Getting to the root of the vicious cycle

I refer to the 13 Feb 2013 Straits Times letter “Stuck in vicious circle of rising wages and costs?” by Ms Teo Mei Ling.

Ms Teo says that if SMEs were to increase the salaries of Singaporeans, costs will increase which will be passed on to consumers. In other words, foreign workers help SMEs save cost but has this cost saving been passed on to consumers? Things have become more not less expensive. So where is the cost saving for using cheap foreign labour? The answer lies in ever increasing rentals so in the end the cost savings went to the landlords and the government being the biggest landlord of all stands to benefit most from these cost savings. The WP call for rentals to be lowered is the missing piece in this whole wage-SME survival conundrum. Ms Teo’s husband need not be caught in this vicious cycle if only he recognises its root cause and joins in the fight to overcome it.

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2 Responses to “Getting to the root of the vicious cycle”

  1. ;Annonymous Says:

    You have hit the nail on the head. Go to any food court in any shopping complex in town. Speak to the stallholders and they will tell you they cannot “tahan” the high rentals which keep going up, especially after renovation works. Many simply just give up The same with other small retailer.No prizes for guessing who the biggest landlords of these shopping complexes in Singapore are.

  2. Ace Says:

    There is one more area which needs to be looked at. Most SMEs are family run and hires their entire family in the business. They then pay themselves very high salary and buy cars under the company account. On top of that, they pay themselves high bonuses and director fees at the end of the year. Then when coming to hire outsiders for the job, they simply squeeze every single blood out of them. The total salary of these companies seem high, but it is distorted. Putting the squeeze on foreign workers means that these companies will need to pay fair wages to Singaporeans rather to themselves.

    There is no way such companies will move overseas or close down as they will be the biggest losers, not Singaporean or our country. We have already have a liberal foreign employment policy to feed these SMEs for the last 15 years and Singaporean workers are the ones being exploited. Let us tighten this policy for the next 5 years and see what is the result. Those that cannot survive will leave the industry but these are the companies that depends on the foreign workers for survival and is hardly any loss for the country.

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