Wednesday's - 27 August 2003 - Headlines in the Straits Times
screamed that
" Singapore Wage Cost Burden is heavier than in the
US " .
Surprisingly, the report only concentrated on the wages of the
Singapore Workers but did not mention that Singapore
POLITICIANS and MINISTERS have
their wages bigger than those paid to US President and US
Politicians.
While it was great to artificially forced wages to
go up throughout the 1990's - so as to achieve the Swiss Standard
of Living - somehow it was lost on the Government that Singapore
Wages will outprice ourselves from the world.
Has the Singapore Government forgotten the purpose of Higher Wages
during 1990's - (besides achieving a Swiss Standard of Living)
?
Have they forgotten that it was to force the Labor Intensive
Industries to quit Singapore, and to force factories to retrain our
Singapore Workers to take on HIGHER VALUE WORK
?
What has happened to all those glorious plans ?
Workers have been convinced to accept Companies cut to Workers' Pay
so as to save jobs. Workers also have accepted retrenchment - or
"restructuring" - to save the jobs of other fellow workers.
Now, despite all the brilliant plans cutting into Workers
interests, the ultimate sacred cow (that belonged to LKY's 40% CPF
Rate) is being offered to be slaughtered - yet the Singapore
Government remained tight fisted in pump priming the economy, which
the Malaysian Government had done 6 months ago that resulted in
Wednesday announcement that Malaysia's ecnomy had a 4.9% growth
during the second quarter of 2003.
Yet the Government held on to the various price increases in public
transport, hospital fees, utility charges, telephone charges -
until another surprised discovery has made us out to be higher than
USA or Hong Kong or Timbuctoo. Until then, the Singapore Government
might as well milk the Singapore Citizen Bulls and Cows until the
milk runs out.
Wage cost
burden heavier than in US
Quoting a Perc global survey, Deputy PM Tony Tan tells why
it is urgent that costs are brought down through CPF rate
cuts
By M. Nirmala
SINGAPORE'S workers have become more expensive than those in the
United States and Australia, according to an international
survey.
LABOUR COSTS
Grade
Japan 8.5
South Korea 6
Hong Kong 5.56
Singapore
5.5
Taiwan 5.33
US 5.07
Australia 4.8
Malaysia 3.9
Indonesia 3.33
Vietnam 3.33
Thailand 3
India 2.8
The Philippines 2.67
China 2
Grades range from zero to 10,with zero being the lowest cost
possible and the the highest
Source: PERC
It shows Singapore is not just ahead of developing countries but
also developed cities such as New York and Sydney.
This 'alarming' situation worries Deputy Prime Minister Tony Tan,
who brought it up yesterday to show why the Central Provident Fund
(CPF) rates must be cut swiftly and substantially.
The survey issued by the Political and Economic Risk Consultancy
(Perc) firm on July 2 shows that on a scale of zero to 10, with
zero being the lowest labour cost country, Singapore stood at 5.5,
the fourth highest among 14 countries surveyed. This puts it ahead
of the US (5.07) and Australia (4.8 ) .
'To me, this is a profoundly important statistic. It's a simple one
but it gets to the nub of the problem. We have priced our labour
out of the market,' Dr Tan told reporters, elaborating on a speech
he made later at a dinner to celebrate the 35th anniversary of
Sembawang Shipyard and its employees' union, and National
Day.
He made it plain he was not expecting workers here to match the
cheap wages of China and India or those of neighbouring
countries.
'But it is crucial that we do not price ourselves ahead of
developed countries which are also our competitors in the global
market,' he said.
He acknowledged that obtaining a correct reading of the economic
situation was difficult.
However, a meeting in June with US businessmen in New York led him
to realise there was something amiss here. The Americans were
confident of a resurgence in their economy but back home, he found
companies continued to retrench.
'There was something more than the Sars' impact or other transitory
factors. It must be a structural factor.'
The Perc report crystallised the problem: high wage costs.
Its labour cost index is derived from a survey of expatriates
working in Asia, asking them to rate the country's labour cost. The
finding is checked for consistency against its data on other labour
costs.
The Perc survey also looked at overall costs of doing business,
prime rents and utility costs, and Singapore did relatively
better.
As Dr Tan pointed out, measures are in place to ease other business
rigidities: Corporate tax will be cut to 20 per cent by 2005, many
government charges have been cut or removed, and land prices are
kept affordable.
The need now is to remove the rigidity in wage structure - the CPF
rates, said Dr Tan.
It makes companies less flexible because it is 'a tax on cash
flow'. By lowering it, more money is immediately available to keep
companies viable, thus saving jobs.
'We have no choice but to reduce our CPF rates substantially and
quickly if we want to save jobs,' he said, echoing similar calls
made on Sunday by Prime Minister Goh Chok Tong and Deputy Prime
Minister Lee Hsien Loong.
Mr Goh had said the current 36 per cent could be lowered to
possibly 30 per cent.
Yesterday, Dr Tan said: 'The more substantial the cut, the more
likely you don't have to make another cut down the road.'
He assured Singaporeans of help: 'No Singaporean will lose his or
her home or be denied medical care because of the cut in CPF. We
will help Singaporeans to meet their mortgage payments.'
Poor families will also get aid for daily needs, he added.
Dr Tan's call for a CPF cut was supported last night by Mr M.
Ramasamy, president of the Sembawang Shipyard Employees'
Union.
He said: 'It's for our survival and we should have done it much
earlier.'
http://straitstimes.asia1.com.sg/topstories/story/0,4386,206710,00.html?
