Tuesday, November 5, 2013

The Profit Motive

When Lim Chong Yah bemoaned that something should be done for the low wage workers at the bottom of the feeding chain, he proposed a two prong attack:
1) freeze the country’s highest salaries for three years;
2) raise salaries of workers earning less than $1,500 by 50 per cent over three years

While silence has been maintained on the call for wage freeze for the fat cats, a $200 pay rise for full-time cleaners has been announced. Ignoring for a moment the politicisation of the recommended hike - applicable only to cleaners at all 15 People's Action Party run town councils - the low wage earners are finally getting a respite. Half a loaf is better than no bread, so goes the saying.

Then Teo Ho Pin, coordinating chairman for PAP's town councils, had to blow the whistle on their "generosity": "At some point , we need to revise service and conservancy (S&C) charges." The wage hike was not a consequence of enhanced productivity, residents have to pay first before expecting to see any improvement in the maintenance of their wards.

The modus operandi is also obvious in the proposed overhaul of the of the bus industry, which is basically a duopoly of SMRT and SBS Transit. SMRT chief Lt Col Desmond Kuek described the new contracts model as "more sustainable" than the current structure, in which operators have to meet service stands and "face a cap on fares". If Kuek had ridden the trains or buses anywhere as long as us commuters, he would have remembered that "cap" has been raised countless times. Buried in the blurb about the workings of the new model is this line: "Public transport fares have not been adjusted in the last two years." Nowhere is it mentioned, nor do we recall, that public transport service has improved over the last two years. Nudge, nudge, wink, wink, hike first, work on improvement later.

The exposé on the real intention of the overhaul? SBS Transit's ringing endorsement of the proposed exercise: "As an operator, you are generally assured of a certain rate of return instead of being exposed to revenue risk." That assurance of profitability will surely come from ripping off the hapless commuters. Always have been, always will be.


  1. Pardon my failing memory, but apparently one exPM had decades ago promised substantial dividends every year to those who subscribed to SBS and Singtel . Die, die also must show profit. Especially when TH , the overwhelming Majority Shareholder in both do need them , no ?

  2. That's why TH and GIC are fully invested in Sg -- sure win strategy.

  3. Did'nt LKY say to Ngiam, " what's wrong with collecting more money " when both men were discussing the purpose of the COE ?

    I am sure PM Lee said something similar to his bunch of stooges, " what's wrong with paying ourselves more money. " ....even when he and his team have yet to prove their worth.

    Having said, I believe the most important principle associated with the LKY Institute for Public Policy has to be
    "what's wrong with collecting more money ?"
    And this is one principle that all students earmarked for a career in the civil service must always remember, especially foreign students sponsored to study the PAP methodology.

  4. 3 steps to fare hike:

    1 Nov - Report public bus operators SBS Transit and SMRT have met all service standards

    2 Nov - Report public bus operators are loss-making

    4 Nov - Announce possible long-due travel concessions to poly students and people with disability.

    I bet my last dollar that fare hike is imminent.

    It's ridiculous that duopoly can be loss-making business. Perhaps they operate on a HDB-LTA model - left pocket to right pocket, the more they build the more they lose. Or the management is mostly on million-dollar paycheck like the over-priced ministers.

    Bus companies have always been profitable no matter when and where they operate. So cut the crap PTC and PBOs, just admit both of you are in cahoot to make handsome profits from public's misery.

    1. It's supposed to be HDB-SLA model.

    2. You can bet the hike is already on the table. The "sweeter" of discounts for poly students and handicapped are well used tricks of their trade. As usual, for every 10 cents of rebates, they will pocket dollars more in net profit.

    3. The same with the cleaners, then S&C charges goes up. Just wonder whether this time they make enough allowance to provide for investing in shares to pay for their fat bonuses.

      Remember to ask Tio Ho Pin.

  5. With a gezillion dollar salary and the now weekly (some say daily) train stoppages, kwek shud indeed suffer the 4 rung demotion to lt col. Inflation is everywhere except our wages and in the garment's massaged economics data. You know self-interest comes first in the civil service every time, they have real wages growth, the sheeple just have to suck it up.