Economist Lim Chong Yah recently floated a shock proposal to help tackle Singapore’s growing income gap.
Under his suggested “wage shock” plan, the former chairman of the National Wage Council from 1972 to 2001 and professor at NTU’s School of Humanities & Social Sciences, suggested raising the monthly salaries of workers who earn S$1,500 or less by 50 per cent over three years. At the same time, the wages of those who over S$15,000 a month would be freezed for the same period.
National Trades Union Congress secretary-general Lim Swee Say labeled it a “very risky” move 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.
Managers of small and medium-sized enterprises (SMEs) also criticised Lim’s suggestions, saying they were too extreme. Such a move could lead to the mass closure of SMEs as the companies may not be able to bear the cost of the wage increments, they said.
UNION LEADERS SAY…
However, union leaders welcomed Lim’s proposal, saying it was “a real morale booster” and “long overdue”.
A wage shock move will not work, you need a balanced approach
When you introduced Minimum sum salary by let’s say funding $1 for everyone below $1k salary, those in the income bracket of $1k-$2k will also be affected, raising business costs indirectly, unless businesses are able to recover this cost thru productivity or innovations, it will not make sense unless the government comes in to fulfill these goals, ie provide free trainning to upgrade their skills for higher productivity, which in turn brings higher returns for the businesses to offset it. So the costs maybe higher than it seems due to implied costs, but it will ensure the standard of living for Singaporeans will be improved.
– Contributed by Oogle.