Singapore could face another round of inflation if firms raise wages

[jdelpiero]

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.

He said this will also affect Singapore’s competitiveness and the ability to create jobs.

Mr Tharman was speaking to some 500 workers at the Singapore Industrial and Services Employees’ Union dinner on Wednesday evening.

Higher rice and oil prices have led some Singaporeans to call on the government to set the tone by raising wages.

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.

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.

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.

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."

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.

Mr Tharman said the lasting solution to inflation is to continue with efforts to help workers upgrade their skills and earn better wages.

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. — CNA/ms

[kazuki]

didnt they just have an increment themselves???

This grp of ppl better not be asking for another round this yr!:shooting:

[wyvern]

Hmm... I am kind of puzzled and confused by this. Our government says not advisable to increase wages but on the other hand, inflation on the rise, rice, oil prices are escalating. If we are not entitled to wage increments or adjustments, then in order to generate more income, that would imply we need to undertake more job to generate more income... Do correct me if I am wrong... :D

[tHaNk_yOu]

i also read this.. i realli lost and confused..maybe some expert can help to explain this..

[jdelpiero]

seems like there's one rule for them and one rule for the rest of us.

Economy up a little.. who's the 1st to rush and give themselves a raise for *such* a job well done?

So much for equality, progress, and whatever the hell is in our national pledge for the people.

[kazuki]

putting it in simple words.
They are forever always ready to take on any slighest credits for their benefits, and not take on responsibilities for the slightest error.

Their game is very simple. They hold onto the leash and walk the dog. If u dun be the obedient puppy to wriggle your tail and roll on your bank now and then we want you to, they change u out.
They are ready to import a foreign breed, remember?


IMO, they should take themselves as role models and take on what they say.
Not only say one thing, but yet act on another.

[cyc]

yeah, agreed that these are confusing... juz a few mths ago, a minister said that company that are doing well shld reward their employees by giving 'em a pay rise (or bonus)...

anyway, if/when a recession comes, the govt shld be the 1st to take a paycut (but I doubt they would do that)...

[whitelove]

they say whatever they want lor . . .

[Akira Fudou]

There is nothing we can do... lucky my company is not that pro gov...

[Leslie]

This one also confused me ... I can only think that he's saying

a) pure increase in wages is bad (cos lead to increased cost of doing business that will eventually lead to business failure, layoffs or other negative effects) plus perhaps future situation of too much $$ chasing same amount of goods.

b) what needs to be done is to increase productivity so that higher wages are justified by greater output and business efficiency which will grow economy.

But dun take it from me la, my econs is CMI one.

[$lave]

his warning was for companies that raise wages to help employees to cope with inflation though, so i suppose (b) seems to be what he meant.

although seriously, what companies are so generous to hand out increments to help employees with inflation?




This one also confused me ... I can only think that he's saying

a) pure increase in wages is bad (cos lead to increased cost of doing business that will eventually lead to business failure, layoffs or other negative effects) plus perhaps future situation of too much $$ chasing same amount of goods.

b) what needs to be done is to increase productivity so that higher wages are justified by greater output and business efficiency which will grow economy.

But dun take it from me la, my econs is CMI one.

[cyc]

although seriously, what companies are so generous to hand out increments to help employees with inflation?

my company :D

remember, last time company must pay 20% to CPF, then later they only need to pay 10%, my company give me that other 10% they saved :yeah:

[kazuki]

my company :D

remember, last time company must pay 20% to CPF, then later they only need to pay 10%, my company give me that other 10% they saved :yeah:

very good company actually...=D>


Coz companies have to rem that its employees that form companies. Instead of having high staff turnover, which may create low working morale and also lose workplace culture.

[Leslie]

his warning was for companies that raise wages to help employees to cope with inflation though, so i suppose (b) seems to be what he meant.
I think he meant both (a) and (b) (that is, he didn't mean to have any contradiction in what he said).

The confusion is cos pple were going "on the one hand say dun increase wages, then on the other say the way forward is to upgrade skills that will lead to more wages".

[Godmaster]

SINGAPORE, July 11 - A Singapore court charged 19 people on Friday, including several opposition party members, for taking part in a protest over rising prices in the city-state.

Amongst those accused was Chee Soon Juan, leader of Singapore's most vocal opposition party, the Singapore Democratic Party, and several of its executive members.

Court documents showed they were charged for participating in a procession and an assembly, offences that carry a maximum fine of S$1,000 .

"The Tak Boleh Tahan Protest was meant to speak out against the multitude of ill-timed price hikes initiated by the government," said a joint press statement by the group.

Tak Boleh Tahan means "Cannot Take It" in Bahasa Malay. Singapore's inflation is at a 26-year high, leaving increasing numbers of the city's poor turning to temples for free food.

Some economists believe the government's two percent tax hike on goods and services last July helped stoke inflationary pressures.

Protests in Singapore are rare and an assembly of five or more people requires a permit from the police. Singapore says it needs tough laws on assembly for the maintenance of peace and stability.

The accused said they will go to trial but are currently without legal representation. In a press statement, the group's sole lawyer, Chia Ti Lik, said he was unable to represent them because he was also accused.

"We are now all the more convinced that the protest was needed and justified and simply had to be done," the statement said. "We make an appeal for Singaporean lawyers to come forward to represent us in these proceedings." (Reporting by Melanie Lee; Editing by Neil Chatterjee and Jerry Norton)

http://sg.news.yahoo.com/rtrs/20080711/tap-singapore-protests-c3bb44c.html

[cyc]

I don't think a protest led by the opposition party is credible...
ignorant pple are protesting all over the world, don't expect it to hit S'pore tho'... I don't think our govt (or any govt in the world) can do much abt the rising cost of living, anyway the "big" countries are already taking measures to curb the spiraling prices... I'm not a fan of protest coz I think it's disruptive and doesn't serve any purpose... the best form of protest is to make ur vote counts in the General Election, imho

[Koo]

I wonder how the NDP show will be like, if everyone is ask to bring along a book on economical study and throw in the white crowd in the middle!:evil:

Have anyone ask why banks have yet to increase interest rates in view of inflation. A nice drawn out master plan is in place to suck money out of SG to fuel the passionate investment of the "elite kind".:moneyface

[cyc]

Have anyone ask why banks have yet to increase interest rates in view of inflation.

local banks interest rate follow the US one closely... US had been cutting interest rates in view of the credit chrunk crisis...

[kazuki]

Have anyone ask why banks have yet to increase interest rates in view of inflation. A nice drawn out master plan is in place to suck money out of SG to fuel the passionate investment of the "elite kind".:moneyface

actually by macroeconomics theory, lowering interest rates is to get ppl not to put their money in the bank and to spend more instead.
This is in hope that it will push up the GDP.

But now problem is that no matter how low they push the interest rates, ppl just wont spend coz the economy is really that BAD globally.

[cyc]

actually by macroeconomics theory, lowering interest rates is to get ppl not to put their money in the bank and to spend more instead.
This is in hope that it will push up the GDP.

actually, interest rates is also related to stock market and real estate... when the stock market and real estate are "hot", the interest rates would go up, this is to cool down the speculators in the stock market and real estate, becoz pple would need to borrow from the banks to invest in these instruments, becoz the lending rates goes up, the deposit interest rates also goes up, and more pple would be encouraged to put their $$$ in the banks when the returns from the stock market and property market ain't good enuff, forcing the banks to lower interest rates... that's the cycle in summary, now we're at the lower interest rates cycle becoz of the foreclosure in US property market (many home owners had to default the mortgage payment)... 8 yrs ago, the interest rates is even lower becoz of the Asian stock exchange meltdown (or the dot.com bubble burst) which led to recession in many countries...

[kazuki]

i think us is in deep trouble no matter who comes in as the new president, he has hell of a problem to solve.

But i think whoever it is, die die like also dun want to declare they are having an economic recession...

[Leslie]

Recession is a dip in real economic growth for 2 consecutive quarters right?

So, not a question of declaring or not declaring ... maybe some number massaging can be done I dunno, but if real growth shrinks consecutively and the final numbers reflect that, then it's technically a recession no matter who says otherwise. The public will be able to determine from available data. The most politicians can do is perception control etc.

[kazuki]

but i think problem now is that big boy still want to be the BIG BOY, and he knows that declaring will get his ppl into a longer period of depression.

Actually this reccession might just take longer to recover than i tot it will.
Initially i tot it should recover by late 08 early 09. But looking at the banks closing down, ppl rioting here and there. I scare it may really just prolong to 2010 and later... :(


Any economics students/graduates here can share their POV?

[cyc]

I'm not an economics student/graduate, but here's my POV :)

technically, US is not in recession yet becoz like wht Leslie said, u only hit recession if u've 2 consecutive -ve quarter growth (or 2 consecutive same quarter loss, according to my boss)... last quarter, US had a slight positive growth, even tho' if u compare the result to the same quarter last yr, it's much lower... so, I would say that the US economy is slowing down a lot, to the point that many predicted that recession is well in the horizon...

the US govt had no choice but to "save" the major banks that are closing down, to prevent a "snowball" effect... otherwise, the effect would be magnified to an unimaginable depression... in this aspect, the S'pore govt did a better job by enforcing stricter housing loan approval process...

how long would it take b4 the US economy can recover? I don't think even a Prof in economy can answer that question, and give an accurate prediction (whoever that can predict well would make tons in the stock market)... too many factors involved, US currency rate, interest rates, oil prices, food prices, war, another 911, etc etc...

[kazuki]

but even the "god of investor" Soros says its a recession, and its coming too slow which is making it very strong.... :(

[cyc]

but even the "god of investor" Soros says its a recession.

some pple like to say some different/controversial juz to make the headlines... I read the article also, he said it's not a recession technically but pple had been losing jobs & spending less, and with the high fuel & food price, it's recession now...