Wage shock therapy ‘very risky’: Lim Swee Say

National Trades Union Congress (NTUC) secretary-general Lim Swee Say on Friday said raising wages for the lower-income strata in Singapore would be a “very risky” move, reported The Straits Times.
 
Speaking at a press conference on Friday evening, Lim was commenting on a proposal floated by economist Lim Chong Yah earlier this week, saying that people who welcomed it may not be aware of the potential costs involved.
 
Professor Lim, who chaired the National Wages Council from 1972 to 2001, said on Monday that raising the monthly salaries of workers who earn $1,500 or less by 50 per cent over three years, while freezing the wages of those who earn monthly incomes of $15,000 or more for the same period, could help to close Singapore’s growing income gap.
 
“This approach is very risky,” said the NTUC chief. “What is at stake are jobs and structural unemployment. You can push up the wages of low-wage workers by 50 per cent in three years, but you cannot improve his skill, his productivity, his employability by 50 per cent in three years,” he was quoted as saying.
 
The broadsheet reported that union leaders welcomed Prof Lim’s proposal, saying it was “a real morale booster” and “long overdue”, but NTUC’s Lim said in response, “If you can up the wages of workers by 50 per cent with zero downside, I think union leaders, of course, will welcome it.
 
“But I also think that there are many union leaders who understand that nothing comes free so there must be some downside,” he added.
 
The Straits Times also reported that Lim was not convinced that wages could be raised in the way Prof Lim suggested without resulting in other workers and consumers having to compensate the amount involved.
 
He in fact reportedly warned that if productivity did not rise to match the 50 per cent increase in wages, workers would suffer from job losses and structural unemployment.

Assuming a base pay of $1,000 per month and a group of 400,000 low-wage workers, Lim estimated that the total amount involved in the proposed wage hike would come up to a hefty $4.56 billion.
 
If the low-wage workers were from domestic sectors such as cleaning, for example, the increase in wages would also result in a higher cost of living for residents here — by means of conservancy charges, for instance, added Lim.
 
According to the paper, Lim stressed that he was speaking wearing the hat of the NTUC secretary-general, not in his capacity as Minister in the Prime Minister’s office, and was not issuing a rebuttal to Prof Lim’s proposal.
 
He also reportedly pointed out that in today’s world, jobs and manpower are significantly more mobile than they were three decades ago.
 
“In a highly globalised world, a slight mistake can lead to serious repercussions,” he said.

What do you think -- do you believe Professor Lim's "wage shock therapy" will work?

Do you believe his proposal to increase wages of low-income workers by 50 per cent over three years will have no downsides?

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