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Professor Lim Chong Yah: Singapore’s income gap approaching dangerous levels

aurvandil

Alfrescian
Loyal
Most interesting if you know who he was once related to.

http://www.tremeritus.com/2012/04/1...ores-income-gap-approaching-dangerous-levels/

Professor Lim Chong Yah, who was a key architect of the economic restructuring exercise that overhauled Singapore’s wage system in the late 70s, said that the growing income inequality is approaching dangerous levels.

Prof Lim also noted Singapore’s over-dependence on cheap foreign labour. He said that Singapore now ‘needs shock therapy to wake up its economy’ and ‘the only way out is to restructure again’, in the area of wages of low earners.

Prof Lim is the Albert Winsemius Chair Professor of Economics at the Nanyang Technological University. He advocates for workers’ training and equitable wages and chaired the National Wages Council from 1972 to 2001, during which real wages grew at an average of 4.6% per year. He helped mastermind an economic shake-up from 1979 to 1981 that lifted wages for workers and helped Singapore move from a ‘low-skilled, low-value added and highly labour-intensive structure’ to one that used more technology and knowledge.

He attributed the opening of floodgates to foreign labour, to Singapore’s fear of being uncompetitive. The result was that the non-resident labour force increased from 300,800 in 1991 to 1.2 million last year, out of which only 1.7 per cent earned wages high enough to pay income tax. Not surprisingly, GDP expanded impressively during this period.

More worrying is the growing income inequality in Singapore, as measured by the Gini coefficient, which Prof Lim highlighted. Singapore was at 0.473 last year, perilously close to the danger 0.5 mark, ‘normally considered a dangerous line to reach, far less to cross’.

Income inequality has worsened as global forces pull up the highest income groups while cheaper foreign labour which has been flooding Singapore, pulls down the lowest income groups.

Prof Lim’s proposal, which he called ‘Economic Restructuring II’, includes substantially increasing wages for the lowest-paid workers and freezing top earners’ salaries for three years. He proposed that NWC should discuss such a restructuring exercise process.

Prof Lim was speaking at a lecture given at the Economic Society of Singapore yesterday evening (9 Apr). Prof Lim has made clear that he was merely expressing his own personal views.

With regard to the timing of such an exercise, he felt that despite the weak external economic condition, ‘this is the best timing’ for such a move given Singapore’s low unemployment rate and strong fiscal position.

During an interview after the lecture, he told the media, “I have no intention to destroy the investment climate. But if a company is labour-intensive and needs to import cheap labour it may think twice. For high-skilled companies that use a lot of technology, Singapore is still an ideal place.”
 

Kinana

Alfrescian
Loyal
Not a good solution by Lim Chong Yah.
what is the point of putting a ceiling on high earners if the companies are willing to pay?
Is he also suggesting raising wages for foreign workers as well and cause inflation? What exactly is he talking about? This guy is senile.
 
Z

Zombie

Guest
what is the point of putting a ceiling on high earners if the companies are willing to pay?
Is he also suggesting raising wages for foreign workers as well and cause inflation?

I agree.

High/Top earners are usually employed by international companies. If they want to pay, they can pay the excess outside Singapore by any underhand methods. These incomes may then be bought into Singapore and it may avoid taxes if they know how.

Raising wages for foreign workers, attracts even more foreign workers into Singapore.
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
LCY is already an old man.. quickly ask him if you still have the chance.. :smile:

Many rant about the "income gap" but I don't see why it should be a problem in the first place. It can easily be fixing by deporting all millionaires but how that would help any country is beyond me.
 

deepblue0911

Alfrescian
Loyal
Many rant about the "income gap" but I don't see why it should be a problem in the first place. It can easily be fixing by deporting all millionaires but how that would help any country is beyond me.

Gap can be nec and useful if it allows the lower income people to strive for better life. But if too much wealth is concentrated on too few people, whose wealth allow them to not only consume resources but also opportunities for prosperity, then the society may sink into a vicious structural cycle where the poor just get poorer. And when basic needs of the poor could not be met, then you've serious trouble in society.
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
Gap can be nec and useful if it allows the lower income people to strive for better life. But if too much wealth is concentrated on too few people, whose wealth allow them to not only consume resources but also opportunities for prosperity, then the society may sink into a vicious structural cycle where the poor just get poorer. And when basic needs of the poor could not be met, then you've serious trouble in society.

There are loads of opportunities in Singapore for the poor to become wealthy so income inequality is a non issue.
 

aurvandil

Alfrescian
Loyal
We should not see LCY as a bitter old has-been blowing hot air. The CIA utiluses the Gini Cofficient as an indicator in their intelligence estimates. They have done empircal work to show that a Gini which exceeds 0.5 for an extended period is a necessary though not sufficent condition for massive social change in a society.

http://epik.com/blog/the-gini-is-out-of-the-bottle.html

Put in Singapore's context, very high chance for PAP to lose elections if the Gini exceeds 0.5 and stays there for an extended period of time.
 

Kinana

Alfrescian
Loyal


In the case of Singapore, there is nothing to hold people back from education. Anyone who is willing to work hard can prosper. I see the same pattern again and again. This income gap is not an issue unless people have wrong values of jealousy towards others who are wealthy.
 

Perspective

Alfrescian
Loyal
To shed a little light on income gap leading to "danger".

Richer are going to spend more on what is unnecessarily high. An example is property, leading to price hike, ex homes and hence potentially homeless. Every member of every rich family driving a car and jamming roads leading to more tax on public transport, or increase in fuel usage leading to the poor not being able to choose jobs that require driving (eg salespeople, taxi-drivers) and settle with lower paying jobs. The list goes on - there is the "danger".

As for reduction on cheap labour, it can be done by limiting foreign intake and taxing the rich more to pay for the added costs of labour.

In a way, it directs the income of the rich from things to services. From the dead stuff (eg rich cars) to people. Also prevents the poor from resorting to crimes against the rich. Therefore, win-win. Do people know that we are getting dirtier streets and smeller toilets because the challenge of getting more and better-standard labour for cleaning is getting harder.
 

aurvandil

Alfrescian
Loyal
I thought he still is related to the PM. His daughter is Lee Hsien Yang's wife.

20110527.094120_razormgchan.jpg


When the picture above surfaced, everyone focused Kee Chui Chan.
Less well known is Lee Hsien Yang and how he was standing at his mom's funeral by himself.

Why do you think that was so?
 
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