PROFESSOR Lim Chong Yah's radical plan to narrow the income gap is not workable, said the Singapore National Employers Federation yesterday.

 

Foreign investors and multinational companies do not take to shocks, and top talent may leave Singapore, warned its president Stephen Lee.

 

Pay increases are also not 'something you can easily switch on and off', Mr Lee added in the employer group's first comments on the proposal.

 

Last week, Prof Lim put forward a plan to narrow Singapore's income gap by raising the monthly wages of workers who earn below $1,500 by 50 per cent over three years, while freezing the pay of those who earn above $15,000 over the same period.

 

Yesterday, Mr Lee told reporters on the sidelines of the Manpower Ministry's workplan seminar that while the federation agrees with Prof Lim on the need to raise wages, it disagrees on how to do it.

 

Prof Lim has 'concentrated very much on the wage level', and his plan will not work 'without taking into consideration the competitiveness and the flexibility of the market', countered Mr Lee.

 

He argued that it is better to take a long-term view which raises wages and productivity at the same time. This will be more sustainable and 'not as radical'.

 

Mr Lee's comments came immediately after Minister of State for Manpower Tan Chuan-Jin also spoke about the plan. The Government will 'robustly' address the pay of low-wage workers such as cleaners, Mr Tan said in his workplan speech, but it needs 'to do so sensibly' so it does not 'adversely tilt the economy over'.

 

He was the first office holder from the ministry to respond to Prof Lim, although he did not refer to the professor by name in his speech. Mr Tan said: 'Let us tread carefully. Economic restructuring does not come just by raising wages alone.'

 

Meanwhile, Prof Lim has responded to concerns that his proposal will risk incurring job losses.

In a letter to the media on Monday, he argued that low-wage workers are already 'grossly underpaid'. Even after the 50 per cent boost over three years, their wages will still be below their productivity contributions, he added.

 

And as to whether low-wage workers can be helped by fiscal policies, the professor said he is worried the low-income will come to rely on government handouts for their well-being. This is why 'retraining and retraining of our workers to enhance their occupation mobility' is an integral part of the plan, he stressed.