Has the "Truth" being fully spoken about Singapore Wages ?

Atobe SG

So many different views have been offered from so many sources concerning the "High Wages" of the Singapore Workers.

The Government and the NTUC insist that the wages paid to the Singapore Workers have "priced" them out of the competition.

Everyone knows that "Wage" is only one part of the equation in any buiseness.

Has the "Truth" been fully spoken about the supposedly "High Wages" paid to the Singapore Workers ?

Will cutting CPF and wages make Singapore competitive?

Large part of Singapore's wages goes to pay for the government bureaucracy, land and transport costs. The living cost is also moving up as electricity rates, MRT fares, GST etc are all increasing. These costs are "managed" by policy makers.

Are these costs being reduce?

DPM Dr Tony Tan, addressing Sembawang Shipyard workers yesterday cautioned them about the need to cut CPF and wages to make Singapore competitive.

He said the independent research unit PERC in its report released confirmed that the labor costs in Singapore are higher than USA and Australia. [Source: Channel News Asia]

DPM Tan did not elaborate on the fact that a huge portion of Singapore's wages goes to pay for a very fat, over weight and top-heavy government bureaucracy, as well as indecent land and transport costs.

Peer a little deeper into this conumdrum and one might notice that all these variables were tighly "managed" and "controlled" by Singapore's policy makers.

He also remained silent on the fact that the inflation rate in Singapore has inched upwards as electricity rates, MRT fares, GST etc are all increasing even as Real Wages shrink and bankruptcies increase.

As usual, Singapore policy makers have only looked at one side of the equation and have ignored the big picture. These include the cost of living in Singapore.

Several other essential factors have also been overlooked in DPM Tans examples of US and Australia;

a) Unlike the US, UK and Australia, there is no public welfare scheme or unemployment benefits here in Singapore. If one doe not work, one does not eat literally. The worker is on his own with no help at all from the state.

b) What about the cost of land and a car, compare these in US, UK and Australia?

c) Singapore (unlike US, UK and Australia) has a very bloated and top-heavy state administration. See below comments from Lee Han Shih;

Lee Han Shih in the 19 Aug 2003 issue of TODAY (and Singapore Review):

"One out of perhaps 10 people in the local labour pool works for the government (the exact number is not disclosed). These people do not generate wealth. Their salaries are paid for by the labour of those who do. On average, one in nine people in the private sector is supporting a civil servant.

Put another way, some 11 per cent of every non-civil servant's pay goes towards keeping the civil service running .

This money is collected in many ways - directly through income tax and the goods and services tax and indirectly through levies, licence fees and other charges that work themselves into the salary structure.

This is a scary figure.

Coupled with CPF contributions, nearly half of a working person's wages (47 per cent, to be precise: 36 for CPF and 11 for the civil service) cannot be used to meet his immediate needs. Is it any wonder that business costs in Singapore are considered high?"

The above is even more scary when we compare the largest component of wages in State Administration, Ministerial salaries. Using DPM Tans base for comparison (i.e. Australia, UK and US);

1. Singapore Prime Minister's Basic Salary US$1,100,000 (SGD1,958,000) a year Minister's Basic: US$655,530 to US$819,124 (SGD1,166,844 to SGD1,458,040) a year

2. United States of America President: US$200,000 Vice President: US$181,400 Cabinet Secretaries: US$157,000

3. United Kingdom Prime Minister: US$170,556 Ministers: US$146,299 Senior Civil Servants: US$262,438

4. Australia Prime Minister: US$137,060 Deputy Prime Minister: US$111,439 Treasurer: US$102,682

As usual Singapore policy makers have chosen form over substance, looking only at one sole criteria; wages. A worker's wage cannot be viewed in isolation by itself as there are a host of other variables which will determine this wage.

Is this a Case of severe Myopia or Will Full Blindless? You decide.

And even if one chooses to look solely at wage as a basis for comparison, the focus should be on REAL WAGE (i.e. Wage net off costs of living and daily expenses).

It is no secret that one of the main reasons for the for Singapores dismal birth rates is the huge cost of starting a family here.

Dominique Dwor-Frecaut, regional economist at Barclays Capital said a 6 per cent CPF cut "is not going to get companies knocking on their doors to set up new manufacturing bases in Singapore.

"Low- and middle-end factories would still prefer to go to China. The only difference it can make is in the services sector, where it may induce banks to come to Singapore."

The CPF Cut may be a "Quick Fix" but not a Long Term Solution. Policy Makers cannot conveniently refer to this to address every economic problem. It is not a universal cure all. Surely Singapore's best and brightest highly paid cabinet can do better then this.

Analysts added that introducing a flexible wage component could work to kick-start the economy and save jobs BUT would not help cure longer-term structural problems. Said Hugh Young, managing director of Arberdeen Asset Management in Singapore "Ultimately, if you ask me whether it can bring about a circular swing which is more fundamental in the long term, I will say no."

A "systemic change" is necessary for Singapore to pull itself out of the current economic rut.

They argue it needs to take bolder measures such as further liberalisation of the domestic services sector, more encouragement of private enterprise and even possibly going as far as implementing a looser monetary policy.

It is conceded that the CPF is a problem. But this was a brainchild of the PAP. And having imposed it regimentally in the past, it seems that policy makers are now doing a 180 degrees about face, solely at the expense of workers.

Are Singaporeans seeing the results of a micro-managed economy gone awfully wrong? And why have policy makers not learnt from their past mistakes to let market forces regulate the ebb and flow of the economy?

Perhaps it is because wage restraint policies do not affect Ministers on a personal level.

Quote: "When asked how the pay cut would affect him, Mr Goh admitted candidly that it would have little impact as his children were grown up and his house paid for, "I do not speculate on the property market. I do not have any oustanding loans. I don't owe anybody anything. So what I have, I don't spend very much." - Straits Times, on how the 10% ministerial pay cut would affect PM Goh Chok Tong, Mar 23, 200

Lee Han Shih hit the nail on the head when he noted; It is telling that the first thing the government does to help get jobs for Singaporeans is to start up yet another statutory board, the Works Development Agency, which presumably generates some new jobs for civil servants.

Date: 27 August 2003

http://www.thinkcentre.org/article.cfm?ArticleID=2159

Variable SG

A primary force that happens to drive the high wages is also partially attributed to the dominant employer mentality that only experienced employees are capable of adding value.

The dogmatic perception that is resident within the minds of many employers, remains is no different from the way that they closed the doors on certain position whereby a 'qualified' job seeker must be seen to be the possession of a certified graduate degree from a respectable university.

It is hence this intangible allevation of value, along side with other material instrumental factors beyond civilian control such as factory/space rental etc, that forms the responsible culprit.

In a way, prehaps to a certain degree, the situation wouldn't have been in such dire straits today if the bulk of HRs and co policy have not been so focused around the valuation of the word 'experienced'.

Of course we are deluding urselves by saying that today's problem would not have occured if companies had been formerly, been readly to give fresh job seekers more open doors opprtunities. However, we also cannot deny that the depth of the shi.t would probable have been not as deep as today, assuming that the former had been a common practice.

This is the same as with the property market cycle. The speculator inflate the bubble up himself when times are good and get to grin for a while. But when the bubble finally get streched beyond its tolerance and burst, the player will end up with nothing.

Atobe SG

The problem with wages would have been quietyly settled based on "supply and demand" - market forces mechanics.

Unfortunately, the manner in which "the mechanics of market forces" as applied in Singapore is one in which the Government controls the "market", as well as the "forces" that is suppose to take its respective natural gravitational routes.

The following is an article from someone further away from Singapore, who perhaps may not be as myopic and probably maybe able to discern the trees from the forest.

Full Marx for Singapore's working class
(South China Morning Post)

30 August 2003 by Jake van der Kamp

In USA, manufacturing workers earn US$20.32 [S$35.64] an hour and the minimum wage is around US$5 [S$8.75] per hour.

In Singapore, there is no minimum wage.

How did the PAP govt decide Singapore workers are more expensive then those in US ? - Think Centre

AND HERE IS the latest gem from Singapore, straight from the front page in this diehard bastion of central planning of the leading English language newspaper, Pravda (Party Rendition and Authorised Version of Daily Announcements).

Apparently the Singapore government is worried wages have gone too high and some corrective action must be taken to bring them down.

That finding results in part from what some people in New York told Deputy Prime Minister Tony Tan on a visit there (this counts for detailed policy research in Singapore) and partly from a recent wage survey by the Political and Economic Risk Consultancy (Perc), which rated labour costs in Singapore as higher than those in the United States or Australia.

Perc's methodology in this survey was to ask expatriates what they thought of labour costs in different countries, another example of the sort of detailed policy research that has little time for hard statistics. The figures from both countries on employee earnings say that average wages are at least 25 per cent greater in the US than in Singapore and this is after taking the highest Singapore numbers I could find.

For the flavour of what you get when basing a labour cost study on expatriate opinion, notice from the table that Perc rates labour costs in Vietnam higher than in Thailand. For a good laugh tell that to people in Hanoi or Bangkok.

You may also wish to note that Singapore's gross domestic product per capita is 25 times greater than Indonesia's while Perc says its average labour costs are only 1.6 times as great. This sort of disparity with neighbouring countries is common and suggests that Singapore workers are underpaid for their level of productivity.

But why let the facts get in the way of a good scare story. The Singapore government subscribes to the story and has come up with a way to cut labour costs - cut back contributions to the Central Provident Fund (CPF) from their present level of 36 per cent of employee earnings. This does not mean, by the way, employees will instead get this money. It is their employers who will.

Now if the Hong Kong government were to cut Mandatory Provident Fund contributions in Hong Kong most people probably would applaud. It is dead money anyway. Given the derisory rates of return that the CPF gives Singaporeans, you would think they might share that sentiment.

But Singaporeans do not have to wait until retirement to get their CPF money. They can use their contributions to pay for their homes and other approved investments. Many of them are thus unhappy with the proposed cut. In mortgage payments they will have to make up from their direct income what previously they got from the CPF. It is all rather highhanded and will hurt them.

And who will benefit? To answer this question you must first appreciate two crucial differences between Singapore and Hong Kong. The first is courtesy of the usual central planner's obsession with making things, Singapore still has 25 per cent of its economy tied up in manufacturing while the figure in Hong Kong is less than 5 per cent.

The second is that 75 per cent of investment in manufacturing in Singapore is foreign investment whereas that figure in Hong Kong is negligible. What will happen in Singapore is foreign employers will take what native Singaporean workers lose through this cut.

There will be a transfer of wealth from the people who worked for it to the multinational corporations (MNCs). This could be excusable if these MNCs then invested the money back in Singapore but the difficulty is capital investment in Singapore is dropping faster than a rock in freefall and has never been lower than it is now, relative to the size of the economy. The MNCs are mostly in exit mode now. They will not put the money back into Singapore. They will just take it home with them.

Then you get to that fuzzy thinking that labour costs are an obstruction to economic performance. If so, Mr Tan, may I ask you what is the point of economic effort ? Is it not to improve the prosperity of those who Participate? What sort of an achievement is it if you instead make them poorer?

I have always maintained that Singapore is the one country to have come closest to achieving communism in the classic Marxist sense. This is now unfortunately also showing the classic result of central planning put in practice, a steady grinding down of working class disposable income.

Date: 29 August 2003

http://www.thinkcentre.org/article.cfm?ArticleID=2165

Viper52 SG

Just as I suspected. See the question I posed in the Singapore Wages HIGHER than the USA thread. I had questioned PERCs methdology of obtaining their data and just as I've suspected (from speaking to American and Aussie friends) PERC is bullcrapping big time and the PAP is using crap to scare Singaporeans.

The article Atobe posted poses a VERY good question: Why let the facts get in the way of a good scare story?

Why Indeed.

Atobe SG

With the Government refusal to reveal the true accounting of the Singapore Reserves, and the performance of the Government Investment Corporation, it can only tell that there are more to the situation than what is actually being revealed.

Read my post in the "Singapore Wages Higher than the USA" - in which there are some calculations of CPF collection on monthly, annually, and over twenty year period - for a working population of 3,000,000 only out of a population of 4.5 million Singaporeans.

The amount collected is shocking, and yet so little is revealed, and the CPF interest rate is so insultingly paltry for the large amount of funds that are being utilised by so many GLC units.

The biggest insult to Singaporean CPF contributors is the imponderable audacity of the GLCs having appointees in the Board of Directors from Political and Family relations - all paid with fat salaries and bonus or performance shares options.

With a shrinking population to support a larger number of retirees, one need little imagination to figure out the difficulties to pay out fully "at one go" on reaching the retirement age.

The other alternative is to slow down on the collection of CPF, and tighten the release procedures further so as to slow down or stretch out over time the payout amount.

wuming78 SG

hey atobe, are there any other such websites which focuses on such issues? interesting and intriguing read i must say.

Atobe SG

Try the following sites:

Singapore Affairs

http://www.thinkcentre.org/

http://www.sfdonline.org/

http://www.singapore-window.org/

http://www.fateha.com/

http://www.jamesgomeznews.com/

http://www.geocities.com/newsintercom/

Malaysian Affairs:

http://www.mggpillai.com/index.php3

Fanatical_Knight SG

Can atobe or viper please explain to me in LAYMAN terms, what YOu ARE SAYING? I am a dummy clone who listens to the good government…because they make things simple… even if its all lies or whatever. So please, just tell me, I am a working banker, what does all that stuff you just said, have to do with workers like me??? What is the point, please tell me simply.

Viper52 SG

[ Neo ] SG

The secrecy that goes behind the amount in the Reserve and the GIC is needed to ensure on the safeguarding of national interest. You can't blame the Government entirely for keeping such figures concealed. As long the independent figurehead, the President serves the function of being the 'auditor' on behalf of the people.

But I will have to agree with you on the note that the interest rates for the CPF sum is a little low, given the recent slashes in contribution percentile for over the past few years.

As mentioned by the journalist in Today, the current market trend uses the daily interest computation method, which I too feel, should be the more appropropriate methodology.

And also, maybe the interest rates should have some room for some upwards adjustment.

If the planners requires a good cause to justify upon the increase, then prehaps inflation would probably be a very good word to come in right now.

smurfer SG

hey hey hey... this isnt another agrument that i had done months ago.??? I already said dat time I foresee CPF will be cut and if this is the real case, then OUR LIVING COST should be REDUCED also... and someone argue wif me saying that this is called ... "inflation" and blah blah... wat the F$^$..

I could say, CPF cut for now is just a matter of slowly killing us... imagine, CPF is just a intangable asset dat we own... why I say intangable?? coz we know ITs existance but just could not feel it physically at all... in other words, not our own $$$ jus like in the bank... OF coz, simple terms we are able to use it for HDB payments, hospitalisation (touch wood)... and investment (may be in stock, gold, endowment but is being restricted only up to a percentage)... Y is dat so? I always feel its just not dat right...

now comes to pay cut... YES, as compared to some countries like indonesia, phillipines, malaysia, etc those backward countries, our labour cost are bit of higher as compared. But WHY don't you measure our capability, education, and ability in working aspects??? COULD a company just hire a phillipines maid to do programming??? surely dats the diff for our salary... I personally feel the MAIN reason why companies are moving out of SINGAPORE is due to our LAND, UTILITY, and TRANSPORT cost... just imagine a normal 2000sqft office would cost almost $12,000 a mth... IS that a mistake made by goverment in the first place???

Y just cut our salary and CPF... cant just lower the rental?? Of coz another factor Im not happy in is our increased in electricity... why is that theres still need an increased of 5% (17% - 12%) after the US-IRAQ war??

Im NOT going to support PAP anymore in the next election unless there's an IMPROVEMENT shown in their work... maybe all ministers could haf their PAY cut by 90% and see how they could survive wif S$1500.00 ~ S$2000.00 a month for 2 ~ 3 years wif their family??? If not, do lower the cost of our living... Evil or Very Mad

Atobe SG

I am not so sure if the President's has any authority to oversee the National Reserve, given the experience of the late President Ong Teng Cheong - who made a sincere attempt to test the 2-key system of safeguarding the National Reserve.

Unfortunately, the 2-key system did not work to the satisfaction of the Ruling Party, nor to the satisfaction of concerned Citizens.

The Ruling Party felt that the Elected President had too much authority then originally intended over the control of the National Reserves, and since there was no clear definition as to his authority in getting a true accounting of the National Reserves, it was wrong for the Elected President to have asked for it.

Hence, a review and an amendment to the legislation was made to correct this loophole, and to prevent the Elected President from making any future similar actions.

How can the Elected President exercise his intended role of protecting the National Reserves - by controlling one of the 2-key (with the other one held by Parliament) - if he have no clue as the size and extent of the National Reserve ?

(Read from the following site:
http://www.singapore-window.org/sw00/000310a3.htm )

When the National Reserve is only held in secret and known only to a few trusted persons - that does not include even the current Prime Minister - consisting only of familiar ties and faces, legitimate concern should be raised in such a system.

With the poor performance of GLCs and GIC investments, some already well publicised - while most are kept secret - how can we be assured that proper management has been exercised in the use of our National Reserves ?

Who looks after the Board of Directors of the G.I.C. - when no one dare to question the authority of SM ?

What will happen to the National Reserve when SM is no longer around, and his family name run out of suitable heirs to the PM post - if he thinks that only the Lee family tree has the capable and suitable genetic material to control the National Reserve ?

Without any clear information concerning the use of National Reserve, we can only speculate that the G.I.C and GLC is making use of cheap funding from the CPF - and profits from domestic consumption through services provided by GLCs.

How else could the funds for Temasek Holdings, G.I.C and GLC come from, and how profitable are the investments ?

If the Management of Temasek, G.I.C. and the GLCs are paid fat salary and generous bonus share options, why are the CPF Account Holders paid such paltry sums for the money that are forced to be locked up, and utilise by these Government establishments ?

Fanatical_Knight SG

A banker who does not understand whats being discussed here so far? You sure you're a banker?

You want it simple? Sure, your lovely government is asking you, along with the Singaporean people, to expect less pay, but pay higher prices for everything (More GST, increased utility prices, arbitary bus fare increases) so that foreign companies can come in to make a quick buck at the expense of local companies off cheaper Singaporean labour, while your simple and honest ministers make millions while using shabbily-researched articles to make you believe you're overpaid.

They claim why the cost of doing business in Singapore is too much because of Singaporean workers being overpaid. Hence slashing our salaries would make Singapore a better place to do business, according to the government.

Meanwhile, neutral observers say that cutting salaries will help, but only a little because coporate taxes are too high in Singapore, land is overpriced and these have to be addressed before business costs can go down. But then, the words of these observers are mostly not reported in the Straits Times because if the people read them and ask the government to cut costs at their end, would mean the government would have less to spend, like Singaporeans

Oh, before I forget, lower wages for Singaporeans also mean lower costs for the government linked companies, which can earn our ministers more bucks off cheaper Singaporean workers.

You prefer simplicity over truthfulness? Says a lot doesn't it?

Yeah i am a low teller, its simple, just take money and key in the numbers of accounts etc etc... any tom dick or Harry can do that.

Anywayz... wtf? Is that true? Cos i think its really strange how they say we overpaid, cos bank tellers in US and UK get paid a lot more... hell i heard that Plumbers in England get paid like 3000 pounds, POUNDS!!! I have always thought that Govt news was strange, but it does make some sense. I mean compared to thos skirt-wearing spear throwing workers in Thailand and China, we demand higher wages, so is'nt the govt correct in that sense? OFcourse, those countries also have more land too. But what i cant stand is ****Ing Lee Kuan yew or whoever the minister is, making more money than us like 10 or 20 tiems more... fuck i am gonna complain.

Atobe SG

One of the many reasons that LKY gave - (to justify the high salary paid to Cabinet Ministers and also to Senior Civil Servants) - is that since it is the Government that creates the environment that allow Corporations to make money, and since these Corporations profit from such an environment and pay their Chief Executives handsomely, then it is ridiculous that the Singapore Government Ministers and Civil Servants should be paid a fraction of what these Chief Executives are paid.

To extend the argument further, the Singapore Citizens should demand from the Government equal pay packages paid to the Ministers since it is the OBEDIENT SINGAPORE CITIZENS that allow a PEACEFUL and STABLE ENVIRONMENT that allow these Corporations to make their profit and pay their Chief Executives so handsomely.

If Singapore has attained First World status, then rightfully we should not be expected to live on a CPF MINIMUM retirement allowance of S$300 PER MONTH.

Since the Asian Standard of Living is no longer applicable, the Government should PLAN for ALL Singaporeans to have wages befitting the status of being CITIZENS of a country with FIRST WORLD STATUS, and who have DILIGENTLY contributed to the stable political and economic environment, with more sacrifices then the various PERSONALITIES in the Political Leadership.