Wednesday, May 16, 2012

All Ups and One Down.

Was looking at SMRT’s 10-year annual financial reports in brief and the recent spate of intimidation and finger-pointing in response to Prof Lim Chong Yah’s urge for a revamp of wages for our workers to address the income inequality issue, came into mind.  

A series of intimidation followed efficiently from our Cabinet that wage increase without corresponding productivity increase will result in inflationary pressure on business costs and consequently scaring away businesses away from Singapore. Their bottom line is that productivity holds the key to any possible wage increase even though Prof Lim has already pointed out that our workers have been underpaid, meaning that previous increased productivity has not been compensated by adequate wage increase. Yet, we have to further increase our productivity before even dreaming of any wage increase. The irony is that our workers have been working the longest hours among the 12 countries in an International Labour Organisation 2012 Report.

More cold water is thrown in by MP Teo Ser Luck [Here]. He demands increase in revenues for business on top of the productivity increase as the pre-requisites for any wage increase. PM Lee Hsien Loong wrapped it all up as a Labour Day gift for all workers simply: Singaporeans, Stop! dreaming of higher wages.

Naturally, business owners and GDP-reliant government would cry out loud for increase productivity. But who could guarantee our workers, in black and white, that increased productivity would warrant a pay increase? Productivity increase contributes directly to revenue increase in the form of cost savings. Business owners are business owners afterall, coveting for profits. Increased revenues would not necessary translate into wage increase or proportionate wage increase. That is the reality which our Cabinet and MPs choose to overlook.

Take a look at SMRT’s net profits over a decade (Fig. 1). Net profits have grown 183% over the ten years with year to year increase in most years. Despite incurring a loss in FY 2011 and gaining a small increase in FY 2010, SMRT still bagged in over $160 million in the last three consecutive years.

(Fig. 1)

(Staff and related costs include directors’ fees and remunerations)

Fig. 2

Assuming Teo Ser Luck’s logic that growing revenues and increase productivity will bring about higher wages and using SMRT as an illustration, SMRT workers should have seen their wages increase by the same proportion, or at least, by a similar proportion. Over the course of ten years, SMRT’s staff and related costs increased by 70% in total (Fig. 2), inclusive of fees and remunerations of the directors, as well as the CEO’s. Much of this 70% is due to the huge increase in staff cost in FY2003 alone.

Looking at the average percentage increase per staff, subsequent years see cost per staff growth kept below 10% and in some years, an actual wage drop, meaning the average wage for workers did not see wages growing above 10% and were subject to wage cut in some years. This cost per staff will not be an accurate reflection of those staff below the ranks of directors and CEO, as any increase of this latter group of staff will distort the average wage of staff by a large extent. In cases where increment is only allotted to directors and CEO, overall staff costs will still increase.

If we compare the percentage increase in SMRT’s net profits year-to-year with that of the staff and related costs, wages seem to fall behind the net profit growth. FY 2007, FY 2008 and FY2009 saw a 31.08%, 10.38% and 8.5% increase in net profit respectively but subsequent FY2008, FY2009 and FY2010, staff and related costs per staff fell between 2.08% to 4.25%. FY 2005 alone saw a substantial 40.35% increase in net profits but it was translated into only a 2.3% increase in staff costs per staff in FY2006.

Although the figures shown here is a very raw form of illustration, it serves to highlight the fact that our workers generally are at a losing end where wage increase is subject totally to the mercy of business owners or top executives. And there is no organization or a strong and independent trade union, much less the ruling party, to literally fight for the welfare of our workers who were shortchanged in the first place.