It was announced by Prime Minister Lee Hsien Loong during his National Day Rally speech on Sunday (29 Aug) that all local employees in companies hiring foreign workers will have to be paid at least the sum of the Local Qualifying Salary (LQS) in time to come.
Pointing to the recommendations that a Tripartite Workgroup made on how lower-wage workers (LWWs) can be helped, PM Lee said:
“Second, we will require companies hiring foreign workers to pay all their local employees at least a Local Qualifying Salary. Today, these companies already have to pay this Qualifying Salary ($1,400) to some of their local employees, depending on how many Work Permits or S-Passes they require.
“We will tighten this to require these companies to pay all their local employees this Local Qualifying Salary if they wish to hire any foreign employees; and this Local Qualifying Salary will also be adjusted from time to time.”
All of the three recommendations made are said to have been accepted by the Government.
According to PM Lee, the extended progressive wages and tighter requirements for LQS will cover eight in 10 LWWs in Singapore.
Meanwhile, some have argued that the proposed universal implementation of LQS is something that has been introduced since 2007 and has nothing to do with minimum wage, but rather to ensure that employers do not underpay their workers.
However, they seem to have blindsided PM Lee’s words, “to pay all their local employees” at least a LQS set at S$1,400. This is a stark difference from the past arrangement where employers can choose to pay their workers at half the LQS to qualify for 0.5 headcount for the purposes of quota for S-Pass and Work Permit.
Now, there is no option for employers who hire foreign workers to choose whether or not they want to pay their local workers at LQS.
So, regardless how an existing term of LQS is being used, the proposed arrangement is for all employees of a company to be paid at LQS — or at least S$1,400 if the company hires foreign workers — is defacto a minimum wage for all.
While some might be concerned how employees in companies that do not hire foreign labour will not be subjected to the proposed regulation, one has to first wonder how a company hiring only locals would be paying their staff less than S$1,400 to begin with and how such companies can retain their staff once the proposed scheme comes into force.
Former People’s Action Party (PAP) Member of Parliament (MP) Inderjit Singh has also labelled the proposed scheme as “minimum wage” for Singaporean workers.
Even pro-PAP and former Nominated Member of Parliament (NMP) Calvin Cheng shares the same sentiment, despite his initial denial on the proposed scheme being a “minimum wage” scheme.
It is noteworthy that the PAP MPs have been voicing against the introduction of minimum wage which alternative parties — such as Workers’ Party (WP) — and civil rights groups have been calling for.
Take for example how MP for Sengkang GRC Assoc Prof Jamus Lim was swarmed by PAP MPs last year when he stood and ask for the implementation of a simple across-the-board minimum wage, noting that majority of Singaporeans would be willing to pay more for essential services and that the employment impact of a minimum wage is likely to be very limited.
Minister of State for Education and Manpower Gan Siow Huang stood and questioned the WP MP:
“Assoc Prof Jamus Lim seemed to have suggested that minimum wage can be implemented with minimal impact on unemployment. I beg to differ.
“In current times, where businesses are being challenged and we are in a period of recession, there is a very real risk that if we were to introduce a universal minimum wage across all sectors, I think many of our lower wage workers may lose their jobs, and from low-wage they become no-wage.”
Even esteemed Senior Minister Tharman Shanmugaratnam chimed in on the matter:
“Raising the standard of living of the poor is a complicated matter. And I say this, by the way, as an economist, as someone who studies overseas experience very carefully, and who together with my colleagues, is a practitioner. How do we do it without losing that wage earners’ ability to have the pride of having a job and earning a wage? We do it through the Progressive Wage Model, which has to be expanded. We do it through Workfare. We do it through a range of other subsidies – whether it is KiFAS, the housing subsidies and many other ways.
“And it is not a job that is done for good; we have to do more – many of the speeches that we have heard in the last few days about how we can do more in a way that really helps those we are trying to help. But we are frankly not very far away from each other in that objective. In fact, we seem to be quite convinced, there is a consensus, let me put it that way, that that should be our objective. But just try to avoid straw man arguments and pretending that you have a monopoly on compassion.”
Taking what the PAP MPs have said above and what they have been saying over the years about the minimum wage scheme, could it be that the PAP is just arguing against what WP has been proposing for the sake of it?
Or were they forced to adopt the policy that they so detest because of the growing unhappiness of voters over the status quo?
Although the Progressive Wage Model (PWM) has been touted as an alternative to minimum wage, but it currently only applies to outsourced workers in three industries – and such workers are still typically paid less than S$1,300.
With the proposed scheme, all workers in all industries will get a minimum salary of S$1,400 if their companies hire foreign workers.
As for the PWM, it will be left for the unions to decide what should be the minimum wage for the various industries — when it is eventually implemented — though it would definitely be higher than the LQS.
