Former National Wages Council Chairman repeats call for "wage shock therapy"
Professor Lim Chong Yah (Photo: ESS)
Professor Lim Chong Yah revisited his much debated wage shock therapy aimed at narrowing income inequality today at the Singapore Economic Policy Forum.
The architect Singapore's wage system in the 70s repeated his call for a three year wage freeze for top income earners.
However, on pay hikes of bottom income earners, Professor Lim's latest suggestions were more tapered.
He said that serious considerations should be made to introduce a compulsory minimum wage scheme, with a suggested quantum of $1,000.
But that is only if wages of lowest paid resident workers remain stubbornly low in two to three years.
Professor Lim's original proposal in April was to raise the monthly salaries of workers who earn S$1,500 or less by 50 percent over three years.
It was then criticised as unsustainable and risky.
For now, he says that the National Wage Council should continue with the issuance of quantitative wage increase guidelines for those earning less than $1,000 - $1,500 a month.
Other economists MediaCorp spoke to had mixed views on how best to close the income gap, but most like Associate Professor Randolph Tan at SIM University agreed that wage increases for bottom income earners have to keep pace with productivity gains.
"If the proposals kick in too quickly, then you may actually end up disadvantaging the very workers you are trying to help. The main problem with trying to raise the wages of low wages workers is that if it doesn't keep pace with productivity, then companies are going to find it very hard to continue operating and they may actually fold up altogether, and if companies fold up, then it's not actually going to help low wage workers."
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