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Narrowing income gap – take from top and give to bottom: Goh Chok Tong

gohIn a Facebook posting on 31 May, Emeritus Senior Minister (ESM) Goh Chok Tong said he was “delighted that NWC has recommended that workers at the bottom of the wage heap be given pay rise of at least $60.”

The NWC is the National Wages Council.

It was set up in 1972 to “to formulate wage guidelines to be in line with long-term economic growth, so that Singapore’s economic and social development would not be undermined.” [See here.]

On 30 May, the NWC recommended that workers earning below S$1,000 be given a S$60 pay hike.

The suggestion was welcome by The National Trades Union Congress and the Singapore National Employers Federation. The civil service, Singapore's largest employer, also accepted the recommendations.

ESM Goh said, “These workers, like cleaners, are indispensable to our good health, clean and green environment and basic liveability as a densely populated city.”

He said that with the wage increase, “their companies' wage costs do not have to go up either.”

“Companies can hold their total wage bill constant as a percentage of total operating costs, and tweak the wage shares of employees by taking some from top management and giving them to those at the bottom,” ESM Goh explained.

“In other words, close the income gap within each company. If all companies can do this, we also narrow the income inequality within the country. This will make for a more inclusive and equitable society.”

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ESM Goh’s posting has so far elicited one response, from a Derek Goh, who said:

“This statement although noble has disturbed me since I read it. The government and GLCs are the largest employers here. It will be interesting to see how much of a wage cut will ministers, perm secs, and CEOs, COOs of GLC volunteer to lead Corporate Singapore to this ideal.”

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ESM Goh has not responded to Derek Goh’s posting thus far.

In October last year, CNBC reported that “new laws in Singapore imposing restrictions on foreign workers have sparked some concern about a rise in labor costs among small and medium-sized businesses.”

In March this year, worries about higher costs of doing business in Singapore were again in the news, with the government announcing a hike in employers’ contribution to employees’ Central Provident Fund accounts, and rising rentals.

It is unclear if businesses feel ESM Goh’s suggestion is workable.