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Saturday, 2 June 2012

Bridging the rich-poor gap in Singapore

The recent pay increases are seen by some Singaporeans as a step forward, but critics view them as tweaking, rather than resolving, a fundamental problem.

WHEN Cabinet ministers took turns to rebuff a proposal to push up salaries of lowly-paid workers, most Singaporeans viewed it as good as buried.

Given the strict way the government is run, the revolutionary idea raised by former state economic adviser Professor Lim Chong Yah might well have faced the death sentence.

His think-out-of-the-box way of narrowing the economic gap called for the salaries of low-level workers to be raised by 50% over three years, and those at the top-end be frozen for a similar period.

The widening gap between rich and poor is becoming one of the most pressing problems here today. It threatens Singapore’s social fabric despite its strong GDP growth.

To the PAP, Prof Lim’s suggestion probably smacks too much of socialism.

But according to the professor, this land of record millionaires needs such a solution because it has for years been significantly under-paying its poorer workers.

The rich are becoming richer, and the poor poorer, not the best way to win votes.

The Boston Consulting Group said that 15.5% of Singapore households have at least S$1mil (RM2.4mil) in liquid assets, the highest percentage in the world.

But the earnings of the city’s 20% lowest paid had declined during the past 10 years.

The unequal growth was not due to globalisation or technological change, but the mass influx of foreign workers in the past 10 years, said prominent diplomat Prof Tommy Koh.

He said Singapore had a per capita income similar to Denmark, Finland, and Sweden, yet cleaners in these countries were paid some seven times more than those in Singapore.

Prime Minister Lee Hsien Loong’s response to Prof Lim was a firm “no” and said such pay increases must be matched by a rise in productivity.

That is virtually impossible as this growth slowed to an average 1% a year in the past decade.

However, I’m glad no one said “never” to Prof Lim. Due to the seriousness of the problem, it is unlikely any leader can swear that the concept will not be relooked at one day.

In fact, since Prof Lim’s controversial suggestion, a series of steep pay increases resembling — and even exceeding — his suggestion has been announced — although only for a duration of one year.

Prof Lim’s proposal was for an average of 16%-17% a year for a consecutive three years.

The recent ones included the following:

> SMRT announced that it was raising bus drivers’ salaries by 35%, but for a six- instead of five-day week.

> Public health workers, including nurses, will have had increases of up to 17% from last month.

> Social workers can expect pay rises of up to 15% this year.

> NTUC, the large union movement, announced that non-executive staff will get up to 15.8% in wage increment and adjustment.

> Several thousand junior and mid-level civil servants will get pay increases of between 5% and 15% this year.

The increases are, of course, unconnected to Prof Lim’s proposal but some observers believe the government is worried over, and may be responding to, the growing public unhappiness about stagnant salaries.

In its way, the job market seems to be lending support to Prof Lim’s proposed measures. The economic imbalance is the second worse in the world, next only to Hong Kong.

But Premier Lee disagreed.

“Although we want our workers to earn more, we cannot simply push up Singaporean wages as we would like,” he wrote on his Facebook page.

“The only way for our workers to do better is to compete on knowledge and innovation, upgrade our skills, and stay ahead of the pack.”

Critics, however, say this is near crisis time and it is not sufficient for the premier to stick to a conventional approach.

Meanwhile, the national wages advisory council, of which Prof Lim is former chairman, has for the first time since 1984 recommended a minimum quantum of pay raise.

It suggested S$50 (RM120) plus an unspecified percentage for workers earning less than S$1,000 (RM2,400) a month.

Although critics say it is a far cry from what is needed, it is apparently aimed at drawing a minimum line.
The authorities have always rejected calls for a minimum wage in Singapore.

Ryan Ong of Yahoo Moneysmart commented: “No offence and all, but that’s about as helpful as a pair of blunt scissors.

“I guarantee a whole bunch of companies are already reading ‘unspecified percentage’ as ‘nothing’.”

Some Singaporeans welcome the recent pay increases as a step forward but critics view them as tweaking, rather than resolving, a fundamental problem.

But as the debate flows, a dark shadow is appearing on the horizon that can worsen the situation and threaten any prospect of strong pay increases.

The global economy appears to be slowing down as it faces woes from Europe, which Singapore has strongly invested in, and an economic slowdown in China.

More employers are likely to become more concerned about avoiding being pulled down rather than how much to raise staff salaries.

A local daily reported that some industries, including shipping, are already feeling the pinch from the slowing Western markets.

Some are planning measures to reduce costs or retrench workers as a short term solution, TODAY reported.

This puts the squeeze on the government’s social compact of promising jobs and a reasonable living standard to Singaporeans in return for their political support.

The grounds at home and abroad are becoming tougher for everyone.


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Mar 17, 2012

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