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<!-- / icon and title --><!-- message -->SINGAPORE - Economist Lim Chong Yah's radical suggestions to raise the salaries of low income workers while freezing the pay of high income workers to narrow the wage gap are "too risky", warned National Trades Union Congress (NTUC) secretary-general Lim Swee Say yesterday.
Mr Lim, who is also Minister in the Prime Minister's Office, is the first Cabinet Minister to address the suggestions made by the economist, who helmed the National Wage Council (NWC) from 1972 to 2001.
Professor Lim had on Monday called for the wages of workers earning S$1,500 and below to be increased by 50 per cent over the next three years, and a salary freeze for those earning more than S$15,000 a month. For the middle income, he proposed pay increases between a quarter to a third of that received by the lowest-income group.
Speaking to reporters yesterday, Mr Lim, however, felt that a 50 per cent corresponding increase in productivity in the next three years would be difficult to achieve. If wage increases outstrip productivity gains, companies may cut jobs or move out of Singapore and there may also be structural unemployment, added the labour chief.
Mr Lim also pointed out a ripple effect that may occur: After the salaries of those in the lower income tier are pushed up, those in the middle tier will start questioning employers on why their salaries are not increased correspondingly.
Doing a quick calculation as he spoke, Mr Lim also questioned who will pay for the increased wages, which he estimated to cost more than S$4 billion over three years - based on 400,000 of such workers earning S$1,500 a month.
Prof Lim had led wage restructuring in the '80s, raising the pay of low income workers. Mr Lim, however, felt that the strategy is less feasible today, given that the world is more globalised, and companies and jobs have become more mobile.
While Prof Lim's proposal may sound appealing, Mr Lim said the labour movement's approach to raising productivity - and hence wages - may take longer, but is ultimately more sustainable in the long run.
He added: "The right thing for us to do now is to find a way to strengthen our alignment, to speed up the process of skills upgrading, speed up the process of productivity enhancement and speed up the process of innovation because that's the real solution that I believe will bring us from where we are today to 2020."
When contacted for a response to the labour chief's comments, Prof Lim refused to be drawn into a debate, stating that he had already put forth his arguments for his proposal.
Prof Lim told Today: "If the NTUC secretary-general Mr Lim Swee Say has serious reservations for my ER2 (Economic Restructuring 2) proposal, then the logical sequence is to keep it in deep freeze, instead of temporarily freezing the salaries of the highest income groups as suggested by me."
He added: "It is a pity that my wage reform proposal should fizzle out in this manner, but I hope the spirit of wage reform will remain."
NTUC will also explore ways to attract young Singaporeans to work in certain sectors to ease companies' reliance on foreign workers, said Mr Lim. The labour chief noted that in recent years, the trend has been that even as various industries here are growing, the "role of Singaporeans is weakening".
Mr Lim let on that, going forward, companies will find ways to attract younger Singaporeans to join various sectors and in doing so will reduce the reliance on foreign workers - an area he will address in his May Day message.*
"Some of them are posting quite encouraging results. Hopefully, (this will) address their manpower shortage," he said.*
In December last year, at the National Delegates' Conference, Mr Lim had named construction, information technology and shipbuilding as those that the labour movement need to focus its energies on in efforts to hire more Singaporeans instead of foreigners.
Even the PAP can't keep supporting these loss making companies forever. In the past they could rely on the CPF to support these state enterprises but I think the kitty is almost empty.
