theonlinecitizen May 24, 2013

By Leong Sze Hian

Low wage share is OK?

I refer to the article “Lower wage share doesn’t mean wages are lower” (Straits Times, May 24).

Workers in Singapore better off than South Korea, Japan, Europe?

It states that “In fact, the average wage of workers between 2000 and 2009, adjusted for purchasing power across different currencies, was higher in Singapore than in South Korea, Japan and Europe, it said.

Further, real wages per Singapore worker grew by 1.4 per cent between 1992 and 2012, compared with -0.2 per cent in Germany, -0.1 per cent in Japan and 0.9 per cent in the US, the ministry added.”

This kind of comparison – not logical?

As a layman, in my opinion, you know what I think is wrong with the above and the (implied) conclusion that “lower wage share doesn’t mean wages are lower” (in Singapore) – the 3 countries used in the comparison all have much higher wages than Singapore, high minimum wage (which Singapore does not have) and much lower income gap than Singapore, which has one of the highest Gini in the world.

Allow me to explain this with a practical example. The lowest paid worker in Singapore is about $800 a month (and we have so many low-wage workers).

In contrast, the typical lowest wage worker in the 3 countries are generally say at least 3 times more. So, if you earn $800 and your real wage growth was 1.4 per cent per annum for the last 12 years – you are literally dying today and struggling to make ends meet.

Singaporeans better off than Germans, Japanese and Americans?

So, how on earth can we come to the conclusion that you are “better off” than workers in the 3 countries who say earn $2,400, but had -0.2 to 0.9 per cent real wage growth?

Moreover, these 3 countries have welfare, pensions, unemployment benefits, etc, that Singapore does not have. In other words, when workers in these countries have declining or low real wage growth, they get help because it is in the social system.

In Singapore, you are on a relative basis – more or less on your own to fend for yourself.

Average wage is misleading?

Also, using average wages can be quite misleading just like the recent accolade that Singapore is the richest country in the world by GDP per capita. Why don’t you try looking at the median and 20th percentile wages?

Parrot singing the same old song?

As to “A more meaningful discussion on how to raise wage levels in Singapore should thus focus on tangible measures such as ongoing efforts to raise productivity across the economy and policies to encourage employers to share their gains with employees” – the article in the Straits Times on the same day – “Productivity slides while labour costs soar 8.7%” – which said “Productivity fell 3.7 per cent in the first three months of the year, compared to the same period last year, in a downward trend that began at the end of 2011″ – may be the best self-rebuttal that singing the same song that wages can only go up with productivity when it has not worked for so many years already, is getting to be like a “parrot” that continuously spews the same meaningless words.

Let’s come back down to earth and look at the stark reality of the wage statistics in Singapore.

I refer to the article “Singapore’s economy must grow for pay to go up: PM Lee” (Straits Times, Apr 26).

It states that “Salaries remain a key issue for workers, said Prime Minister Lee Hsien Loong yesterday, recounting conversations he has been having with union leaders in the lead-up to Labour Day.

Wages can only go up with economic growth?

But for incomes to rise, the economy must grow, Mr Lee said, making clear the centrality of economic growth which has been disputed by some who are worried about foreign workers and inequality. “Everyone would like their lives to become better and one important way of doing that is to make sure your pay goes up, especially with low-income workers. And for the pay to go up, the economy has to grow.””

Let the numbers do the talking?

Let’s take a look at some wage statistics:

0.4% real median wage growth 2000 – 2012?

1) I estimate the real median wage growth (excluding employer CPF contribution) was only about 0.4 per cent per annum from 2000 to 2012 (“Real wage growth p.a. in 1990s was 16 times more than last 12 years?”, Mar 5)

0.1% 20th percentile real wage growth last decade?

2) 20th percentile of workers had only 0.1 per cent per annum real wage growth (excluding employer CPF contribution) for the last decade or so (“Lowest income had highest inflation & lowest pay rise?“, Feb 5)

4 of 8 occupational categories had near 0 basic wage growth?

3)Basic wage growth is estimated to be close to zero or negative for 4 out of the 8 occupational categories in Singapore, from 1999 to 2011 (“Workers’ rights: 12 years of near negative wage growth for almost all workers?”, Dec 9, 2012)

Negative real wage growth 2012, 2011, 2009, 2008?

4) Real median wage growth (excluding employer CPF contribution) was negative last year, in 2011, 2009, 2008 and only 0.5 per cent in 2010 (“Yet another year of negative real wage increase?”, Jan 31)

University & Polytechnic graduates starting pay in stagnation?

5) University and Polytechnic graduates’ real starting pay growth has been negative for at least the last five years or so (“Graduates’ real starting salaries minus 0.4% p.a. last 6 years?”, Mar 22 and “Polytechnic graduates’ real pay dropped 16%?”, Jan 10)

University graduates’ median starting pay declined by 10 per cent in real terms from 2007 to 2012 (“Entry-level pay stagnating because of inflation: Experts“, Straits Times, Apr 27)

Cleaners’ real pay decline 40%?

6) Cleaners’ pay has decreased in real terms by about 40 per cent in the last 12 years or so (“Cleaners’ pay: Wait “till kingdom come”?”, Mar 15)

GDP growth?

In contrast, GDP growth was about 5.9 per cent per annum, from 1999 to 2011

- 5.2 per cent per annum from 2000 to 2012

- 6.0 per cent per annum from 2002 to 2012

- 4.9 per cent per annum from 2008 to 2012

Pay will go up with economic growth?

So, if the above seems to be apparent that wages didn’t go up with GDP growth – do you think wages will grow in the future if GDP grows?

Lowest GDP growth in ASEAN?

By the way, Singapore had one of the lowest GDP growth in ASEAN last year, at just 1.3 per cent, compared to 5.0, 5.6, 6.2, 6.4 and 6.6 per cent, for Vietnam, Malaysia, Indonesia, Thailand and the Philippines, respectively.

High inflation?

Moreover, Singapore’s inflation rate “is one of the region’s highest” (“Singapore’s economy: Bashing the metal-bashers”, Economist, May 4).

Quagmire?

How do we get out of the quagmire of low growth, low wage growth, high inflation and low productivity?

74% want to leave job?

The “bonus” outlook for this year does not look very good too – “Amongst the 60 per cent of respondents who received bonuses this year, 74 per cent were dissatisfied with the payout.

26 per cent indicated their bonus had increased compared to last year. 33 per cent said their bonus remained the same, while 40 per cent reported receiving lower bonuses.

Among respondents who received bonuses, 75 per cent indicated they are harbouring intentions of leaving the company” (“74% of S’poreans unhappy with bonus payout: survey“, Channel NewsAsia, May 6)

20th percentile households’ income grew 15% since 2000?

In contrast to the above stark statistics, the Ministry of Finance in its reply “Social cohesion not left to market forces” (Straits Times forum, May 22) to PAUL Chan Poh Hoi’s letter “Rising inequality may not lift all boats” (Straits Times forum, May 16), said “However, his bleak portrayal of incomes over the last decade or two was inaccurate.

The median Singaporean household has seen income per member grow by 30 per cent since 2000 after adjusting for inflation. Households at the 20th income percentile experienced 15 per cent growth in real incomes. They have seen much greater gains since 1990.

Neither has there been a “price tsunami” since 1990. Consumer price index inflation in Singapore has averaged 2 per cent per year since then, below global inflation of 9 per cent.”

Does “since 2000″ mean from 2000 to now? If it is, then the annualised increase is only 2.2 and 1.2 per cent for the median and 20th percentile respectively, from 2000 to 2012.

To put this into perspective, a family earning $1,000 in 2000 would only be earning $1,154 in 2012 in real terms- big deal right!

Including employer CPF contribution?

I believe the statistics cited are for income including employer CPF contribution and could it also possibly be that the number of working members per house has increased, particularly for lower-income households, or that household size may have been declining ?

Why not give also the statistics for per working housing member too, instead of just per household member, as well as per household?

In this connection, let’s take a look at the Departmentbof Statistics’ Key Household Income Trends 2012,

Lowest 10%’s real income grew 0.7% per annum last decade?

The 1st to 10th decile’s real Average Monthly Household Income from Work Per Household Member Among Resident Employed Households, grew by only about 1.1 per cent per annum from 2007 to 2012.

From 2002 to 2007, the real income growth for this group was onlyabout 0.3 per cent per annum.

So, does it mean that the real income growth for the last decade was only about 0.7 per cent per annum?

HDB 1 & 2-room’s real income grew 0.55% p.a. last decade?

For HDB 1 and 2-room flats, the real growth was only about 0.3 and 0.8 per cent per annum, from 2002 to 2007 and 2007 to 2012, respectively.

So, their real income growth was only about 0.55 per cent per annum for the last decade.

This group comprise 4.7 per cent or 54,144 households out of the total 1,152,000 households.

200,000 households don’t earn much?

Resident Households by Monthly Household Income from Work excluding Employer CPF Contributions, was 3.2, 7.0 and 7.3 per cent of total households, for income below $1,000, $1,000 to $1,999 and $2,000 to $2,999, respectively.

Does this mean that there were about 201,600 households (36,864 + 80,600 + 84,096) earning below $3,000.

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I refer to the article “Care for lower-income in times of slowdown: Chan Chun Sing” (Channel NewsAsia, Feb 8).

Slow-down in foreign labour?

It states that “the White Paper has proposed to slow down the intake of foreign labour and new citizens, not just bringing in fewer immigrants each year, but allowing more time for adjustment.”

Since The growth in foreign employment was 70,400 in 2012, and The growth rate of non-residents in the total labour force from 2011 to 2012 was 7.4 per cent, which is still much higher than that for residents at 1.9 per cent, how can we say that “the White Paper has proposed to slow down the intake of foreign labour” when the White Paper says that the current 1.49 million foreigners is projected to grow by up to 1.9 million in just seven years ‘ time?

Moreover, how can the increase in the intake of permanent residents (PRs) from 27,521
in 2011, to 30,000 a year in the future be a slow-down?

Slow-down in new citizens?

Also, how can we say that “the White Paper has proposed to slow down the intake of new citizens”, when there were only 15,777 new citizens in 2011 versus the White Paper’s projection of up to 25,000 new citizens a year in the future?

Slower growth means negative real income growth for low-income?

As to “”Growth will give us a better chance to help people to improve their lives over time. Growing slower does not mean we will have a more equal society. In fact if we grow below a certain rate, the low-income of our society actually suffers negative income growth in real terms”, how do we explain the fact that despite our growth focused strategies over the last decade, the 20th percentile of workers only had a real gross wage growth of 0.1 per cent per annum in the last decade?

Helping lower-income?

With regard to “Mr Chan also urged Singaporeans to care for the lower income groups during times of a slowdown in growth or no growth.

Mr Chan elaborated: “We must imbue in our more successful ones the sense of responsibility to help the weaker ones in society. We must agree as a society that those who have the least must be given more help”, since the primary reason given for raising the GST was to help the poor, let’s look at what we are doing in this regard.

ComCare – only $104m

The sum allocated to the ComCare and Social Support Programme was only $104 million, and only $25 million for the Elderly and Disability Programme.

So, this $104 million – according to the CDCs’ annual report for FY2011, the number of applications for financial assistance was 72,700 for the whole year from 1 April 2011 to 31 March 2012 – had to be distributed to so many needy families who were successful in their applications. How much on the average did each family get?

People’s Association – $338m

The second largest component of expenditure in the Ministry of Community Development, Youth and Sports (MCYSS) was $338 million for the operating expenditure of the People’s Association (PA).

More help for lower-income in 2007?

When the GST rate was raised from 5% to 7% in July 2007, a household in the bottom 20% had to pay additional GST of $370 per year, but received an offset package of $910 per year, in addition to permanent benefits of $1,000 per year. (“Budget debate round-up speech“, Mar 2, 2011)

Less help now?

So, let’s see how much less lower-income families will get now.

It’s GST Cash of $250 and GST U-Save Rebate of $260 (1 and 2-room HDB) and no Medisave top-up if there are no family members age 65 and above.

Also, in the past, Medisave top-ups were given to those age 55 and above. So, why is the age now increased to 65 and above?

So, are lower-income families effectively getting much less now under the GST Voucher scheme, compared to the previous GST Offset Package?

Leong Sze Hian

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I refer to the article “Population projected at 6.9 million by 2030 with strong Singaporean core” (Channel NewsAsia, Jan 29).

6.9m by 2030

It states that “Singapore’s population could hit 6.9 million by 2030 – up from the current 5.3 million.”

Up to 6m by 2020?

According to the Population White Paper, “Singapore’s total population of residents and non- residents in 2020 is projected to be between 5.8 and 6 million, depending on our fertility trends, life expectancy, as well as our social and economic needs.

The resident population (comprising citizens and PRs) is projected to be 4 to 4.1 million, of which citizens alone will make up 3.5 to 3.6 million.”

Foreigners grow to 1.9m?

This means that the current 1.49 million foreigners is projected to grow up to 1.9 million in just seven years ‘ time.

So, what happened to the consistent rhetoric in recent years that the huge influx of foreigners will be curtailed?

More new citizens, new PRs continue to grow at same pace?

As to “The proposal is to take in 30,000 new permanent residents (PR) every year which will keep the PR population stable at about half a million. Then, from this pool, take in 15,000 to 25,000 new citizens each year, to stop the citizen population from shrinking”, what this means is that instead of curtailing the influx of new citizens, we are increasing it from the current 20,000 new citizens to as much as 25,000 a year.

Also, with regard to keeping new PRs “to about 30,000 each year currently. We plan to maintain the current pace”, means that we will not be curtailing the influx of PRs as well.

Do we need to keep growing?

The fundamental question that we may have to ask ourselves, may be why we need to keep growing the population?

The notion that we need more young people to support an aging population may not hold water, because Singapore unlike most developed countries spends very little on supporting the elderly, as we do not have pensions, universal healthcare or welfare for the elderly.

Even if we accept the argument that we need to grow the population in order to keep it from shrinking in the far distant future, shouldn’t we be focusing on the resident population, rather than the overall population to include foreigners? Why do we need to continue to increase the foreign population by so much?

Implications for Singaporeans?

The more important questions, arguably, may be what are the implications and outcomes for Singaporeans in terms of competition for jobs, depression of wages, rise in the cost of living, housing, healthcare, transport, etc?

Are we doing enough?

In this respect, for example, the white paper continues to make assumptions that productivity growth will be better, when clearly all the productivity enhancement schemes, funding, etc, have not worked. – “Up to 2020, if we can achieve 2% to 3% productivity growth per year (which is an ambitious stretch target)”

Another example is “We are upgrading the signalling systems of the North-South and East-West Lines to increase capacity on these lines by up to 20% during the peak period. When completed in stages from 2016, there will be 6 instead of 5 trains running every 10 minutes during peak periods, reducing the passenger load and shortening waiting times”.

So, starting from 2016 when the improvements will start to be completed in stages, how much less crowded is it going to get with one more train every 10 minutes during peak hours, with the population growing from 5.3 million now to six million in 2020?

Yet another example, may be to increase the number of acute hospital beds by 2,200 or 30 per cent. Considering that the increase in the total number of hospital beds over the last decade or so was zero, how can 2,200 more beds by 2020 be enough to cater for the 700,000 increase in the population?

No new initiatives?

There seems to be no new substantive initiatives to address Singaporeans’ most pressing problems like negative real median wage increase over the last five years or so, and the relentless rise in the cost of living, particularly for basic goods and services.

There appears to be much of the same old stuff, like life-long upgrading, Workfare, job-matching and placement programmes, etc.

No projection of future revenues?

What is perhaps sorely lacking is that there is no projection of any increase in government revenues or budget surpluses, and how some of these may be channeled towards mitigating the adverse impact of our continuing “pro-foreigner” growth policies, particularly for lower-income Singaporeans?

Review policies?

The least that we can try to do, may be to review policies such as the removal of the 30 per cent water conversation tax, decoupling the principle of increasing property taxes with increasing rents for owner-occupied homes, freezing transport fares as long as operators continue to make hefty profits, maintaining Service and Conservancy Charges (S & CC) for town councils that have operating or accumulated surpluses, capping the maximum healthcare fees payable when one undergoes treatment in subsidised wards, etc.

I wonder what the outcome of the Punggol-East by-election may have been like, if the release of population white paper had not been delayed.

Leong Sze Hian

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I refer to the report “Real growth in household incomes over past 5 years despite higher inflation: MOF” (Channel NewsAsia, Dec 26).

Real incomes have risen?

According to the the Ministry of Finance’s second issue of the Singapore Public Sector Outcomes Review (SPOR),  “Real incomes have risen in the past five years, driven by good economic growth and a tight labour market.”

However, the above is based on “Real Median Monthly Household Income per Household Member (including Employer CPF Contributions) among Resident Employed Households (in 2009 dollars)”. What is the outcome, if we use the income excluding Employer CPF Contributions?

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Transitioning will be organising a forum on 29 Dec (Sat) at 2.30pm at NVPC seminar room entitled:-

 Do we need a 6-million population?

Our current online poll has strongly  indicated that 87% of the 1800 respondents do not approve of a 6-million population in our country.

Hear  from our esteemed group of speakers: Dr Vincent Wijey of SDP, Mr Leong Sze Hian – financial wizard, Mr Kumaran  Pillay Managing Editor of TOC,  Mr Naztyn of NSP who is also an accountant and Corinna Lim current Executive Director of AWARE debate on the issue.

Our Prime Minister has indicated that for Singapore to grow we will be targetting for a population of six million people.

One in three workers here is now a foreigner and the recent PRC Chinese SMRT strike has shown that there is a problem  with integration and our unions are also unable to cope with the foreign labour issue.

Our current population is 5.3 million and we are already bursting at the seams with over crowded trains and bottled necked roads.

More seriously, there is no proper blueprint on why the government needs a population of six million people except for the rhetoria of low birth rate and economic growth.

Are we also properly prepared to bring in another 700, 000 people through the immigration channel?

Will there be enough jobs for them? Will Singaporeans be sacrificed again to make way for other foreigners to ply their trade here in the name of population growth?

Transitioning has seen many Singaporeans whose jobs were snatched away from incoming foreign  professionals for the past few years.

Will there be enough housing units for these new immigrants?

Will their influx  to push up our property market to new high in the near future?

The government will also be releasing a White paper on the population growth and Parliament will open early next year to debate on the issue.

If you are keen to participate in this year-end forum on  population growth by artificial means, be the first to sign up by emailing us at gilbert@transitioning.org.

Simply email us your name and contact number and we will revert to you soonest.

Registration is on first come  first served basis till seats run out and we have limited seats left.

Thanks and see you soon!

Have a good holiday ahead!

Gilbert Goh

President

Transitioning – unemployment support services

NB: NVPC is located at 6 Eu Tong Sen Street #04-88 The Central S(059817). Nearest MRT is Clarke Quay. Please use the shopping lift up.

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I refer to the article “Li Keqiang: Growing GDP without growing personal incomes is useless” (TR Emeritus, Dec 22).

It states that “Vice Premier Li Keqiang again emphasized on Dec. 19 that only by reform can China realize real development. Vice Premier Li reiterated that the government should benefit the people through reform, which is the largest dividend for China. If the growth of GDP cannot drive up people’s income, then even if GDP is at its highest, it will be useless.”

7.1% annual GDP growth

According to the Department of Statistics, Singapore’s annual GDP at current market prices grew from $143.9 to $326.8 billion, from 1999 to 2011.

This is an annual growth rate of 7.1 per cent over the last 12 years.

12 years of near negative real basic wage growth for almost all workers?

Against this, in the last 12 years or so, there has been near negative real basic wage growth for almost all workers. (“Workers’ rights: 12 years of near negative wage growth for almost all workers?”, Dec 9)

We urgently need to reexamine our policies which have delivered good economic growth, but almost no increase in personal incomes.

Li Keqiang’s remarks underscores the reality that such an outcome is “useless”.

So, unless we start to do what Li Keqiang is saying, the future of Singaporeans may be a bleak one.

Leong Sze Hian

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I refer to the Editorial “Tharman: Firms have difficulties finding S’porean workers. Really?” (TR Emeritus, Aug 11).

Yearbook of Statistics 2012

Let’s take a look at the Department of Statistics' Yearbook of Statistics 2012, to see if there are any indicative clues as to why firms have difficulties finding Singaporean workers, or rather why Singaporeans may be having difficulties getting firms to hire them?

Less CPF contributors?

The percentage of “CPF Contributors in Labour Force” has been declining every year, from 57.0 per cent in 2007 to 53.6 per cent in 2011.

This may mean that despite good GDP growth over the years, firms may prefer to hire foreigners because they save 17 per cent on the employer’s CPF contribution.

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I refer to the article “Pace of inflation quickens again” (Today, Jul 24).http://www.todayonline.com/Singapore/EDC120724-0000044/Pace-of-inflation-quickens-again

Inflation increase to 5.3%

It states that “Year-on-year, inflation last month was 5.3 per cent, compared to 5 per cent in May … in the first six months of the year, households in the lowest 20 per cent income group were hardest hit by inflation, compared to the other income groups.

Lowest 20% income group hardest hit at 6.3%

While the CPI for all items averaged 5.1 per cent for all households during this period, this group experienced a 6.3-per-cent increase in prices.

In comparison, the middle- and high-income households experienced price increase averaging 5.2 per cent and 4.6 per cent, respectively”.

No impact on such households as they own homes?

As to “In a statement, the department said: “However, these overall differences between the groups were attributable to higher imputed rentals on owner-occupied accommodation, which have no impact on the actual cash expenditure of such households as they own their homes”.

It added: “Excluding these imputed rentals on owner-occupied accommodation the CPI increases were comparable for the three income groups, at 4.1 per cent, 3.9 per cent and 4.0 per cent for the lowest 20 per cent, middle 60 per cent and highest 20 per cent income groups, respectively”.

Don’t forget HDB rental flats?

DBS economist Irvin Seah noted that some lower-income families – those who cannot afford to own homes and have to resort to renting – would have felt the full brunt of inflation”, I believe most of the over 50,000 HDB rental flats’ tenants may be lower-income families. There may also be thousands of lower-income families in Interim Housing, renting a room in the HDB open market, etc.

Low income also had HDB rentals increased?

In this regard, since HDB rentals’ “rates are pegged at HDB market rent and are subject to changes”http://www.hdb.gov.sg/fi10/fi10323p.nsf/w/RentDirectHDBRentDeposit?OpenDocument#FirstTimer, tenants may be impacted by higher inflation and higher market rents.

Moreover, the HDB had changed its policy a few years ago to increase the 1 and 2-room rentals from $26 and $44 to as much as $205 and $275, respectively, for those with household income between $801 to $1,500, 2nd-timers, after the initial 2-year rental period, etc.

Prior to this policy change, I understand that the rental was simply $26 or $44, as long as a household’s income was not more than $1,500, without any increase for 2nd-timers, income over $800, etc.

How can a family earning $801 afford the increased rental of up to $275, or for that matter a 2nd-timer family earning $800 or less having to pay increased rental of up to $165?

Since a 1st-timer is generally defined as one who has never owned a HDB flat, I believe many rental tenants ended up paying more.

Such policy changes cause financial stress to lower-income families.

Clearly, the lowest-income group need more help, with rising utilitiy bills as well.

So, lets look at one example of recent news about how they are being helped.

Help based on those in need, or money donated?

South West Community Development Council (CDC) will be increasing the
number of needy families receiving $50 a month in food rations under its Food West programme, from 320 last year, to 550 families from 1 July.

The bigger group of beneficiaries this year is the result of the
longer list of companies that are contributing this year.

Whilst I applaud the CDC’s efforts and the generosity of the
contributing companies, this may highlight the issue of whether the
number of families helped, should be based on need, rather than how
much donations the CDC can get?

Why compete for charity dollars?

CDCs are also, in a way, competing with Voluntary Welfare
Organisations (VWOs) for charity dollars.

Why not use Budget surpluses?

With a Budget surplus of $2.3 billion last year, and a net Budget
surplus of $8.2 billion over the last six years, why do the CDCs have
to embark on its almost never-ending quest for more donations?

Leong Sze Hian

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