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