Thursday, 9 January 2014

Towards A Targeted Socialism Not Minimum Socialism

The PAP is using $1000 to showcase the targeted democratic socialism announced last year. Cleaners and guards will have a guided basic wage of $1000 per month.  And the PAP claims that this is not minimum wage. Only affected companies need to comply if they want to renew their licenses and stay in business.

What is the difference between a targeted wage and a minimum wage? We don’t know as we have to watch the development whether all Singapore workers will demand for $1000 per month when applying for a job.  Now, there is a targeted wage rate, will other industries follow or not?

More importantly, will this close the gap between the rich and the poor? Most likely not, from $800 to $1000 looks like a big increase of 20%, but what is $200 per month to a high income earner?  So, this is a targeted approach, just like a 5-year plan, how often will it adjust? Or, the target is set intentionally low - an outdated calculation just to showcase the so-called democratic socialism. Because there is a popular demand and because the fact shows no wage increase in the past 10 years, the PAP is forced to come out with a lower than expected targeted wage guideline?

So, when we talk about Swiss standard of living, it is a target, and not the minimum. Now, you know why only few have achieved the Swiss standard of income (may be living too), but majority of us are still looking at the target, laughing at the target.     
Hence, when announcing this new strategy, DPM Tharman Shanmugaratnam said, “Our approach is different.  We want to raise incomes while helping everyone, including those with less skills, to stay on the job ladder.”  (Today, 9 Jan 2014).
Direct or Indirect Way

By using a targeted approach, the PAP is using an indirect approach in helping lower income workers. In fact, in the past 50 years, we have witnessed the change of approach from direct to indirect. From direct taxes to indirect taxes, from no COE, ERP to their implementations, even the public transport companies, there is a targeted rate of return.

The advantage of this indirect approach is that it is very easy to implement. The government just uses administration measures to set the target, a moving and adjustable one, not a promised minimum one.

It means there is no human contact and no real feeling, only through two parties – between employers and employees and the government is an indirect third party.
This is the greatest disadvantage of an indirect targeted approach. When prices (COE, ERP, transport fees, taxi fares, school fees, HDB flat price and cost of living) increase, the government does not have a direct feeling. They just adjust the regulations and set a target.   

An indirect targeted approach can become very passive in thinking, in running the country and in solving the real needs of lower income workers. Otherwise, the pro-claimed most efficient government in the world will not wait for more than 10 years or 15 years to look at the problems and try to solve it now (really?).

DPM Tharman admitted that “Cheap-sourcing practices discourage wages, skills, and quality from moving up in the way they do in most other industries.’   (Today, 9 Jan 2014). 
Why does the government allow ‘cheap-sourcing practices’ for so long?  It is because it is an easy way out and indirectly, the government can have extra revenues from work permits, levies etc.

This indirect thinking and approach is now deeply planted in the government administration. So much so that even Temasek also claims that they do not manage CPF monies.

True or False? (Today, 8 Jan 2014)

We all know that CPF monies go to the government through the issuance of government bonds. The government then provides monies to Temasek for investments inside and outside Singapore. Yes, in paper, Temasek does not manage CPF monies directly. However, indirectly Temasek gets the funding from the government. So, who are the main contributors of the sovereign funds to Temasek? The people of Singapore, including CPF members, through the government, give the monies to Temasek for management and investment.

The theory of ‘Temasek does not manage CPF monies’ is an indirect thinking.  Unless, Temasek gets her monies from a foreign source, it then can claim that it is not managing the monies of Singapore.  With this indirect approach and thinking, one wonders whether Temasek’s investment approach is for Singapore or for her own management.  

No wonder up to now, there is still no government issued bonds to fight inflation in Singapore. Under the indirect target approach, can we expect a similar inflation-indexed ibond#1 on offer in Singapore?   


1 comment:

  1. How come when it came to increasing their own Minister salaries, they have instead taken a DIRECT approach to comparing with the 8 highest income earning professions straightaway ?

    Are they telling us straight from their horses mouths that they REALLY are hypocrites to begin with ?