berthahenson

More jobs, higher wages, more pain?

In Money, News Reports on September 16, 2014 at 3:03 am

I suppose we should be happy with the half-year manpower report that was published in MSM today. Wages are going up – because employers can’t hire as many foreigners as before. Real median wage went up 4.6 per cent last year, and is likely to go up further. (Nope, got no updated half-year figures on income.)

I guess employers have no choice but to raise wages to attract locals to work. There are 63,900 jobs going a-begging as of June. So more jobs, higher pay for locals, as ST trumpeted today. But there’s a cautionary note that ST sounded as well, backed up by experts and economists.

What if employers just passed on the increased manpower cost to consumers? So, everything cancels out and real income growth, said one economist, will be “muted’’.  And it looks like this might well happen given how productivity is going down. It’s gone into “negative territory’’ or to put it simply, people are actually doing/producing less than before in the second quarter. It’s -1.3.

You can blame the construction sector. It’s the biggest drag on productivity. (I sort of wonder if this is because the construction sector is skimping on employment of foreign workers because of higher levies they have to pay. And if lack of labour is also a reason for more people dying on worksites.)

But hey, most of us are NOT in construction so wages shouldn’t be affected, right? Except that the services sector isn’t doing too well on the productivity front as well – and this is the sector that is facing a foreign labour squeeze in numbers. You wonder where the hotels and malls that will be opening will get their workers…They just have to pay more to get the fussy locals to work then?  Higher and higher wages, and higher and higher cost of living. What’s the point of holding more money if it buys you the same amount of stuff as before?

What if employers simply cannot find workers despite offering higher pay? They can do a few things – re-locate, bug the G for more foreign workers or fold.

MOM said in its statement: “The manpower-lean environment will continue to be a feature of the Singapore economy. As the economy restructures, some consolidation and exit of less productive businesses is expected.”

We’ve been hearing so much about wages that I wish we had a handle on how our employers are holding up, like how many had to “exit’’ less productive businesses. It will be good to look at bankruptcy figures to find out how SMEs are faring. Is this rate increasing? It should be, given that economic restructuring does mean that companies would have to “consolidate’’ or “exit’’. If so, retrenchment figures should go up too. But a total of 2,410 workers were laid off in the second quarter of this year, lower than the 3,110 workers who were retrenched in the previous quarter. What does this mean? Are we over the worst?

Experts interviewed by ST don’t seem to think so.

They noted that the authorities tightened foreign worker hiring policies with the aim of forcing firms to work more efficiently. But the reverse has happened in some companies. It quoted Singapore Business Federation’s chief operating officer Victor Tay as saying that a lack of workers has pushed some firms to focus on day-to-day operations instead of planning ahead to raise productivity.

In other words, some companies are too busy trying to keep head above water to think long-term.

ST also quoted Mr Victor Mills, chief executive of the Singapore International Chamber of Commerce, as saying that curbs on employment pass renewals have led to the rejection of “talented, committed and productive’’ foreign employees who could have helped raised productivity levels.

Hmm…they weren’t replaced by locals? Or the locals not as good?

Only 11,000 or so foreigners were hired in the first this year, mainly for construction. And this is half the number the year before. The labour market report, however, didn’t break down the figure into employment or S pass or work permit holders.

I think the people who wanted fewer foreigners here have got their wish. Except that now, we’ve got to persuade Singaporeans to do the jobs that foreigners used to do – for the pay that they did. Or if we want to make even more money, we simply have got to be better (read: productive) than the foreign workers were.

It’s time to make productivity sexy.

The widow and her millions

In News Reports, Society on September 15, 2014 at 1:29 am

Okay, I think everybody who’s been reading about the tussle over the $40million fortune of the old widow would have formed an opinion now…You just can’t help it from reading the news reports. So it seems a 40 year old tour guide from China has somehow managed to inveigle himself and his family into the widow’s bungalow – and will.

The 87-year old Madam Chung turned over all her affairs to him, giving him lasting power of attorney in 2012. (Before anyone asks, seems she was diagnosed with dementia only this year.) She has left all her assets to him as well, effectively cutting out the family (she has a younger sister and a niece – mother and daughter) as well as a long-time friend who used to stay with her and who actually introduced her to the said tour guide. Needless to say, the friend thoroughly regrets the introduction. And the niece has started legal proceedings to revoke his power of attorney which gives him control over Madam Chung’s life.

Mr Yang Yin looks like he’s in hot soup. It’s not just the family who is gunning for him. Questions are now raised about his permanent residency status which the immigration authorities are investigating. Seems he obtained his employment pass when he moved here in 2009 by setting up a dance studio, with Madam Chung of course. But somehow he’s now a PR. (Which, by the way, means he can’t be quietly repatriated) Then the Singapore Chinese Chambers of Commerce and Industry is wondering why he’s describing himself as an SCCCI director on business cards, when they don’t even have such a position. And an MP has denied knowing him as her grassroots leader, when pictures of him at community events turned up.

Of course, Mr Yang didn’t do himself any favours by uploading holiday pictures of himself and his family and bragging online about his luxury watches and how he’s into big money, right after he moved into the Gerald Crescent bungalow.

He’s moved out of the bungalow and is now in a Toa Payoh flat it seems. There was an unseemly row between the niece, herself in the tour agency business, and his wife, when she turned up to evict the family.

He’s sticking to his guns though maintaining that the old widow had asked him to be her “grandson’’ and that her family cared nothing for her. He even hinted that her long time friend was in a relationship with the widow’s late husband, something which the old lady, now 84, has vehemently denied.

He transferred her money into his account – so he could “manage her finances more efficiently’’. He claimed that Madam Chung made regular payments to her younger sister and her niece but he stopped the payments when he took over her finances. He did not say why he did so but thinks that “this could be the reason for (them) to be upset with me.”

He got his family to move over from China and into the bungalow – so that he did not have to travel to China and back which would have “hampered  my ability to look after Madam Chung’’.

He gave Madam Chung’s long-time driver the boot in 2009, saying that the old man, now 80 years old, had tried to attack him. He’s now Madam Chung’s chauffeur.

He sacked her Indonesian maid in 2011 because she was always “asking for money’’ and because he and his wife were around to take care of the household chores.

Yes, he did buy and sell a $1 million Amber Road condominium unit last year, for a $200,000 profit. But this was an investment on Madam Chung’s behalf and had “her knowledge and consent”.

As for the niece maintaining that her aunt had been manipulated into signing over her legal rights in 2012, he said that a doctor accredited with the Public Guardian office had declared that Madam Chung had the “requisite mental capacity’’ when she did so. I wonder who this doctor is. The media didn’t say. And I also wonder who her lawyer is….

The case has yet to go before the courts and both sides seem to have gone to the media to air their views. Predictably, Mr Yang is being painted very black in social media. And the pity is, so are his compatriots from China.  Yet he is one man among millions and Justice Bao has yet to rule on the case. (Seriously, it sounds like a Chinese drama serial).

This is probably the first, or at least rare, case of someone trying to revoke another person’s power of attorney. It must be an interesting time for the office of the Public Guardian which surely has a vested interest in making sure that its processes are water-tight. I wonder what sort of questions the public guardian asks of anyone who is signing away his legal rights and how it ensures that the person hasn’t been influenced in any way, especially a childless widow with millions.

And in the middle of it all is the old lady, a retired physiotherapist, who has no children. If the man and his family have moved out of the bungalow, and she no longer has her driver and maid, I wonder who’s looking after her now.

Is it CPF-only for retirement?

In Money, News Reports on September 11, 2014 at 2:59 am

I was a bit disappointed to read the terms of reference for the panel to review CPF. It seems to me so itsy-bitsy. I guess that’s the point. The Prime Minister has made clear the CPF isn’t in need of an overhaul but some tweaks. So the panel now has to think about what sort of minimum sum would be needed in future, after next year’s $161,000 for those who turn 55. The PM has promised a moratorium of sorts on the rise so I guess it will be for the panel to decide how much, and when.

Then the other terms of reference are what the PM has already let fall in his National Day rally speech, on the possibility of lump sum withdrawal, allowing some people to get higher returns on their CPF and a graduated re-payment scheme (small to bigger returns over the years).

ST was predictable in getting the panel members to talk about their role. TODAY went further to ask non-panel members what they thought of the terms of reference. I agree with those interviewed that they do seem narrow.

TODAY reported NUS economics lecturer Chan Kok Hoe saying that the CPF’s adequacy as a retirement vehicle depends mainly on two factors: How much funds people are able to accumulate for retirement and what returns they can obtain relative to inflation.

It reported:

The terms of reference do not include looking into the first factor, which would involve the allocation of funds between housing and retirement as well as overall CPF contribution rates, he said. On the second factor, the panel is tasked to study how to adjust CPF payouts to increase nominally over time, but not to examine whether CPF funds should be invested in special inflation-indexed government securities, he said.

I agree. If the issue is retirement adequacy, shouldn’t we go further than examining what sort of  minimum sum would be able to give a regular payout till day of death? Like looking at the ratio between setting aside cash in the CPF and putting money into housing? Or have we settled that retirement adequacy includes assets such as housing? Well, there needs to be a big mindset change over “unlocking’’ the value of housing if so. And shouldn’t we also be looking at CPF contribution rates now set for employee and employer?

But I could be wrong. These could well be questions subsumed under the Minimum Sum scheme re-look.  

Then again, there is the big explosive question on withdrawal age. So it’s still 55 at the first key unlocking CPF and later, at 65, you start getting payouts? Or should be 60, and then 65 given the rise in retirement age? It will be immensely unpopular to raise if you think back to the days of the Howe Yoon Chong report. I really think that is a question the panel could pursue and give all the numbers that go with its recommendation. It doesn’t mean that the G would have to adopt whatever the panel  proposes – it will be a political decision outside the panel’s ken – but it would be a good education for all concerned, especially who want their CPF, like, now.

ST has an interesting piece by academic Donald Low commenting on another aspect of retirement adequacy outside of the CPF scheme, the Supplementary Retirement Scheme which gives tax savings if you put aside a certain sum in a bank every year contingent on withdrawal at age 65. It’s not a very well-known scheme and taken up mainly by the higher income. Mr Low talks about making it compulsory or at least an “opt-out’’.

I suppose if the panel had to look at so many different aspects, like what sort of interest the CPF should make or what the money should be invested in (inflation-indexed securities?), it would take more than its allotted one year time frame.

But I also wonder if we should move away from looking at CPF (cash and home) as the people’s sole retirement income. Mr Low’s SRS option is one. Maybe other groups should be working in parallel with the panel, to study the amount of insurance among various groups of people, for example, as well as what sort of family financial support is now given to the elderly. Just like parents give pocket money to their children, I am sure adult children do the same for the elderly. Or has this gone out of fashion and the elderly are now supposed to fend for themselves?  

This is just my one cent worth. Not accounting for inflation, of course.

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