By Teh Shi Ning

PROFESSOR Lim Chong Yah's radical proposal on Monday - for a wage revolution not unlike the 1979 one he was central to - drew criticism from disbelieving economists and businesses who saw it as impractical - 'economic suicide'.

It is not hard to see why. His bold three-year plan includes a wage freeze for top earners while incomes for the poorest are raised by huge quantums - 15 per cent in each of the first two years and 20 per cent in the last year.

Those earning the most are the very same globally sought talent Singapore cannot afford to drive away with such a move, critics said. And small and medium enterprises (SMEs) unable to bear wage cost hikes could put low-wage workers out of work, or channel costs to their prices, driving inflation up, others added.

Prof Lim, replying to questions post-lecture, said that he has indeed given thought to these matters. But different priorities - he sees income inequality as a potential 'Achilles' heel' for Singapore which must be swiftly addressed - lead him to different conclusions.

For instance, he thinks foreign talent will still be drawn to a country with 'peace, security, harmony and reward'. 'Foreign talent know, and should know, that Singapore is not an El Dorado. It is a country and a nation. We will have to treat each other with respect,' he told BT. He also acknowledges that SMEs dependent on low-cost labour will have a hard time, but thinks they 'will have to design their manpower utilisation to make better use of their workers'.

But beyond the criticism it has drawn, the more crucial fact may be that Prof Lim's proposal has reignited debate over Singapore's income gap and how it is unlikely to narrow if things are left as they are.

Singapore's Gini coefficient has risen over the last decade, from 0.454 in 2001 to 0.473 in 2011. Another common measure of income inequality, a ratio of household income from work per household member at the 90th and 10th percentiles, also worsened, from 8.58 in 2001 to 9.19 in 2011.

Incomes of those at the lower rungs have also been stickier. The latest labour market report released last month showed that from 2006 to 2010, Singaporean workers' real median incomes rose 13 per cent, while that for the bottom 20 per cent of workers rose a slower 11 per cent.

Globally, income inequality is disconcerting because of the threat it poses to social stability and hence growth - something Singapore's leaders have recognised.

The Prime Minister, for instance, said at the start of a new term of Parliament last October that 'income inequality is starker than before' and that 'at the lower end, incomes have risen too slowly, far too slowly'.

Moves to strengthen the social safety net may have helped. For instance, the Gini coefficient, when adjusted for cash transfers to the poor and taxes on the rich, actually narrowed slightly from 0.455 in 2010 to 0.452 last year.

But the government's broader push lies in ongoing measures to curb foreign workforce growth with tighter quotas and higher levies, and the nationwide campaign to boost productivity. The hope is that this economic restructuring will address the downward pull on the lowest wages. Its success, however, will rely on workers and companies acting as they should.