Finance Minister Tharman warned of a possible second round of inflation if wages are being pushed up to meet price increases. I wrote a previous post on what someone thought about matching pay increments to inflation. Of course, the reply I got was “mind boggling”, but Minister Tharman highlighted the repercussions on how the “cost” of pay increments matching price inflation will eventually be passed back to the consumer. This gives rise to a catch-22 situation.

If pay is increased according to inflation rates, then the employer will incur additional cost which may be passed back to the consumer of his company’s service or product. Consumers of his service or product are in turn hit by this inflation. If all employers do the same thing, then we will be spiraling to a devaluation of the currency, which will set the entire nation into a bigger recession.

So, what’s the solution? The “trick” is to actually let the inflation die down by itself. Yes, there should be “normal” pay increments and if people are not able to afford buying something, they will shun it – and sellers will naturally lower the price in order to get their goods or services moving. In the mean time, we “suck thumb” *.

Guard against a second round of inflation: Tharman

By Goh Chin Lian

SINGAPORE must guard against a second round of inflation. The latter could come about if wages are pushed up just to keep pace with price increases.

Finance Minister Tharman Shanmugaratnam issued the warning yesterday, noting that Singapore prefers to fight inflation by having a strong Singapore dollar to ward off imported inflation.

The Government will also give help directly to those who most need it, instead of trying to bring inflation down for every one as a whole, he said to a gathering of 500 unionists.

Mr Tharman’s call for restraint comes at a time when workers – especially those in manufacturing, transport and administrative jobs – see inflation eroding their wages, and could press for more pay.

Despite wages rising by close to 11 per cent in the first three months of this year, real wages in some sectors fell after accounting for inflation that has reached beyond 6 per cent, according to a recent Manpower Ministry report.

Inflation is forecast to slide later this year, but meanwhile imported food prices have risen 10 per cent compared to a year ago, and petroleum products are 64 per cent higher, noted Mr Tharman.

Still, upping wages to offset inflation was no cure as it would simply cause employers to pass the costs on to consumers as well as dent Singapore?s competitiveness, he said.

In a separate interview with The Straits Times, Manpower Minister Gan Kim Yong said: ‘We have learnt from our experience in the 1970s and 80s.’

When wages rose in response to inflation, bosses upped prices, leading to a wage-price spiral then.

Source: Straits Times Interactive, http://www.straitstimes.com/Latest%2BNews/Singapore/STIStory_256485.html

And oh… will we be so poor that there will not be any canned pork for us when we die? (editor: canned pork is a popular dish amongst the Chinese)

No canned pork for hungry ghosts this year

By Jessica Lim

WHEN the Hungry Ghost Festival rolls around in three weeks time, there will be lots of getai singers, noisy auctions and symbolic burning of Hell notes.

But one traditional offering will be conspicuously missing: there will be no canned braised pork, due to shortages of the meat.

Compounded by stricter rules, shelves in supermarkets are bereft of the product, which is usually included in hampers put up for auction at community dinners to celebrate the festival.

During the Hungry Ghost month, which begins in the seventh Lunar month, which is usually in August, worshippers believe that the gates of Hell are open to allow spirits to roam the earth in search of food and other necessities.

Food offerings are given to appease the spirits. And canned pork is one of the main staples.

Source: Straits Times Interactive, http://www.straitstimes.com/Latest%2BNews/Singapore/STIStory_256485.html

Article extracted on 10th July 2008

* “suck thumb” means to be stuck in a situation and not being able to do anything to alleviate the problem



Reader's Comments

  1. Tharmaan | July 11th, 2008 at 10:59 am

    Cry baby. Come get some…

  2. Onlooker | July 11th, 2008 at 12:18 pm

    On the same island but opposite side of the table.
    So rich that every meal is cooked by a chef who only have to cook for a priviliged few or have their meals taken in a restaurant.Or the fish are flown in fresh from Japan, hokkaido.
    With golden toilet taps because they are overworked and golden tap cheer them up so they can do more charity work for themselves.
    Whatever happen to the time when they took a small pay cut along with the citizen when there is massive retrenchment?
    But you see the pay raise that come after is the most astonishing.

  3. Vandalin | July 11th, 2008 at 1:17 pm

    This and other urban legends on your favourite gahmen website today!

  4. Dhope | July 11th, 2008 at 3:52 pm

    Does this mean that the ministers should take a paycut to assist in the dying down of inflation? Cos less $$ = less ability to buy things = faster lowering of inflation.

    Hmm…

  5. Simply Jean » Blog Archive » Coming soon: Fuel surcharge for taxi (and why it seems like a plane trip) | July 11th, 2008 at 6:26 pm

    […] I know that driving a taxi is not easy, but the taxi drivers are not the only group of people who are hit by the raising cost of fuel. In fact, when fuel prices go up, everything else is affected because everything will indirectly be dependant on fuel. Moreover, we are experiencing high inflation now and the solution, it seems, is to live it out. […]

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