While the Government’s current ‘Minimum Wage Plus’ sectoral approach covers productivity and career progression within specific sectors, such a move has taken “too long” to implement, said the Workers’ Party (WP) chief Pritam Singh.
Such is why a universal minimum wage extends beyond a “moral imperative” — it is also a yardstick for “national solidarity” and how Singapore treats its most vulnerable workers, he said in a Facebook post on Monday (12 October).
‘It has been eight years, with three sectors covered. This is far too long for Singaporeans who work outside these sectors. How long are they to wait? This was a question my colleague Leon Perera asked in Parliament to which no reply was forthcoming,” said Mr Singh.
The Aljunied GRC Member of Parliament posited that instead of solely relying on the sectoral approach to assist low-wage Singaporean earners, it would be better for the minimum wage task force to “consider a parallel endeavour that implements a universal minimum wage with $1300 as a base” alongside the sectoral approach, so as to not leave behind citizens who are employed outside of the specific sectors.
“In a recent BT article I shared, many business leaders have already indicated that they would support a reasonably considered national minimum wage. I hope employers, businesses, unions and the Government consider this issue as one that goes far beyond dollars and cents, but as a fundamental basis of our national solidarity,” said Mr Singh.
Manpower Minister Josephine Teo in a Facebook post yesterday said that the new tripartite workgroup on low-wage workers “will once again bring together key stakeholders to examine the issues holistically and refresh the consensus on what will work best for our workers and businesses”.
Stating that the Progressive Wage Model (PWM) has contributed to the expedited growth of wages for the worker at the 20th percentile compared to the median worker — “most markedly in the last five years” — Mrs Teo said that the Government is seeking to expand the PWM to cover more workers.
“Workfare has been enhanced four times, most recently in January this year. Together with the Special Employment Credit, it has raised wages by up to 40% and strengthened retirement adequacy through cash and CPF top-ups,” she said.
National Trades Union Congress chief Ng Chee Meng said in a separate Facebook post that nearly 80,000 workers in the cleaning, landscape and security sectors “have seen their incomes increase based on built-in yearly wage increase as part of the PWM” to date.
A number of commenters on Mr Singh’s post today, however, agreed that a minimum wage would be a more “effective” strategy for low-income earners in Singapore.
One commenter noted that Singaporeans who earn less than S$1,300 per month “are a small minority” in the workforce, which will not make a huge dent in the country’s economy if implemented.
The commenter also noted that the current Workfare top-up under the PWM “only top up ard $49 cash for a worker earning $800 per mth”, which is insufficient in helping low-income earners meet their monthly expenses.
One commenter posited that low-income earners may be “less dependent on handouts” from the ruling People’s Action Party if a universal minimum wage is implemented.
A couple of commenters highlighted that the problems faced by low-income earners in Singapore go beyond the issue of wages, but rather “extremely weak and fragmented labour laws” that are “heavily tipped in favour of employers”.
One commenter argued that other ways should be explored such as modifying relevant government regulations before arguing for the implementation of minimum wage.
Mr Singh, however, reiterated his support for the minimum wage, stating that many of his own views “reflect the lived experiences of our low-income”.
One commenter concurred with Mr Singh’s views, stating that the “self-correcting neoliberal capitalist model” is no longer functioning the way it should be.
Implementing relevant legislation such as the minimum wage, they said, “need to take place to correct the moral limits of the market” to ensure that Singapore’s low-income workers are protected.
Minimum wage paid by employers, not govt; minimum wage raises employment rate in some countries contrary to common belief: Academician Linda Lim
Professor Emerita of Corporate Strategy and International Business at the University of Michigan Linda Lim in an interview in July this year with Kwan Jin Yao — a PhD (Social Welfare) Candidate at the University of California, Los Angeles — said that neither the thresholds set by the PWM nor the minimum wage proposed by WP meet the minimum income standard required for a one-person elderly household to sustain basic needs.
Professor Lim noted that the current wage target under the PWM is S$1,237 per month for cleaners and S$1,250 for landscapers. The minimum wage proposed by WP, on the other hand, is S$1,300 per month.
Both thresholds still fall below the “absolute poverty level threshold”, she argued.
While Singapore does not have an official poverty line, the estimated threshold for “absolute poverty” in Singapore, based on research by NUS social work professor Irene Ng, is S$1,878 per month for a family of four, according to Professor Lim.
The conservative estimate encompasses basic necessities such as food, utilities, service and conservancy charges, polyclinic medical expenses, and children’s school uniform, books and supplies.
Absolute poverty, Professor Ng explained, is when “the amount of money one has falls below a predetermined level set by the state, or an official or authoritative body”.
Research by the NUS Lee Kuan Yew School of Public Policy last year found that seniors in Singapore aged 65 and above living alone need at least S$1,379 to sustain their basic expenses.
Professor Lim questioned why only the cost of low-wage workers should be suppressed when other costs can also be reduced.
“Some employers say rising rents force them to squeeze labour costs, and they resort to the widespread cheap sourcing of foreign workers. So if there are, like, five components of cost, why do you only choose this one?”
“Singapore is often ranked as one of the world’s most competitive economies. I’m not sure how a marginal increase of, say, 20 per cent in the cost of low-skilled labour would damage this significantly,” she argued.
Professor Lim stressed that cost will not increase if productivity also increases through the deployment of technology and better management. Instead, she opined that cost can be reduced by lowering the size of landlords’ or property owners’ profits.
She cited a study in the United States, which found that from 1978 to 2015, restaurant food prices “rose by just 0.36 per cent for every 10 per cent increase in the minimum wage”.
“Researchers, therefore, conclude that small minimum wage increases do not lead to higher prices,” said Professor Lim.
Further, the lowest-earning workers comprise only a small proportion of the workforce in a particular economy, and is also “small, relative to the number of consumers in a high-income country”.
While the estimated number of low-wage workers in Singapore is “very high for a rich country” — around 30 per cent of the workforce — 70 per cent do not fall into the category, Professor Lim illustrated.
Any increase in costs borne by consumers are therefore equally spread across the board, she said.
“Remember, we’re not talking about a big chunk of chocolate … [We are talking about] very low wages increasing by a small amount for a minority of the labour force,” Professor Lim said.
A minimum wage, she added, will also remove the need for taxpayers to subsidise the salaries of low-wage workers through welfare payments, as the poor will be earning “closer to the living wage”.
“Wage credit, workfare — all of those are paid by the Singaporean taxpayer,” said Professor Lim.
Responding to a question on claims that a minimum wage will increase costs on the taxpayers’ part, Professor Lim reiterated that the minimum wage “is paid by employers” and “does not come from the government budget, unless it is too low so that there are separate wage subsidies” such as what is seen in the PWM.
A minimum wage, said Professor Lim, is also less “bureaucratically complex” compared to the PWM, the latter of which “requires a lot of civil servants to maintain”.
“The civil servants are paid a lot more than the minimum wage workers,” she quipped.
Minimum wage increases incentive to work; unemployment can be compensated via redundancy insurance: Professor Linda Lim
Countering the common perception that minimum wage encourages unemployment, Professor Lim argued that there is “empirical evidence in other rich countries shows that [there is] little impact of minimum wage on overall employment”.
A minimum wage, she said, “increases the incentive to work”.
“If you offer people more money, they are more likely to work more if a higher wage enables low-wage worker to better cover how cost of work like child care and transport,” Professor Lim elaborated.
Further, the issue of unemployment can be compensated via the existence of unemployment insurance, she added.
The closest to unemployment insurance is the redundancy insurance proposed by WP in Parliament, which also became one of the key proposals in its election manifesto this year in the wake of the COVID-19 pandemic, where many have lost their jobs as businesses and economies experience a massive downfall.
Unemployment insurance, said Professor Lim, is “the norm in other rich countries” but has yet to be implemented in Singapore.
Even “if increased budgetary resources are required”, Professor Lim said that they should be “minimal”, as Singapore has “plenty of accumulated surplus and reserves from which to pay them”.
Compared to other high-income countries, she added, even if an increase in taxes is required — which is unlikely — “they would not be out of line with what we should expect to pay at our income level”.
“Singaporeans have done well by the system, including benefiting for decades from third world wages in a first world country can afford. It should be willing to pay a bit more to improve the lot of its fellow citizens,” she said.