Petir: Towards higher wages, higher productivity for all?

I refer to the Editorial “Towards higher wages, higher productivity for all”, by Minister in the Prime Minister’s Office, Lim Swee Say, in the May/June 2012 issue of Petir.

Learning the wrong lesson from the US?

Still say higher productivity means higher wages?

It states that “Everywhere in the world, workers want higher wages, employers want lower business costs. Having both is only possible with higher productivity and fairer sharing of gains. But this is not easily done.

In Greece, wages have gone up faster than productivity. The country is now in a deep recession. Unemployment rate exceeds 20 per cent. Youth unemployment rate is close to 40 per cent.In the United States, it is the opposite. After adjusting for inflation, median wages grew by just 11 per cent from 1973

to 2011, much lower than productivity gain of 80 per cent. Wage stagnation at the middle coupled with high unemployment has led to the recent Occupy Movement and the cries of “99 per cent versus 1 per cent”.

There are some lessons we can draw from these countries. High wage increases not supported by productivity gains will lead to high unemployment. On the other hand, high productivity gains without a fair sharing of gains will lead to unease and unrest.”

I find the above statement rather puzzling – isn’t it rather obvious that the starking lesson we can draw from the United States, may be that higher productivity does not necessarily lead to higher real wages. Isn’t this somewhat of a self-contradiction to the consistent rhetoric that wages can only go up with higher productivity?

In this regard, why are we still saying “We need to bring up productivity gain to at least 2 per cent, if not 3 per cent a year, so that there will be more to share”?

Declining productivity?

In this connection, according to the latest the Ministry of Manpower’s (MOM) Labour Market First Quarter Report 2012, released on 15 June 2012.,

labour productivity contracted by 2.2% over the year in the first quarter of 2012, after declining by 0.5% in the previous quarter.

Ask employers not to employ foreign workers, but keep letting in more?

As to “Employers should upgrade skills and jobs, not just rely on more foreign workers”, why do we continue to have liberal foreign labour policies which resulted in local employment growing by 36,600 in 2011, against foreign employment growing by 84,800.

In fact, local employment growth declined by 35 per cent, from 56,200 in 2010. And of these, how many “locals” were Singaporeans?

In contrast, foreign employment growth increased by 42 per cent, from 59,700 in 2010.

Examples of productivity-led wage increase?

With regard to “Some people do not see any scope for improving the productivity of low-wage workers. I beg to differ.

In hospitality, a hotel receptionist who previously earned $1,200 a month, improved his skills in housekeeping and F&B. As a worker with three skills, he could be deployed more flexibly by the hotel, and received a wage increase of 50 per cent.

In retail, NTUC FairPrice upgraded service quality and productivity. With more productivity gains to share, lowerwage workers enjoyed a built-in wage increase of up to 15.8 per cent.

In manufacturing, workers in a food factory learnt to operate a packing machine instead of doing the work manually. Their wages went up by more than 10 per cent.

In security, with new tools and technology, a security firm now offers staff the flexibility to either work fewer days with the same pay, or work the same number of days with more pay.

In cleaning, with labour-saving devices, 2,000 conservancy cleaners outsourced by PAP town councils now earn at least $1,000, with more improvements to come.

These are not isolated examples. Under the Inclusive Growth Programme (IGP) spearheaded by the NTUC’s Employment and Employability Institute (e2i), thousands of workers in hundreds of companies have upgraded their skills, enhanced their productivity and increased their wages. By 2015, IGP alone will reach

out to 100,000 workers”, most of the above shining examples may be anectodal and isolated examples.

What we need are statistics, rather than examples.

So, for example, according to the Labour Market First Quarter Report 2012, workers in the Security and Investigative industry, had the highest Average Weekly Paid Overtime Hours, at 14.5 hours, amongst all workers. So, are most security workers being paid more, or simply working more overtime hours, such that as I understand it their per hour wage may still on the average be around $5, with typical 72 hour work weeks.

Another example, is that of cleaners.

Wages fell from $1,277 to $750?

According to the article “Mindset change needed to help low-wage workers” (Straits Times, Feb 7), in 2000, the median gross wage for cleaners and labourers was $1,277. By 2010, it fell to $960. For cleaners of industrial buildings, the median gross wage is even lower, at around $600 in 2010.

Real wage fell 38% in 10 years?

After accounting for inflation for the last decade or so, I estimate that in year 2000 dollars, the average $1,000 pay of town council cleaners is equivalent to only about $787 in 2000 dollars. So, what this may mean is that the real pay of cleaners has declined by about 38 per cent in the last 10 years or so.

Another example, is part-time workers? Will employers like NTUC FairPrice increase their current pay, which I understand is about $5 an hour?

Inclusive Growth Programme working?

Finally, in respect of the Inclusive Growth Programme (IGP), why is it that the latest IGP update, has no break-down of the following statistics?

A programme to improve the skills of low-wage workers and help them earn better pay has benefited some 8,000 workers so far”. – How many Singaporeans are earning a monthly wage of $1,700 and below?

What percentage of the total do the 8,000 represent?

How much wage increase did these 8,000 workers get?

What percentage of all Singaporean workers earning $1,700 and below, had an increase in wages which resulted in a real wage increase last year, given that the median real wage increase last year was – 0.8 per cent?


Leong Sze Hian

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.