Raise CPF contribution from employers for low-income staff

January 17, 201410:22 am324 views
Raise CPF contribution from employers for low-income staff
‘Raise CPF contribution from employers for low-income staff’

SINGAPORE — Raise the retirement age to above 65 in order to ease the local labour shortage. And in place of a national minimum wage scheme, introduce a compulsory wage increase — through an increase in employers’ CPF contribution — to raise the wages of low-income workers.

These are the two suggestions that Professor Lim Chong Yah, former Chairman of the National Wages Council (NWC), has for its current leadership, saying they emanate from lessons drawn from the operation of the NWC.

Prof Lim, who had chaired the tripartite body for almost three decades after it was formed, was speaking to reporters on the sidelines of the launch of his latest book, Singapore’s National Wages Council: An Insider’s View, yesterday.

In 2012, Prof Lim ignited a public debate — which also drew a response from the Government — after he called for the Singapore economy to be put through “shock therapy” to address the widening income gap. His proposals then included freezing the salaries of top earners for three years and instituting the minimum wage system.

When asked if he still stood by his earlier call or had changed his mind, Prof Lim pointed out that the paper he presented at the Singapore Economic Policy Forum 2012, which contained the proposals, was republished in a chapter of the book.

He added that he had advocated the introduction of a national minimum wage in a memorandum he submitted to the NWC back in 1972, when it was formed. But he could not get the support of all tripartite parties.

“It is not a panacea to solve all ills, but it can be helpful under certain circumstances,” Prof Lim said of the minimum wage, which he noted is in place in more than 130 countries.

Asked about the possible downsides in having a minimum wage system, he said: “Inflexibility It can be such that a lot of people become unemployed. But, in our case, we can handle it because we have the NWC.”

The NWC can adjust the minimum wage and overcome that weakness, said Prof Lim, who is Emeritus Professor of Economics at the National University of Singapore and Nanyang Technological University.

Asked about the Progressive Wage Model (PWM), which allows workers in low-wage jobs to get higher pay through training and productivity gains, he pointed to Mauritius, which has a “multiplication of minimum wages” consisting of about 460 different rates for different sectors and has created “a lot of immobility problems and management problems”.

While he felt that Singapore would not end up in a similar situation, Prof Lim said it was something which it needed to think about.

There are also issues that need to be resolved for the PWM, such as whether the training will automatically lead to productivity gains and pay increases, he added.

 

source: todayonline.com

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