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.
3 comments:
Are you sure that he is so "simple minded."
He is so clever to "push away" the problem, and you have to explanin for him, and he is the least concern as to whether you can take the bus or not... It is a matter of "option" lah.
They are so clever in bring up "simple" solutions and yet all of us, or 60 percent, have voted for them to continue with the "simple mind" solution.
What do you think.
Accidentally deleted a post by Anon. Apologies. Here is a repost of the deleted post.
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@"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."
I believe that this has not always been the case in Singapore.
Previously wages of foreigners working in Singapore were subject to CPF contributions. Like Singaporeans then, they were only allowed to make withdrawals upon reaching 55. If they wished to make earlier withdrawals, they had to fulfil various requirements, including quitting their job, leaving Singapore, and promising never ever to work or live in Singapore again.
It discouraged some foreigners from working here. It especially caused problems with the Malaysian government who did not believe that wages due to their citizens should be withheld for use by Singapore's government to further Singapore's national objectives. This was a point that was up repeatedly for negotiations with the various "packages of issues", including water supply, KTM land and airspace access, that caused much difficulties in bilateral relationships. It is only in recent years that significant progress has been made, although these issues still remain, in one form or another, on the discussion table.
The dropping of the CPF requirements for foreigners working in Singapore was enacted only in the early 2000's at the height of the dotcom, pharmaceutical, and globalisation craze. It was stated then that foreigners and their employers, upon agreement, can choose not to contribute to CPF.
I remember very clearly reading about this policy change on the front page of the Straits Times. My first thoughts then was:
"Thanks a lot. Now Singaporeans will have to cut their price EVEN further to keep their jobs. Tough love man... this is a government that really cares!!!"
And yes I'm old enough to remember the "25% + 25%" era. That was cut in 1985, I think, during the recession of the mid-80's. It became "20% + 20%" and it has been mostly downtrending since, with the employers portion dropping faster.
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My reply:
The “foreigners” of the 1980s were actually hardly seen as foreigners then. Most were Malaysians and many of them had the blue IC. The only true foreign labour that did not attract CPF were the low skilled labourers - and that too many were from Thailand and some from Indonesia.
When we had the 25-25 CPF rate, that pushed up labour costs up even for the Msians. In the long run of course it would be cheaper to get labour from Philippines, India, China etc.
When we were hit by the recession in 1985, the CPF rate was adjusted to 10% for employers, but the employee side remained 25%. That meant a 15% point drop in real wage for us then.
It took many donkey years for workers to see that 10% raised to the current 20%, and that too, the PAP and their big boy companies trumpeted and boasted that they were “helping” workers, in spite of their costs. Never mind that many of the MNCs and big companies were already making tons of money due to that 15% point wage cut.
One of the biggest impact the above had on workers was that many HDB dwellers suddenly found themselves short in CPF payment for their mortgage loan. That’s when HDB came up with the “brilliant” idea of allowing you to lower your monthly payment or suspend it totally for a certain period. That of course led to other bigger problems like interest being compounded upon the interest accrued, resulting in a bigger loan payment when you resume payment.
The above is just one example I can cite where PAP’s policies cause a chain of events that worsen things rather than help.
I clearly remember the above bcos I was involved in part of the national discussion to the above case. I was just a young punk then. So you could imagine how those big guys thought that I was less worthy of a person to listen to. Somehow I thought that for all their high rank and pay, they really could not see far. Sad to be proven right - decades later.
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