Workers’ Party (WP) Jamus Lim took to his Facebook on Tuesday (14 July) to reiterate his point that implementing minimum wage in Singapore is “not unabashedly good policy”, but it’s rather a “good start that is also evidence-based”.
He said this in response to negative reactions that have emerged about the party’s manifesto for GE2020.
“There has been some pushback against the claim, from our #workersparty manifesto, that min wages is sound policy. Let me begin by emphasizing a position I’ve held from the start: min wages is not unabashedly good policy. But it is a good start that is also evidence-based,” Mr Lim wrote.
One of the key suggestions included in WP’s manifesto for this year’s election is putting in place a minimum take-home wage of S$1,300 per month for full-time work and pro-rated for part-time work. According to the party, this will provide some ease to over 100,000 Singaporeans who currently earn less than S$1,300 to meet their basic need.
In the post, Mr Lim explained that there is rarely “unambiguous evidence” in social sciences, adding that studies can produce difference results.
“Studies can yield different results, which is why continued research is important & policies should be based on the overall literature. That’s why I mentioned that many papers since Card-Krueger corroborate its findings,” he said.
He added, “The best way to aggregate and evaluate the totality of results is to rely on meta-analyses, which are studies of studies.”
“Meta-analyses take the existing results out there, and ask if there are systematic conclusions we can draw from the literature.”
He went on to explain that nearly all meta-analyses in the UK and US “find little or no employment effects” from minimum wages. As such, just like studies on anthropogenic climate chance, the “evidence mostly points in one direction, but it isn’t unanimous”, Mr Lim said.
“Very recent studies also tend to support the notion that min wages generate little employment effect, even for low-wage workers, and even when the jump is quite substantial. This is the main takaway from studies of Seattle’s recent min wage ordinance,” noted Mr Lim, who is an economics professor who holds a PhD in International Economics from the University of California, Santa Cruz.
He continued, “Of course, there are country-specific idiosyncrasies. That’s why before rolling out such a policy here, it is crucial that we have an evaluation framework in place, and an independent min wage-setting board, which can make on-the-fly adjustments in response to local conditions.”
Following that, Mr Lim, who is part of the winning team in Sengkang GRC for GE2020, pointed out that consumers and firms pay for the minimum wage, and not the government.
“Who pays for the minimum wage? Some people think this would cost the government. Actually, most min wage models have no fiscal impact, and the burden is borne mostly by higher prices consumers pay (3/4), and in part by firms (1/4).
“I see this as a feature, not a bug. The point is to redistribute some bargaining power from capital to labor, and I think we can afford to chip in a little to take care of the least well-off in society. With many more buyers than min wage workers, the price effect will be small,” he said.
Progressive Wage Model is not minimum wage
If that’s not all, Mr Lim also pointed out that he disagrees with some people who said that the Progressive Wage Model (PWM) is a minimum wage.
“One final point: some have suggested that the Progressive Wage Model (PWM) rolled out by the govt, is (in effect) a min wage. I don’t agree,” he wrote.
He explained that the “PWM ties wages to job function” and this gives a lot of space for employers to cut corners, without redressing power differentials.
“It also leaves those who simply cannot upskill in the lurch, and earning below a living wage. The reality is that, by our estimates, 100,000 workers remain below the min wage, and so PWM is obviously not working for these people,” he stated.
Based on the Ministry of Manpower, PWM “helps to uplift” low-wage Singaporeans and permanent resident workers who are working in sectors like cleaning, security and landscaping.
The model was first introduced for the cleaning sector in September 2015, and a minimum wage was implemented for workers in specific industries, as well as the required wage increase that the workers are supposed to get as they progress in their careers. This minimum wage amounts for each category are also adjusted incrementally over the years.
Just a day before Mr Lim’s post, Pro-People’s Action Party fanpage, Singapore Matters uploaded a post on its Facebook commenting about the minimum wage matter.
It said that no other explanations or arguments are needed besides this one statistic. The post stated that minimum wage was legislated in the US in 1938, however 40 million people still live in poverty today.
“No big arguments needed. Just one statistic. Minimum wage was legislated as Federal law in the US in 1938. 82 years later, million are still left behind,” it said.