This ‘bold and iconoclastic’ proposal seeks to complete the wage revolution of 1979 to 1981, says Professor Lim Chong Yah.He helmed the National Wage Council (NWC) from 1972 to 2001 and as its founding chairman had a pivotal role in that first, radical three-year wage restructuring exercise.Then, the NWC had recommended a 20 per cent across-the-board increase in wages a year, including higher contributions to Central Provident Fund accounts and to the Skills Development Fund, which grants companies training subsidies.

Speaking to an audience of about 50 at an Economic Society of Singapore public lecture yesterday, Prof Lim Chong Yah outlined another three-year solution to Singapore’s ‘two Achilles’ heels’ – the sharp rise in low-wage foreign workers and rising income inequality – while raising productivity.This features a sizeable pay hike for the lowest-paid workers, regardless of nationality or age, earning less than $1,500 per month over three years.

Lim Chong Yah Does Singapore need Economic Restructuring II

He proposes a cumulative 15 per cent rise in the first year, another 15 per cent in the second, and 20 per cent in the third. This increase would be channelled, in equal parts, to the worker’s take-home pay, his CPF Retirement Account, and the Skills Development Fund.

At the top end of the income ladder, Prof Lim Chong Yah proposes a three-year wage freeze for those earning $15,000 or more a month.But he stresses, the intention is not to ‘frighten the geese that lay the golden eggs’ as there will be no pay cut, pay ceiling or super-taxes imposed.

As for the middle income, he proposes pay hikes ranging from a quarter to a third of that received by the lowest-income group, part of which will go into the CPF Retirement Account. The government should also match contributions to the Skills Development Fund to demonstrate its commitment to the restructuring effort.

Prof Lim Chong Yah envisions all operating details of this proposal being discussed and decided on by the tripartite NWC, as was the case in 1979, to ‘forge consensus by the three tripartite social partners’.He acknowledged readily that national economic restructuring is ‘much more difficult’ now than it was three decades ago, given the changed political, economic and socio-economic climate.

But he thinks that Singapore still has effective tripartism and a government and civil service with integrity and ability, so what is needed is ‘national will’ in the face of ‘the problems of economic success’.

In response to questions from the floor, Prof Lim Chong Yah said that his proposed scheme is unlikely to have a significant negative impact on unemployment – now at record lows – and that high-quality foreign investment will continue to flow into Singapore in pursuit of strong fundamentals.

Asked about the pace he proposes, which seems swifter than the government’s target of a more gradual 30 per cent rise in median incomes in the 10 years till 2020, Prof Lim Chong Yah said that some ‘shock’ is needed to ‘check, halt and if possible reverse’ the rise in income inequality.

Lim Chong Yah
Professor
Lim Chong Yah Division of Economics
Director, Economic Growth Centre
BA Hons (Mal), MA (Mal), D Phil (Oxon), Hon PhD (Soka), BBM, PJG, DUBC

Lim Chong Yah Email: ACYLIM@ntu.edu.sg
Lim Chong Yah Tel: 67905689
Lim Chong Yah Fax: 67925560

Lim Chong Yah HSS-04-88
School of Humanities and Social Sciences
Nanyang Technological University
Nanyang Avenue
Singapore 639798

Currently, Professor Lim Chong Yah serves as Professor of Economics and Director of Economic Growth Centre of the School of Humanities and Social Sciences, Nanyang Technological University, Singapore. Previously, he was Reader, Professor and Senior Professor of Economics (1969 – 1992) at the National University of Singapore, where he also served as elected Dean of the Faculty of Arts and Social Sciences (1971 – 1977), and as Head of the Department of Economics and Statistics (1977 – 1992).

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“There will come a time when eventually the public will say, look, let’s try the other side, either because the PAP has declined in quality or the opposition has put up a team which is equal to the PAP and they say, let’s try the other side,” wrote Mr Lee in his new book.”That day will come,” he said.

“No system lasts forever, that’s for sure. In the next 10 years to 20 years, I don’t think it will happen. Beyond that, I cannot tell. Will we always be able to get the most dedicated and most capable, with integrity to devote their lives to this? I hope so, but forever, I don’t know,” he said.He gave the example of the Japanese Liberal Democratic Party, which held power from 1955 to 2009, with an 11-month interruption from 1993 to1994, as an example. He said its downfall was in part because it “carried on with old ideas”.

MM Lee on PAP losing power That day will come

Mr Lee, who now remains on PAP’s central executive committee after serving as PAP party leader until 1992, revealed his concerns in a series of candid interviews with journalists from The Straits Times.

The interviews are published in a new book “Lee Kuan Yew: Hard Truths To Keep Singapore Going” which will be launched on Friday at St Regis Singapore.Mr Lee said the change in government could take place suddenly if PAP leaders splits “either for reasons of principle or personality”.

Or it could happen over time, if the PAP declines in quality or if the opposition assembles a team equal to the PAP.He said, “If the decline in standards happens gradually, an opposition of quality will be launched. The public can sense it. If it is sudden, well, you’re landed with an emergency, and unless a credible team emerges, the country will start to go down the drain.”

But despite his concerns, he was confident Singapore would survive a handover to another party because of the safeguards in its political system. These include the elected presidency, free and regular elections and a bureaucracy separated from the political leadership.

“If we are voted out, the system is still working,” he said. “The new government cannot frivolously change the top men with its own sycophants nor spend the country’s past reserves without the President’s consent. They need to govern within these rules.”He pointed out that it was this projected shift in power some day that prompted the PAP to start the safeguards in the first place.

http://sg.news.yahoo.com/blogs/singaporescene/mm-lee-pap-losing-power-day-come-20110315-005439-740.html