Tuesday, 5 March 2013

Productivity, Maid Salary and International Wages

If you believe the PAP will implement changes for a better Singapore with equality and social justice, you are as optimistic as Professor Ng Yew Kwang.  Will the PAP change and remake Singapore? It is ‘so far not so good’.      
My Indonesian maid is returning home after two years of service and her salary is $350 per month including day-off allowance. My new maid is from Myanmar and her salary is $485 per month including day-off allowance.

In terms of percentage, this is a big jump in pay, especially when you compare it with our low income workers who have no real income increase for more than 10 years.  So, it is fair to say that “Even maids have better bargaining power than low wage workers in Singapore.” http://pijitailai.blogspot.sg/2012/04/even-maids-have-better-bargaining-power.html
[Maids in Singapore, if they don’t do so much shopping, should have more savings and disposable income than our low wage workers. ]
The government says you must increase productivity then the wages can be adjusted. For the case of a new maid, the productivity will be low in the first few months due to coaching and training. However, to employers they have to pay more regardless of productivity. 
[I learn from my maid agent that due to salary adjustment, some older employers are asking maids to work longer hours to make up the difference. (?) Maybe they learn from the PAP: wage increase must match with productivity and hours of work.  Unfortunately, this will create unnecessary waste of resources and higher PUB bill for extra cleaning, washing and cooking.]
The maid market is an international market and Singaporeans are forced to pay international wages or closer to it. However, Singaporean low wage workers are working in domestic market and have no bargaining power at all.  

In the current market, if I want to get a new Indonesian maid, it will be more costly than a Myanmar maid. So, practical Singaporeans and business owners will have to find a new source of cheaper supply.  But the fact is even the cheapest replacement will cost higher than the existing ones.

The maids have their governments to support them but our government does not support our low wage workers because they are not “exportable products”. (Sorry to use this term).

To soften the burden of low income families and families with dependents, the government introduces maid grants and lower maid levy.   This indirectly also helps to push up the maid salary or making (supporting) Singapore maid market closer to the international wage level in Taiwan or Hong Kong. 
[Hong Kong's 300,000 domestic helpers will get a pay rise for the second year running, taking the minimum wage from HK$3,740 a month to HK$3,920 - an increase of 4.8 per cent, or HK$180. 
Employers offering a food allowance instead of free meals will have to pay HK$100 more, or no less than HK$875 a month. 
It is the eighth pay rise since 2001 and will apply to all contracts signed from today.] (Emphasis mine) 
Taiwan or Hong Kong can offer higher wages to foreign maids and we can’t.  Why?  Their income per capita is lower than us and they are able to pay maids more.  One key factor is there are minimum wages there. We are free to offer salary to maids but maids can choose to work in other countries.  

From Economy to Political Economy

Comparing to maids, low wage workers are not getting international wages in Singapore.  Even in your own country, you are not protected if you don’t have marketable value or exportable potentials. This is pure economics and Singapore economy has been organized and operated like this since the PAP took over the government.

It is no surprise the ‘Population White Paper’ sets a targeted economic growth rate supported by a sustainable population.   And a NTU economic professor, from the view of development economics, supports the idea of bigger population. 
[An economics professor has spoken up to dispel what he perceives to be misconceptions on immigration and Singapore having a bigger population. 
Nanyang Technological University’s Winsemius Chair Professor of Economics Ng Yew Kwang, are the ones that make people oppose the idea of a larger population for Singapore — congestion, as well as the depletion of existing resources and the crowding out of locals.] 
The PAP’s economic model is too economics and has less political, social, and even cultural considerations.  An economics professor will find it difficult to find faults at a pure economic and capitalist model such as Singapore. But Singapore is a nation. So, Singaporeans wants to see Change! - A real change.

This is why Professor Ng also recognizes this and in his reply to TRE, he says:

[I also mentioned that, though Singapore has done well on efficiency and growth in the past, it has not done so well on equality and broader social objectives, including happiness. I suggested that Singapore is in a good economic and financial position so that it may pursue more in these areas without worrying too much about doing it excessively. ] 
Change or no change, optimistic or pessimistic 

Professor Ng is at the optimistic side and he believes the PAP will change or is changing. Hence, he suggests the government to “pursue more in these areas” (equality and social objectives).

However, I don’t see the change. I am not as optimistic as Professor Ng. Even Budget 2013 is a chicken bone not a drumstick. #1  It is just a modification to the existing model not a real change.   

The current PAP leadership is hardly a change agent or a change quality!

The PAP government is looking at the economic profits/rents by exercising monopoly power or productivity (depressed wages). It has no idea to create wealth through creativity, entrepreneurship, and design.   

If really the PAP can improve the quality of life, equality, and social justice in Singapore for Singaporeans,  then more people will support the White Paper like the professor. But this needs a real change! – A total different approach from the current economic model.


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