The topic on minimum wage has been an ongoing debate in Singapore for a long time now. In fact, members of the Workers’ Party (WP) have been pushing hard in Parliament for the implementation of a universal minimum wage of S$1,300 across all sectors in order to ensure that all Singaporean workers have a decent shot at making a living.
The WP said that S$1,300 is an average amount a four-person household in Singapore needs for basic necessities like food, clothing, and shelter.
The alternative party also noted in its GE2020 manifesto that there are currently more than 100,000 people in the Republic who earn lesser than that.
According to Census 2020 data, 280,021 resident households in Singapore earn less than $2,000 a month — 182,445 households do not have individuals considered to be employed.
WP’s chief and Leader of the Opposition Pritam Singh said in Facebook post that implementing a minimum wage “is not just a moral imperative, it is an act of national solidarity, one that is even more relevant in today’s economic environment”.
However, government ministers and People’s Action Party (PAP)’s Member of Parliaments (MPs) have repeatedly rejected implementing a minimum wage, noting that its Progressive Wage Model (PWM) is better.
Even Senior Minister Tharman Shanmugaratham and then-Manpower Minister, Josephine Teo, have both referred to PWM as “minimum wage plus”, a point which union leaders echoed.
PWM is a system introduced by the Government in 2012 to lift the wages of low-income earners by pegging it to skills, productivity, and career development. However, PWM currently only applies to outsourced workers in three industries — namely security, landscaping, and cleaning.
Leong Mun Wai, Non-Consituency Member of Parliament (NCMP) from the Progress Singapore Party (PSP), had earlier asked why it is so difficult for the Singapore government to take that one small step to mandate a blanket living wage or minimum wage since it has already put in a lot of subsidies for the low-wage workers.
In response, Mrs Teo pointed Mr Leong to the introduction of Workfare in 2007, noting that it “comes at no cost to the employers and, therefore, no dis-employment risk to the worker”. She said that it is the broadest-based support that the Government has been providing to lower wage workers.
“It comes every month; it supports the lower wage workers, not only cash payouts but also to build up their CPF so that, like all Singaporeans, they have the prospect of not just providing for their families but also providing for themselves in retirement. Workfare, in 2007, was a big step. Let us remember that,” Mrs Teo explained.
On the PAP’s website, it is further explained that PWM is preferred to a minimum wage scheme as workers are encouraged to move up a “ladder” of increasing wages by acquiring more skills or taking on more responsibilities.
Despite the Government’s refusal to implement a minimum wage as recommended by the WP, Managing Director of Monetary Authority of Singapore (MAS) Ravi Menon just recently (22 July) said that the Government may seriously consider studying a modest minimum wage as a complement to the current PWM.
“If we have a minimum wage, we must be clear of its rationale: It is to help lift the wages of those at the bottom of the income distribution,” Mr Ravi explained.
“A minimum wage also signifies a societal value: That no one should be paid less that this amount for his or her labour. It is not unlike setting minimum standards for workplace safety and humane conditions of work,” he added.
Additionally, former diplomat Prof Tommy Koh also noted back in 2018 that the PWM is not equivalent to a minimum wage, and argued that the Government’s apparent resistance towards implementing a minimum wage in Singapore is rooted in “fake” ideological arguments.
“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,” said Prof Koh.
Now, the point of this article is neither to highlight the merits of minimum wage nor state how essential it is for Singaporeans. Rather, it is to note that the same people who have been arguing against minimum wage have, in fact, mandated a form of minimum wage for themselves.
Ministerial salaries reformed after watershed election in 2011
The salaries for civil servants including ministers were revised in 2000 and was announced by then-Deputy Prime Minister Lee Hsien Loong on 29 June 2000.
In his ministerial speech, Mr Lee said, “Our policy is to pay people according to their market value and contribution, in the case of political appointment holders, with a discount. Paying officers properly is essential to recruiting the quality of talent that we need to build a first-class public service.”
The salary structure was changed from salary points to salary ranges. The proportion of variable pay in the annual salary was also increased by introducing a new “GDP-related bonus” and by building up the performance bonus.
The review committee recommended to benchmark an MR4 entry-level minister to the median income of the top 1,000 Singapore citizen income earners, with a 40 per cent discount to “reflect the ethos of political service”.
The remuneration of ministers were based on which ministerial grade – from the lowest to the highest, MR4, MR3, MR2, or MR1 – they were at. Every minister’s pay package included a variety of fixed components such as a monthly salary for 12 months, a non-pensionable yearly allowance of one month’s salary, a special allowance of one month’s salary, and a public service leadership allowance of two months’ salary, as well as a mix of other variable components like performance bonus and a gross domestic product (GDP) bonus.
The salary ratios reflect the roles and responsibilities of the different political appointment holders. For example, the Prime Minister, who is the head of the Executive, will earn two times the salary of an MR4 Minister, according to the Public Service Division’s website.
Mr Lee later said in a speech in 2007 as Prime Minister that “it is critical for us to keep these salaries competitive, so as to be able to bring in a continuing flow of able and successful people”.
The adjustment introduced in 2000 to ministers’ salaries resulted in a huge jump in their wages, which made Singapore politicians to be the highest paid ones in the world.
However, following the GE2011’s disappointing results for the ruling party and the loss of Aljunied GRC, Prime Minister Lee Hsien Loong announced that a committee would be appointed to review the salaries of politicians, adding that the revised salaries would take effect from that date.
In the White Paper, titled ‘Salaries for a Capable and Committed Government‘, the Government-appointed committee recommended that the annual salary should be slashed 36 per cent. It also recommended for the President’s pay to be lowered 51 per cent and for ministers to face 37 per cent pay cuts.
The matter was debated in parliament, and the recommendations were later accepted on 18 Jan 2012. However, even after the reduction in salaries, Singapore politicians still remain the highest-paid politicians in the world.
In 2018, Emeritus Senior Minister (ESM) Goh Chok Tong reinforced the idea of the high ministerial pay, saying that the Government will end up recruiting “very, very mediocre people” as office-holders if it cuts the salary of ministers.
“I am telling you the ministers are not paid enough, and down the road, we are going to get a problem with getting people to join the government, because civil servants now earn more than ministers,” said ESM Goh. “Now we dare not pay ministers a good wage.”
“To any one of us here, $1 million is a lot of money. So where do you want to get your ministers from? From people who earn only $500,000 a year, whose capacity is $500,000 a year? So (when) I look for ministers, anybody who wants to be paid more than half a million, I won’t take him. You are going to end up with very very mediocre people, who can’t even earn a million dollars outside to be our minister. Think about that. Is it good for you, or is it worse for us in the end?”
Now, going back to the argument of how minimum wage shouldn’t be introduced for the common Singapore worker, why then is there a minimum wage mandated for the politicians?
Singaporeans are forced to compete with foreign labour without the protection of minimum wage in order to ensure they take home a livable wage, but politicians are not exposed to such competition due to the nature of a political office.
Using the definition from Deputy Prime Minister Heng Swee Keat, PAP politicians are bubble-wrapped from the unlevel playing field of foreign competition in Singapore. At the same time, Mr Heng tells Singaporeans not to expect to be offered such protection for their employment.
As such, this makes one ponder upon the unfairness that may be in place as politicians’ salaries are pegged so high, whereas local workers have no minimum wage level that they can fall on to.