<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published October 16, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>COMMENTARY
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Facing up to a new world of low wages
There's no stopping firms in a borderless world to relocate to where labour costs less
By CHUANG PECK MING
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>
LABOUR chief Lim Swee Say tells workers that they now have to be "cheaper, better and faster" if they want to keep their jobs in a post- recession world of stiffer competition.
Cheaper? Low wages? It makes sense if the NTUC secretary- general's intention is to temper expectations.
With the economy bouncing back, workers would think it's pay-back time. They had taken pay cuts to help their company when business was bad. Now, they want the cuts restored - and more - for their sacrifice.
But the economic recovery is going to be weak despite the promising growth numbers in the second and third quarters. Remove the fiscal prop provided by governments the world over, and we could see that the growth in many economies - economies that we depend on such as America, China, Europe and Japan - totter. And governments, faced with crippling budget deficits, are pulling back.
Prime Minister Lee Hsien Loong already served notice that economic growth is likely to be slow in the next year or two. What's more, even with growth returning to the economy, unemployment will still lag behind and stay up.
CBF is the answer<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT> <TABLE border=0 cellSpacing=0 cellPadding=4 width=300 align=right><TBODY><TR><TD vAlign=top align=middle>
<!-- AdSpace --><IFRAME height=250 marginHeight=0 src="http://ads.asia1.com.sg/html.ng/site=tbto&sec=btointhenews&cat1=bnews&cat2=btointhenewsart&size=300X250" frameBorder=0 width=300 marginWidth=0 scrolling=no bordercolor="#000000"><script language='JavaScript1.1' src='http://ads.asia1.com.sg/js.ng/Params.richmedia=yes&site=tbto&sec=btointhenews&cat1=bnews&cat2=btointhenewsart&size=300X250'></script><noscript>
</noscript></IFRAME><!-- /AdSpace-->
</TD></TR></TBODY></TABLE>
Mr Lim is reported to have explained that "cheaper, better and faster" is the answer to the labour movement's concern that record unemployment in many countries could lead to the rise of protectionism and price under-cutting in the next two to three years.
And low wages was not what he has in mind in becoming "cheaper", but improved productivity and more cost- effective production of higher quality goods and services.
Yet wages will be squeezed if we are to become cheaper to compete in the world market, because they make up a big part of business cost. Wage hikes in recent years, because of labour shortage, have also moved ahead of productivity growth.
It's easy for workers to become cheaper, but they won't want to do so because it may mean taking a pay cut or giving up a big raise and bonus. Becoming better is harder, but you can do it - just sign up for skills upgrading class and make sure that you learn. So is becoming faster.
But we may have little choice. We could be on the cusp of a new age of low wage for workers - and there are many indications we are heading that way.
Curbing excessive pay
The Americans and Europeans are putting curbs on excessive pay, which they blame for the greed that it fostered - the very greed that they claim had helped spark the worst recession since the Great Depression of 1929.
While the curbs are aimed at the financial hot shots who made millions on Wall Street, they are likely to spread to other sectors and filter down the job ladder. And in a globalised age, the restraint imposed on pay in the West will find its way to the rest of the world.
It is the same as how the massive unemployment spawned by the economic downturn in that part of the world has extended its reach, resulting in a shocking 51 million people jobless worldwide in this year alone, according to an estimate by the International Labour Organization. So there is a record number of people hungry for jobs out there - and they won't mind working for less pay, keeping the downward pressures on compensation. While Singapore's move to moderate the inflow of foreign workers may keep many of these jobless out, there's no stopping companies in a borderless world to relocate to where labour is cheaper. And the incentive to do so is stronger with the even tougher competition in the post-recession period.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>COMMENTARY
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Facing up to a new world of low wages
There's no stopping firms in a borderless world to relocate to where labour costs less
By CHUANG PECK MING
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>LABOUR chief Lim Swee Say tells workers that they now have to be "cheaper, better and faster" if they want to keep their jobs in a post- recession world of stiffer competition.
Cheaper? Low wages? It makes sense if the NTUC secretary- general's intention is to temper expectations.
With the economy bouncing back, workers would think it's pay-back time. They had taken pay cuts to help their company when business was bad. Now, they want the cuts restored - and more - for their sacrifice.
But the economic recovery is going to be weak despite the promising growth numbers in the second and third quarters. Remove the fiscal prop provided by governments the world over, and we could see that the growth in many economies - economies that we depend on such as America, China, Europe and Japan - totter. And governments, faced with crippling budget deficits, are pulling back.
Prime Minister Lee Hsien Loong already served notice that economic growth is likely to be slow in the next year or two. What's more, even with growth returning to the economy, unemployment will still lag behind and stay up.
CBF is the answer<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT> <TABLE border=0 cellSpacing=0 cellPadding=4 width=300 align=right><TBODY><TR><TD vAlign=top align=middle>
<!-- AdSpace --><IFRAME height=250 marginHeight=0 src="http://ads.asia1.com.sg/html.ng/site=tbto&sec=btointhenews&cat1=bnews&cat2=btointhenewsart&size=300X250" frameBorder=0 width=300 marginWidth=0 scrolling=no bordercolor="#000000"><script language='JavaScript1.1' src='http://ads.asia1.com.sg/js.ng/Params.richmedia=yes&site=tbto&sec=btointhenews&cat1=bnews&cat2=btointhenewsart&size=300X250'></script><noscript>
Mr Lim is reported to have explained that "cheaper, better and faster" is the answer to the labour movement's concern that record unemployment in many countries could lead to the rise of protectionism and price under-cutting in the next two to three years.
And low wages was not what he has in mind in becoming "cheaper", but improved productivity and more cost- effective production of higher quality goods and services.
Yet wages will be squeezed if we are to become cheaper to compete in the world market, because they make up a big part of business cost. Wage hikes in recent years, because of labour shortage, have also moved ahead of productivity growth.
It's easy for workers to become cheaper, but they won't want to do so because it may mean taking a pay cut or giving up a big raise and bonus. Becoming better is harder, but you can do it - just sign up for skills upgrading class and make sure that you learn. So is becoming faster.
But we may have little choice. We could be on the cusp of a new age of low wage for workers - and there are many indications we are heading that way.
Curbing excessive pay
The Americans and Europeans are putting curbs on excessive pay, which they blame for the greed that it fostered - the very greed that they claim had helped spark the worst recession since the Great Depression of 1929.
While the curbs are aimed at the financial hot shots who made millions on Wall Street, they are likely to spread to other sectors and filter down the job ladder. And in a globalised age, the restraint imposed on pay in the West will find its way to the rest of the world.
It is the same as how the massive unemployment spawned by the economic downturn in that part of the world has extended its reach, resulting in a shocking 51 million people jobless worldwide in this year alone, according to an estimate by the International Labour Organization. So there is a record number of people hungry for jobs out there - and they won't mind working for less pay, keeping the downward pressures on compensation. While Singapore's move to moderate the inflow of foreign workers may keep many of these jobless out, there's no stopping companies in a borderless world to relocate to where labour is cheaper. And the incentive to do so is stronger with the even tougher competition in the post-recession period.
</TD></TR></TBODY></TABLE>
