No.  Wages are not likely to increase since it’s feared to cause a 2nd round of inflation.  It sounds logical at first since wage increases will increase the cost of final products or services.  So far so good until one starts counting the number of types of consumer products an average Singaporean buys thats actually made in Singapore.

A large number of consumer products Singaporeans uses are imports eg. Food. Products that probably incur warehousing and transport as Singaporean costs.  The rest of the costs are incurred by the exporters, and hence, Singaporean wage increase “probably” may be manageable afterall?

On the other hand, it would cause our export products, such as some electronics and such, to cost more.  And with that, we might experience in a dip in export sales simply cause our produce aren’t as cheap anymore.  In other words, it affects our competitiveness (Remember, the finance minister said, ‘competitiveness’ ) with other exporters.  Less money is gonna roll into Singapore companies, and again, the employees are gonna be affected.  But wait!  In light of US’s slow down, higher fuel prices and inflation thats taking place everywhere, chances are, we are STILL gonna experience a dip in export sales. 

http://www.shanghaidaily.com/sp/article/2008/200806/20080618/article_363587.htm

SINGAPORE’S exports fell the most in 17 months in May as the island’s manufacturers shipped fewer electronics and other goods to the United States and Europe.

Non-oil domestic exports dropped 10.5 percent from a year earlier following a revised 5.3 percent gain in April, the government’s trade promotion agency said in a statement yesterday. Economists expected a 2.1-percent increase.

Manufacturers across Asia face easing demand amid slowing growth in the US, the region’s largest overseas market. Singapore’s trade promotion body last month lowered its forecast for export growth this year to between 2 percent to 4 percent, from an earlier estimate of 4 percent to 6 percent.

So maybe raising wages won’t be such a bad thing after all?  Problem is, where are companies going to get the money to do so when they are experiencing dip in Sales?  Since we are at it, where did all the money go?

Likely, the money was the contributing factor in the income divide as mentioned in a previous writing about poverty in Singapore.  Companies valued their middle and higher management people more, and forgot to raise the salaries of those who did the real hands on work.  Perhaps… Just a guess.

Back to the main problem, combating inflation.  Currently, the government has been urging Singaporeans to reduce their expenditures in light of this 7.5% inflation level.  All in all, a very sound and wise advice and encouragement which should be heeded.  Use your air conditioners less, buy fans, go topless more often (I’d love this one ), take more cold showers instead of heated ones, switch off your power sockets when not in use and even buying cheaper locally made stuff helps. Thats about all a Singaporean can do in order to play their part in encouraging “deflation.”

Maybe the Government isn’t about to help increase wages.  What about declaring the rest of 2008 to be a GST free year?  Thats gonna decrease cost by 7% almost instananeously!  Perhaps this will encourage the richer folks to spend more and encourage better monetary circulation. 

The chances of them doing that, is equal to that of a flying pig. 

The author is just day-dreaming… again.