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Professor Tommy Koh. Source: ST

Prof Tommy Koh: Govt resistance towards implementing minimum wage rooted in “fake” ideological arguments

Highlighting that schemes such as the Progressive Wage Model (PWM) and the Workfare Income Supplement (WIS) are not the equivalent of a minimum wage, Ambassador-at-Large at the Ministry of Foreign Affairs and professor of law at the National University of Singapore Professor Tommy Koh argued that the Singapore government's apparent resistance towards implementing a minimum wage in the Republic is rooted in "fake" ideological arguments.

In a roundtable discussion on wages in the age of disruption by The Straits Times on Friday (30 Nov), which was moderated by ST's Opinion editor Ms Chua Mui Hoong, Prof Koh said: "The Singapore government has always said minimum wage produces unemployment ... I would say, look at the experiences of Japan, South Korea, Taiwan and Hong Kong - all of which have introduced minimum wage. there were no such consequences."

The discussion also featured former labour chief and former Cabinet minister and now Temasek Holdings chairman Mr Lim Boon Heng; NTUC assistant secretary-general and chair of the tripartite committees on the Progressive Wage Model Mr Zainal Sapari; president of the Association of Small and Medium Enterprises Mr Kurt Wee; and co-founder of cleaning start-up Nimbus Mr Daniel Thong.

Responding to Mr Zainal and Mr Lim's statement regarding how adopting a minimum wage may reduce competition and deter foreign investment in Singapore, Prof Koh said: "One of the advantages of living a long life is that you remember many stories from the past ... so I want to remind both of these young people that many years ago, we had a debate on whether or not Singapore should have a five-day [work] week.

"For the longest time, the Singapore government said, "No, we should not have a five-day week. Why? it will erode our work ethic, reduce our competitiveness, deter foreign investment" ... Then in 2004, the second Prime Minister [Goh Chok Tong] gave way to the third Prime Minister [Lee Hsien Loong], and overnight, Singapore had a five-day week ... We were so happy celebrating the event that we forgot to ask the government, "What happened to all of the arguments?"

Prof Koh, in his response to Mr Zainal and Mr Lim, said: "With great respect to both of you, the Workfare Income Supplement (WIS) at the moment... is so modest that it has not elevated poor workers out of poverty, to which Mr Lim replied: "Neither has the minimum wage in many countries."

Prof Koh, in his disagreement, said: "In Hong Kong, when they adopted a minimum wage - I think it was fixed at about $1,400 - it lifted 140,000 Hongkongers out of poverty.

"Contrary to the Government's argument, the introduction of the minimum wage in Hong Kong, Taiwan, South Korea and Japan did not lead to unemployment or illegal employment.

"So if it's not ideological, then why are you giving me all these fake arguments? It's as fake as the argument you used for not having a five-day week. You know, this is the usual scare tactic, it doesn't scare me," said Prof Koh.

Mr Lim, in response to Prof Koh, said: "I think your point here is whether WIS is enough or not. It's not a question of whether we have minimum wage - it's whether WIS is enough or not."

Rebutting Mr Lim's claim that Singapore already has a de facto minimum wage through the WIS, Prof Koh reiterated: "We don't have a minimum wage. The Progressive Wage Model, the WIS do not amount to a minimum wage."

He argued that such schemes are "only applicable to four sectors," to which Mr Lim counter-argued that the schemes are applicable to all sectors.

Prof Koh, however, brought the discussion back to his aforementioned point: "When we moved from a five-and-a-half-day to a five-day week, it had no negative impact on the competitiveness of the Singapore economy. And I dare predict that if we have a minimum wage, it will have no negative economic impact on our economy."

Singaporeans are under-rewarded for their labour: Prof Koh

Answering the question as to why there might be so many low-wage jobs in Singapore, Prof Koh argued that it is due to capital being over-rewarded and labour not being rewarded enough.

"In the case of Singapore, wages account for only 44 per cent and capital accounts for 56 per cent (of gross domestic product). OECD averages are 50-50," he said.

Citing Palestinian blogger Nas Daily's "Crazy Poor Asians" short video, Prof Koh said: "He made the point that the average wage of the foreign workers in Singapore is only $600 a month, and he worked it out - less than US$2 (S$2.70) per hour - and he asked: Why is it so low? ... He answered his own question - because there is no minimum wage in Singapore.

"So the reason why people at the bottom of the pyramid earn such low wages (is) that they're competing against a million low-paid workers from the region," said Prof Koh.

Singapore's economic philosophy has always included equity as a part of growth: Prof Koh

At the start of the roundtable discussion, Prof Koh made three points in support of a minimum wage:

Firstly, that Singapore's economic philosophy "has always been growth with equity," and that "all citizens, and not some citizens, should [have a] share in our growing prosperity."

"We are such a rich country ... The IMF ranks us as the eighth-richest country in the world and, yet, there are so many poor people in Singapore," he said.

"I remember that our founding Prime Minister, Mr Lee Kuan Yew once told the Chinese ambassador in Singapore that his vision is to build a Singapore in which the nation's income profile resembles an olive ... but today our income profile does not resemble an olive - it resembles a pear.

"The UN [United Nations] has described Singapore as being the second most unequal society after Hong Kong. I think all of us here should agree that this is a ranking that we do not wish to have going forward ... that we want to build a more equal Singapore," he said.

Secondly, that "we should be concerned about the extent of poverty" in a nation as "prosperous" as Singapore, and that "we should think of acceptable ways to reduce our poverty."

Citing statistics from a handbook published by the Lien Centre [for Social Innovation] at SMU [Singapore Management University], Prof Koh noted that "there are between 100,000 and 140,000 households that live in absolute poverty ... meaning, they are unable to afford basic needs."

"In addition, according to the handbook, there are between 20 to 35 per cent of our households that live in relative poverty," he added, which means that "their incomes are less than 50 per cent of the median income."

"Our median income today is $4,400, so 50 per cent means $2,200," he highlighted.

Thirdly, Prof Koh argued that "there are too many workers in Singapore today who do not earn a living wage".

"I aspire to a situation in which every working man and woman in Singapore can earn a living wage. What is a living wage? A living wage is a wage that enables the worker his or her family to live in dignity and in material sufficiency.

He added that while two wage-related schemes introduced by the Singapore government such as "the Progressive Wage Model, which now applies to four industries - cleaning, security, landscaping, and lift technicians" and "the Workfare Income Supplement" have been "helpful", such schemes have not done much to alleviate poverty in Singapore as a whole, as the "cash component" in the WIS, for example, is "very small".

"Putting them together still doesn't enable many of our workers to rise above poverty," said Prof Koh.

"I want to say that 92 per cent of the 187 members of the ILO [international labour organisation] have a minimum wage. Only 8 per cent, which includes Singapore, do not have a minimum wage," Prof Koh stressed.