Choo Zheng Xi / Editor-in-Chief
“If we would like to see Singapore moving up as one of the most developed countries in the world, and costs increase accordingly, lower income Singaporeans might need a minimum wage to survive.”
A minimum wage law was a constant theme of the late opposition icon Mr Joshua Benjamin Jeyaretnam, and more recently canvassed by ex-NTUC Income CEO Mr Tan Kin Lian. But yesterday the minimum wage was canvassed by an unlikely proponent: businessman and People’s Action Party (PAP) Member of Parliament, Mr Inderjit Singh.
Speaking in his personal capacity at the Institute of Policy Studies’ (IPS) Singapore Perspectives 2009 seminar, Mr Singh said that cheap foreign labor had depressed wages, and this hurt low income Singaporeans the most.
“As we brought in more and more people, many from India and China, not just at the top level of talent, but also at various levels including unskilled workers, we depressed wages of Singaporeans”, he said.
Noting that the problem of low wages was exacerbated by a high cost society, he added:
“Our costs continued to go up. So we caused a double whammy for Singaporeans who had no choice but to live with the high cost of living while having to accept lower wages”.
Minimum wage a possible solution
One way of solving this problem, he said, could be a minimum wage policy.
Speaking to TOC after his speech, he acknowledged that a minimum wage would be an additional cost to business, but that the government was in a position to draw up a scheme to make it workable.
Noting that the government was “unlikely to move very quickly on this”, he nevertheless emphasized its importance.
“If we would like to see Singapore moving up as one of the most developed countries in the world, and costs increase accordingly, lower income Singaporeans might need a minimum wage to survive.”
One way of doing it, Mr Singh suggested, was “either we incentivize companies to implement it, or the government has to supplement wages to a minimum level.”
Mr Singh favoured an incremental introduction of a minimum wage policy, as companies might not immediately adapt well to such a policy in the current economic downturn.
To begin with, the government could work within the existing Workfare Income Supplement (WIS) framework to level up wages. Mr Singh suggested including workers earning up to $2,000 in the scheme. The current scheme covers only those earning up to $1,500. He also suggested giving payouts on a monthly basis instead of the current six-monthly payout.
Growth at all costs a mistake
In the course of his presentation, Mr Singh was critical of several of the aspects of the Singaporean growth model, which he characterized as “growth at all costs”.
He raised the problem of high business costs not matched by productivity, tracing it to the government’s fixation with moving up the manufacturing value chain too quickly.
Mr Singh told the audience of 700 that a growth driven policy had “dislodge[d] Singapore’s economy, workforce, and other infrastructure”. He felt that a “slower rate of development, encouraging the stretching of domestic capabilities and technologies, would keep industries in Singapore for a longer period of time”.
He was also critical of what he called the government’s approach to “disincentivize companies from trying to keep many of what the government considered as no longer attractive capabilities in Singapore”, which he felt had led to too high a turnover in Singapore’s core competencies and had “made it difficult for Singaporeans and firms to cope”.
Moving ahead, Mr Singh proposed a model he felt was more sustainable:
“The suggested model should involve a moderation of cost while Singapore’s core competencies are strengthened…We must avoid any “boom and bust” type of policies, which go for broke in good times and slow down when the world economy grows.”
——-
Note:
In 2008, Mr Inderjit also criticised the “growth at all cost” policy. He “pointed out that the “grow-at-all-costs” policy of the government might have overheated the economy and worsened the income divide… “I feel a significant part of the inflation has been caused by factors that we could have controlled.
“In the last two years, the government has contributed to inflation by allowing multiple cost increases, both directly or through policy changes that resulted in cost increases.
“The end result is an era of very high cost increases, high inflation not supported by enough wage increases, especially for the lower and lower middle income Singaporeans and companies.” (Channel NewsAsia)
———
Read Channel NewsAsia’s latest report (20 Jan 2009): Average household income up across all income groups in 2008.
———
HELP keep the voice of TOC alive!
If you like this article, please consider a small donation to help theonlinecitizen.com stay alive. Please note that we can only accept donations from Singaporeans. Thank you for your assistance.Do you have a flair for writing? Volunteer with us. Email us your full name and contact details to theonlinecitizen@gmail.com
I thought that Mr Singh’s comments on the growth model made sense. The govt has always been “fixated” or obsessed about hi tech and low tech. These Ministers of ours are doctors, bankers, lawyers, how much do they understand manufacturing trends? Our so-called hi tech companies are merely assembly operations done by automated processes manned by line operators. The technology of a disk drive or a drug may be advanced but the production processes are so heavily mechanised there isnt nothing much for the local Singaporean to think. All the R&D have been done overseas back in the US. But our govt thinks it is hitech.
That is why they are so easily outsourced to the detriment of Singaporeans! Now they are gambling on Casinos. Do you think there will be much brainwork involved? Does one think that jobs like croupiers, floor managers,bouncers are secure too? Cant the operators later recruit from Macao, China where they are cheaper? Then another job exodus! What abt biotech? This industry does not offer jobs by the thousands, only limited ones like washing test-tubes for PhD’s (acc to Philip Yeo). The production of the drug can be moved to China anytime. And then what’s left??? I think we paid our top Ministers to think and plan, but our millions in payroll are wasted. They can talk big, and try to talk up the economy with empty air when the chickens come home to roost (their disastrous results begin to show). Or try to compete by squeezing workers’ wages further, or cut CPF etc. We put so much reliance on the MNCs and GLCs and neglected the SMEs and local entreprises. MNCs are fickle and footloose and go where the costs are dirt cheap. That’s when we suffer, but not the iron rice bowl Cabinet Ministers and French-food loving Scholar top civil servants!
“That is why they are so easily outsourced to the detriment of Singaporeans! Now they are gambling on Casinos.”
Not forgetting that with casinos promote the industry of social escort and high-class hookers. Look like pretty gals no longer need degree anymore to become materialistic wealthy.
Disappointed that Budget 2009 didn’t announce any plans for systematic overhaul of Singapore’s labour market.
#47 seebeng:
By allowing foreign workers from Third World countries to flood the market, the government is interfering in and distorting the supply and demand mechanism.
I think it might just be exactly the opposite. Opening up the market freely to foreign workers benefits both the foreign workers (they get higher pay than back at home) and employers (business cost is reduce, so consumers enjoy lower costs too).
The main complaint is usually political, just like outcries at outsourcing in developed countries. For the case of outsourcing, data shows that it ultimately benefits the developed countries, including local labours because it reduces cost of living for themselves too. Many of the goods and services they use are lowered.
#49 mrbiao:
That’s assuming all Singaporeans are academically inclined and intellectually capable enough to go into skills-based jobs. That’s the same as advocating an elitist society.
I find the definition of elitism here [1 #90] useful. I don’t think there is any elitism here, i.e. any privileges going to a group of people who are considered more superior.
The purpose is to help people in two categories:
1) people whose jobs which are lost to other countries and can never come back
2) people who want to get a job which demands higher pay
I share your concern for people who have difficulty upgrading, but I don’t think it needs to be “academic studying”. It can be just any practical skill which let people take up a new job. And, we should provide social welfare for people who are looking for jobs and are willing to work.
[1] http://theonlinecitizen.com/2008/12/mother-machine/ (#90)
Finally someone who is speaking my language. Thank you very much, Mr Mr Inderjit Singh & Mr Tan Kin Lian.
However I will like to emphasize that minimum wage is just the tip of the ice berg. We still have a lot to learn from the Europeans such as
1) Max cap for work hours. It is time to scrap the unproductive OT system. People can do their work as slow as they like to clock the OT hours. Pay flat fee allowances for assignments which occurs beyond office hours.
2) QC is far below international standard due to exhaustive OT by the production workers. German factories to limit themselves to 8 hours a day for the assembly line to maximize quality, implementing 0 accident, 0 defect policies with incentives awarded to the workers.
3) Surely it is time to raise the wages. Our local employers are shorted sighted due to greed. You pay peanuts, you get monkey business. A Dutch waiter is paid 2,000 Euros = $4,200 SGD. An Australian car mechanic is paid $3,000 SGD. Singapore’s wages is not even half of these.
We discouraged our child from applying the tourist related industries courses in the polys last week. For a simple reason, they would be competing with the foreign labours from China, Philippines, etc.
These courses are now redundant for Singaporeans! I guess the elites are not so clever and will be fighting fire again!