NTUC’s “gift” – helping the poor or blatant exploitation?

Leong Sze Hian and Andrew Loh

The National Trades Union Congress just announced a $4 million worth of assistance for 80,000 low-wage workers under the new discount vouchers scheme.

According to the Straits Times report, “NTUC’s $4m gift to less well-off workers”, the ST says:

“In all, about 80,000 lower-income union members can apply for these vouchers from NTUC.”

It goes on:

“Each voucher gets them a 5 per cent discount for every $10 spent at six NTUC cooperatives, including its childcare centres and pharmacies.”

Now, before we all start cheering the ostentatious generosity of the NTUC, read the report closely. You will notice that :

One, the report couched it as a “gift”. Is it really so, or is it a blatant attempt by the NTUC at self-promotion – and to generate even more revenue for itself? (Read on and judge for yourself.)

Two, the headline says “less well-off workers” without mentioning that it is unionized members only who qualify for the vouchers. (Read on to discover how much one has to pay NTUC to be a member before enjoying the “5 per cent discount”.)

Three, “each voucher gets them a 5 percent discount for every $10 spent”. In other words, for every $10 you spend at NTUC cooperatives, you get 50 cents discount.

Why give discount instead of cash?

A 5 per cent discount voucher may not help the needy as much as giving the equivalent amount to them in cash. What the needy needs most now may be to mitigate the rising cost of basic food items.

For example, Fairprice raised the price of one of it house brand rice (5 kg bag) by 13 per cent, from $4.70 to $5.30 in March. Cooking oil and dairy products have also clocked double-digit gains.

Thus, giving them say $5 cash may be better as they can use it all to buy rice or milk powder, instead of just getting a 5 per cent discount when the price has already risen by double-digits. If prices continue to rise, discount vouchers also become lesser in actual value.

As each voucher gets them a 5 per cent discount for every $10 spent, if the purchase is say $11 or $12, the effective discount would only be 4.5 or 4.2 per cent respectively.

Giving discount vouchers may also be setting an undesirable precedent, as assistance to the needy has always been in cash or cash-equivalent vouchers, instead of a discount.

ComCare Funds should not be used to benefit NTUC

The ST article also reported NTUC Chief Lim Swee Say as saying that “grassroots leaders can use the money from the million dollar fund to buy the vouchers for their needy residents”. Mr Lim was referring to the ComCare Fund. This may not be a good suggestion, as grassroots organisations should give cash to the needy, instead of purchasing the discount vouchers.

The ComCare Fund budgeted amount is for direct assistance to the needy that they are already entitled to, and therefore should not be used to purchase discount vouchers.

Thus, using ComCare Fund to buy the vouchers is not a good way to implement the decision to set aside at least $1 million from the fund to help needy families cope with rising food prices.

Increased profits for NTUC

NTUC Fairprice Group’s after-tax profits increased by about 90 per cent from $52.7 million in 2006 to $100.1 million in 2007, against an increase in revenue of only about 12 per cent, from $1.4 billion to $1.6 billion, for the same period.

This begs the question: Why, despite absorbing the GST increase on hundreds of essential items for the latter half of last year, NTUC Fairprice Group’s profits increased so much?

So, instead of just giving $4 million of discount vouchers, why not give cash vouchers which would only reduce its profit increase last year from 90 to 82 per cent?

What’s the point of increasing the price of rice by 13 per cent or milk by 20 per cent, and then giving a 5 per cent discount?

Mr Lim was also quoted as saying in another ST report titled, “Rice a small part of bills at Fairprice: Swee Say”:

“Yes, the cost of living has gone up, but it does not mean your $10 has become $5 because you did not spend all your $10 to buy rice.

“You spent only 22 cents to buy rice.”

To infer that only 22 cents out of every $10 is spent on rice, derived from the $1.6 billion spent at Fairprice, of which $36 million was on rice, may not be entirely accurate and indeed seems simplistic. Generally, the lower-income may be spending more on rice relative to their total expenditure, relative to what the general population spend on all items at supermarkets.

Helping the poor or blatant attempt at self-promotion?

Companies give discount vouchers all the time, as a means of promoting more sales and advertising. Will the call to buy house brands, and now the giving of discount vouchers, lead to higher sales volumes, which may result in even higher profits at the end of the day?

In this NTUC vouchers case, a low-income or poor Singaporean would have to spend money being a member of NTUC and pay its monthly membership fee (which we understand is about $9 or thereabouts per month), before he is entitled to a 50 cents discount every time he spends $10 at NTUC Co-ops.

Do only union members shop at NTUC?

This “gift” of a 5 per cent discount sounds rather like blatant self-promotion and exploitation of the plight of the poor by the NTUC rather than any sincerity in helping them.

Finally, isn’t this in a sense, akin to unfair competition against other supermarkets, retailers, childcare centres and pharmacies ?


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