Home > PAP candidates > Slower Economic growth = Lower starting pay for Singaporeans?

Slower Economic growth = Lower starting pay for Singaporeans?

I saw this post on TR where our new Minister of National Development stated:

Speaking during a youth forum held at Woodlands Community Club yesterday, Mr Khaw was asked by some in the audience about the large numbers of foreigners in Singapore to which he replied:

“We thought (taking foreigners in) was important to bring wages to people’s pockets, so that we can grow as fast as we can… (and) catch up with other countries. But now, we get the message that ‘we don’t want so much growth, that we are prepared to accept slower growth’”

“It actually affects the youth immediately, because when you slow down growth, it means that job opportunities also come down (and) starting pay also comes down”.

I did not verify this statement but I think it’s mostly accurate. But does slower economic growth = lower starting pay? I think this is a ridiculous statement. In labor economics, pay rate is determined by (what else?) labor supply and demand. Of course, as mentioned in one of my earlier posts, there are also other factors that come into play. For an open economy, an influx of cheaper labor force is known to force down pay rates as labor supply increased (and these cheaper labor force is willing to take on a lower pay rate than locals). Having a slower economic GROWTH, as long as it is still growing, does not mean lower starting pay. Having economic growth also means inflationary pressure. So even if real wage does not increase, nominal wage increase is very likely. Going by this logic, if the government opens the flood gates to allow in similarly skilled foreign workers that could easily substitute local fresh graduates, discounting the fact that there are laws in place to prevent blatant hiring of foreigners, it is still possible to see lower starting pay for Singaporeans despite higher economic growth fueled by all that extra foreign professionals.

If you are trained in a highly niche area and in high demand, such as doctors, your starting pay will not go down. But if you are displaced by technology or cheaper labor force, that is a different story. Price has this special characteristic of being sticky. When is the last time you see things actually becoming cheaper as the economy grows? Decreasing wages in a growing economy is counter-intuitive and it is not possible. Why would a worker be willing to accept lower wages and bonus if the company is earning more in an expansionary economy?

I view such statements with much discontent as it was cunningly delivered in a threatening tone. Mr Khaw is basically threatening: Support pro-foreigner policy or be prepared to suffer in your take home pay. When, when, when, when, when will the PAP ever really understand that money is not everything and the REAL REASONS for demanding slower influx of foreigners by Singaporeans?

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Categories: PAP candidates
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  1. May 31, 2011 at 3:16 am

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