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Wage increases for low-income workers cannot be blamed for higher cost of living

Opinion: The Prime Minister’s suggestion that wage increases lead to higher prices is misleading, as it implies that labor costs are the main driver of business expenses in Singapore. In reality, high rental costs and indirect taxes are the primary contributors.

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by Khush Chopra

The Prime Minister’s recent suggestion that wage increases will lead to higher prices implies that labour costs are the main driver of business expenses in Singapore.

The suggestion by the Prime Minister that labour costs are the largest component of the costs of doing business in Singapore is misleading.

While this may well be the case in most Western economies, this might not hold true for land-scarce Singapore.

In Singapore, rental costs—including HDB prices and rentals, private housing costs, and other rentals—contribute significantly to the overall costs of doing business. Additionally, indirect taxes such as GST, ERP, COE, high utility bills, high private hire vehicle (PHV) fees, high taxi, bus, and MRT charges, and foreign worker levies account for a substantial portion of the total cost of goods and services.

Based on this perspective, the estimated breakdown of Singapore’s cost structure for doing business could be argued as follows:

  • Labour Share (Wages): 20%
  • Rental Costs: 40%
  • Indirect Taxes: 40%
    Total: 100%

It is clear, therefore, that the government is a significant contributor to the high cost of doing business in Singapore and a major driver of the high cost of living. Factors such as rental expenses and various indirect taxes play a predominant role, not labour costs.

The ruling party’s economic policies, property prices, rental costs, and indirect taxes are the primary drivers of Singapore’s high cost of living.

Don’t blame the intended wage increases for low-income workers for the high cost of living.

Supporting Points

Let us look at the primary drivers of the cost structure in our economy.

1. Rental Costs:
– High property prices and rental rates significantly impact business expenses. Due to limited land availability, commercial rent in Singapore, especially in prime areas, is among the highest globally, placing substantial financial pressure on businesses.

2. Indirect Taxes:

  • The Goods and Services Tax (GST) affects the cost of all goods and services.
  • Electronic Road Pricing (ERP) and Certificate of Entitlement (COE) fees add to transportation costs, which are then passed on to consumers.
  • High utility bills, public transport costs, and private hire vehicle fees contribute to the overall high cost of living and doing business.

3. Foreign Worker Levies:
– Levies on hiring foreign workers increase labor costs directly, as businesses must pay these fees in addition to wages.

4. Global Economic Factors:

  • Supply Chain Disruptions: Global supply chain issues, such as those experienced during the COVID-19 pandemic, can drive up costs for raw materials and goods, leading to higher prices in Singapore.
  • International Competition: Singaporean businesses often compete globally, and international pricing pressures can influence local prices. Businesses may need to absorb higher costs to remain competitive.
  • Currency Fluctuations: Changes in exchange rates can affect the cost of imports and exports, influencing overall business costs and consumer prices.

While labour costs are a component of the overall cost structure, they are not the predominant factor in Singapore. Instead, high rental costs and various indirect taxes and fees imposed by the government are the primary drivers of the high cost of doing business. Consequently, the government’s policies and regulations significantly impact the cost structure, affecting both businesses and the general cost of living.

Even if labour is a significant factor in pricing, higher wages will not necessarily lead directly to higher prices due to competitive market pressures and price elasticity of demand. The relationship between wages and prices is not linear.

Ultimately, we need comprehensive policy approaches that balance wage growth with cost-of-living concerns.

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Singapore is no different from Dubai and wannabe Malaysia. Totally unlike true first-world countries like those in Scandinavia, where cheap foreign labour is not needed to build decent infrastructure and economic growth.

I think it’s got to do with greedy landlords and business owners in cahoots with politicians eager to pay themselves bonuses based on myopic, get-rich-quick GDP-inflating strategies.

S1

Last edited 3 days ago by Blankslate

PAP is the boss(GIC, Temasek), they are the ones who wants cheap labor like foreign workers so they do not want workers to have high salary. Bosses wants to make lots of money and profit by exploiting worker with low salary. Greed breeds stupidity. Greedy bosses think workers are good to bully, one day they do not vote PAP, see how they cry.

Never declare a minimum wage or a minimum living wage but makes a statement that it is the increase in wages that is causing costs to go up. It is the government itself that owns the most real estate that is pushing the prices up with high rentals. Next is allowing the wealthy foreigners to live here, pushing private residential and commercial property prices up. Public Housing and Shops are also affected because foreigners are allowed to buy on the resale market. I have already written numerous times, if HDB is ring fenced only for Singaporeans, costs will come down.… Read more »

On tremeritus site there’s a write up on the $850/- gov giveaway..written by a Mr Foong Swee Fong.
Very true words.
If u can, take a few minutes to read it.

The STRONG REFUSAL AND DENIAL to raise, ENACT Minimum living wages – DISPLAY the GREED Monopoly of PAP Administration to Self Reward themselves To ACCESS SG State Reserves in ORDERvyo Deprive Obstruct any leeway, any Freedom for Singaporeans to LIVE a decent live the Opposition of WHICH is to allow the PAP to hold at RANSOM SGs to have to DEPEND on PAP for 3 meals. Look at STRANGLING Housing accomodation Polices to COERCE Seniors to live with strangers in rented rooms and flats. Glaringly one of the conditions STUPUALTED , references made to if person’s has made some money… Read more »

The real cause behind the cost is monopoly and oligopoly in Singapore. Monopoly and oligopoly structure make people pay more because of uncompetitive price . Government own companies like Temasek, NTUC, DBS, Singtel which are profit seeking. Singaporeans situation is similar to playing monopoly without owning those hotels and lands. Singaporeans pay “indirect tax” to these companies all own by government like housing loans(DBS), water & electricity, food (NTUC). As we know inflation are making them rich, citizen poor.

Last edited 3 days ago by Petrus Romanus

For only this once, what Lawless Wong said seem to make some common cents and not common sense. Lawless Wong, let’s take a leap of faith to reducing all Ministars annual salary to S$200k and also with corresponding reduction of all those for appointment holders, mayor, etc. We should see the cost of living coming down as per your analogy that only wage rise will increase the cost of living. Otherwise you don’t have the moral right to make that comment. Make no mistake. Since Lawless Wong was appointed DPM and till now as PM, nothing has change for the… Read more »

Now we’re slowly seeing with eyes wide open, the so called independent president T and LW are both duds…
They Blame everything on citizens .
It’s their own messed up bad policies backing up on them.
Nothing much will change i dare say….both gave 100% PAP blood in them and are forced to tow the party line…
Will LW dare to do anything to change? I doubt it ,with that free loader ex pm /new sm ,hovering about LW’s team.

Huh?

DID they SHOUTED OUT LOUD NEW Engagement, NEW 5 CS, NEW Pathways, New Ways of Success? Er…. forward broken bird SG?

2 MORE NEWs – NEW way of LYING. New Way of BS.

Last NEW – Nothing is New.

New President and new PM, … and the majority were in the belief, that there’ll be great and positive days ahead !!! Or so they believed !!! Sure, … it was greatly disappointing and positively crap !!! There’s literally no end to the utter nonsense this regime’s spouting. Finding outrageous and out of sorts reasoning to explain away the cost of living crisis, … and may I remind y’all that SillyPore is unmistakably ranked 2nd only to Monaco, .. in the “Highest Cost of Living Worldwide” charts !!! Imagine, this regime’s brainchild, … the all singing, all dancing and all… Read more »

It is your open door policies that lift all tides. Your lives are ordered and dictated by the rich you attract and anchor on this tiny island. They tap your economic support system as a spring board to regional markets and in turn through municipal charges, such as rental and taxes etc, build your reserves. The people are thus constantly pressured to increase wages through “creative destruction/innovation”( a rubbish concept) . The tide has to rise because all govts are corrupted. You trust your vote? It would be another “corrupted govt” to take its place( look around you). Going to… Read more »

Wow, the PAP Administration BLAME GAME has reached a NEW PARADIGM.

When is the PAP Administration REMAKE SG and Singaporeans to be BLAMELESS, NOT making us OUT as their CONVENIENT Target 🎯 Board WHEN they FAILED to Live Up to Their Million Dollars Salaries Statuses juxtapose their Performances, when they are SO DEVOID of capabilities and abilities?

Goodness. If this PAP is NOT EVIL, CRUEL what is – NEED to Google for new meanings when looks like conventional dicts cannot match them.

So the BLAME by PAP Administration on Globalisation, Tech Advances for their FAILURES, their INCOMPETENCE, has ENDED because these blames Go No Where, DEBUNKED.

Now they SING a NEW and DIFFERENT TUNE.

Singaporeans NEED to QUESTION Wisely , Vigourously, is this Millionaires of PAP Administration TELLING LIES, DEFLECT RESPONSIBILITY, COVER UP FAILURES, Ownself CORRUPT OWNSELF (like eg. when Keppel Corruption is Apparently NOT PUNISHED appropriately, DULY, NO HOLDS BARRED, with the FULL FORCE of the LAWS and MEANS).

This Administration is CLEARLY, FORCEFULLY blaming SGpns for RUNNING INFLATION when THERE ARE NO MEANS for each Singaporean to DO ANYTHING about it . Correct?

When a MillionDollar Prime Minister and his/her colleague, MillionDollar Ministers are earning MillionDollars and tell you your wage increase causes inflation…. and increased cost of living, would you ask for wage cut voluntarily? When millions of dollars spend on cleaning up oil spills and businesses loss in income with perhaps billions dollars of economic losses as result. When badly designed mega bus stop causes more spending and maintenance cost. When hawkers asked and Forced to subsidies inflation by reducing their income and sponsor ‘low cost’ food by reducing quality and quantity. When your utilities bills kept increasing each month and… Read more »

The DISHONESTY is at its ALL TIME HIGH when PAP’s OWN FAILURES are SO HUGE and GLARING so MUCH so they EVEN do NOT NEED their Own National No Blame Culture to Play Games with in SG and its People.

How on EARTH these PAP Administration Bastards Aliens can resort to BE SO HEARTLESS – better for SG NOT to exist since It’s only a SMALL RED DOT.

Sheep produce cotton

How does Sheep causing labour costs high

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