Lim Chong Yah unveils "Shock Therapy II"

[Enye]

BT Report

 

Professor Lim Chong Yah, who rattled many economists and businesses with his wage shock therapy in April, on Thursday addressed the two extremes in Singapore's salary and wage system in his "Shock Therapy II".

 

In his latest paper presented at the Singapore Economic Policy Forum 2012, Professor Lim said the National Wages Council (NWC) should continue with the issuance of quantitative wage increase guideline for those earning less than S$1,000-S$1,500 a month for the next two years.

 

He reiterated his suggestion for NWC to call for an across-the-board temporary three year moratorium on salaries of the very top executives both in the private and public sectors.

 

Professor Lim added that should the wages of the lowest paid resident workers remain stubbornly very low in two or three years' time, serious consideration should be made to introduce a compulsory minimum wage scheme with, say, S$1,000 a month as the start-off quantum.

 

In April, Professor Lim created a stir with his proposed wage reforms which included a wage freeze for top earners while raising incomes for the poorest by huge quantums - 15 per cent in each of the first two years and 20 per cent in the last year.

 

The proposals reignited debates over Singapore's widening income gap. Shortly after, in May, the NWC recommended that the pay of workers earning below S$1,000 a month be raised by at least S$50 a month.

 

 

 

An small excerpt of his paper--

 

The Two Extremes

My remedial proposal had two parts. One aimed at lessening the number and percentage of workers at the lowest end of the income ladder. Two advocated a three-year pause to the ever increasing rate of escalation of income of the highest income group. Media reports on the salaries of some top executives in Singapore can range from $2.5 million a year to $5.5 million a year, or roughly $208,000 to $458,000 per month. In one instance, I recall 4 top family-related directors of a publicly listed company paid themselves between $2 million and $3 million each, when the company did not see it fit to pay a single cent dividend to its shareholders. When a very brave shareholder at the AGM asked the Chairman of the Board of Directors for an explanation of this dichotomy, he replied to the effect,

Edited October 25, 2012 by Enye