Obviously, there is a problem. The problem is not just the Chinese National drivers' pay. It is not even about their strike. Those are just symptoms. In fact, it is not just about SMRT. The root problem lies within the PAP policies themselves. The policies which affect our economy
In this post, I would like to highlight one of the most disastrous policies of the 1980s by PAP, which till today, still has effect on companies' productivity and our cost of living. I am referring to the high CPF contribution by both employer and employee during the 1980s. Here is that post I made - Lim Chong Yah echoes PAP's "heads I win, tails you lose" hogwash
Doesn't Prof Lim sound exactly like the PAPpy guys taking all the credit but avoiding all the liabilities?
With the above point made, in my opinion, I feel that there is some degree of truth what Prof Lim claims. It is true that the regional economics affected Singapore. However, I feel that his shock therapy then aggravated the situation further.
One of the most worrying factors in the shock therapy then was the high contribution of CPF, both for the employer and employee. It was 25% each. This meant that while the employee was seeing only 75% of his pay as cash he could spend, the employer saw his wage costs as 125% of what his workers' gross pay is.
That's a 50% point gap in wages that gets locked which does not get to be pumped back into the economy! A pure waste of finance resources, if one were to think that this is the result of a recommendation from a renowned economist!
This was applicable to all wages and not just the base pay. Hence, if there is a three month bonus, the employee effectively gets only 2.25 months in cash, while the employer sees it as 3.75 months wage costs.
This anomaly was one of the first things that was to be addressed when the recession hit us in the late 1980s. The CPF contribution rates were reduced drastically.
The 25% contribution for both employer and employee then (yes, it was 25/25 in the 1980s for those who are too young to know that) was the start of the spiraling high cost of living which we still are facing today.
The above caused companies' cost to go up, while workers' buying power to go down. Since costs went up, businesses also had to up their price, further eroding consumers' purchasing power - which in turn, caused workers to ask more, putting further pressure on wage costs.
There goes the vicious cycle which even carries on till today. Isn't the most common reason given by employers for their preference to hire foreigners today, is that they are cheaper to employ?
Prof Lim Chong Yah should be brave. If he wants to take the credit for the boom times (which worked very successfully in the early years), he also has to take the flak for the recession he helped aggravate.
But then again, Prof Lim, being a die-hard PAP supporter from the PAP camp, thinks like the PAPpies themselves. Bathe in the glory when your plan works, blame the economy when it fails.
My comments and conclusion -
The SMRT strike incident is just a symptom of a larger problem. The strike itself is about pay dispute. On one hand, the company is trying to save on costs. But that means that this group of drivers had to be paid less. In view of the fact that other groups of drivers had more pay, the dispute took a turn for the worse.
But this symptom hides a bigger problem we have. The problem that was caused by the PAPpies themselves. The early policy of having high contribution CPF contribution for both employers and employees in the 1980s still has its effect today. It was because of this policy that puts Singapore workers' pay way above foreigners' pay, where the foreigners' wages are not subjected to the high CPF contributions. Isn't this the root cause that got SMRT (and many other companies) to hire cheap foreign labour? And in the case of SMRT, didn't these foreign workers compare their low wages to other groups that started the dispute?
Today, we do not have such a high contribution rate. But we can't reduce too much either. That's because if it is reduced too fast too soon, while it may help cut costs for employers and give employees more spending power, the CPF savings may not be enough for HDB dwellers to pay for the high cost of HDB flats. Ironically, the high cost of HDB flats is also due to yet other PAP's past policies!
Finally, as what was mentioned earlier, to have a million dollar salaried minister utter words a schoolboy could, makes nonsense about paying our ministers fat salaries. Lui is so simple minded, he can't see that the strike and pay dispute are symptoms and not the real problem itself. The real problem lies in the past (and present) policies of the PAP.