I read about this article yesterday in Yahoo Singapore. I
thought I share within this thread.
‘Shock therapy’ economist urges NWC to
call for more wage increases
By Jeanette Tan | Yahoo! Newsroom – Thu, Oct 25, 2012
An economist who earlier called for a drastic hike in salaries
of low-income workers in Singapore has urged the country’s wage
council to continue batting for quantitative increases in the
workers’ monthly pay for the next two years.
Speaking on Thursday morning before an audience of 200 people at
the annual Singapore Economic Policy Forum, former National Wages
Council (NWC) chairperson and Nanyang Technological University
economics professor Lim Chong Yah commended the tripartite body’s
recommendation that workers getting below $1,000 a month get a
$50-hike in their salaries.
“That (the $50 NWC increment) is a very
good move, and that might reduce the number of people having very,
very low income,” he told reporters at the sidelines of the forum.
“We don’t need big changes, we just need to have recommendations to
increase the wages of the lowest income group in Singapore
systematically over the next few years.”
He also said that should monthly wages remain low, say below
$1,000, a compulsory minimum wage should be implemented to pull
Singapore’s lowest salaries up.
In his set of proposals he titled “Shock Therapy II”, Lim also
again pressed for a three-year freeze on the country’s highest
salaries.
Earlier this year, Lim’s proposed “shock therapy” to address the
country’s widening income gap. He had urged the raising of salaries
of workers earning less than $1,500 by 50 per cent over three years
while imposing a moratorium on the country’s highest wages during
the same time.
On Thursday, he said his latest proposals would work better than
increasing government transfers and allowing salaries to rise to
what he calls “exorbitant, unconscionable” levels, which he
believes would make Singapore’s economy uncompetitive.
“If we all expect the government to do this, to do that, so much
transfers to help the poor, needy and low-income groups, where does
the government get the money? Through taxes. (But) you see if you
raise taxes too high, you affect our competitiveness,” he said,
citing reasons such as having a small labour market, a lack of
natural resources and the increased risk of inflation arising from
overcrowding.
As for the moratorium, Lim said it would be imposed more as a
psychological measure to prevent all of the wages at the highest
echelons of the private sector from rising together.
“If the top level wages go up, they pull people linked to them
up and in the long run, we become an uncompetitive economy,” he
added.
Might the proverbial golden goose (of our local top talent) flee
the country in that scenario? Lim doubts so.
“There is no fear they will emigrate or run away just because
there is a freeze or kind of moratorium… I doubt very much. But if
the alternative is to have higher and higher taxes, that might
frighten them away,” he said.
To make this plan happen without causing excessive inflation,
Lim said it has to be “properly handled, carefully implemented and
spread over three years”.
He added that his aim was to ensure that companies take part in
active restructuring, using better technology and mechanisation and
reducing their dependence on cheap foreign labour, in particular
manual labour, failing which profit margins could decline.
“I hope that the main impact will be on restructuring and
another impact, probably this is not so desirable, on the margin of
profit… profit levels in some cases will be lower,” he said.
Explaining why he now included the provision of a $1,000 minimum
wage scheme in his proposal, Lim said it should be used as a last
resort.
“Let us work on the policy of raising the pay… of the lowest
income groups, the tail end, first,” he said.
Why $1,000? Lim says it appears to be a good figure, coming in
at about a third of the minimum wage in neighbouring Malaysia, and
a quarter of that in Australia.
“Besides that, (that amount) has been used by NTUC, by NWC as a benchmark, below
which they say that wages should go up by at least $50, so it’s a
good, nice figure and I think that’s about right, the $1,000
figure,” he said, qualifying that should inflationary pressures
become too high, the figure may have to be adjusted further in the
future.
