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Why Singaporeans Should Support a Minimum Wage

This week there has been a lot of debate about the advisability of implementing a minimum wage in Singapore. Manpower Minister Josephine Teo kicked off with the jargon-filled nonsense that we have come to associate with her to mislead Singaporeans into the belief that the Government was actually acting in their interests. This was then followed by comments by Pritam Singh supporting a monthly minimum wage of $1300 and Parliamentary rebuttals by bottom specialist “Everybody has a car, we have two” Koh Poh Koon.

PAP are terrified of a minimum wage because it undermines the whole raison d’etre of their economic model which since the 1960s has been based on a simple economic model put forward by the development economist Arthur Lewis, “Economic Development with Unlimited Supplies of Labour.” Once the surplus labour pools in Singapore had been used up, particularly with the rise of the female participation rate to Western levels  by the 1980s, Singapore should have seen real wages rise as scarcer labour forced employers to pay more and substitute capital for labour. Instead the PAP decided to make it easy for Singaporean employers, principally the Government through its ownership of most large domestic companies, to import foreign labour from our neighbours in ever increasing quantities. Whilst  the economic benefits of immigration usually outweigh the costs, the benefits must be shared with the losers, particularly unskilled and less educated workers in the lower earnings percentiles. In any case Singapore’s foreign labour policy was never about immigration but only about exploiting the difference between what workers from poorer countries would be willing to work for and what Singaporeans would accept.

To share the benefits we should have had a minimum wage across the board, applying to foreign and local workers alike.  This would have prevented lower paid workers from being undercut by foreign workers. With a minimum wage there would be no cost advantage to doing so if the Singaporeans were already being paid at that level, It should also have been coupled with restrictions on employers being able to sack local workers to replace them with cheaper labour brought in from abroad.

However this would have required a Government that had as its central concern the welfare of Singaporeans. Instead the PAP leadership got greedy, seeing a golden opportunity to bamboozle gullible Westerners (though not Paul Krugman who even in the 1990s saw through the rapid economic growth numbers) with high economic growth rates and thus provide a strong argument for totalitarianism and a reason to re-elect them, while also lining their own pockets by justifying outrageously high salaries. More importantly, by depressing the wage share in GDP and thus consumption while increasing saving through a growing current account surplus the Government also was able to accumulate growing claims on foreign assets in the shape of the reserves. This provided yet another means for the top leadership to enrich themselves in managing that stock of foreign assets as well as the dominant and pervasive network of state-owned companies. The most egregious example of this is Lee Hsien Loong’s appointment of his wife to run Temasek and his refusal to tell us what she is paid.

A minimum wage removes a necessary condition for the PAP’s economic model to work. The obverse of the PAP’s addiction to cheap labour is low productivity because there is little or no incentive for businesses to automate or substitute capital for labour. The PWM was set up as a way of allowing the Government to pretend that it was doing something about raising the wages of the lowest paid workers while avoiding implementing a minimum wage policy. It only applies to three sectors (security, cleaning and landscaping) and is supposed to set a minimum income of $1,300 per month. Since it is a monthly figure there is no control on hours worked and employers could just up the number of hours to meet the minimum. On a per hour basis (assuming a work week of 45 hours in line with the average according to Ministry of Manpower (MOM) this equates to about $6.50 an hour. While Josephine Teo praises Workfare and the Special Employment Credit as raising wages by up to 40% this is doubtful. If the supply of labour is relatively inelastic compared to demand it may just act as a subsidy for employers who can easily substitute foreign labour for SIngaporeans and could react by reducing pay by the amount of Workfare which is relatively small anyway.

By contrast in the UK the minimum wage for over-25s is about $15 an hour and the US minimum wage is about the same. The Australian minimum wage is about $20 per hour while Geneva in Switzerland (remember Goh Chok Tong’s promise of a Swiss standard of living by 2000?) has recently mandated a minimum monthly salary of about CHF 4,000 or close to $6,000. The Swiss minimum is about that of France yet Switzerland has free movement of labour with the EU.

The PAP’s arguments against minimum wage are that it will raise costs for employers and also lead to higher unemployment for unskilled workers. The charge that it leads to higher unemployment is refuted by the facts. Both the UK and the US had record low unemployment rates (until the pandemic) despite minimum wages that had been raised considerably in real terms. In fact in Singapore a minimum wage will raise the incomes of the less well off (who save less) and likely lead to higher consumption and thus greater demand for domestically produced goods and services. While it may result in greater automation (which will boost productivity more effectively than any number of Government subsidies), having a minimum wage across the board will likely lead employers to cut back on their use of foreign labour and employ more Singaporeans since foreign labour will no longer have a cost advantage. This substitution effect may lead to lower unemployment among Singaporeans not less.

Reform Party has had a minimum wage in our manifesto since 2011 and in the last election we said we would set it at $10 per hour. Compared to other developed countries with similar levels of per capita income this seems relatively undemanding, even timid. This would work out to a monthly income of about $2000. That should be the minimum our low paid workers should get. However, as it would destroy the fundamental basis of the PAP’s economic model, the Government will keep on coming up spurious reasons why Singapore cannot afford it and how it will lead to economic collapse. Singaporeans should see through this as the usual PAP peddling of economic myths and fallacious reasoning, most of it to defend their elite status and outsize and unjustified  financial rewards. While some see a minimum wage as a moral imperative, I see it as merely sensible economic policy.

 

 

Kenneth Jeyaretnam

* The author blogs at https://kenjeyaretnam.com/
.

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21 Responses to “Why Singaporeans Should Support a Minimum Wage”

  • oxygen:

    SON OF PUNGGOL-land cried bitterly in Parly of the risks of minimum wages advocacy degenerating into “vote auctioning”.

    I am afraid his vision is myopic.

    The distribution of vouchers to selected constituents – is primae facie ALREADY VOTE AUCTIONING and opens the doorway to this abuse nearer to election date.

    Mr. Bean won’t be convinced of his rhetoric.

    The 61% voters got lousy “education” (which in LEE-jiapore in reality is) indoctrination – they never, it seems, learnt the art of skepticism and verification.

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  • SEND FOREIGNERS HOME:

    Straits Times: Over $5.5b to be paid out in Jobs Support Scheme from Oct 29

    “Over $5.5 billion under the Jobs Support Scheme (JSS) will be paid out to more than 140,000 employers from Oct 29, to help them retain their workers amid the Covid-19 pandemic.”

    This is insanity. In a economic downturn employers need to reduce operating cost so they “downsize” by retrenching staff. Why is the Government using taxpayers’ money to pay employers to hire staff they do not need.

    THE BEST WAY OF JOB SUPPORT FOR SINGAPOREANS IS TO CANCEL THE WORK VISA OF FOREIGNERS TO FORCE THEM TO GO HOME. SINGAPOREANS CAN TAKE OVER THEIR JOB IN SNGAPORE. THIS “CREATES” JOBS FOR SINGAPOREANS. THE GOVERNMENT CAN THEN USE TAXPAYERS’ MONEY EMPLOYERS THEIR SHARE CPF FOR EACH SINGAPOREAN THEIR HIRE.

    The above is not only cheaper but guaranteed to work. PAP is using (and wasting) taxpayers’ money to support its pro-alien policy and hubris (it does want to acknowledge exempting foreigners from CPF was a big mistake).

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  • Francis:

    https://youtu.be/j0g8Hf_WLGE

    Jacinda Ardern (NZ’s PM): Increased minimum wage to $17.7 per hour and at the same period of time brought the unemployment rate to the lowest in 7 years. Hmm… did she also compliant about her yearly salary of around SGD 450k is too high and try to introduce new law to freeze politician salary?

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  • EducatedIdiots:

    Progressive or minimum wage solution are RED HERRING and so does not address the real issue – oppression by the domineering rich elites.The problem is too many bad jobs created to produce “good jobs”(overrated blood sucking professionals such as lawyers, doctors and politicians to bankers/financials etc etc).

    Truth is we can’t pay people enough to break away from debts(high cost of living). These conniving rulers and elites of societies are maintaining an economic system or model to enslave the masses on the consumption of wastefulness and destruction(creative) – an entire book can be devoted on this subject.

    Many as a consequence will….die(total well being and families destroyed)

    Social aids and charities will not be able to solve these problems who live on the fringe of society( as such mental cases and suicide rises etc)

    If the people like the author continues to play politics or continue the narrative of political discourse, like the incumbent, in his flavor, the world will never come out of its darkness or hell.

    The wages of SIN is death. Period. Don’t try to be smarter than the WORD, because you are not.

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  • 99% look down itself:

    The 99% thinks and behave as if its nothing to the 1%.

    The are resigned to this failure thinking.

    Asian Value is such that the 99% see themselves isolated and weak. In reality, united for a common cause they can control the 1%.

    To illustrate, a big company the size of Google or Amazon , for instance, is nothing if the 99% walks out.

    But some countries are against this from happening:

    1. Union issue.
    2. Freedom to express.
    3. Rights.

    Eg. Food deliverers now are paid lesser and lesser especially during this period . I wont say exploitation.

    Eg. Initially they were paid $9 an order. Now $5.80. Food delivery co gets about 30% per order commission paid by merchants. Delivery guy gets paid fixed low fee of 2.50 to 7 depending distance. A bit of fee adjustment is provided by delivery co.

    Now, the co went further. Allowing a customer order from up to 5 stalls and deliverer have to collect and wait from 5 stalls costing him many times more time abd effort but receives just 1 fee while the co gets 5 times commission if 5 stalls of food ordered. The commission is based on price of food items. So it can be ver lucrative for co. But deliverer gets exploited.

    So whats my point??

    1. The 99% knows they are shortchanged. But ruled by fear they do not unite .
    This makes the 99% having 1% power and the 1% yielding 99% power.

    2. If united the co surrenders in one day.

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  • Drastic wage change needed:

    No need argue so much lah.

    Set minimum wage to $3K per month. The lowest wage worker can therefore on his SINGLE income support his full time housewife to look after the affairs of the home and children. No need for wife to work to help husband and leave children unattended. This is good guarantee strong families to evolve that will translate to a better stronger nation.

    With minimum wage of $3K, in today’s covid situation where many have lost their jobs, many will be willing, graduates included, to take up low end jobs starting at a meaningful realistic $3K monthly salary to survive until things turn around. Anyway being a road sweeper is not a demeaning job. This job if done diligently with pride to ensure the cleanliness and public hygiene of public area will be a source of pride for any worker irregardless of education level.

    Many of the ills in this world is due to couples both going out to work, unnecessarily and greedily to earn more money, for materialistic pleasures of a better car and extra holidays, leaving children in their formative years to strange foreign domestic workers, spending monies on clothings to look good in office, some indulging in office outings and extra marital scandals and other unhealthy side effects.
    Yes women must be educated to the highest level she could attain, double PHDs if need be, then let her seriously decide once she gets married, on her topmost priority in life that is to assume the noble natural role as the QUEEN of the home. Government must encourage this thinking.

    There will be exceptions but by and large MARRIED WOMAN as full time housewives supported by sole breadwinner husbands earning realistic sufficient salary guaranteed by government is the answer to the varied problems the world is facing today. Think about this seriously.

    The HUGE BIG problem is the insatiable greed of employers and towkay and those in charge who pay their workers cheap peanuts and bloating their own stomaches with fat salaries and bonuses and incomes and profits with more and still more monies than they really ever need. Never satisfied. They argue that they are always right in whatever they do with their highfalutin words and figures. The fact really is their insatiable GREED and least concern for the workers.

    Now look at how covid is bleeding them all. This is a divine signal for the inhumanity of the greedy top 10-20 percent to pay serious attention to. They argue they are always right. The poorly paid lower income earners have no genuine leadership, no honest sincere spokesman, no saviours to really help them out. They have been floating on their own for decades.

    That’s the ongoing problem for easily the last 5 decades.

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  • Went to Japan:

    Singaporeans are highly educated bunch but they dont use their brains much. Why would ministers, civil servants and even GLCs management be paid millions but doing the jobs that Lao Lee and his pioneers were doing before? In those years from 1960s to 1980s, their performance was even better than these current bunch of 3G and 4G clowns. We did not have once in 50 years kind of flood. The city was developed by this pioneer, we never heard much of break downs, pushing blames to surbodinates and lots of excuses for non performance. And these pioneers were only paid fraction of what this current bunch of clowns are paid. They said multi million dollar pay is to combat corruption, but look at the number of scandals now??? Are you not shocked? A mayor who shadows Town Council’s work is paid $600,000 a year, we have 5 clowns doing it. And this is not known as frivolous spending, then what?

    Singapore is known to be stingy, all kind of terms and conditions on almost anything that relates to govt’s expenditure. This explains why people are paying a lot to govt policies but getting very little in return. And everything is overpriced but the cost of business which is theirs are low because they suppress at all cost. Yes cost of workers are low because they want the lowest bids to win. But they make so much from levies and everything associated to accommodating these workers, it is a win win to them. It cost more to actually hire a foreigner to do the job but the cost is passed on to buyers, the bulk of the revenue from levies, accommodation, utilities all to govt and its affiliated.

    When it comes to their own pay and bonuses, they fight like they will die for it, when it comes to our benefits, they throw darts and knives as if we are going to raid the coffers. This explains when oppositions tabled their proposals, everyone of them are shot down. It is because they want to show that the oppositions are useless or it is going to cost more to the govt. Isn’t this irony to what they want WP to do?

    A lot of low wage migrant workers are not doing well in Singapore, they try to make sense by working over time to ensure they can make money to repay agent fee and have enough savings to send home every month. A cleaner is paid $1000 a month, still have to pay agent his housing $500 and then his expenses such as food, phone and others? Many of these workers are suffering but of course they have little choice. This govt has no sympathy for these people or Singaporeans who are in this situation, they only care about numbers and themselves.

    Dr Koh is a joke honestly to call it political auction. He is a hypocrite, when he was in Punggol East, he spoke like he is going to be his own man and fight for citizens. But today, look at him in parliament, he is just another “Shame” in the making… more like a british bull puppy.

    61% fails to understand that the govt style will not change, it is always a business entity which

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  • Went to Japan:

    protects its own interest and interest of its GLCs and cronies.

    Until you vote them out or continue to vote in more oppositions, you will not see change. The next 2-3 years, you will see more of these bs until the year before GE, they start to pretend to be people friendly. The hypocrisy takes after the leadership. They said they will adjust to the need of Singaporeans who wants more oppositions and will work together. But GE is won, you can see the switch back to vampire slaying mode.

    Also the familee saga, he said he wants to reconcile but he still pursue his brother wife and nephew. What a hypocrite.

    Never believe in this party, they are all for themselves and votes.

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  • PAP mandate strong:

    But KJ , if my memory didnt fail me. u are 1 of the few who help AY to USA. OK U judge AY wrongly.

    On this subject could it be u also judge wrongly ?

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  • harder Truths:

    Ken
    The more a government tries to control an economy by directly making laws that affect employment and wages, the worse the situation becomes. Milton Friedman has brilliantly shown why back in 1970. There is no need to justify a debunked theory all over again. The US and UK have minimum wages, but it has not helped their economies – it has made things worse.

    The focus must be to return to fundamentals. If $G is to survive as we know it now e is no other remedy. $G’s problems are structural – fiddling with the small things is not going to help.

    The first critical mistake was to become a communist state by controlling all resources, land and micro-managing the lives of people. This includes what jobs are permitted in $G, what schools we can afford to attend, what property anyone can buy and so on.

    This system of Communism has created the serfs and the masters. The serfs can only afford the bare minimum and live only to pay back illegal debt demanded by the masters for living in our own island, on land we cannot own, studying only to advance the wishes of the regime, and with good jobs limited to the communist party members.

    A free economy and fair education system would allow the most able to achieve business and academic excellence. Yes – it is not perfect, but it works. Just ask those who were here during the British Empire. The system is able to correct itself.

    Our entire economy is manufactured and unreal, depending on a few sectors that have predictably collapsed since COVID and the so-called masters have no idea what to do – being yes-men, never having to work and living off citizen’s earnings =means they are just parasites.

    The second great problem which has busted the livelihoods of $G locals is the massive foreign population. The locals cannot compete with the cunning and underhanded techniques of these invaders.

    The remedy if $G is to survive the next 3-5 years (which is the time frame many economists are putting to this downturn) is to get rid of the foreigners en-masse as the number one priority.

    Secondly bring back free markets, get rid of the communists and have an independent judiciary and fair law-enforcement (not Team Gestapo)

    It does not matter what other countries think – $G citizens are fighting for survival.

    I know this will not happen, it is impossible because we have 61% ballsless who are willing to cut their own throats to lick the ar*e of the masters. But identifying the problem is more important because then you can solve it.

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  • PPL Syndrome:

    Actually, i view it as a LPPL syndrome.

    Let me share a story :

    Once an Old Man said over his dead body if he allows his son to gamble.

    Then his son insist on gambling. Because he needed his son to cry for him when he dies, he reluctantly agreed. To save his face, he cooked up excuse for allowing gambling. This intellectually dishonest old man call it Adult Game of chance instead of Gambling. So he said his son never was allowed gambling . What his son allowed was the Adult Game of Chance. So on paper, he could say his son never gambled and he is true to his own words that he will never allow his son to gamble.

    Another example. Everyone in the village Locked Down their ranch to clean up after a mad cow disease was spreading.

    Old man had earlier publicly said he will never allow Lock Down because he afraid tourists would not cum into his ranch.

    But he had to Lock Down and being the intellectual dishonest character he asked his lawyer crony to conjure up a term for it. They came up with the term Chao Chee Bye CCB for short. So he told the press, his ranch will not have a Lock Down. Its merely a CCB.

    So, did yew catch my drift?

    Lan is the Pah.
    Pah is the Lan.
    Lan Pah Pah Lan syndrome.

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  • Pap sure lose:

    İn a sense PAP Ministers and MPs demand a minimum wage if not they said they can’t support their families but not ordinary people?

    When it comes to collecting money they are willing to make changes.

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  • Pap sure lose:

    As usual KJ doesn’t disappoint in his articles.

    What does bottom specialist Koh know about economics really?

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  • uselesstankl:

    Nasordin’s union BATU is, of course, affiliated to NTUC headed by former PAP Cabinet Minister as well as former SAF Chief of Defence Force, Ng Chee Meng. Nasordin himself even received Comrade of Labour (Star) award at the NTUC May Day Awards back in 2018 for his good service.

    In his letter to ST, Nasordin said that he had previously represented BATU to make recommendations for the government’s Progressive Wage Model (PWM) in the tripartite clusters for cleaners and also for landscape workers.

    XXXXXX

    AI YO, 8 bloody years to implement minimum wage by BATU, SHOWS, they are interested being the ” BOSS” not the worker !!!

    Some collect MEDALS ,some more….

    Shows their doggy tags when going into GRAND NTUC DINNERS !!!

    NO WONDER CLEANERS, LAND SCAPE WORKERS, SECURITY GUARDS HAVE TO WORK 6 DAYS JUST TO EARN 1 k.

    UNIONIST IN THE LIKES OF LIM BOON HENG, LIM SWEE SAY, ALL ARE ” FAKES”

    JUST LIKE ROTTEN WOOD SAID, ” MEDIOCRE’

    NO WHERE TO GO, JOIN NTUC !!!

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  • Jman:

    You are asking Singaporeans to support a minimum wage.

    When Singaporeans are at the receiving end of the minimum wage, many are happy as can be.

    When Singaporeans are at the paying end of the minimum wage, then you will see the true support level. Just ask around and see who is willing to see conservancy and maintenance rates rise, so they poor and less fortunate can earn a living wage. And you will find that support for minimum wage is strong, as long as someone else is taking up the tab.

    You are asking us, Singaporeans. The people who mostly want to have our cake and eat it. Do you expect us to give an emphatic yes?

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  • Give lah:

    Take $1 million pa yourself can but cannot give the poor $1300 pm.
    No paiseh ? Give lah…only $1300.Anyway they also cannot survive in Expensive Singapore.
    Don’t believe ?Try living on $1300pm for your family.
    Sure cry father cry mother.

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  • Why no minimum wage:

    Actually is is so easy to set the minimum wage for Singapore. Just use the data used to determine the CPF Minimum Sum as a starting point.

    The Government does not support a minimum wage because it would show the massive UNDEREMPLOYMENT in Singapore. Singapore has become one of the most expensive place to live since LHL became PM with stagnant wages. The massive influx of “cheap” (no CPF ) foreign workers depress local wages (and massive job losses for Singaporean PMETS). Demand from these foreigners pushed up price sharply screwing Singaporeans big-time.

    Without a doubt, Singaporeans are worse off since LHL became PM.

    Also without a doubt, LHL IS A FAILURE. The same goes for his wife who lost BILLIONS investing in Merrill Lynch and Barclays.

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  • Pappy insults our intelligence:

    (Dr. Koh Poh Koon told the House that minimum wage could leave businesses and workers worse off and also become politicised. Asserting that it is difficult to set the right level of universal minimum wage, Dr Koh said that an amount that is TOO LOW would “defeat the purpose” of such a policy; and an amount that it TOO HIGH would cause businesses to pass the higher costs to consumers, axe staff, or even shutter altogether.)

    What is the minimum amount of money a senior citizen requires to have a basic standard of living in Singapore? This is what a team of researchers, led by Assistant Professor Ng Kok Hoe of the Lee Kuan Yew School of Public Policy, sought to find out in their recent study on Minimum Income Standards (MIS):

    Single 65+ yrs household: $1379/mth
    Coupled 65+ yrs household: $2351/mth
    Single aged 55-64: $1721/mth

    Factor in the CPF cut and those numbers will need to be higher for working old people…. for whom the proposed $1300/mth minimum wage applies especially, as there are so many poor grannies and grandpas labouring on a $5-7/hour wage in Singapore (and I can tell you it shocks and surprises the foreign workers and expatriates I ferry around, without any exceptions)

    https://lkyspp.nus.edu.sg/gia/article/research-spotlight-series-how-much-does-a-singapore-household-need-for-a-basic-standard-of-living

    We don’t have the monopoly on compassion and the surgical specialist is encouraged to exercise his due portion of altruism – if their gigantor secret incomes have not hardened their hearts beyond softening…..

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  • Pap using foreigners as MOUTHP:

    Single 65+ yrs household: $1379/mth
    Coupled 65+ yrs household: $2351/mth
    Single aged 55-64: $1721/mth

    Factor in the CPF cut and those numbers will need to be higher for working old people…. for whom the proposed $1300/mth minimum wage applies especially, as there are so many poor grannies and grandpas labouring on a $5-7/hour wage in Singapore (and I can tell you it shocks and surprises the foreign workers and expatriates I ferry around, without any exceptions)

    https://lkyspp.nus.edu.sg/gia/article/research-spotlight-series-how-much-does-a-singapore-household-need-for-a-basic-standard-of-living

    We don’t have the monopoly on compassion and the surgical specialist is encouraged to exercise his due portion of altruism – if their gigantor secret incomes have not hardened their hearts beyond softening

    Quote

    I 2nd your suggestion.
    Leave CPF out of it.

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  • Give lah:

    Give lah

    $1300pm is not too much to ask.
    Cannot even survive in this expensive Singapore.

    If you think is too much..try living for one month on $1300 for your family.

    No brain …no empathy.

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  • Your cpf wait long long:

    So about two years ago i got to befriend a pakcik in his mid 60s sweeping the streets at Eunos Industrial Estate. He told me he was getting $1250/mth for a 44 hour workweek. He lamented that he still had to pay to CPF a 13% cut. And he had to commute to and from his Sengkang home.

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