An “Enlightening ” story of wages in Singapore?

By Leong Sze Hian

I refer to the Ministry of Manpower's (MOM)  Report on Wages in Singapore, 2011, released on 29 June.

Basic Wage vs Total Wage

In 2011, the real total wages rose by a mere 0.1%, while real basic wages declined by 0.8%. However, the MOM report, which uses a different method of calculation, tells a different story. They claim that real total wages have grown by 0.9%. They have, however, taken the employer CPF contributions as part of their computations.

In the past, median wage was computed without taking into account of employer CPF contributions. The measure of “real total wages” appears to be a fairly new development amidst a rising political dissent in Singapore.

In any case, a historical comparison using past benchmarks still means that median wages fell by 0.8% last year. Why then, is the ministry claiming otherwise?

The new methods are also applied to the computation of CPI (“Consumer Price Index”), where rentals on owner-occupied accommodation are removed. Hence, with their new reporting style, Real Total Wage, after adjusting for CPI gave an increase in real wage of 1.9% in 2011. This, however, was not the practice in the past.

I find it rather strange that we apply this new formula as most Singaporeans already have a house but do not own a car (thus no COE, inflation). Using the new CPI makes the report inaccurate and extremely misleading.

Growth in real wages in line with productivity: Really?

Labour productivity rose by 1.0% in 2011. Over the period of 2000 to 2011, labour productivity grew by 1.7% per annum while real total wages (including employer CPF contributions) increased by 1.6% per annum.

So what was the increase in real basic wage excluding employer CPF contributions from 2000 to 2011? Without access to the full data, one can only guess. And my guess is that, real wage increase between the period of 2000 and 2011 was even lower than the 1.6% per annum.

Majority did not give one-off special payment to RAF

As of December 2011, only a minority (4.1%) of private establishments with RAF (Rank-And-File) employees had given or intended to give a one-off special payment (recommended by the National Wages Council (NWC)) to their RAF employees while 5.1% are still considering whether to give.

The above shows that most employers (95.9%) did not follow the NWC's recommendations. Shouldn't our unions do something about this? Otherwise, workers' real wage increase may continue to languish in the doldrums, with decreases in 2008 and 2009, and a meagre rise of 0.5% in 2010, and 0.8% last year. With inflation hovering at 5%, how are people going to cope? Putting out numbers that are misleading will not solve the problem.

There is even more disheartening news below.

32% of establishments did not raise wages in 2011

The proportion of private establishments that raised total wages of their workers in 2011 was 68%. The average quantum of wage increase of these firms was 6.6% which was lower than 7.6% in 2010. The proportion that cut wages in 2011 (8.5%) was higher than 2010 (8.2%), with quantum of wage cut the same at 4.3%. The remaining 23% kept their wages unchanged in 2011.

If we adjusted for inflation, how many workers received a real wage increase? The numbers will be even more dismal.

Some profitable establishments did not raise wages

The majority of profitable Category A (84%), Category B (76%) and Category C (63%) establishments raised wages, only slightly by 53%. Loss-making Category D establishments either froze or cut wages.

So, if we follow Lim Swee Say’s logic that productivity increase leads to firms' profitability and hence an increase in real wages, then the pertinent question of why these profitable firms did not raise wages looms large.

Overall unit labour cost rose

The overall unit labour cost (ULC) rose by 3.4% in 2011.

Some get paid less as they grow older?

In most countries wages tend to rise with age as workers gain experience. It is a different story here however. The wages of plant/machine operators, cleaners, labourers and other related workers were largely flat for younger workers before declining for those in their mid-forties onwards. Age typically works against workers in physically demanding manual occupations. 

Service and sales workers also generally received declining wages as they grew older. For example, the Ratio of Median Monthly Gross Wages for those age 60 to 64 relative to Age Group 25 to 29, was 0.65.  This means that by the time you are age 60 to 64, you may be getting about 35% less pay than when you were age 25 to 29. If you adjust for inflation, your real pay may have literally been cut to the bone!

Other low-wage workers include food/drink stall assistants ($900), the lower-paid hawker/stall holders (prepared food or drinks) ($1,200), waiters ($1,300) and cleaners in offices and other establishments ($815).

The numbers and statistics presented by Ministry Of Manpower are thus inaccurate and does not give the real picture. Then also, why is this protrayal presented to the public? I leave you discerning readers to formulate your own thoughts.

Edited by TOC Kumaran Pillai and Leonard Khaw