Wednesday, May 2, 2012

Low Wages But High Inflation

In his May Day speech yesterday, Prime Minister Lee Hsien Loong tackled the desire of Singaporeans for higher wages by saying “higher wages push up business costs, affect our competitiveness, and may cause higher inflation."

Singapore does not have a minimum wage (which even Malaysia has) and the PM say that Singaporeans must raise their productivity to get better wages. There’s a few thing wrong with his speech but the biggest by far is the fact that inflation is already here!

Singapore’s inflation is 5.2% but wages has not been keeping up with inflation. High housing prices has been a bugbear of Singaporeans for years and the sky-high prices of COE have cause owning a vehicle to become a daydream for most Singaporeans. There’s no need for higher wages to cause inflation; inflation is a constant problem for Singaporeans already!

Frankly, having high wages does not equal high inflation but for all the talk by the PM of how higher wages would cause higher inflation, having that problem is still far better than what Singapore currently have. Low wages; high inflation!

No comments: