Deputy Prime Minister, Finance Minister and Minister for Manpower, Tharman Shanmugaratnam said in Parliament that a person with a monthly income of $1,000 can afford to buy a HDB flat. Many people found this statement to be unbelievable. Two ministers and one Member of Parliament came forward in his defense and explained why it was possible. Their explanations were still not accepted by most people, who gave their views in the Internet.
I agree with the calculation put forward by Minister for National Development, Khaw Boon Wan. A two room HDB flat cost $100,000. After deducting a HDB grant of $60,000, eligible to certain people under certain conditions, the net cost is $40,000. The monthly repayment over a 30 year loan period, at an interest rate of 2% per annum, is $150. This can be covered by the CPF contribution. There should be no dispute over this figure. Even if the interest rate were to increase to 4% at a later date, the monthly payment would still be less than $200.
The argument by the critics focus on another point - how is the family going to survive on $800 a month. This is a separate matter. It shows the importance of raising the earnings of those at the lower income brackets. There is strong argument for a minimum wage to be implemented in Singapore, to follow the example of most other developed countries.
I guess that a minimum wage in Singapore should be around $1,400 a month. Together with CPF contribution, the cost to the employer should be $1,600 a month.
The Government does face a dilemma about implementing a minimum wage. Already, Singaporeans are more costly than foreign workers. Any increase in the cost of employing Singaporeans through a minimum wage must make them even less competitive. And it will increase the burden on small companies that are not able to cope with meeting the high cost of doing business in Singapore.
In the past, the Government tried to address this issue by giving a workfare income supplement to low income workers. Like many convoluted (i.e. extremely complex and difficult to understand) schemes introduced in Singapore, it did not seem to give much help to the people in need, apart from creating a lot of wasteful administrative work.
There are ways of addressing the challenges, but the Government must be prepared to consider other options, rather than stick to the old approach. In the past, it was difficult to find a solution as there were separate ministers in charge of manpower and finance. We now have the unprecedented situation of one minister being in charge of both portfolios, in addition to being the Deputy Prime Minister!. He now have the power to find a more holistic solution - but does he have the time?
If he does not have the time, he can appoint some people to find the solution. It would be better to get people from outside the old circle that came out with the old approach. Instead, we need fresh ideas.
I agree with the calculation put forward by Minister for National Development, Khaw Boon Wan. A two room HDB flat cost $100,000. After deducting a HDB grant of $60,000, eligible to certain people under certain conditions, the net cost is $40,000. The monthly repayment over a 30 year loan period, at an interest rate of 2% per annum, is $150. This can be covered by the CPF contribution. There should be no dispute over this figure. Even if the interest rate were to increase to 4% at a later date, the monthly payment would still be less than $200.
The argument by the critics focus on another point - how is the family going to survive on $800 a month. This is a separate matter. It shows the importance of raising the earnings of those at the lower income brackets. There is strong argument for a minimum wage to be implemented in Singapore, to follow the example of most other developed countries.
I guess that a minimum wage in Singapore should be around $1,400 a month. Together with CPF contribution, the cost to the employer should be $1,600 a month.
The Government does face a dilemma about implementing a minimum wage. Already, Singaporeans are more costly than foreign workers. Any increase in the cost of employing Singaporeans through a minimum wage must make them even less competitive. And it will increase the burden on small companies that are not able to cope with meeting the high cost of doing business in Singapore.
In the past, the Government tried to address this issue by giving a workfare income supplement to low income workers. Like many convoluted (i.e. extremely complex and difficult to understand) schemes introduced in Singapore, it did not seem to give much help to the people in need, apart from creating a lot of wasteful administrative work.
There are ways of addressing the challenges, but the Government must be prepared to consider other options, rather than stick to the old approach. In the past, it was difficult to find a solution as there were separate ministers in charge of manpower and finance. We now have the unprecedented situation of one minister being in charge of both portfolios, in addition to being the Deputy Prime Minister!. He now have the power to find a more holistic solution - but does he have the time?
If he does not have the time, he can appoint some people to find the solution. It would be better to get people from outside the old circle that came out with the old approach. Instead, we need fresh ideas.
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