atans1

Priductivity: What our masses not told

In Economy on 03/04/2016 at 12:09 pm

But first the Economist reports that a new paper shows that a higher minimum wage may not be as effective in tackling poverty as many hope. Low-wage workers don’t all belong to low-income families. I’m sure the PAP administration and its running dogs* in the constructive, nation-building media and academia will tell NTUC members, PMETs and other S’poreans this.

But NTUC members, PMETs and other S’poreans won’t hear from them that

— An impact of higher minimum wages is higher productivity.

Still there are other potential impacts of higher minimum wages;one is higher productivity. Some British companies that voluntarily shifted to a higher living wage found that staff absenteeism and turnover rates reduced, and productivity improved. It is hard to disentangle cause and effect here; are better-paid staff better motivated or are employers forced to become more efficient to absorb the cost of higher wages?

So if Tharman wants to improve productivity, as he says he wants** to, he should have minimum wages and set them high.

— One possible explanation why productivity has not been increased by new technology could be the sluggishness of wage growth; labour is so cheap that employers have less incentive to replace it with capital. Think the PAP’s administration very liberal FT policy both in numbers and quality: T often stood for “Trash”. Think SGX.

The main function of liberal FT immigration policies is wage repression. Why employ a local if FT is 20% cheaper (OK, I exaggerate because levies are paid, but still cheaper.)

————————————

How FTs affect the wages of the young here and their productivity

This conversation appeared on Facebook

Jeraldine Phneah

I think it is simply unfair to ask Singaporean youths to accept lower pay for PMET positions like their counterparts from developing countries working here are doing i.e. Filipinos, Vietnamese and Malaysians. Some believe that we should do so to ‘remain competitive’ and if we don’t, we are ‘entitled and lazy’.

I think it is unfair to compare our youths with those from other countries. They are earning a lot more here than they would at home due to our exchange rate . When they return, they will be very rich. In contrast, Singaporeans need more money to buy a house here, afford necessities and save up for retirement here.

While I think Singaporeans should not accept lower pay, I am not in any way saying that Singaporeans should earn more than foreigners. I think both should earn equally good pay.

A first world economy where businesses survive largely because wages are kept low is simply unsustainable.

It elicited this response from a tua kee: Yeoh Lam Kong (Once GIC’s chief economist. he’s now in Harry’s School of Public Policy)

Agreed!

It also disincentivises firms from upgrading to higher skilled, more sophisticated operations needing experienced, high level staff as well as lowers the return in engineering or computer science vocations so that local grads have less incentive to take these key subjects at university or as a profession, lowering the supply of locally trained engineering graduates.

So not only is this unfair to Singaporean youth; it also likely retards our manpower and industrial development as well as comparative advantage in key sectors longer term.

Another lady added:

Thank you Jeraldine for expressing so well what I always wanted to say on the “foreign talent” working in Spore. It very true that we are not entitled n lazy.

It very true that till there are control over the lax rule on S n employment pass, co had no incentive to automate as the easy way is simply to hire cheaper FT.

The civil servants post should be open to these FT so that our spoiled n well sheltered civil servant had a taste of their lax altitude to easy approval of FT S n employment pass.

Btw, wondering why the cybernuts from TRELand like Dosh, Oxygen, Ng Cock Lim and Philip Ang are incapable of discoursing like this? No wonder Richard Wan (ex scholar) and Chris K have moved on out of TRELand and associate themselves with TOC.

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— And maybe Higher minimum wages could stimulate the economy and boost wages, for example. Or if employers focus on high-skilled workers in the short term, that could boost productivity and the economy in the long term, eventually providing jobs for the low skilled. 

(All quotes from: http://www.economist.com/blogs/buttonwood/2016/04/minimum-wages)

Yet despite all this wage repression, the Oppo parties not could win more than 30% of the popular vote and in many wards had only the “THe PAP is always wrong” voters voting for them.

S’poreans daft? No: article on how the oil price collapse in 2014 helped the PAP

———–

*Apologies to the real dogs. Blame Mao for using the term to denote rats and other vermin who take human form.. apparently he didn’t like dogs.

**On Friday Tharman sais Data shows that outward-oriented sectors such as logistics and manufacturing saw productivity growth of 3.2 per cent each year over the last five years. However in domestically-oriented sectors, such as retail and F&B, productivity has fallen by about 0.6 per cent each year in the last three years. 

DPM Tharman said that there is a need to close this gap as it can help to ensure income growth for Singapore over the long term. 

He added that lessons from the most innovative firms should be shared with other companies and the focus will be on developing more breakthroughs, deeper innovations and more disruptors. This could see some firms having to exit to make space for the most innovative players. (CNA)

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  1. The PAP’s ultimate constituents are the rich and the management class, i.e. those who are like them. Lax FTpolicy speaks to these constituents by a simple formula

    Productivity Growth + lax FT Policy = excess rate of return on capital.

    As for the masses, quis magent de la brioche (“let them eat cakes”) as Marie Antoinette said.

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