Friday, 22 September 2023

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5 Minutes With… Leong Sze Hian on wages

TOC speaks to Leong Sze Hian and asks him for his views with regards to this report on June 30 by Channel NewsAsia, “Total wages in Singapore rise by 7-year high of 5.9% in 2007”.

CNA: Despite the fact that Singapore‘s economy grew by a lower 7.7 per cent in 2007 compared to 8.2 per cent in 2006, wages grew strongly last year.

TOC: What’s the first thing that comes to your mind when you read this?

Sze Hian: The question that struck me was, what was the median wage growth in 2007? Inflation for the lower-income has always been higher than average inflation. So, if inflation for the lower-income was say 1.6 per cent or more for the last 10 years (1997 to 2007), 5 of the 8 categories of workers’ median monthly gross wage (listed in the Straits Times report Wages rose but not for those at the bottom”, July 1, 2008), may have had no real increase in wages.

Only 3 out of the 8 categories Sales & Service Workers, Plant & Machine Operators, and Managers, had an increase of 4, 2.4 and 1.7 per cent annualised wage change, respectively.

CNA: Total wages – basic wages plus bonuses – of private sector employees rose by a seven-year high of 5.9 per cent in 2007, higher than the increase of 4.5 per cent the year before.

TOC: CNA cites wages for “private sector employees”. What about public sector employees?

Sze Hian: Since the report was based on a survey of full-time private sector employees from establishments with at least 25 employees, it does not include smaller companies, public sector employees, the self-employed, and part-time workers.

If the smaller companies generally pay less than bigger companies, or the private sector generally pay more than the public sector, then, the average wage increase may be lower.

Since part-time workers have more than doubled in the last decade or so, and according to the last available statistics, their wages have stagnated at about $ 500 a month, wage growth for the entire working population may also be lower.

CNA: Although inflation was higher in 2007, resulting in a lower increase of real basic wage, the real total wage increase of 3.8 per cent last year was still higher than 2006’s 3.5 per cent.

TOC: Your view?

Sze Hian: Actually, perhaps what is even more important is how much basic necessities like food, utilities, public transport, healthcare, new HDB flats have increased, relative to median wage growth. In this connection, what was the aggregate median percentage annualised wage change over the last 10 years, for all 8 categories of full-time employees listed and broken-down in the report?

CNA: Labour productivity growth, however, declined from 1.5 per cent in 2006 to -0.9 per cent in 2007, partly due to record employment gains last year.

TOC: Can you explain what this means?

Sze Hian: When labour productivity declines, it means that businesses are becoming less efficient, and costs may be rising relative to output. The main reason may be due to the growth of cheap low-skilled foreign workers.

CNA: The National Wages Council (NWC), in its recommendation of wage guidelines this year, said companies should grant built-in wage increase commensurate with the companies’ performance as well as business prospects so that such increments are sustainable.

TOC: Do you agree with this?

Sze Hian: In principle, yes. The devil is in the details and actual implementation ! Unless there is transparency, workers may not be able to gauge how their wages relate to the companies’ performance and business prospects.

CNA: It added that companies which have done exceptionally well should consider granting workers a higher variable payment.

TOC: How many lower-income workers get such higher variable payment?

Sze Hian: I am dismayed by the statistic that may perhaps underscore the plight of lower-income workers that after 3 years, 81 per cent of companies have not heeded the call to pay lower-income workers more.


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