Singapore

Tackling income inequality should be Govt’s top priority

Our national productivity drive needs to start from the top. We currently have three very senior ministers advising the PM, three ministers in the Prime Minister’s Office—two of them without any portfolio—nine ministers of state and six parliamentary secretaries, most of whom are drawing multi-million dollar salaries. Does the prime minister of such a small country really need so many advisers and ministers assisting him?

This is my response to the Finance Minister’s Budget 2010 speech.

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Income inequality is one of the biggest challenges our nation faces. The median household income in 2009 was only 71 per cent of the average income, down from 74 per cent in 1999 ^{[see note 1]}. This means that the few very high income earners are pulling up the average, while the large number of lower income earners are pulling down the median. The share of wages in GDP has declined from 47 per cent in 2001 to 41 per cent in 2006 ^{[see note 2]}. The Gini coefficient–a measure of income inequality–rose from 0.436 in 1990 to 0.478 in 2009, indicating a widening income gap.

Increasing income inequality has been shown to coincide with higher divorce rates ^{[see note 3]}and crime rates ^{[see note 4]}, particularly property crime. Singapore’s wealthy elites can no longer afford to simply turn a blind eye to the plight of the poor, thinking it will not affect them–because it will, eventually.

Reducing income inequality should be the top priority of the government. This government needs to pay more than just lip service to the goal of ensuring that all Singaporeans benefit from economic growth.

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Low Thia Khiang: Don’t cut pay of workers who reach 60

This was a speech in Parliament on 11 March 2010 by MP for Hougang, Low Thia Khiang, during the Committee of Supply debate, on the budget for the Ministry of Manpower (MOM). Read other Workers’ Party speeches and statements at wp.sg.

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By 2012, the re-employment legislation will require employers to offer re-employment to workers reaching 62 years of age, up to age 65, and eventually to age 67. However, the Re-employment legislation will not replace the Retirement Act of 1999.

The Retirement Act allows an employer to reduce the wages of older employees up to 10% on or at any time after the employee attains 60 years of age.

The 10% pay cut at age 60 was recommended by the Tripartite Committee on the Extension of Retirement and the justification then was to address the problem of the seniority-based-wage system.

With the Government’s call to increase productivity and the progress made in wage restructuring from a seniority-based wage system to a performance-based wage system, I would like to call upon the Government to review the Retirement Act of 1999 by removing the wage reduction option given to employers.

A wage system that moves away from seniority elements and towards job worth and performance is more than adequate to ensure an older worker is paid based on the value of the job and his contribution instead of his seniority. Given that the performance-based wage system will improve the cost competitiveness and employability of older workers, we should remove the wage reduction anomaly from the Retirement Act as older workers would have been paid market rate in the run-up to age 62.

Moreover, the Tripartite Committee’s recommendation that employer’s CPF contribution rate for employees aged 60-65 years be reduced from 7.5% to 4% and from 5% to 4% for employees aged above 65 years is sufficient to make re-employment worthwhile for employers.

Sir, any provision in our labour laws to reduce the wages of older workers upon reaching re-employment age will dampen the zeal of an ageing society to continue working beyond retirement age.

By 2012, the re-employment legislation will require employers to offer re-employment to workers reaching 62 years of age, up to age 65, and eventually to age 67. However, the Re-employment legislation will not replace the Retirement Act of 1999.

The Retirement Act allows an employer to reduce the wages of older employees by up to 10 per cent on or at any time after the employee attains 60 years of age.

The 10 per cent pay cut at age 60 was recommended by the Tripartite Committee on the Extension of Retirement and the justification then was to address the problem of the seniority-based-wage system.

With the Government’s call to increase productivity and the progress made in wage restructuring from a seniority-based wage system to a performance-based wage system, I would like to call upon the Government to review the Retirement Act of 1999 by removing the wage reduction option given to employers.

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Low Thia Khiang: Give part-time and contract workers have good training opportunities

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As at June 2009, there were 87,400 resident employees on short term contracts of less than three months and 156,200 residents on part-time employment. About half of these employees are in the older age group and the majority of them have lower educational qualifications, with a gross monthly income of below $1,000.

I am of the view that the number in this category of employees would increase over time because companies want flexible manpower and to be able to respond faster to changing demand and cost variations as the business environment changes. Secondly, as our society matures with an increasing number of ageing employees, more people may prefer such a mode of employment, as seniors may not want to work full time.

Contract and part-time workers may not necessary be low wage and low productivity. Some studies have shown that part-time workers can be as productive as full-time workers and companies employing part timers do not necessary suffer low productivity. I understand that in the Netherlands, in which a relatively large share of the workforce works part-time, achieves high labour productivity. Hence, I believe that there is much room for improvement in productivity and income of our contract and part-time workers.

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Sylvia Lim: Tier electricity pricing to favour small consumers

While offsets to low-income households will be useful while it lasts, an additional idea is to have a tiered system of pricing electricity in favour of small consumers. The fundamental idea is for a threshold level of power consumption by households to be determined. Households consuming less than the threshold level will enjoy a low tariff charge. With increasing consumption levels, the tariff escalates. The higher tariff collected in the upper tiers can be used for 2 purposes: to cross-subsidize the first tier tariff, and to encourage all households not to over-consume electricity.

This was a speech in Parliament on 8 March 2010 by NCMP Sylvia Lim during the Committee of Supply debate, on the budget for the Ministry of Trade and Industry. Read other Workers’ Party speeches and statements at wp.sg.

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The Economic Strategies Committee has put forth recommendations on Singapore being a Smart Energy Economy.

As electricity is a modern necessity, it is of paramount importance that it is reliable, pollution-free and affordable.

As regards reliability, the ESC recommends that in the medium term, Singapore consider importing coal and electricity to diversify our energy sources, so as to free up land in Singapore. I would like clarification on the pros and cons of relying on imports and thus becoming less self-reliant for our energy needs. Which are the countries we are likely to import electricity from? Will there be additional risks to our energy security?

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Raymond Lim once proposed a way for “completely free” public transport

Actually Minister Raymond Lim had once proposed a way to have completely free public transport. Here’s what he said about public transport concessions during a constituency visit back in 2008.

In response to NCMP Sylvia Lim’s call in Parliament on 11 March 2010 for transport concessions for the disabled, Transport Minister and MP for East Coast GRC, Raymond Lim, said: “I’d be very slow in stipulating (to operators) how best to run the concession policy.”

But actually the Minister had once proposed a way to have completely free public transport. Here’s what he said about public transport concessions during a constituency visit back in 2008:

“The money still must come from somewhere, right? It is about 1.5 percentage point increase in your GST. So now it’s 7 (per cent), you want it to be free? You want the GST to go up to 8.5 per cent, to run a completely free bus and MRT system?”

Sylvia Lim: R&D spending needs to be accounted for

I agree that it is necessary for Singapore to invest heavily in R&D for our nation’s future. However, it is critically important to measure the output and impact of our R&D investments to ensure that it is money well-spent.

This is admittedly not an easy task. The results from research may take years to materialise, and some R&D may be undertaken for strategic reasons, the benefits of which may not be easy to quantify. Nevertheless, any public spending needs to be accounted for.

This was a speech in Parliament on 8 March 2010 by NCMP, Sylvia Lim, during the Committee of Supply debate, on the budget for the Ministry of Trade and Industry (MTI). Read other Workers’ Party speeches and statements at wp.sg.

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Since the year 2000, Singapore has spent $33 billion on R&D, also referred to as the Gross Domestic Expenditure on Research and Development, or GERD. Of this, about $12 billion was funded by taxpayers.

Low Thia Khiang: Access to good mentors key to helping entrepreneurs succeed

While financing is important, access to good mentors is equally key to help these entrepreneurs succeed. Are there sufficiently experienced mentors available to advise our entrepreneurs? If not, are there plans to invite successful business founders or venture capitalists from places like the Silicon Valley to provide sound advice to these start-ups and evaluate their business plans?

This was a speech in Parliament on 8 March 2010 by MP for Hougang, Low Thia Khiang, during the Committee of Supply debate, on the budget for the Ministry of Trade and Industry (MTI). Read other Workers’ Party speeches and statements at wp.sg.

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The ESC and the Budget seem to focus heavily on helping companies which are already successful to become Globally Competitive Companies.

In its drive to identify and assist these promising medium-sized companies, has the Government forgotten about local small businesses like sundry shops and car workshops? Would such small enterprises have a place in the new economic landscape, or will they be crowded out or gobbled up by bigger fish?

What is the Government doing to help local small businesses, especially those in sunset industries, to become more competitive and viable in the new economy?

Secondly, is the Government providing the right environment and support for entrepreneurship to flourish in Singapore? We must not lose the spirit of enterprise in Singapore, keeping in mind that many global companies today started from very humble beginnings.

Last year, a survey of 2,300 students from local universities and polytechnics found that less than 2 in 10 of them considered starting their own businesses after graduating, compared to almost 7 in 10 who planned to take up salaried jobs. Is the Minister concerned that so few of our brightest students aspire to be entrepreneurs? Are our schools helping their students to develop more of the traits necessary to be successful entrepreneurs? For example, risk-taking, initiative and agility.

I understand that SPRING Singapore has a number of schemes that provide funding to start-ups. Can the Minister provide an update on how effective these schemes have been in nurturing successful entrepreneurs?

The ESC and the Budget seem to focus heavily on helping companies which are already successful to become Globally Competitive Companies.

What is the Government doing to help local small businesses, especially those in sunset industries, to become more competitive and viable in the new economy?

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Growth must improve welfare of Singaporeans: Sylvia Lim

Our ultimate aim of growth is to improve the welfare of all citizens. GDP is not an adequate indicator of welfare, and the government’s pursuit of growth in the recent years has had serious side-effects on the quality of life, and social cohesion.

This was the speech Non-constituency MP and Workers’ Party chairman Sylvia Lim delivered in Parliament yesterday.

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Each year, the government has certain GDP growth targets and plans the Budget and policies around it. This year, the government has put in place a productivity target recommended by the Economic Strategies Committee.

Whatever measure is used, the ultimate aim of growing our economy must be to forge a higher quality of life for all our citizens. Though not everyone has the same talents and capabilities, our growth must provide every person with a good standard of living and a sense of physical and economic security. We may be a small country geographically, but within our borders, citizens should feel at home and valued as persons and not just for economic contributions. Continue reading “Growth must improve welfare of Singaporeans: Sylvia Lim”

Low productivity not our workers’ fault: WP’s Low

Workers’ Party chief Low Thia Khiang has slammed the PAP government for seemingly suggesting that Singaporean workers have only themselves to blame for their low incomes, because of their low productivity and skills. He said it was easy to blame our local workforce for low productivity when it was the Government which opened the floodgates to foreign workers.

Low was speaking Parliament on Tuesday in response to the Finance Minister’s Budget 2010 speech last week.

The Opposition leader pointed out that manual workers like cleaners and garbage collectors in developed economies are paid so much more than their counterparts in Singapore, attributing this to those countries’ more compassionate and effective policies to ensure that workers at the bottom of the economic ladder enjoy a decent and dignified life. Referring to the Government’s latest productivity drive, which is to grow productivity by 2 to 3 per cent each year over the next decade, Low wondered if low wage workers had to wait another 10 years for the wage increases which they had not seen in the last 10 years.

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The Economist calls Singapore a ‘stingy nanny’

The respected British weekly, The Economist, has published a cutting criticism of Singapore’s social safety net in its latest edition dated 13 February 2010, titled “Welfare in Singapore: The stingy nanny”. Here are some excerpts.

The respected British weekly, The Economist, has published a cutting criticism of Singapore’s social safety net (or lack thereof) in its latest edition dated 13 February 2010, titled “Welfare in Singapore: The stingy nanny”. Here are some excerpts:

Citizens are obliged to save for the future, rely on their families and not expect any handouts from the government unless they hit rock bottom.

In government circles “welfare” remains a dirty word, cousin to sloth and waste.

The most destitute citizens’ families may apply for public assistance; only 3,000 currently qualify.

Applicants complain that the process of seeking help is made tiresome and humiliating. Indeed that could be the point, supposing it deters free-riders.

But the thinness of the safety net also reflects a widespread article of faith, recited and reinforced over the years. Even among the social workers who work in hard-hit communities there is surprisingly little frustration at the meagreness of the handouts on offer or at the lengthy application process.

In 2008 the World Bank rated it the third richest country in the world, in terms of GDP per head at purchasing-power parity. And the idea that its Big-Brotherly government might be outfoxed by conniving welfare queens seems odd.

Lee Kuan Yew, Singapore’s founding father and still its “minister mentor” has maintained that ambitious migrants help to keep citizens on their toes. In an interview given to National Geographic last July he said that if native Singaporeans lag behind “hungry” foreigners because “the spurs are not stuck on [their] hinds”, that is not the state’s problem to solve.

The Economic Society of Singapore (ESS)—not exactly a radical cell—recently proposed to a government committee that it should build a more robust safety net, starting with unemployment insurance. This would promote social stability and help muster public support for Singapore’s open-door migration policies, it argues. Properly designed, such measures would not create disincentives to work and thrift. “While self-reliance is a good principle in general, it may be neither efficient nor just if taken to extremes,” noted the ESS.

Citizens are obliged to save for the future, rely on their families and not expect any handouts from the government unless they hit rock bottom.

In government circles “welfare” remains a dirty word, cousin to sloth and waste.

The most destitute citizens’ families may apply for public assistance; only 3,000 currently qualify.

Applicants complain that the process of seeking help is made tiresome and humiliating. Indeed that could be the point, supposing it deters free-riders.

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