Wages and Higher Income for Better Distribution of the Economic Pie

After I had posted an article on “Minimum Wages, Productivity and Inflation.” I came across an article in the Star newspaper, (Seah Chiang Nee, Insight Down South) on a somewhat similar issue.

Singapore’s former National Wage Council chairman, Professor Lim Chong Yah was reported calling for a national wage strategy to close the economic gap. “To narrow the economic gap between the rich and poor, Mr. Lim had suggested a shock wave therapy, to raise the monthly salaries of workers who earn S$1,500 (RM3,680 or less by 50% over three years.”

Professor Lim’s proposal on raising salaries of those earning S$1500 or less by 50% and a simultaneous freeze on those earning more than S$1500 a month over a 3 years time frame created some commotion.

Some Singaporeans were happy, others not so happy. Professor Lim said that Singapore’s lowest paid workers has been underpaid because of the influx of cheap foreign workers.

Doesn’t that ring similarly for us Malaysians too? We need to have a more equitable distribution of income to raise living standards for our poor and middle classes too.

For my earlier comments on minimum wages, kindly click on the link :

Minimum Wages, Productivity and Inflation

Minimum Wages, Productivity and Inflation

Recently, there has been many discussions, and under the National Wages Consultative Council Act 2011, we would have a minimum wage not long from now. The Council is empowered to review and recommend minimum wages.

You could very well say that as a retiree how would a minimum wage affect me. You are right on that. I had worked as a Human Resource Manager before, and I wholly support a minimum wage as I cannot believe that any worker, even an unskilled one could live meaningfully on a wage that has been lower than our proposed, supposedly minimum wage of RM800 to RM1000. I do believe an unskilled worker who is doing an unattractive job should be paid more and have the means to enjoy a better lifestyle too.

Much has been said about matching productivity with wages. Besides skills training that could help to improve productivity levels, having the correct attitude is imperative too.

It is also about being passionate and trying to do a good job whatever your career call or job.

If we are to be a high income economy, we could not afford not to start with better pay for our unskilled labour. Relying on foreign workers is not good for us in the longer term.

When their home countries progress and develop further, these foreign workers will find better home opportunities than what we have to offer if we do not progress and move up the rung to a developed nation status. We definitely cannot scour country to country for foreign workers to keep our costs down to be competitive.

We have to work on productivity improvements, through more output per unit or per worker. We need to invest in better machines, technology, processes and innovation to improve output and product. Productivity has deeper correlations to education, skills training, value systems and utilization of investments. Productivity increase is better assured with the right education as well as the proper value system.

Inflation

Inflation does not necessarily follow when you have more money in your pocket. You have to distinguish your needs and wants and to work together in bringing cost of goods and services to reasonable levels and not raise them indiscriminately. An increase in the supply of the requisite goods and services that would see a rise in demand would help to keep prices under control too. Having more in their pockets now does not mean the worker will spend all he/she has; they may decide to save the extra for rainy days if prices do not go up too much to affect their purchasing power.

Better Living Standards

I hope that with the minimum wages in place, we could set off a race to raising our living standards for everyone. It should be high enough to improve our purchasing power and living standards and low enough to remain competitive. I personally feel that there should be less wage disparity between the different groups of skilled and unskilled labour. Having said that, does not necessarily mean that a worker with better qualifications will not qualify for higher pay, just not so high. I do hope that the unskilled worker with a minimum wage would be feel appreciated, be committed to what he or she is doing and proud of their contributions to the economy.

After all, who then would take up the unattractive jobs and help keep the cogs turning.