TR EMERITUS

Toh Chin Chye on CPF in Parliament With the pending lawsuit against Roy Ngerng and the protest rally at Hong Lim this weekend on peoples’ savings in the CPF, what is the daft Sinkies thinking on this issue? Many are crying foul and demanding that they get their money back, they want their life savings back at 55, no more funny and unintelligent excuses. What would the rest of the world be thinking? Would they be puzzled, mouth wide open, eyes popping out, at the thought of the peoples’ life savings being held back and to be decided by the govt on when and how much they could take back? Here are the thoughts of some Sinkies. Some are still questioning if the CPF savings are indeed their money. And they need a minister to say yes, it is their money. And they feel so relief in hearing that. Can you believe it, Sinkies saving a life time, putting their hard earned money into a saving scheme and not sure if the money is theirs? And some even said, it is gone, treat it as a tax to feel better. To this kind of thinking, by not acknowledging that it is their money, by giving up, they will feel less painful. It is a kind of resignation, a kind of capitulation. Can you imagine that daft Sinkies could think like that? And the money is no small sum, hundreds of thousands of highly valued and desired Singapore dollars, that many in other countries could feel very rich and could live on for a life time. And some take consolation, or maybe really feel it, to be exhilarating, jubilant, when they see the string of zeros in their CPF statements, feeling so very rich. And some are still hurriedly putting in more cash into their CPF savings to feel richer, to enjoy higher interest rates and to feel secure. And there are some odd balls protesting and wanting their CPF money back. They are rejecting the 4% interest rates for no interest. And they are not only contributing money generously to a young man to make their feelings felt to the Govt, but will attend in force in a protest rally this Saturday at Hong Lim Park, the Speaker’s Corner, where no permit is needed to hold a protest, just a simple registration of intent. Would the media report on this strange protest and the strange behaviors and thoughts of the daft Sinkies? Maybe the world’s media will report this incident as a comedy, an uniquely Singaporean thing that would not happen in any country, people protesting to have their life savings back. The whole world may have a good laugh at the daft Sinkies if they come to know what the protest is all about. This is going to be front page news material for the world media except ours. How can daft Sinkies not be a joke? Chua Chin Leng aka redbean * The writer blogs at mysingaporenew.blogspot.com.  Read More →

According to the table (see below) at the Central Provident Fund (CPF) website, the first CPF change was introduced on 1 Oct 2003, the cruel contribution cut to 33%. "The First Cut Is The Deepest" is also the title of a song by Rod Stewart, but nobody has the mood to sing after this. And since the Prime Minister said, “People support CPF cuts because there are no protest outside parliament,” the CPF board got carried away with the implicit consent. CPF Minimum sum, salary ceiling, lower contribution rate for older workers, Medisave minimum sum, phasing of withdrawal rules, etc - the sky's the limit. And the table does not include one more significant change - the erosion of CPF interest rate over the years. It was 5% in 1963, went up to 6.5% in 1974, and then the slide started heading south to current 2.5%. The formula for calculating the interest rate is a complicated business. From 1 July 1999 to present, the formula is supposedly 80% fixed deposit rate and 20% savings rate of the average of the major local banks over the preceding relevant 3 months. Problem with this method is that the banks have a different rate for someone depositing $100, and another with $100 million to park here. Just ask any wealth management executive. Don't set your hopes too high up for the coming 7 June gathering of disgruntled voices at Hong Lim Park. Even the sympathetic members of parliament calling for higher rates and improvements to our CPF system will be met with same deaf ears. Technology makes it easy for the cold hearted, they simply switch off the hearing aid. Maybe what we need is a change of venue, say, outside parliament house. Tattler * The writer blogs at singaporedesk.blogspot.com.  Read More →

How raising wages could help raise productivity While it is regrettable that the NWC didn't have enough sense to raise the wage increment threshold from $1,000 to $1,200 after two years, I'm actually more surprised by another statement made in the NWC statement. The NWC's recommendation was that "real wage increases should be in line with productivity growth over the long term". Sounds sensible (because it is), but wait a second and think about that formula. Yes formula. The formula for labour productivity is essentially the value of the output of the worker divided by the value of the input of the worker. The G likes to reduce all this to dollars, and not just dollars, monetised dollars, basically what a company sells. So based on the recommended G formula from the "Way to Go" website (Singapore's modern productivity drive post-Teamy the Bee), it doesn't matter if a worker produces, say, 1,000,000 units of Item A. If the company doesn't sell any of it, then labour productivity is considered low. Poor worker. Slaved his ass off and can't get a raise because his company basically sucked. SPRING has a more generic calculation, but that's for internal audits - we're interested in the overarching G definition of "productivity", which the NWC is using, and that is money. I don't believe that every company leeches profits in order to torture workers. Some do, but others don't. Even so, when companies/NWC say that they can't increase real wages because productivity hasn't increased, what they're saying is (assuming the worker isn't a lazy douchebag): a) we can't convince our customers or clients to pay more, so I can't pay my workers more (which is what is happening with the security industry after decades of cheap-sourcing). b) I can't get my damn act together and sell the goods and services that you produce for the company profitably, so I can't give you a raise. c) Singapore's companies are so lousy at putting the factors of production together efficiently, so I guess all you workers will have to suffer for it. Sorry. It seems to me that one way to raise productivity is to raise wages! If unions can play hardball and push wages up, then the cost of goods and services, especially in the local context, will be forced to rise (international trade is another different problem, which is why Singapore tries to stay away from international competition in low value-added goods and services). For example, raising cleaners' wages, as NTUC has managed to do (by basically negotiating properly and getting the G to play along), will mean that the buck is now passed to cleaning companies. Those cleaning companies worth their salt will survive by passing on the cost to customers (maybe even add a little more fat into the billing if their product/service is sufficiently differentiated). VOILA! Productivity! (also because we assume that although labour productivity may stagnate, capital productivity will actually rise). The downside is that the workers with the higher wages do pay for SOME (not all) of the cost that is passed down to the customers, because sometimes they are the customer (HDB S&CC charges for example). The rest of it is paid for by other companies (boo hoo, higher cost of doing business), the G, or by the rest of us who didn't get a raise (boo hoo, inflation). But three cheers all around (for SG) if we can sell some value-added, innovative, unique, differentiated product globally and make other economies pay for it (SG needs entrepreneurs)! Okay, I'm getting into the international economics thing I didn't want to get into now... back to local. Sure, some companies will die along the way, but as long as the economy/market doesn't actually shrink during that time, the displaced workers will find new employment at this higher wage level elsewhere (at a more productive company that has managed to convince clients to pay more). Now I'm waiting for the economists to come and try to point out all the exceptions to my suggestion and why it won't work (in theory). Daniel Yap * The author blogs at Signs of Struggle.  Read More →