When I read the article (see below) in Business Times yesterday about the much respected Prof Lim Chong Yah calling for wages for the lowly paid to rise by leaps n bounds over three years and at the same time to cap pays of $15K and above per month for the same period, I thought it was a belated April Fool’s joke.
So I copied the article and circulated it to the usual folks on my email-list with the heading “I don’t believe this!”
What was more unbelievable were two of the three replies I got.
First, from my elder brother, who wrote: “I think Prof Lim has proposed a jolly good idea. I’m sure true Singaporeans and foreigners with goodwill who earn $15000 and more per month will not mind a 3 year moratorium. The government should seriously consider this proposal.”
Second came from a friend with deep family ties to the PAP.
He wrote: “I actually agree in principle with what Prof Lim is trying to do. Since the PAP decided to make millionaires out of its ministers by using private sector remuneration to justify ministers’ pay, we have been grossly (and increasingly) overvaluing the worth of those at the top and undervaluing that of the average Joe and those at the bottom ranks of our workforce.
“We copied this predatory practice from the US, which is quite different from the fairer and more social- centric compensation system of the European countries. It has resulted in an ever-widening income gap between the haves and have-nots, which has been cleverly disguised as the effects of globalisation.
“And those articulating this bs are the same people who run our country and businesses – the latter hired guns, not entrepreneurs who put their own money on the line , and who are the direct beneficiaries of this predatory practice. They also happen to control the press and other media, and there is a danger that this bs may morph into a mainstream value.
“As the saying goes, repeat a bs often enough and you begin to believe in your own bs. But increasing inequality in our society is not sustainable in the longer run, as social tensions must increase as a result, leading to more explosive implications for our society. Prof Lim is indeed a wise man in trying to shock us out of slipping into this malevolent stupor.”
I might have concluded that I am in the minority of one if not for another giddy headed old gal — and makan kaki– like moi who replied thus: “Yeh so what’s the point of me bringing my grand kid to go for kumon, Julia Gabriel in hope he can go to RI, Hwa Chong ha?Better to go for carpentry classes and maybe learn to cha kway teow!!! Come to think of it my part time maid could have come up with the scheme! What is his pay?? Jen the furious.”
Then I discovered that one dot.seng says it all for me. So no, I’m not in the minority in my reaction; certainly not of one; perhaps not even of 10,000!
But then, what’s the use, if the Government buys Prof Lim’s line of thinking and acts on it?
I shudder at that prospect, remembering that Prof Lim presided over the National Wages Council when the Government went on another high-wage policy binge. Hope we won’t see a repeat of that experiment in the early 1980s that led one establishment maverick to blast — after the event.
“The 1985 recession was a self-created recession. Between 1981-1985, we had a policy in government to uplift from no-skill to high-skill. What the government did was impose very high CPF. The CPF went up to 50%. All costs went up, but at the same time there was no incentive given to encourage companies to upgrade. Just pure punishment.”
Business Times – 10 Apr 2012
Lim Chong Yah suggests second wage revolution
3-year plan to cut income inequality, foreign labour use
By TEH SHI NING
(SINGAPORE) To tackle rising income inequality and an excessive reliance on cheap foreign labour, one prominent local economist is proposing a three-year restructuring plan that includes a wage freeze for top income earners and sizeable pay hikes for the lowest paid.
This ‘bold and iconoclastic’ proposal seeks to complete the wage revolution of 1979 to 1981, says Professor Lim Chong Yah. He helmed the National Wage Council (NWC) from 1972 to 2001 and as its founding chairman had a pivotal role in that first, radical three-year wage restructuring exercise.
Then, the NWC had recommended a 20 per cent across-the-board increase in wages a year, including higher contributions to Central Provident Fund accounts and to the Skills Development Fund, which grants companies training subsidies.
Speaking to an audience of about 50 at an Economic Society of Singapore public lecture yesterday, Prof Lim outlined another three-year solution to Singapore’s ‘two Achilles’ heels’ – the sharp rise in low-wage foreign workers and rising income inequality – while raising productivity.
This features a sizeable pay hike for the lowest-paid workers, regardless of nationality or age, earning less than $1,500 per month over three years. He proposes a cumulative 15 per cent rise in the first year, another 15 per cent in the second, and 20 per cent in the third. This increase would be channelled, in equal parts, to the worker’s take-home pay, his CPF Retirement Account, and the Skills Development Fund.
At the top end of the income ladder, Prof Lim proposes a three-year wage freeze for those earning $15,000 or more a month. But he stresses, the intention is not to ‘frighten the geese that lay the golden eggs’ as there will be no pay cut, pay ceiling or super-taxes imposed.
As for the middle income, he proposes pay hikes ranging from a quarter to a third of that received by the lowest-income group, part of which will go into the CPF Retirement Account. The government should also match contributions to the Skills Development Fund to demonstrate its commitment to the restructuring effort.
Prof Lim envisions all operating details of this proposal being discussed and decided on by the tripartite NWC, as was the case in 1979, to ‘forge consensus by the three tripartite social partners’.
He acknowledged readily that national economic restructuring is ‘much more difficult’ now than it was three decades ago, given the changed political, economic and socio-economic climate. But he thinks that Singapore still has effective tripartism and a government and civil service with integrity and ability, so what is needed is ‘national will’ in the face of ‘the problems of economic success’.
In response to questions from the floor, Prof Lim said that his proposed scheme is unlikely to have a significant negative impact on unemployment – now at record lows – and that high-quality foreign investment will continue to flow into Singapore in pursuit of strong fundamentals.
Asked about the pace he proposes, which seems swifter than the government’s target of a more gradual 30 per cent rise in median incomes in the 10 years till 2020, Prof Lim said that some ‘shock’ is needed to ‘check, halt and if possible reverse’ the rise in income inequality.
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