Cannibalising our own wages

“Personal cheap sourcing” could be one reason why we face wage stagnation.

By Daniel Yap

 

In a perfect world (which we don’t live in), better wages for workers should mean that more money goes out into the marketplace to be spent. That in turn means higher revenues for companies, which translates into higher wages as businesses increase productivity and share profits with their employees.

Of course, things can go wrong and often do. When we turn that cycle backwards, we have employers who pocket business profits and refuse to give proper wage increments. We have middlemen who add little value to the supply chain but only serve to jack up the price of goods. And finally there is us – the consumer who won’t pay for quality services or products, and who stinges on spending for short-term gain. That’s what we call “personal cheap sourcing”.

The Government has already started to work against an ultimately cannibalistic practice of cheap sourcing by introducing the Step-by-step Guidebook on Best Sourcing for companies and government. The hefty, 188-page guide is summed up thus: cheap isn’t always best and may lead to problems down the road.

We, like good companies and government agencies, need to break this vicious cycle of going for the cheapest goods we can find, especially in a day and age where time and convenience are more valuable than mere money.

Breaking this cycle is like dating: each has to play his or her part, but at the same time, we can’t be waiting for someone else to make the first move. Let’s take a look at some of the ways we get it wrong.

 

When we won’t pay more for quality

It’s easier to judge this with products – a piece of furniture that will last for 10 years, or another than lasts for three years, but at half the price. That knock-off shoe that looks like the real thing, but which will give you blisters after an hour. Not so hard to spot value here, and some of us are even willing to part with money for quality.

When it comes to service, however, can we say the same? When was the last time we tipped an awesome waiter over and above the 10 per cent service charge? Do we tip a safe, helpful, smooth-driving cabbie for a good ride? Do we willingly pay more for the same product at a store that gives you more convenience, or better service? These questions are at the heart of personal best sourcing.

 

When we let the worst of kiasuism take over

That advertisement in the newspaper is designed to get you thinking about price, often by helping you ignore everything else. Like that cartoon character Mr Kiasu homing in on the best deals (and by that he really just means the cheapest deals) we perpetuate the false idea that the cheapest items should be the most sought after.

 

When we celebrate the cheap more than the good

I bought a backpack recently after extensive online research. It was perfect for the purpose I wanted it for – waterproof, rugged, and able to fit a laptop. But at $200, it seemed expensive compared to the bag it replaced – a $39 backpack with a raincover. The reviews of the new backpack online and from friends were glowing. It was considered by users to be perhaps the best backpack they had ever purchased for this use. Some had used theirs for five years or more. My current backpack gave out after about a year.

Picking price over quality for a product is the same as an employer trying to pay a worker the absolute minimum, even though the worker performs well at work. Eventually, (I hope) the employee will leave to find an employer who truly values the quality of his work. Although we do not have a “relationship” with the products we consume, it must be clear to use that price does not equal to value.

“Personal cheap sourcing” is part of an economic cycle that helps companies with a “cheap” mindset while taking business away from quality employers. If we want jobs to pay better, then we, as employees, need to wean ourselves off this mindset as well – starting with our local context.

 

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About the author

Daniel Yap

Daniel Yap works in the media industry and enjoys blogging on social and political issues. He is married with four children.

He blogs also at: http://doulosyap.wordpress.com

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