The National Trades Union Congress’ (NTUC) deputy secretary-general Koh Poh Koon stated in Parliament on Thursday (15 October) that the Workers’ Party’s (WP) proposal of implementing a minimum wage of S$1,300 could result in a worse situation for businesses and workers, and also become a politicised issue.
Dr Koh pointed out that Government initiatives like the Progressive Wage Model have already helped increase the wages of lower-income workers. He said this during Thursday’s debate on Deputy Prime Minister Heng Swee Keat’s ministerial statement on the Government’s strategies to rise stronger from the COVID-19 crisis.
Ever since the recent General Election in July this year, one topic that has been widely discussed is definitely on the minimum wage.
On Monday, WP chief and Leader of the Opposition Pritam Singh called for a universal minimum wage by setting S$1,300 as a base for Singaporean workers. Pointing it out in a Facebook post, Mr Singh said that this is not a “moral imperative” but “an act of national solidarity”.
Minimum wage can lead to “political auction”
During his speech, Dr Koh, who is the MP for Tampines GRC, raised three arguments. They are that a minimum wage could be a disadvantage to the lowest-skilled and most vulnerable workers as it is difficult to find the right value; that it could possibly become a political tool; and raise the question to where it should be applied to migrant workers as well who make up more than 1.3 million people in the Singapore workforce.
He explained that it “defeats the purpose of having a minimum wage” if the amount set is too low, emphasising the difficulties in setting the right minimum wage. On the other hand, if the amount set is too high, then some businesses might not be able to afford it, resulting in them ceasing operations, retrenching workers or passing on the cost to consumers.
“This is a particularly pertinent consideration at this time when we are in deep COVID-19 crisis. Many companies, especially your SMEs (small and medium enterprises), such as those in the construction sector, are suffering and not quite out of the woods,” he noted.
If that’s not all, the Tampines GRC MP also questioned Mr Singh’s point on setting a universal minimum wage as a “moral imperative”.
“Today, let’s say we can all agree to S$1,300 minimum wage proposed by the WP, a ‘moral imperative’ as Mr Singh puts it in his recent Facebook post. But what next? What happens next? How will this number change from this year to the next, and on what basis?” said Dr Koh, who is also a Senior Minister of State for Health.
He added, “In a political contest, a political party will surely come along and say, well, S$1,500 will reflect a higher ‘moral imperative’. Yet another will come along and say, S$1,300 is good, S$1,500 is better, but S$1,700 must surely be more divine ‘moral imperative’. It can become a political auction.”
Rather than a minimum wage, Dr Koh highlighted the benefits of the Government’s initiatives to help low-wage workers – a mix of the Progressive Wage Model (PWM), Workfare Income Supplement (WIS) scheme and training programmes. He said that these plans help to increase the incomes of low-wage workers without putting their jobs at risk or raising consumer prices significantly.
For example, he explained that PMW allows workers to increase their productivity, which gives them a chance for promotion and higher wages.
“Workfare is another significant intervention. It acts like a form of negative income tax – the Government tops up the income of workers earning less than S$2,300 per month,” he added.
Dr Koh went on to state that the “vast majority” of 850,000 workers in jobs normally labelled as low-income, like service staff, cleaners and clerks earn above S$1,300 a month.
Separately, about 100,000 who earn below S$1,300, including self-employed would not benefit from a minimum wage, he said.
Additionally, with workfare disbursements and Central Provident Fund contributions by employers, 56,000 earn less than S$1,300. And out of the 56,000 workers, 32,000 – or 1.7 per cent of the local workforce – work full-time.
“So what the WP wants to achieve with the proposed minimum wage of S$1,300 a month, we have already achieved through PWM and many other policy measures.”
WP MPs respond to Dr Koh’s statement
In response to Dr Koh’s speech, Mr Singh emphasised that this concern is not with the PWM, but rather on why is the Government taking this long to cover these low-wage workers.
“Can we not consider how we can cover them now immediately because it’s not a small number,” he asked.
“If you think of 60,000 rental units available from HDB, and you compare that with this number … it’s quite a lot of Singaporeans who need some help. I don’t think it is acceptable that anyone, any Singaporean, is earning below this number. It is simply not acceptable,” he said.
Mr Singh also asserted that WP’s proposal of a minimum wage does not include foreign labour given that they are governed by other regulations.
If that’s not all, the opposition leader also voiced his concerns about some sectors will profit off the backs of the PWM. This can be done by increasing the wage even before it is implemented in their industry. For instance, he said that some companies who are renewing lift contracts in his constituency have already increased their bid cost by between 5 and 47 percent.
“If all this increase is going to the Singaporean worker, then I’m prepared to take on that burden to persuade our town council residents that we need to raise S&CC (Service and Conservancy Charges),” he said. “But my question is, is that a realistic hike in costs?”
As a reply, Dr Koh pointed out that the Government already has its tripartite partners, which include government officials, union representatives and employers, to study data.
“Reams and research are good, but in practice, it’s always harder to do, because there are practical considerations, there are pushbacks,” Dr Koh said.
He continued, “That’s why when we work on a negotiated outcome, there is always that balance that can be struck – where the businesses are prepared to absorb the cost. If not, they have a way to rationalise how to pass the cost on to the consumers”.
As to Mr Singh’s concern about companies taking advantage of the PWM, Dr Koh noted that since the scheme falls on a skills ladder, any cost increase can be referred back to their skills levels. Additionally, town councils should also have a proper process of evaluating tenders.
Other MPs weighed in their thoughts
Mr Singh’s fellow colleague, Sengkang GRC MP Jamus Lim, also joined the debate to raise his thoughts. Associate Professor Lim noted that studies on minimum wage does not lead to an “appreciable increase” in unemployment were properly conducted, and are not mere beliefs.
He also said that the issue of politicisation can be solved by calling for an independent wage board to fix the minimum wage.
As to when Dr Koh said that people with disabilities make up 1.7 percent of the local workforce, meaning that they should be given other helping means instead of putting the burden on their employers, Assoc Prof Lim stated that it is a “straw man” argument.
Following that, PAP MP for Holland-Bukit Timah Edward Chia chimed in and noted that businesses need to remain competitive, and this can be done by coupling up with an increase in productivity.
Mr Singh then asked, “I would like to ask the member in return, is he agreeable to pay the … 32,000 workers S$1,300 as a business employer. Is he prepared to do that? I hope he is.”
As a response, Mr Chia explained that a business owner is not responsible for a group of employees but rather the whole company. As such, improving productivity of workers, which is the main element of PWM, is crucial.
“(An) arbitrary minimum wage may actually be more negative for a business. We need to look at it as a holistic approach, helping businesses up-skill their employees,” he said.
At the end of the debate, Dr Koh reiterated the aspect of the PWM by saying that a worker’s wage increase has to be justified by an improvement in their skills.
“The problem with a minimum wage is that it is not connected to any skills ladder. It is a number,” he said.
Dr Koh also agreed that there is still a lot more needed to be done to help more lower-wage workers.
“Achieving social equality and enabling lower-income families to improve their lives is never a simple task. There is no silver bullet,” he said.
“It is also continuous work. NTUC and the tripartite partners will focus on the real hard work of uplifting wages of lower-wage workers and seek public support for our workers while hoping to avoid all possible downsides.”