Wednesday, 14 November 2012

Our Sg Wages

Finally, a Minimum Wage?


Prof Lim Chong Yah has suggested that compulsory min wage scheme may be necessary

Last week, these headlines were splashed across our mainstream media: “10,000 cleaners set to get pay increases” (Today); “Across the board pay increase for cleaners” (清洁工起薪全面提高, Lianhe Zaobao); “Proposed cleaners’ pay starts from $1,000” (Straits Times). Some even likened it to “a minimum wage in deed and not in name” which would then signify an about-turn for our government who, as recent as last year, was adamant that “a minimum-wage policy runs counter to the Singapore work ethic and culture of self-reliance” (source).

The plight of our poorly-paid cleaners (“My wife’s life as a cleaner”) has struck a chord in many Singaporeans and last week’s news must have brought some cheer to those of us who believe a pay raise for workers in the cleaning industry is long overdue.

But is it really as good as a statutory minimum wage? And are there any loopholes that may be exploited by unethical employers? Since these are only recommendations, what are the incentives for employers to implement the guidelines? Are there any penalties for errant accredited cleaning companies that have won tenders for government jobs? What measures are in place to prevent the exploitation of disadvantaged workers?

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NWC advice 'will depend on wage situation'

Whether the National Wages Council (NWC) continues presenting quantitative recommendations depends on how the wage situation unfolds in the coming years, Acting Manpower Minister Tan Chuan-Jin told Parliament yesterday.

The NWC had recommended specifically that employers grant a built-in wage increase of at least S$50 to workers earning a basic monthly salary of up to S$1,000, deviating from previous years when it did not specify dollar terms.

Asked by Member of Parliament (Chua Chu Kang GRC) Alex Yam whether such recommendations, especially for low-wage workers, will be the way forward for the next five years, Mr Tan said: "Whether this becomes a norm depends on how we see the situation unfolding in the coming years." 

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In defence of Lim Chong Yah

PROFESSOR Lim Chong Yah is one of Singapore's most distinguished economists. He was the professor of economics at the National University of Singapore (NUS), before moving on to the Nanyang Technological University (NTU) to become the first Albert Winsemius Professor of Economics. 

He is currently Emeritus Professor of Economics of both NUS and NTU.

Prof Lim is both a scholar and practitioner. He was the founding chairman of the National Wages Council (NWC), a post which he held for more than 30 years. No one has contributed more to the success of this unique Singapore institution than he. In view of his credentials and track record, we should study carefully his three proposals for a more inclusive Singapore wage policy.

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Real salary increase in S’pore among lowest globally next year



Companies in Singapore are forecasting a 4.5% salary increase in 2013 – the same increase to have been awarded this year and lower than the regional average, according to ECA International, the world’s leader in international assignee management. This is the first time since 2009 that the rate of salary increase in Singapore has not been higher than the previous year.

“The fact that proposed salary increases in 2013 mirror those awarded in 2012 reflects the uncertainty many companies have as to which way their financial performance will go next year,” says Lee Quane, Regional Director, Asia, for ECA International. “However, while there is apprehension about the future, most companies in Singapore remain less cautious now than in 2009 in the aftermath of the global financial crisis when they were granting increases of just 2%.”

According to IMF forecasts, inflation in Singapore in 2013 is anticipated to be 4.3%, so in real terms the 4.5% wage increase will only just offset the inflationary impact. Once this inflation is taken into account, Singapore employees can anticipate the lowest real salary increase in the region and some of the lowest globally. This continues the pattern already seen this year whereby employees in Singapore have, on average, experienced no increase in real terms.

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Singapore.The Stagnant Society?



Many years ago I remember seeing a book entitled “The Stagnant Society” which was about the relative decline and low growth rate of the UK.  As a result living standards rose more slowly than the more dynamic European economies. There were both economic explanations (a lack of investment) as well as the harder to quantify sociological ones (a rigid class structure which led to both a poorly equipped educational system and a general disdain for manufacturing and trade).

Forty years later Singapore seems to be in danger of falling into the same trap. The problem of relative economic stagnation for the bulk of Singaporeans is highlighted in a report by MOM published this week. (http://www.mom.gov.sg/Publications/mrsd_singaporeans_in_the_workforce.pdf )

Their figures show that real incomes for the bottom 20% of Singaporeans barely increased over the period 2001-2010 while median real incomes rose by only 1.2% p.a. All the growth occurred during the period 2006-2010 which is suspicious. I suggest that there are three reasons why income growth may look better than it in fact was:


Foreign expats in Singapore highest paid in the world - report




In an annual survey released by HSBC on Monday — which was conducted across 100 countries and involved more than 5,000 expatriates — Singapore emerged as the most favored expat destination to make money in and accumulate luxuries.

Foreigners, who make up a sizable portion of Singapore’s 5 million-plus population, earn more than those living in any other part of the world. About 54 percent of Singapore-based expats who took part in the poll earn more than $200,000 annually compared to a global average of only 7 percent according to the Expat Explorer 2012 survey.

The survey, in its fifth year, showed 80 percent of the expats who moved to Singapore saw an increase in their disposable income. Around 44 percent reported an increase of 50 percent or more in their disposable income, compared to the global average of just under a fifth. Full story

Related:
  1. Sporean low-wage earners' pay stagnated over last decade: MOM - Yahoo! News
  1. How long more will NTUC short-change Singaporean workers? - The Online Citizen
  1. Singapore.The Stagnant Society? - Rethinking The Rice Bowl
  1. Stagnant wages, immigration fuel Singapore squeeze - BusinessWeek

An “Enlightening ” story of wages in Singapore?

I refer to the Ministry of Manpower's (MOM)  Report on Wages in Singapore, 2011,

In 2011, the real total wages rose by a mere 0.1%, while real basic wages declined by 0.8%. However, the MOM report, which uses a different method of calculation, tells a different story. They claim that real total wages have grown by 0.9%. They have, however, taken the employer CPF contributions as part of their computations.

In the past, median wage was computed without taking into account of employer CPF contributions. The measure of “real total wages” appears to be a fairly new development amidst a rising political dissent in Singapore.


Inflation 5.3%: Wage increase?

I refer to the report “Most companies intend to freeze hiring: survey"

It states that “The report also surveyed companies on how the salaries of current staff are likely to be affected in light of the uncertain economic outlook, compared with to the first half of this year.

98% of workers’ wage increase below inflation? The majority (58 per cent) of respondents indicated that there would be no change in staff salaries. Twenty two per cent of companies intend to increase staff salaries by up to 3 per cent while 18 per cent of those surveyed plan to hike wages by 3 per cent to 5 per cent.

Only 2 per cent of companies reported that they would be increasing staff salaries by more than 5 per cent”. Does this mean that about 98 per cent of companies may not increase or only increase staff salaries by not more than 5 per cent? This may not be good news in the light that inflation is currently running at 5.3 per cent. So, it may likely be yet another year of negative real wage increase for Singaporeans.



How long more will NTUC short-change Singaporean workers?

I am glad Prof Lim has clarified that his "wage shock therapy" is intended to restore half of the wage increase that Singapore workers would have got if not for the "unlimited influx of cheap foreign labour" into Singapore; because of these cheap foreign workers, he estimated that Singapore workers have been underpaid by much more than 100 per cent compared to their counterparts in Hong Kong, Japan or Australia (Low-wage workers here 'underpaid': Lim Chong Yah, TODAY, 17 Apr 2012).

He reminded me of the original wage restructuring policy in 1979 proposed by the National Wages Council which described it as a wage-correction policy; the objective was similar to what Prof Lim now says of his wage shock therapy – to make up for wages lost by Singapore workers to cheap foreign labour brought in by companies.

Government ministers and the NTUC fully supported the 1979 wage-correction policy then, but now several ministers and the NTUC secretary general have poured cold water over it, calling it impractical, "unworkable" and even "risky" as large wage increases not followed by productivity growth would "lead to job losses and structural unemployment".



Where Do the Wealthiest Expatriates Live?

The survey, in its fifth year, showed 80 percent of the expats who moved to Singapore saw an increase in their disposable income. Around 44 percent reported an increase of 50 percent or more in their disposable income, compared to the global average of just under a fifth.

Given the bleak employment picture in both Europe and the United States, job hunters are increasingly looking eastwards for opportunities, with 70 percent of the expats surveyed citing better career prospects for the move to Singapore.

Singapore, which came in third place last year, moved up two slots to beat Bermuda at No. 2 and Thailand at No. 3. The three other Asian countries that made it to top 10 are Hong Kong, China, and Vietnam.

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Low-wage earners' pay stagnated over last decade: MOM

The bottom 20 per cent of working Singaporeans saw their pay stagnate over the last 10 years, according to a report released on Tuesday by the Ministry of Manpower (MOM).

Though their nominal income rose to $1,400 in 2010, $200 more than in 2001, real income only rose by 0.3 per cent over the decade.

The figures, however, have not included various government transfers and schemes, which further raises overall income received from work by low-wage workers, said the ministry in the report.

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Proposals to narrow income gap fly thick and fast at forum



Minister of State for Community Development, Youth and Sports Halimah Yacob and opposition politician Nicole Seah look on as fellow panellist Leong Sze Hian explains a point during a forum on solving the income gap. Calibrate foreign labour policies. Continue social transfers. Invest more in education and healthcare.

These were among the ideas put forth by a financial expert, a minister of state and an opposition politician, the three panellists at a forum on how the income gap in Singapore could be addressed.

Leong Sze Hian, statistician and former president of the Society of Financial Service Professionals, said current foreign manpower policies are a key reason for the depression of wages among the lower rungs of the workforce.


‘Political will needed to help raise income of low-wage workers’

Everyone needs to do their part in raising the minimum wage of low-wage collar workers in Singapore, including the government.

So says Zainal Sapari, Member of Parliament (MP) for Pasir Ris-Punggol, who is also director for contract, casual and low-wage workers at the National Trades Union Congress (NTUC).

In a wide-ranging panel discussion on low-wage workers at a Young PAP forum on Saturday, Zainal, who was there in his personal capacity, said the government has not been blameless for the widening income gap between the rich and poor in Singapore.

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Some S’poreans grossly underpaid: Professor Lim

Singaporean workers in low-paying sectors have been “grossly underpaid” said economist and former National Wage Council chairman Lim Chong Yah.

Responding to government criticism of his recent wage shock plan, Lim --  who led a similar wage revolution from 1979 to 1981 -- explained that paying workers according to their productivity contributions and aligning productivity growth with pay rises is perfectly understandable.

Explaining the rationale behind his radical suggestion in a letter to the media, Lim said, “My position, however, is that our lowly paid workers have been underpaid by much more than 100 per cent of their pay when compared with their counterparts in countries with comparable national affluence like Hong Kong, Japan or Australia.”


Time for wage reform in Singapore – Yay or Nay?

A tiny country with shining skyscrapers. An Asian tiger, an economic miracle. When most people think of Singapore, that’s what comes to mind. But underneath all that sparkle lies a widening gap between Singapore’s rich and poor.

Over the years income inequality has been on the rise, and the country’s reliance on cheap foreign labour has persisted. As the cost of living skyrockets, Singapore’s residents are beginning to really feel the strain, and many are of the opinion that whatever the government is doing is simply not enough.





Foreign workers put on finishing touches to a high end fashion boutique in Singapore.A flood of cheap immigrant labour has kept wages stagnant for many and widened the gulf between a very wealthy minority and the island's poorest 



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Raise productivity to raise wages: PM Lee

Raising productivity is more important than ever in Singapore's maturing economy as it faces land and manpower limits, said Prime Minister Lee Hsien Loong on Monday.

In his May Day message, PM Lee said the government has been moderating the inflow of foreign workers. By having a tighter grip on foreign workers, wages will be pushed up in the short term. However, this may hold back many companies that are eager to expand but cannot find enough workers.

He warned that it is "dangerous to assume complacently that wages can continue to rise indefinitely, just by our squeezing on foreign workers."


Stagnant wages, immigration fuel Singapore squeeze

Singaporean Ramzi Mohamed is tired of sleeping in the living room of the two-bedroom apartment he shares with his mother and older brother.

His problem is that housing prices in the city-state are up almost 70 percent since 2006 while the 29-year-old gym administrator's monthly salary of 1,200 Singapore dollars ($938) hasn't budged in five years.

"When I was 20, I thought I'd have my own place by 30," Ramzi said. "Now that I'm almost 30, I wonder if that will ever happen."


Singapore ruling party faces threat from working poor

A man is silhouetted against the skyline of a luxury brand outlet and the financial district of Singapore

Neshbahri earned a salary of 700 Singapore dollars ($550) a month when he began cleaning office buildings 11 years ago. His wages haven't budged since then while his cost of living has continued to climb.

The 32-year-old Singaporean's waning purchasing power has pushed him to work nights and weekends to boost his pay, and he wants some relief from Singapore's wealthy but tightfisted government.

Cleaners such as Neshbahri are part of a working poor that often go unseen by tourists dazzled by the Southeast Asian city-state's sparkling downtown, Orchard Road shopping strip and two new casino resorts. But stagnant wages, weighed down by a flood of cheap foreign labor, are tearing at a social compact that has allowed the People's Action Party to govern Singapore almost unchallenged for five decades


Corporate Profits Just Hit An All-Time High, Wages Just Hit An All-Time Low

Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't).


Fewer Americans are working than at any time in the past three decades. One reason corporations are so profitable is that they don't employ as many Americans as they used to.


 Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are other companies' revenue.


In short, our current system and philosophy is creating a country of a few million overlords and 300+ million serfs. 

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related:
Our Sg Wages
Wages, wages, wages!
Ideals and the man - Prof Lim Chong Yah
Parliament Debates Budget 2013
Tackling poverty the 'kuih lapis' way
Callings for a Poverty Line
Setting a poverty line may not be helpful
A minimum wage for Singapore?
The Poor & Homeless in Singapore
Other Side of The Singapore Story
No homeless, destitute, starving people in S'pore. Poverty has been eradicated
Singapore “Swiss” Standard of Living
Growing Up With Less
A minimum wage for Singapore?