2012 - Spotlight was on wages and income inequality

As we look back at 2012, we cannot deny that it was a year dominated by the debate on wages.

The year started with the Ministerial Salary Review Committee's recommendations to benchmark the entry MR4 Minister’s salary to the median income of the top 1,000 earners who are Singapore Citizens but with a 40% discount. Parliament accepted the recommendations of this Committee, and the salary of an entry level Minister is now set at $1.1 million, while the Prime Minister draws $2.2 million, including over 20 months bonus.

Then in February 2012, the Finance Minister, also addressed the topic of income growth in this year's Budget debate, and said that income growth has got to he tied to growth in productivity, innovation and skills growth. But economists (such as this one HERE), suggests that it's distribution, not production that has failed us over the last 30 or 40 years.
"The haves get more and more, and the have nots get less and less even though overall output is rising. And to make it worse, those in power have successfuly promoted the idea that intervening to ensure that workers get to keep the share of output they've earned will harm our long-run growth prospects."
As if to highlight the unfair distribution of income to the most vulnerable in Singapore, over 100 Bangladeshi workers went on strike in February, over unpaid, outstanding salaries.

In March 2012, in response to Deputy Prime Minister Tharman Shanmugaratnam remark that a household earning $1,000 a month can own a flat, The Straits Times featured a story of Mr Mohammad Charlie Jasni, an odd-job labourer who earns $850 a month, who will be moving with his family into a new two-room HDB flat in Punggol by the end of the year.  I had then exclaimed, 'I really don't know where the pride is, in trumpeting Charlie got his 2-room flat, when in today's Singapore, he's still only earning $850.'

On 3rd April, the DPM Tharman, speaking about a need for societal reformation at National University of Singapore's Students' Political Association's Ministerial Forum said, "We need a society where customers treat blue-collar workers with respect. And that requires some attitudinal change. A society where the mother in law is quite happy when the daughter says that, 'I'm going out with a waiter'. That's what it is. Because it is a good job, pays well, he's enterprising, and he's going to do well."

Not long after the DPM highlighted the plight of blue-collar workers in Singapore, who may not be able to start a family because of their low wages, on 9 April 2012, Professor Lim Chong Yah, former head boncho of National Wages Council, proposed a wage revolution.

Prof Lim's wage shock therapy, which is a bold 3-year initiative to freeze wages for top earners while raising incomes for the poorest by a huge quantum - 15 per cent in each of the first two years and 20 per cent in the last year, made a lot of Singaporeans realise that something is very wrong about how incomes are distributed here.
"...if you want to understand what’s happening to income distribution in the 21st century economy, you need to stop talking so much about skills, and start talking much more about profits and who owns the capital.Mea culpa: I myself didn’t grasp this until recently. But it’s really crucial." ~Paul Krugman
As a response to Prof Lim's wage revolution therapy, and while debate was raging if blue collar workers can survive in our economic environment on very low salaries - with some only earning $750 per month working full-time -  the PAP Government insisted that salary increases must be tied to productivity growth, and continued to discuss the pros and cons of increasing the salaries for such labourers.

While the PAP Government was putting forth various conditions before which the wages of citizens with lower-income could be raised, graft cases involving high-profile public servants were being exposed - flying in the face of the PAP Government's mantra that it is important to pay high-ranking public officers high salaries to keep graft at bay.

Even as Prof Lim's proposal was being criticised as unsustainable and risky by those that are in power, Prof Lim made another proposal in October, dubbed 'Shock Therapy II', where he again proposed wage freeze for top earners, and minimum wage for bottom earners.

The strike by the 177 SMRT drivers in November 2012, perhaps, put the spotlight squarely on lack of bargaining powers lower-income and contract workers have in Singapore. Of those that staged a strike over wage disputes, 29 were repatriated back to China, one was sentenced to 6-weeks jail, and another 5 have been charged for staging an 'illegal' strike, but are claiming trial.

At this time, the Union chief, Lim Swee Say, after meeting with the business community, spoke up very strongly against the demands of the strikers saying that the Union in Singapore is uncomfortable about supporting equal pay for equal work. The Union will instead support fair and reasonable wages, he said.

But how do you determine what are fair and reasonable wages? If you don't pay equally for equal work, won't you disadvantage the Singaporean workers, for employers will be tempted to take the cheaper alternative - who are the foreign workers? If that happens, the wages of Singaporean workers will stagnate (or grow at a slower pace) because they will be pegged to the lower-earning foreign workers. Singapore must be the only country in the world where the Union sides with the employers to disadvantage the workers.

To highlight the inequality of income distribution, and the widening gap between the rich and poor in Singapore, a Government publication highlighted in end December that Singapore's Gini Coefficient has not changed much, and remains close to the often used dangerous level of 0.5.

I did a flash poll on my Facebook recently as to who my friends would consider to be 'Singaporean of the Year 2012'. Most, 32 percent of those that took the poll, voted for Professor Lim Chong Yah, for getting the debate on wage reforms going.
I agree. Prof Lim the former architect of Singapore's wage system recognised that the current wage system in Singapore is not pragmatic, and pushes the burden to the most vulnerable in society. Those who may not even have bargaining power to ask for what should be rightfully theirs. Prof Lim did not stop at recognising this unfairness, but also put forth two bold proposals. For that he must be lauded.

This Government of the People's Action Party, which has pegged the salaries of its high-ranking officers, Ministers and President to the salaries of the highest earners, has irresponsibly let the wages of the most vulnerable stagnate at the very bottom, by refusing to take decisive actions.

Will we see light at the end of the tunnel for one of the most hardworking people in the whole world next year, or will their real incomes continue to see negative (or very minimal growth) in 2013?

Let's be hopeful though as we venture into the new year.

Happy 2013 everyone.


Unknown said…
If Mr Thaman wants our society to treat blue-collar workers with respect, then we should pay them respectable wages otherwise parents will never be convinced. The root cause of intense pressures that our children face in schools is getting that university degree which parents perceive as a passport to well paying white-collar jobs.