Dr Tommy Koh, Singapore’s former ambassador to the United Nations, wrote an article which was published in the media on 3 January 2015.
In his article, Dr Koh expressed his concerns over the current wide income gap and inequality in Singapore.
“Our per capita income is one of the highest in the world,” he said. “Singapore is, however, not perfect. There are areas in which we can and should do better.”
“I am disturbed by the inequality in Singapore. We have one of the highest Gini coefficients in the world,” he added.
Dr Koh wrote another article [Link] about 2.5 years ago suggesting that Singapore can learn from the successful European countries whose populations are below 10 million, namely, Denmark, Finland, Norway and Sweden.
He mentioned in his earlier article that citizens aspire to live in fair societies and an important aspect of fairness is the equitable distribution of income and wealth.
“This is the moral force behind the economic doctrine of inclusive growth,” he said.
“The inequality in Singapore, as measured by the Gini coefficient, is even greater than that in America. Too great a gap between rich and poor undermines solidarity and social cohesion. It poses a threat to our harmony and our sense of nationhood.”
Dr Koh then made some comparisons between Singapore and the 4 Nordic countries.
Per capita incomes in 2010:
Singapore: S$59,813
Denmark: S$69,249(€42,500)
Finland: S$54,584 (€33,500)
Norway: S$105,096 (€64,500)
Sweden: S$60,613 (€37,200)
Gini coefficients in 2010 (zero represents total income equality and one represents total inequality):
Singapore: 0.46
Denmark: 0.27
Finland: 0.25
Norway: 0.24
Sweden: 0.24
The average monthly wages of the cleaner and bus driver in the five countries are as follows:
Singapore – Cleaner S$800, Bus driver S$1,800
Denmark – Cleaner S$5,502, Bus driver S$6,193
Finland – Cleaner S$2,085, Bus driver S$3,910
Norway – Cleaner S$5,470, Bus driver S$6,260
Sweden – Cleaner S$3,667, Bus driver S$4,480
As can be seen, Singapore’s per capita income is similar to that of Denmark, Finland and Sweden but the 4 Nordic countries are much more equitable than Singapore, as reflected in their Gini coefficients as well as the average monthly wages earned by the cleaner and the bus driver.
Argument to raise wages of low-wage workers through productivity growth not persuasive
Dr Koh also said that some Nordic countries have a minimum wage and some, such as Denmark, do not. The minimum wage is, therefore, a means but not the only means to ensure that workers earn a living wage, he said.
“The argument that the only way to raise the wages of our low-wage workers is through productivity increase is not persuasive. I would like to know, for example, how the two women who clean my office can be more productive than they already are in order to deserve higher wages?” Dr Koh asked.
“I would like to know how the Singapore bus driver can be more productive so that his income will approximate those of his Nordic counterparts?”
Dr Koh further argued that low wages in Singapore are primarily due to the “unlimited supply of cheap foreign workers”.
He said, “The truth is that we pay these workers such low wages not primarily because their productivity is inherently low, but largely because they are competing against an unlimited supply of cheap foreign workers. Because cheap workers are so plentiful, they tend to be employed unproductively.”
“In the Nordic countries, unskilled workers are relatively scarce and thus deployed more productively, with higher skills, mechanisation, and better organisation,” he added.
“What is the solution? The solution is for the State to reduce the supply of cheap foreign workers or introduce a minimum wage or to target specific industries, such as the hospitality industry, for wage enhancement,” Dr Koh concluded in the article written 2.5 years ago.
http://www.tremeritus.com/2015/01/05/low-wages-in-sg-due-to-unlimited-supply-of-cheap-fws/
In his article, Dr Koh expressed his concerns over the current wide income gap and inequality in Singapore.
“Our per capita income is one of the highest in the world,” he said. “Singapore is, however, not perfect. There are areas in which we can and should do better.”
“I am disturbed by the inequality in Singapore. We have one of the highest Gini coefficients in the world,” he added.
Dr Koh wrote another article [Link] about 2.5 years ago suggesting that Singapore can learn from the successful European countries whose populations are below 10 million, namely, Denmark, Finland, Norway and Sweden.
He mentioned in his earlier article that citizens aspire to live in fair societies and an important aspect of fairness is the equitable distribution of income and wealth.
“This is the moral force behind the economic doctrine of inclusive growth,” he said.
“The inequality in Singapore, as measured by the Gini coefficient, is even greater than that in America. Too great a gap between rich and poor undermines solidarity and social cohesion. It poses a threat to our harmony and our sense of nationhood.”
Dr Koh then made some comparisons between Singapore and the 4 Nordic countries.
Per capita incomes in 2010:
Singapore: S$59,813
Denmark: S$69,249(€42,500)
Finland: S$54,584 (€33,500)
Norway: S$105,096 (€64,500)
Sweden: S$60,613 (€37,200)
Gini coefficients in 2010 (zero represents total income equality and one represents total inequality):
Singapore: 0.46
Denmark: 0.27
Finland: 0.25
Norway: 0.24
Sweden: 0.24
The average monthly wages of the cleaner and bus driver in the five countries are as follows:
Singapore – Cleaner S$800, Bus driver S$1,800
Denmark – Cleaner S$5,502, Bus driver S$6,193
Finland – Cleaner S$2,085, Bus driver S$3,910
Norway – Cleaner S$5,470, Bus driver S$6,260
Sweden – Cleaner S$3,667, Bus driver S$4,480
As can be seen, Singapore’s per capita income is similar to that of Denmark, Finland and Sweden but the 4 Nordic countries are much more equitable than Singapore, as reflected in their Gini coefficients as well as the average monthly wages earned by the cleaner and the bus driver.
Argument to raise wages of low-wage workers through productivity growth not persuasive
Dr Koh also said that some Nordic countries have a minimum wage and some, such as Denmark, do not. The minimum wage is, therefore, a means but not the only means to ensure that workers earn a living wage, he said.
“The argument that the only way to raise the wages of our low-wage workers is through productivity increase is not persuasive. I would like to know, for example, how the two women who clean my office can be more productive than they already are in order to deserve higher wages?” Dr Koh asked.
“I would like to know how the Singapore bus driver can be more productive so that his income will approximate those of his Nordic counterparts?”
Dr Koh further argued that low wages in Singapore are primarily due to the “unlimited supply of cheap foreign workers”.
He said, “The truth is that we pay these workers such low wages not primarily because their productivity is inherently low, but largely because they are competing against an unlimited supply of cheap foreign workers. Because cheap workers are so plentiful, they tend to be employed unproductively.”
“In the Nordic countries, unskilled workers are relatively scarce and thus deployed more productively, with higher skills, mechanisation, and better organisation,” he added.
“What is the solution? The solution is for the State to reduce the supply of cheap foreign workers or introduce a minimum wage or to target specific industries, such as the hospitality industry, for wage enhancement,” Dr Koh concluded in the article written 2.5 years ago.
http://www.tremeritus.com/2015/01/05/low-wages-in-sg-due-to-unlimited-supply-of-cheap-fws/
