Singapore could face another round of inflation if firms raise wages
By May Wong, Channel NewsAsia | Posted: 09 July 2008 2154 hrs

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SINGAPORE : Finance Minister Tharman Shanmugaratnam has warned that Singapore could face another round of inflation if companies increase wages to help workers cope with the higher cost of living today.(if raising wages is not a solution to growing inflations, what is? GST credits? Workfare Income Scheme?

to be exact, the increase in wages proposed by the companies is actually not an increase at all.

e.g. we have 7% inflation in 2007
so as suggested by the Finance Minister Tharman

0% wage increase

is it right to say that is actually

= 7% depression of pay

and its not like we don't know that most Singaporeans are living from paycheck to paycheck and having little or no personal savings, aside from the leaky forced retirement saving plan: the CPF.)

He said this will also affect Singapore's competitiveness and the ability to create jobs.(if a particular company is raking in record profits in a booming economy in 2007, i can't see whats wrong with rewarding. perhaps the Finance Minister's worry is Singaporeans might grumble and blame the government for wage stagnation.....which is actually indeed the government's fault from this article itself.)

Mr Tharman was speaking to some 500 workers at the Singapore Industrial and Services Employees' Union dinner on Wednesday evening.(yada yada...what Union? NTUC you mean? sometimes i wonder why Singapore's unions....oh sorry i meant union since there's only 1... looks after the government's interest more than the workers' it was set up to protect)

Higher rice and oil prices have led some Singaporeans to call on the government to set the tone by raising wages.(which is why Singapore unions are pretty much useless. the workers have to fight for their own rights, not the unionists.)

But Mr Tharman said such short-term measures are not prudent. Instead, he said the government has provided assistance to help Singaporeans deal with the higher cost of living. (yes GST credits and Workfare Income Scheme is so useful thank you. now who is the employer? the company or the government?)

These include S$500 million in GST Credits - to help citizens cope with the increased Goods and Services Tax - and special bonuses for senior citizens. (are senior citizens even working at all?

lets say we split

$500 million among 2 973 091 citizens, each citizen gets $168. $168 over 12 months = $14 increase per month

wow $14/month pay increase...thanks i guess i don't need any pay increase from my company)

Mr Tharman said Singapore also addresses the problem of inflation mainly through its exchange rate policy. Since the beginning of last year, the Singapore dollar has appreciated by 11 per cent against the US dollar.(this is assuming all our trade goes through the US...i suppose products made in China, Taiwan, Japan(electronics, automobiles...), Thailand(garments), Europe(electronics, handphones...) are handled in US$?

for his info, Singapore Dollars didn't do much strengthening actually. it is the US$ who dropped instead. e.g. European Dollars strengthened a lot against the US$)

However, the minister said there is a limit to how much Singapore can allow its dollar to rise to fight inflation. Mr Tharman said if Singapore dramatically strengthens its dollar to offset the higher prices, it will instead hurt economic growth badly.

He said oil prices have increased by 50 per cent since the start of this year. And it has gone up by about 100 per cent compared to a year go. Food prices globally are now up to 60 per cent higher than one year ago.

Mr Tharman cautioned Singaporeans to brace themselves as oil prices may increase further.

He said, "We expect inflation to be between 5-6 per cent on average this year, with inflation being lower towards the end of the year. We also expect inflation in the second half of the year to be lower because the effects of last July's GST increase on inflation will wear out.

"However, the recent sharp increase in global oil prices will add pressure on inflation. So we are monitoring this and the impact on inflation closely, and will decide if inflation forecasts for this year need to be revised." (so what happens if Inflation rises to 10% this year? are we going to get more GST credits and Workfare Income Scheme?)

Looking at the global situation, Mr Tharman said the weakness in the US economy could extend into next year. But he maintains that Singapore can expect Gross Domestic Product growth to average between four and six per cent this year. (GPD doesn't reflect very well on how the citizens are coping...especially with the Finance Minister himself personally telling companies not to raise wages...)

Mr Tharman said the lasting solution to inflation is to continue with efforts to help workers upgrade their skills and earn better wages. (is the Ministry of Finance going to pay for my bill and feed my family while i go for a 6 months upgrading course?)

He said it is also important to help experienced, mature workers stay employed and help home-makers get back to work. This will not only increase the household income, but help improve Singapore's tight labour market.(mature? 45 onwards he mean? the reality of Singapore is the older you get, the more dispensable you are. especially when that China or Indian young man can do your job twice as fast for half your pay)

- CNA/ms