Discussion on Workers’ Wages in Singapore Part 1: Wages vs Prices of Goods

Price Increases Due to Cost Increase?

Starhub has decided that “from next month, customers who make calls lasting less than a minute will have to pay more than what they are paying now. The telco will implement a “one-minute minimum charge” for local calls from May 1. After the first minute, talk time will be billed on a per-second basis” It was only in 2008 that M1 had followed Starhub’s lead to offer per-second billing for outgoing calls. But now, two of the three telecommunications companies (telcos) – Singtel and Starhub – have turned around now to implement a “one-minute minimum charge”. Starhub explained that this is due to “rising costs of network maintenance, upgrade and expansion” – what does this even mean? I can hardly imagine how costs have increased so drastically such that the telcos in Singapore would have to resort to implementing higher charges on outgoing calls. Consider that the prices of mobile phones have come down significantly over the past few years – a phone with similar hardware specifications would have cost several times more then what they cost now. Yet, Starhub claims that in spite of their investments in technology, prices are going on. This smacks in the face of logic – how is that even possible? Even Apple has priced their phones at a consistent pricing, even as they continue to use new hardware components for their phones.

No. Price Increases Are for Profits

The only plausible explanation is that the telcos in Singapore are increasing prices because they want to increase profits. Of course, you won’t be hearing them say that. The problem? When there is no competition or rather, pseudo competition, the telcos would be able to fix prices at their whims and fancies. It is surprising that the Competition Commission Singapore hasn’t actually charged the telcos with price fixing. Then again, it’s hardly surprising – not when the government has stakes in the majority of the Singapore-owned companies – would you charge the government when they have the legal machinery right by their side? Of course, does it mean that the telcos should maintain prices for the rest of infinity? Naturally, in a capitalistic economy, as capitalists continue to charge higher and higher prices for raw materials and modes of production so as to earn higher profits, these costs would eventually be passed down to the consumer. Prices will keep increasing in a capitalistic economy so, price increases shouldn’t be surprising.

Growing Disparity Between Wage and Price Increases

However, Singaporeans’ displeasure isn’t rooted in price increases – Singaporeans’ displeasure is rooted in relativity. The increasing in prices for outgoing calls represent only one of many other price increases in Singapore – again, this itself isn’t surprising. What is discomforting, however, is that the increase in wages aren’t keeping pace with price increases – the growing disparity between such increases and the subsequent erosion of people’s purchasing power and savings are what become so glaring that disdain for price increases start surfacing.

Investing in Technological Upgrades = Higher Prices. Investing in Skills Upgrade = Higher Wages? 

When Starhub announced the price increase, they explain that this is due to “rising costs of network maintenance, upgrade and expansion”. For companies which reside in a capitalistic economy which enshrine their contributions, it would of course be easy for them to announce how the prices of raw materials and the modes of production have increased and thus that they would need to increase prices.

What of the workers then? With the amount of training, re-education and increase in skill sets that workers obtain over the course of their work life, are they able to make a similar claim – Now that I have invested in further education and increased my workability with new skill sets, I would demand a higher wage.

Sure, logically, the people should be able to do so. But two days ago, in an interview in The Business Times with Manpower Minister Tan Chuan-Jin, it was reported that, “After adjusting for inflation, the average monthly household income from work per household member, for the households in the bottom decile, grew just 0.3 per cent annually from 2002 to 2007, and an annual 1.1 per cent from 2007 to 2012.” Mr Tan was reported to have said that, “I think it is not acceptable that the wages have been languishing at this level for so long.” It was also reported that “graduate employment surveys by tertiary insitutes here show that after adjusting for inflation, recent cohorts of graduates were starting work at a lower pay than the high enjoyed by the 2007 cohort … Growth in nominal terms had also slowed from 2007 to 2012, compared with the period from 2003/2004 to 2007, based on mean data.” It was reported that, “Mr Tan … is “not particularly happy” with this situation, given that the economy continued to grow in the meantime.”

Tan Chuan-Jin: Minimum Wage Will Hurt Workers. Really? 

Ironically, Mr Chuan “warned that artificially hiking wages without accompanying changes in employees’ productivity and skills can be “quite detrimental”. Employers may not want to employ certain workers because of the costs of complying with a minimum wage – which could end up hurting many of the people a minimum wage is designed to help.”

First, can you imagine if we were to say the same to Starhub? – “The artificial imposition of a “one-minute minimum charge” without accompanying improvements in the quality of calls and Internet speeds can be “quite detrimental”. Customers may not want to employ the services of Starhub because of the costs of complying a a minimum charge – which could end up hurting the profits that the minimum charge is designed to boost.” Of course, this is a very likely scenario – but in a fair competition scenario. Starhub would consider carefully before imposing additional costs on its customers. Of course, Starhub knows that the three telcos actually exist in a monopoly and Singaporeans simply have no choice but to accept the costs imposed on them. And with the Competition Commission Singapore unlikely to act, customers simply have to bite the bullet. Similarly, the NTUC is as government-abiding as the Competition Commission Singapore and is unlikely to provide any saving grace for workers’ wages.

Second, the majority of the countries in the world have implemented minimum wages. I am not quite sure if we can agree with Mr Tan that employers would thus leave en masse from Singapore because they were horrified that they were required to pay fair wages. But I would imagine the Singapore companies owned by the government to be horrified – with their market base firmly in Singapore and without other strong sources of revenue and profits, higher wages among Singapore workers will necessarily eat into their profits.

In the next part of this article, we will discuss the importance of unions and the roles of unions in protecting workers, and how the roles of unions have been compromised in Singapore. Part 2 can be found here.

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2 comments

  1. Pingback: Discussion on Workers’ Wages in Singapore Part 2: Dearth of Unions and Government-Controlled Market Economics | The Heart Truths
  2. Jonno

    I’ll put it in simple terms – the Singapore govt has the mentality of a tin-mine operator or more appropriately, a cruise ship owner given that S’pore has embraced casinos.
    A tin-mine operator of the past exploits the incoming laborers, runs or controls various lucrative businesses and trading concessions for the laborers ie. opium, cigarettes, brothels, liquor, necessities, etc. Everything & anything that can be exploited, will be fully exploited. I used this example to show how far S’pore have come in 40-50 years yet we are still enmeshed in a tin-mine operating environment (…of another form) to this day.
    In the current day, the S’pore govt is much like a cruise ship owner – the casino operator, the shop concessions, the onshore tour operator, etc. – all are contractors to the owner. They take the business risk while paying high rentals or concession fees. In return, the owner provides the captive market for them to exploit to the fullest. Superimposed the ship casino (Integrated resorts), shop concessions (shopping malls, REITs), onshore tour operator (Singapore Flyer, F1 Night Race, etc.) – S’pore is much like a cruise ship!
    Look at social goods that real govts provide to their electorate – healthcare, education, social welfare, pensions & aged care. These are non-existent or only available on a user pay basis in Singapore or welfare subjected to a means test!. What does that tell you? Govt or tin-mine/casino ship owner? Govt budgets are run on a consistent surplus basis – public housing, public tertiary education, public transportation & public healthcare are all run on a for-profit basis! This is not a govt but a cunning business operator exploiting profit to the fullest!
    For once and for all, do Singaporeans seriously think that the S’pore govt would share the wealth? I don’t think so!

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