Stephanie Chok -
As Senior Diplomat Tommy Koh pointed out in today’s Straits Times (‘Basic pay: Tommy Koh weighs in‘), all advanced economies, including Japan, South Korea, Taiwan and nowHong Kong have a minimum wage. Malaysia is now considering it.
It is therefore frustrating to hear the same tired excuses from our current government against implementing a mandatory minimum wage.
Their key arguments generally run along this vein. Implementing a minimum wage is difficult and problematic. It hurts employment opportunities for the low-skilled. “Artificially raising” workers’ wages makes them uncompetitive. It is better to let “market forces” decide wage rates. Workfare works for us.
Is that the “invisible hand” choking me?
The “free market” argument championed by the ruling party as the solver of social problems is a selective one. When the PAP says, “let market forces decide”, it is a strategic choice, because this is not a hands-off government.
The Heritage Foundation consistently gives Singapore high scores (98.9%) for what it terms “Labour Freedom”, defined as follows:
“Labour freedom”, in Singapore terms, means freedom for capital, not workers. And how was this high score achieved? By ensuring that its policy framework prioritizes the needs of capital over the welfare of workers. This is not incidental.
“Invisible” market forces did not morph our labour movement into the “consensual” tripartite framework of today. It was the heavy-handed and consistent intimidation of “non-consensual” leadership, such that only those who did not challenge (too vigorously) the PAP party line have been able to rise the ranks. Fast forward a generation or two and here we have it: a “Uniquely Singapore” labour movement represented by an umbrella union who agrees to wage cuts, does not support a minimum wage and flies the flag of: cheaper, better, faster. (And when you get there, make sure you becomebetter, betterer, betterest!)
What is easy versus what is right
Opponents of the minimum wage say such requirements will increase business costs. The view is that such increases may negatively impact on employment as well as business opportunities and thereby affect unemployment rates as well as “the economy”.
The view that business costs will rise may be true, but also in today’s Straits Times was an interview with Mr. Peter Handel from global training firm Dale Carnegie (‘Keeping employees, and keeping them happy’). In it, Mr. Handel supported Singapore’s controversial wage structure for its ministers, saying the United States should follow suit and pay its President a lot more. According to Mr. Handel, “In any organization, the employees should be paid properly, no question”.
Following on from that logic, any refusal to legalize a mandatory minimum wage is a glaring reminder that one set of business ethics seems to be applied to white-collar workers (including our civil servants), and another to those considered “low-skilled”. It may be debatable what being “paid properly” entails, but surely we can agree that the current status quo, whereby manual labourers/cleaners/service sector workers may earn hourly wages ranging from S$2.50-$3.50, or monthly wages ranging from S$500-$800, is not proper? (I just heard from a friend that some workers were paid S$10 a day for setting up seats along the F1 circuit. That would work out to approximately $1.25 per hour for an 8-hour work day, $1 per hour if it were a 10-hour work day! Honestly – how low do we really want to go?) For a country with a Gross Domestic Product of over $265 billion, this is a disgusting social reality.
Ministers who preach from million-dollar pedestals should contemplate the indignity of being paid S$3.50 for an hour of honest work in a city ranked the 10th costliest to live in the world. Their insistence on Workfare makes it clear the government adopts a “personal responsibility” ethos – can’t earn higher wages? It’s your fault, you need more training. This emphasis, however, is counter-productive when no efforts are made to ensure wages and job scopes will fairly reflect time and money investments spent on “training”. (You can call me a “Sanitation Expert” instead of a cleaner, but what’s the point if I’m still being paid $3.50 per hour on a contract with no annual leave or medical benefits?)
Meanwhile, as blogger Lucky Tan has pointed out: “A minimum wage, if properly set, is the income required for decent living in Singapore. It only distorts the market and hurt the employment of workers when you have an economy dependent low wages and many workers currently employed below the minimum wage.”
There are a number of local labour laws that make things inconvenient and less profitable for employers/businesses. These include the necessity to pay salaries on time, to compensate workers for overtime work and ensure injured workers are adequately compensated. Yet these are enshrined in law for a purpose, because we believe certain minimum protections are necessary and important. The questions: “Is this easy to implement?” and “Will it be difficult for businesses” were not determining factors.
Similarly, debates about a mandatory minimum wage should not be a quarrel over what is “easy” or “business-friendly”. It is a debate over what we, as a community and country, believe is a right and ethical policy direction to take.
Are we going to continue with this current economic model whereby a dependency on below subsistence wages are the norm for a certain segment of our population? What is going to happen in the long-term if there is no intervention?
Improve labour standards and wages for all workers
There have been many complaints about the rise in foreign worker numbers on our island; these low-wage workers are often blamed for depressing wages for locals due to their acceptance of lower pay and harsh working conditions.
It is true that there is little incentive for employers to increase wages when there is a ready supply of workers with even less bargaining power they can hire.
What I’d like to address, though, are some misconceptions about foreign workers being hired simply because they are “cheap labour”. Firstly, it is not always true that hiring a foreign worker is “cheaper” for an employer, especially after the foreign worker levies are included. In several newspaper articles, employers have voiced how foreign workers are more willing to work long hours and stay on the job, unlike locals who are said to quit easily. Employers know that foreign workers often arrive debt-ridden (from hefty agency fees) and are highly dependent on their employers/agents (for their employment as well as their legal status, and often for lodging, food and transport). This can shape them into relatively more compliant workers with a higher endurance for low wages and poor working conditions, some of which violate local labour laws. This is a situation that is disadvantageous to everyone in the low-wage labour market – local and foreign included.
Of course, employers also complain that they have “no choice” but to hire foreigners because locals do not want these jobs that foreign workers occupy in the construction, marine and service sectors. Increasing wages marginally may or may not be enough to keep turnover rates low among locals, because there are other things that make these jobs unattractive – unfriendly shifts, health and safety hazards, the generally demanding nature of these jobs and the low status accorded to such occupations among our society.
It is therefore important to strengthen legislative frameworks so that all workers are protected and overall labour standards (including wage levels) are improved. This is something the “free market” will not resolve on its own, not in a competitive, pro-business environment such as Singapore. As Senior Diplomat Tommy Koh said in today’s Straits Times: “… is it not true that the market is not infallible? Is it not true that, when there is a market failure, the state should intervene in order to make the world a fairer one?”
The point, ultimately, is to equalize the labour market and increase not only the earning power but also the bargaining powers of the working poor – powers that were gradually eroded over the years. Ensuring they are paid a fair wage that reflects current living costs is just a step in this direction, but one that should be taken.
Many countries around the world have implemented the minimum wage. In fact, discussions have already moved towards the implementation of a Living Wage which, according to Wikipedia, is a standard that “generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation”. (Now, isn’t this a beautiful vision?)
As a tagline for a Living Wage campaign site says: “A job should keep you out of poverty, not keep you in it”.
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TOC note:
Minister Mentor Lee Kuan Yew spoke about minimum wage in October 2009. An excerpt from the Straits Times report titled, “MM Lee: Social divide inevitable”.
HAVING a minimum wage in place here to narrow the income gap could do more harm than good, Minister Mentor Lee Kuan Yew said last night.
In fact, every country that has set a minimum wage over what the market will bear has found that the move cuts jobs, he noted. Employers who are forced to deal with higher staff costs would simply find ways to hire less people.
That is why Singapore’s approach has been to create as many jobs as possible, while leaving the market to decide the right level of pay. The rationale for this is that having any job is better than having no job at all. ‘Never mind your Gini coefficient. If you don’t have a job you get zero against those with jobs. So our first priority is jobs for everybody,’ he said.
Click to enlarge.
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“He deserves it. In fact he could have a much easier and more lucrative life being an international consultant. For examle he could have joined Kissinger Associates.”
lky join Kissinger Associates!?i am laughing my ass off.
you think the americans,with their dynamic democracy would want to hire him and start screwing up business relations with other countries??
just ask the americans if they have heard of our little red dote and chances are,they’ll tell you how anal it is to ban chewing gum for so many years.
maybe lky did turn up at the doors of Kissinger Associates.
thing is,they dun wan to employ an old man as their office cleaner nor do they need a bell boy.
he’s not cheaper, faster and better!
and i laugh at your feeble attempts in trying to paint lky as saintly and an all goody two shoes.
” It is better to let “market forces” decide wage rates. ”
What are market forces in economic term? They are supply and demand. Singapore Government has control over the supply of labour through the admission of foreign labour. It means that the Government is controling an essential factor of the market forces in deciding on wage rates. It is indirectly setting the minimum wage rate. If that prevailing rate is below the subsistance level of living in Singapore. it is the Government doing.
What market forces? In Singapore the Government is largely responsible for the market forces.
I say again, the minimum wage in Australia is around S$3,000 a month. The minimum hourly wage is S$18.
Singapore is richer than Australia.
What the Government is doing to its own citizens is a total absolute DISGRACE.
Thanks for the sobering thoughts. It just reminds me, how heavyhanded our so-called, democratically elected government is, with the less fortunate.
re: “a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation”.
An able-bodied singaporean worker has yet to find this basic type of work condition.
What’s even more devastating, when one day, your luck or health or charity is not in your favour? Then what, how?
I have just return from Canada after a month there and saw the vast difference between the two countries.
In Canada there are minimum wage laws and though taxes are high, but benefits are equally good. All monies collected are used for the development and welfare of the people and the government is always on a tight budget.
In Singapore, the Government is super rich and together with the stats boards and GLCs squeezes all the blood money from the masses and pay themselves millions and loss the others in stupid gamble by the national sovereign funds.
When money is loss, they can squeeze from us, but when the GLCs, Funds make monies, it is used to pay the A$$holes millions in return and nothing is used to help the country or the people.
For you info, I have never seen a single old man or women cleaning table and slotting hard for a living in Canada as the elderly are well taken care of in by the government. Even my sister who paid hell lots of taxes are happy with the system there.
Nowadays, I have no more respect for the LEEs and their dogs anymore.
The old man is talking nonsense yet again. Really sad. Gone are the days when nation building was for the good of the people, the masses, and not just the elite.
It is really pitiful that in one of the top 5 richest countries in the world that we have people being paid $10 per day.
Singapore, as everyone knows, has more than a first world per capita GDP – it is rich beyond the dreams of our forefathers. However, on the social side it is getting more third world than ever.
The education system has far better infrastructure than when I was in school. However, when I was in school THINKING was still part of the curriculum. The Government has now taken thinking out of education. What is the purpose of education if it is not about thinking. The education system is therefore worse than third world.
When we were poverty stricken we produced a Tan Howe Liang and a Wong Peng Soon. Now that we are super rich we have not produced any sports person who is up there amongst the best of the best internationally. We resort to hiring mercenaries who have absolutely no loyalty to Singapore. Really embarrassing for all of us.
I fear for Singapore. What is happening to the under-privileged is something we should be ashamed of. They struggle to put food on the table while the elite wallow in their obscene wealth.
Well anyone who has elementary knowledge of economics knows that putting a floor on wages will increase costs and reduce the number of jobs avaliable. How much more expensive will hawker food be and how many jobs will be lost, nobody outside the government knows. Anyway even if there is minimum wage it is quite likely that foreign workers rather than locals will benefit. And also the relative strength of capital over labour is a global thing rather than local thing, so there is nothing much singapore can do to isolate itself. So there really isn’t much point of having a minimum wage. Usually there can be two ways of dealing with the downtrodden – either leave them to fester in suburban sink estates or to feed them with social benefits. Either way it is not a desirable outcome and it is because it only focuses on the relationship between the state and individual. Perhaps an alternative in the form of community action to provide local jobs eg through schemes such as mutualism is a possible approach instead.
tszsan, 25 September 2010
quote:
” Perhaps an alternative in the form of community action to provide local jobs eg through schemes such as mutualism is a possible approach instead.”
privatise profit, socialise costs?
the community can do without such un-necessary burden passed down from employers. if the community steps in, then should the community have a share of companies’ profit?
community = taxpayers?
companies shouldn’t be encouraged to shirk its responsibilities & look at the community to pick up the tab.
who can afford to work for a pay that cannot sustain oneself & feed family?
no point if the community/govt cannot provide jobs that pay enough to sustain oneself & family, the little pay doesn’t work in favour of companies. high attrition rate will result.
what is mutualism??…
what talking you?…
It there a market level playing field in Singapore? Let the market decide the wages? The gov control everything. Everyone had to pay electricity, water, gas, phone,road tax, education,transport bills to the gov. All these product & services are monopolised by the GIC & temasek companies & gov linked companies. We get paid peanuts and yet sucked out of our blood earned money. They are paids millions with so many manpower to do their jobs. Send back all PRS and foreigners and there is no need for minimum wage program. Let the market force decide.
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Lots of interesting content