If restructuring is too slow, competitiveness will be hit; if too fast, companies may fold
By Jessica Cheam, The Sunday Times, 3 Mar 2013
As Singapore's economy goes through a phase of restructuring over the next few years, it is critical to get the pace right, said labour chief Lim Swee Say yesterday.
Too slow and Singapore would lose its competitiveness, too fast and companies could fold leaving workers left without jobs, he warned.
"This transition is important, and the pace is equally important, too," said Mr Lim, who spoke on the sidelines of an NTUC event yesterday.
He said that if Singapore tried to push the pace too fast, for example, by freezing the growth of foreign workers immediately and by forcing wages to go up quickly, it could repeat the mistake of the mid-1980s when it adopted an aggressive wage-driven approach.
Then, the National Wages Council had recommended annual wage increases for the entire economy to promote economic and social progress but the wage hikes soon priced Singapore out of the market.
"I remember in those days we even gave wage increases twice a year, every six months... but we forced the pace too fast and as a result we went into recession," he said.
With the new transition, the labour movement hopes the country can sustain its full employment even as wages go up.
The Government has in recent months moved to address growing concerns of a rising income gap.
The Budget unveiled last week sought to achieve this by introducing tiered taxes with higher rates for the wealthy, bigger payouts to the needy and a centrepiece $3.6 billion Wage Credit Scheme to help companies tide over the difficult process of restructuring.
Under the scheme, the Government will fund 40 per cent of wage increases for Singaporeans who earn up to $4,000 a month, from now till 2015.
In his first comments on the Budget since it was announced, Mr Lim said the labour movement "is very encouraged" by the moves.
"We believe that it has all the policy instruments in place to help us move onto the new track."
However, even with the right policies, it does not guarantee the right outcome, he said.
"The implementation of these policies is crucial. As we move ahead, we hope that we can continue to work closely with businesses and workers to make this transition as smoothly as possible," said Mr Lim.
Asked about businesses' concerns that they might not be able to support the wage rises beyond the three-year lifespan of the Wage Credit Scheme, Mr Lim agreed that these were valid worries but said the right question for businesses to ask is not whether the scheme will continue, but how best they can use it to upgrade operations, productivity and wages of workers in the next three years.
"No company can afford not to to try anything new, because as we go through this transformation, any business that does not keep up with the pace of change will be eliminated by the market," he said. The Budget will be debated in Parliament this week.
Mr Lim also touched on the importance of nurturing women's role in the workplace.
Commenting on the PAP Women's Wing's recent call for the right to flexi-work arrangements to be legislated, Mr Lim said there will be differing views on this issue, but with or without legislation, businesses and the wider community should give women their support.
"We must make sure our women do not have to choose between having a meaningful career and a happy family," said Mr Lim, who flagged off a mass walk at NTUC's carnival at Downtown East yesterday to mark International Women's Day.
Labour MP stresses need to use Wage Credit Scheme right
By Tessa Wong, The Sunday Times, 3 Mar 2013
By Tessa Wong, The Sunday Times, 3 Mar 2013
Companies should use the newly introduced Wage Credit Scheme (WCS) to restructure rather than to boost their bottom lines, said labour MP Zainal Sapari last Friday at a forum dominated by a debate on the wage subsidy.
The WCS, announced during the Budget speech last week, sees the Government subsidising 40 per cent of any salary increase for the next three years for Singaporeans earning up to $4,000.
Mr Zainal, who is also director of the National Trades Union Congress' unit for contract and casual workers, stressed that this subsidy is meant to help companies restructure and not as "a subsidy for the usual wage increase".
If it is used in that way, then "as a worker you don't feel the impact, but on the part of the company, it increases their bottom line".
He added that the labour movement is "very, very concerned" about non-unionised companies exploiting this loophole "because there is no check and balance on the part of the employer".
Mr Zainal and the other speakers on the panel, at the forum organised by the Centre for Research on Islamic and Malay Affairs, spent most of their two hours debating the relative merits of the WCS.
The other panellists were Society of Financial Service Professionals past president Leong Sze Hian, Mendaki chief executive Moliah Hashim, and Aware board member Wong Pei Chi.
Mr Leong said he is in favour of a minimum wage over WCS, arguing that the latter would not help all low-income workers, as more companies are hiring contract workers or converting full-time employees to contract work.
In response, Mr Zainal argued that implementing a minimum wage "could lead to a situation where it becomes the maximum wage" where employers are reluctant to pay more than what is required.
He noted also that when Hong Kong introduced a minimum wage law, it caused a labour imbalance among sectors. For example, it saw a shortage of waiters as more workers chose to become security guards, he said.
He acknowledged, however, the need to have "some sense of what is a reasonable living wage" to use as a benchmark for social assistance programmes.
The forum also discussed topics such as affirmative action based on economic class or race, the need for transparent data particularly on the wages of the various ethnic groups, and stay-at-home mothers.
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