Saturday, April 14, 2012

Higher wages will not lead to loss of jobs

I support the recommendation by Professor Lim Chong Yah to raise wages by 50% over three years for the grossly under-paid workers. For those earning $800 a month, the revised wage is only, $1,200, which is still below any sensible minimum wage required to meet the high cost of living in Singapore. Professor Lim's suggestion is quite moderate.

I disagree with the view of a Minister who claimed that the revised wage will lead to structural unemployment and a loss of jobs in Singapore. This statement is rhetorical and is not supported by economic common sense.

There are many domestic jobs that have to be done in the country. Raising the wages to a minimum wage does not result in a loss of jobs, except through mechanization. There are many jobs that have to be done by people and cannot be replaced by machines. Any such loss of jobs will be minimal.

There will be loss of low paying, manufacturing jobs. Most of these jobs are carried out by foreigners, and not by Singaporeans, who cannot afford to survive on these wages. The removal of these jobs, and the reduced reliance on foreign workers, will help to reduce the over-crowding and demand on our public infrastructure.

There will be some loss of jobs, but the overall impact will be positive for Singaporeans, if Professor Lim's suggestions are implemented.

There will be an increase in the cost of living due to the higher wages. However, the impact is likely to be small, as the wages at the lower level do not form a large component of the total cost. The excessive profit margin and earnings of the highly paid managers have a bigger impact. Professor Lim has suggested a freeze on the earnings of the higher paid people.

It is also likely that the cost of rental, which now forms a significant proportion of cost, will reduce when wages are increased. Consumers will not pay the higher prices, so rentals and profit margin will have to moderate to make up for the higher wage cost.

I am disappointed that our ministers, who earn astronomically high salaries, continue to oppose moves to give decent wages to workers and reduce the big income gap in Singapore. It is time for Singaporeans to speak out against these bad policies.


Jammie said...

"There will be loss of low paying, manufacturing jobs. Most of these jobs are carried out by foreigners, and not by Singaporeans, who cannot afford to survive on these wages."

You forget, Mr Tan ..that these foreigners' managers, supervisors are singaporean. The kopitiam they patronize belong to Singaporean. The room they rented owned by Singaporean. The taxi they took and they shop they buy from, ..are all owned by Singaporean.

You are too simple-minded to only look at the foreign workers.

yujuan said...

See it the other way.
Low wages would lead to loss of jobs. There is an MNC who recently decided to transfer the core R & D to China, the main reason being they find difficulties recruiting engineers. Why? Because engineers are lowly paid here in Singapore, with new graduates and the employed engineers leaving in droves to better paid jobs in other industries.
So low pay and high costs would lead to job loss when Companies relocate overseas. The equation is wrong - Govt depress wages but allow costs to escalate, thus do not protect jobs.
Perhaps the Govt has already given up manufacturing, and permit this industry to die a slow death.
The Sin industries are a better, faster and richer way to increase GDP growth.
Also, how long could a country sustain its GDP growth based on selling State lands for property development. Perhaps there is an Agenda behind, with people so busy working to service their millions dollar homes, they have no time to think about politics, thus leading to easy governance, and to even more security at the polls to continue ruling the country.

Tan Kin Lian said...


I am aware of the points that you have raised, but do not agree with your views.

In many cases, the managers are also foreigners. The benefit to the coffee shop and the HDB flat owners from having more foreigners in Singapore does not commensurate with the negative impacts.

I also do not forget that you have been stalking me in my Facebook, and your goal is to attack me where you can - especially if my points appear to be critical of current government policy. You have also made unwarranted personal attacks on me - calling me "simple minded". What gives you this right to be so arrogant?

I do not welcome this type of behavior. So, you can expect your future comments to be rejected.

C H Yak said...

@ Part 1 - "Professor Lim recommends a "shock" approach (50% increase in wages low income earners in 3 years) to snap us out of this vicious cycle because he sees Singapore nearly reaching a dangerous situation unless we do something."...
I think he should know very well : "How come with all the NWC recommendations I made for pay increase every year, our low wage earners' wages still so lowly paid? ********" " I am already 80 years old " ... "How long more you need me to wait ... ?" No wonder he gave up and pass it to another Prof."... Many years ago, I suggested they might as well dismantle an "obsolete" NWC board. LOL.

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