At the same time, Lim and the government are not fully engaging. Lim was talking about narrowing the income gap, but the government sidesteps the question and talks about productivity improvements.
They are actually different things.
You can have productivity improvements that raise the wages of the bottom stratum, but still have top salaries zooming away. They result may not be any happier. As top salaries zoom up, their buying power tends to raise the overall price level in an economy, and so even as bottom wages rise, they may still find things priced out of reach.
Concentration of wealth sucks vitality out from a society. Vested interests that are too entrenched present barriers to innovation, in the same way that monopolistic behaviour stifles competition. There is a public good to be had when income spreads are prevented from getting too wide.
Yet, the sad fact is that the government does not even want this question on the agenda. They chant the mantra that high pay attracts great talent and that great talent means economic growth.
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http://yawningbread.wordpress.com/2012/04/15/softly-softly-will-not-narrow-income-gap/
ALex AU, Lim CY, and the PAP are all off base on this. The ever ending search for higher and better productivity is meaningless unless it can be translated into a better life for Singaporeans. Singapore's productivity can be traced by many means including the Per Capita GDP. It has tripled since the 1970s/1980s. Can singaporeans say honestly that their lot is better as productivity has gone up?
Lim CY is right in that minimum wage has to go up. There is no choice there. You can raise it by double digits like he says, but it will not help. He has not thought this out at all. Minimum wage, if enforced in singapore is the law of the land. Meaning that if you work in Singapore, you must be paid this minimum sum. But who will it benefit the most? The legions of low paid FT hired for whatever tasks or the native born singaporean? I believe the Minister mentioned that there were 400,000 singaporeans earning $1500 a month or less. Even if you give them an immediate 10% pay raise it amounts to a total increase of only $150 a month. Does this make a difference in their lives? Not really. If you are an FT low wage earner, a 10% increase is substantial for you. That is because their cost base is in India, China or whereever they came from.
But what is causing the wage disparity in the first place? Lim CY has said that there is one large income gap, and to close it, we must have a minimum wage. but what is the cause of this gap and what impact does it have? I guarantee you that there is a wide income gap in countries like Switzerland and Japan. In fact, in every country of the world, you will find very rich people and not very well off people. But the lower income people in countries like Switzerland live a life of comparative luxury compared to the lowe wage earners in Singapore. They work less hours, have a social safety net better than singapore and so forth.
The cost of living is a big problem too. No use giving a minimum wage increase of say 10%, when inflation is 12%. The PAP must reduce its desire to earn profits from everything at the expense of the locals, and they must stop importing large amounts of FTs that compete for jobs and also raise the cost of housing, food, etc. Will they do that? Of course not. Lim Chong Yaw should know this.
By the way, ALex' suggestion to raise the marginal tax rate is also stupid. Although the personal tax rate is low in singapore, when you look at all the hidden taxes unique to SIngapore, u will see that we have one of the highest tax rate in the world. when u add in the low interest they give you for your CPF when other conservative investments would have earn you triple, that is a tax. When u pay $350K for a flat that cost $120K to build, and not even own it, that is a tax. When you pay $120K plus COE for a car that cost $18K anywhere else in the world, that is a tax. There are many more such examples, resulting in a much higher tax rate here.
