By 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.”
Last week, the former chief of the National Wage Council had suggested raising the monthly salaries of workers who earn S$1,500 or less by 50 per cent over three years. He also suggested freezing wages of those who earn over S$15,000 a month for the same period simultaneously.
However, his suggestion has come under fire by the government for oversimplifying the issue and that his proposal contains serious hidden risks for the Singapore economy such as structural unemployment and higher cost of living.
The latest minister to have spoken out against Professor Lim’s plan is Minister of State for Manpower (MOM) and National Development (MND) Tan Chuan-Jin.
Speaking at an MOM workplan seminar on Tuesday, he said it would take more than “wage shock therapy” to close the income gap in Singapore.
Tan acknowledged that the low wages earned by workers in some sectors are not acceptable and assured that his ministry intends to uplift the wages of Singaporean workers.
“We intend to address this robustly but we need to do so sensibly so that we do not adversely tilt our economy over. That can happen, and when that happens, it affects all Singapore workers,” Tan said.
“Economic restructuring does not come just by raising wages alone. It requires a range of reforms and initiatives to boost productivity and to increase the quality of our workforce … and to make sure we move up the value-chain in the goods and services that we produce, and the jobs we create,” he added.
Earlier this week, Labour chief Lim Swee Say labelled the wage shock plan “very risky” because it would push up wages of low-wage workers but a corresponding increase in skill, productivity or employability may not follow suit.
He also added that such an increase for low-wage workers would result in a higher cost of living as businesses passed on higher costs to consumers.
Transport Minister Lui Tuck Yew chimed in and urged caution and patience in understanding the consequences of Lim’s suggestion.
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