each voucher gets them
a 5 per cent discount for every $10 spent, if the purchase is say
$11 or $12, the effective discount would only be 4.5 or 4.2 per
cent respectively.
Giving discount vouchers
may also be setting an undesirable precedent, as assistance to the
needy has always been in cash or cash-equivalent vouchers, instead
of a discount.
ComCare Funds should not
be used to benefit NTUC
The ST article also
reported NTUC Chief Lim Swee Say as saying that “grassroots leaders
can use the money from the million dollar fund to buy the vouchers
for their needy residents”. Mr Lim was referring to the ComCare
Fund. This may not be a good suggestion, as grassroots
organisations should give cash to the needy, instead of purchasing
the discount vouchers.
The ComCare Fund budgeted
amount is for direct assistance to the needy that they are already
entitled to, and therefore should not be used to purchase discount
vouchers.
Thus, using ComCare Fund
to buy the vouchers is not a good way to implement the decision to
set aside at least $1 million from the fund to help needy families
cope with rising food prices.
Increased profits for
NTUC
NTUC Fairprice Group’s
after-tax profits increased by about 90 per cent from $52.7 million
in 2006 to $100.1 million in 2007, against an increase in revenue
of only about 12 per cent, from $1.4 billion to $1.6 billion, for
the same period.
This begs the question:
Why, despite absorbing the GST increase on hundreds of essential
items for the latter half of last year, NTUC Fairprice Group’s
profits increased so much?
So, instead of just giving
$4 million of discount vouchers, why not give cash vouchers which
would only reduce its profit increase last year from 90 to 82 per
cent?
What’s the point of
increasing the price of rice by 13 per cent or milk by 20 per cent,
and then giving a 5 per cent discount?
Mr Lim was also quoted as
saying in another ST report titled, “Rice a small part of bills at
Fairprice: Swee Say”:
“Yes, the cost
of living has gone up, but it does not mean your $10 has become $5
because you did not spend all your $10 to buy
rice.
“You spent
only 22 cents to buy rice.”
To infer that only 22
cents out of every $10 is spent on rice, derived from the $1.6
billion spent at Fairprice, of which $36 million was on rice, may
not be entirely accurate and indeed seems simplistic. Generally,
the lower-income may be spending more on rice relative to their
total expenditure, relative to what the general population spend on
all items at supermarkets.
Helping the poor or
blatant attempt at
self-promotion?
Companies give discount
vouchers all the time, as a means of promoting more sales and
advertising. Will the call to buy house brands, and now the giving
of discount vouchers, lead to higher sales volumes, which may
result in even higher profits at the end of the
day?
In this NTUC vouchers
case, a low-income or poor Singaporean would have to spend money
being a member of NTUC and pay its monthly membership fee (which we
understand is about $9 or thereabouts per month), before he is
entitled to a 50 cents discount every time he spends $10 at NTUC
Co-ops.
Do only union members shop
at NTUC?
This “gift” of a 5 per
cent discount sounds rather like blatant self-promotion and
exploitation of the plight of the poor by the NTUC rather than any
sincerity in helping them.
Finally, isn’t this in a
sense, akin to unfair competition against other supermarkets,
retailers, childcare centres and pharmacies ?
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