Monday, September 13, 2010

Minimum Wage - How long must we wait?

Hong Kong has already done it. Malaysia will most likely have it by next year.

In an earlier posting in Jul 2009[The Truth about Jobs, Jobs, Jobs], I discussed why the PAP govt will resist having a minimum wage for Singapore workers. We very often hear the govt talk how it has done well to lower unemployment in Singapore. That is only one side of the story because creating jobs in Singapore is not the same as creating jobs in other developed nations - all these countries have minimum wage laws and they have to create jobs that pay decent wages while Singapore govt can just create jobs that pay any salary. In fact Singapore creates so many jobs, the govt imports tens of thousands of foreigners to fill them. What is important is not number of jobs but the availability of jobs that pay good decent wages.

"We say Singapore is multi-racial. We all have the equal right to belong and call ourselves Singaporeans. Yes, there will be competition, but it will be fair competition. There may be inequality of outcomes, but we will still look after each other,"
- Dr Vivian Balakrishnan, CNA, 8 Sep 2010[Link].
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I wonder how hard Dr. Balakrishnan challenged himself when he came up that. Once a critic of the govt, he has morphed into a "PAP man" and he is in charge of the MCYS (Community Development, Youth and Sports) that takes care of some of the less desirable "outcomes" of the system. If you end up without housing because prices have gone up so much and have to sleep at the roadside, MCYS men will come quickly to pick you up and send you to one of the govt shelters - poverty can be kept invisible. If the MCYS men act fast enough and you're willing to bend the definitiions a little to call shelters "homes", the PAP can then boast to the world there are "no homeless in Singapore". They don't boast about that too often these days - NSP's Goh Meng Seng found homeless people living in tents at the beach, I see the homeless sleeping next to pillars at covered walkway leading to Bedok Interchange everyday. Earlier this year Dr. Balakrishnan scolded bloggers and Al Jazeera for misleading the public[Link] in the case involving a homeless couple by saying the couple's plight was due to their own doing when it was govt policy and rules that led to them being homeless. Now Dr. Balakrishnan says there is "fair competition" in the system although there may be "unequal outcomes". What is so fair about a system in which a large segment of population work full time jobs and cannot make enough for basic necessities? These people will never accumulate enough for retirement and will have to work their whole life. Is this fair? Under the current system, Singapore has the highest income inequality among developed country how can a system that produces such a lopsided outcome be considered fair?
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In 2007, even though I was critical of the govt and had some understanding of how this elitist govt operated, I was shocked when PM Lee announced massive pay hikes for the govt. At that time the PAP men had already occupied all of the top 30 highest paid politicians rankings in the world[Link]. How could the hikes be justified when Singapore already had the highest income gap among developed countries? They did it just after the elections as if they couldn't wait - doing it so close the elections was politically unwise because it would become a permanent liability in future elections...it was as if they felt so strongly about it and were so confident of winning future elections, they couldn't wait. The debate on the hikes was almost surrealistic with the PM & MM joining the fray talking about the "extraordinary talents" in govt and "painful sacrifices" the PAP men had to make to be in govt and how the country would sink without them so on. Portraying the govt as extraordinarily talented created another liability later on- when hiccups occurred such as escape of Mas Selamat, floods, housing woes, they instantly lose credibility when people see that they are as human as anyone else. While the PAP govt was arguing to hike its own pay hike, others around the world saw excessive compensation for executives as inherently unfair, unnecessary and artificial[Link, Link]. Instead of setting the example to correct the unfairness in the system, the PAP govt argued that they should simply 'follow the market' :
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".....you have to pay the market rate or the man will up stakes and join Morgan Stanley, Lehman Brothers or Goldman Sachs and you would have an incompetent man and you would have lost money by the billions," - MM Lee, April 2007. [Link]
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So where is Lehman Brothers today? Goldman these days is very busy answering the US SEC for its past unethical behavior. When things are wrong and unjust, we need leaders who are able to see it and set the right example through their actions. Based on what Dr. Balakrishnan said, if you or your children suffer from the unequal outcomes brought about by the system, you have to accept it so long as the system is fair. But how can the system be fair when it produces such a high level of inequality in the first place? Because it is meritocratic and market driven, it has to be fair? We can have meritocracy and the free market, but a different set of govt policy/rules will produce a very different outcome. We have rich doctors because the govt wants Singapore to be medical hub for the rich at the expense of ordinary Singaporeans who now have to face overcrowded hospitals and rising cost of medical care, we have rich bankers because the govt deregulated our markets to allow them to sell structured products with high profit margins to Singaporeans and they can market highly profitable credit cards and unsecured loans....casino operators make huge profits because the govt reverse early policies to allow them to operate in Singapore. It is govt policy to open the floodgates to foreign labor which depressed the wages of a large segment of the population. The outcomes we have today are result of decisions the govt has made and the govt has been consistently lopsided puting businesses and GDP growth above the interests of ordinary Singaporeans.
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So when will we have minimum wages? The PAP wants to preserve the status quo. As long as it can maintain its hold on power, it will continue to implement pro-business policies. Minimum wages takes away businesses' access to cheap labor compelling them to invest their profits in machines to increase productivity. Just compare the labor intensive approach to construction in Singapore vs somewhere else where there is no cheap labor. Lim Swee Say, as labor union chief, tells workers to be cheaper, better and faster. Why doesn't he tell landland lords to lower their rents to make Singapore more competitive? Why doesn't he tell Singapore Power to lower its tariffs which are the 2nd highest in the world so that businesses can pay workers more? Making labor cheap and all else expensive works against ordinary Singaporeans especially those in the bottom 20%. The PAP govt says that businesses will flee if a minimum wage is set....we should ask ourselves what good is achieved if we retain a business dependent on cheap labor in Singapore....let it go and make space for businesses that can pay workers more. Other countries have implemented minimum wages for more than 5 decades. Even Malaysia is going to set a minimum wage.

39 comments:

maximum wage also said...

Minimum wage makes alot of sense.
Citizens will find it worth their while to take on menial jobs. It becomes a more level playing field for citizens competing for jobs with FWs. Overall effect will be positive, with reduced dependency on social welfare and handouts, and of course, better self esteem when one is gainfully employed.

If we have minimum wage for ordinary folks and have max wage for greedypigs like our ministars ( capped at 0.5$Million ) it will be one step in reducing the Gini coefficient.

Towkay said...

Who says we have no min. wage?

- S-pass holders min. $1.8k
- Employment pass min. $2.5k

I have to pay my FTs these minimum wages in order to get them to work in Singapore.

Anonymous said...

In my opinion, setting a minimum wage is not the best solution. Inflation will quickly erode the real value of the min. wage, making it nothing more than a wayang. Setting a min. wage also reduce the total number of jobs available, yet does nothing to address the hordes of FTs fighting for jobs at the min. wage level.

To me, a better and more direct way of addressing the issue is to address the over-supply of labor. Cut the mass import of foreign labor, and overall wage levels will rise due to laws of supply/demand.

Cutting FT numbers also ensures that the fewer jobs remaining due to higher wage levels, will go to the locals and not the FTs.

Some businesses will definitely close/leave SG due to higher wage costs, and costs of living may rise slightly, but overall, the higher wage levels will translate into a better quality of life for all Singaporeans.

Clear eyed said...

"you have to pay the market rate or the man will up stakes and join Morgan Stanley, Lehman Brothers or Goldman Sachs and you would have an incompetent man and you would have lost money by the billions,"

It would have been amusing that the forecaster extraordinaire's forecast is so wrong if the result is not so dire - we still lost hundreds of billions of $ even though we paid these "talents" millions of $ every year.

My own forecast is that minimum wage will never be instituted here as long as we allow these "talents" to call the shots here. After all, their rice bowl is gold, diamond encrusted and iron clad and they enjoy minimum with no maximum pay with assured multiple bonuses annually and pension. We have to help ourselves by wresting back the rights they have taken away from us. The next GE is the opportunity to do so.

Anonymous said...

@Towkay

For naming yourself as a Towkay, you appear ignorant about minimum pay. So let me explain that minimum pay refers to the lowest salaried worker, no matter the job they are doing, e.g., road sweeper, deliveryman or canteen dishwasher.

On the subject of FTs, there seems to be an anomaly. Due to increase in size of population, GCT says we need more tracks and trains and upgrading of signal systems. The reason given for the rise in population is to increase GDP and create more jobs for Singaporeans. The expenditure of 1-2 billion and after that another 60 billion to have more tracks and trains within 6 years, would not be necessary if there had not been any population increase. This does not make sense to me.

The same applies to expenses to alleviate floods, built more roads and stopping the growth of car population. Obviously more waste treatment plants, expand land usage by making Pulau Ubin and maybe even Tekong as living spaces to accommodate even more new residents. Heaven forbid. Was there a tacit agreement between Singapore and Malaysia that we absorb their Chinese population to balance the ratio of races, whilst Malaysia is quite happy to reduce their Chinese population? Appears to me that this is so from what I read about the number of Malaysian Chinese that had emigrated to Singapore.

Towkay said...

@13/9/10 17:27

FTs already have minimum pay as I have illustrated. You are talking about minimum pay for Singaporeans. I don't hire Singaporeans so I am not interested.

Anonymous said...

Minimum or no minimun pay, so long as i am allow to employ foreigners, i will employ the maximum allowed with whatever means i can devise. You want Singaporeans to be more expensive by demanding minium pay. Go ahead and make them less laku(attractive to employ). Swakus, ahsors, ahchans and ahQs.

The towkays ones have most of their umemployed families members, relatives and even friends registered as employees to qualify for more foreigner workers, collect job credits and workfares. See, this is the way to become richer towkays and more successful employers. Use your blain!

Anonymous said...

Anyone has any idea how much is the minimum wage in places like Hong Kong, Taiwan, Japan, Australia and New Zealand? dt

Anonymous said...

in response to someone's question about minimum wages in some countries, for the uk, the link is here http://www.hmrc.gov.uk/nmw/

There are three levels of minimum wage, and the rates from 1 October 2009 are:

•£5.80 per hour for workers aged 22 years and older
•a development rate of £4.83 per hour for workers aged 18-21 inclusive
•£3.57 per hour for all workers under the age of 18, who are no longer of compulsory school age

think the current exchange rate is about 2.1-2.2, so roughly double that number and you get the rate in Singapore Dollars.

Anonymous said...

There is minimum wage in Singapore lah, ministerial salaries lor! chow chow minimum 1 million! That's PAP's hypocrisy and moral decadence for you. F**k the PAP! (metaphorically of course)

Anonymous said...

""""本科及以上学历者赴新加坡接受一个月的金融职业培训,学成后在新加坡各大银行、电信公司工作。高中毕业及大专在读学员可先申读思马特管理学院大专和高级大专课程,其后安排同样渠道就业。""""
Just recruit more young people from China & else where. Why need minimum wages.
Locals don't need to work, just wait foro help??

Anonymous said...

"...it was as if they felt so strongly about it and were so confident of winning future elections, they couldn't wait."
-Lucky Tan

It was NOT "..as if..".

It is really so, or else they won't do it. Nobody wants to fight a losing battle, least of all the PAP.

I think also for the same reason why few, maybe including Lucky Tan, wants to join the opposition and contest elections.

Anonymous said...

The ruling party does not need to explain its policy:

[1] Election campaigning is the shortest in the world. Do you think there is time to talk policy in 10-day campaign period?
[2] Walk over due to GRC
[3] Party Whip system creates discourse in parliament debate and voting
[4] Do you think ST will provide the platform for policy debate?
[5] Redrawing of election boundaries make it difficult for continuity in policy discussion


AS a result, how and when will they talk about issues that requires policy debate?

Anonymous said...

If graduates who are 40 over hv to be security guards, what is the point of education?
Is minimum wage for these people still relevant?

Anonymous said...

For the younger Singaporeans, I suggest maybe they should re-think whether to opt for higher education. It appears that learning a trade skill may be better in the long term. When the going gets tough in getting a job, there is no lack of vacancies for good tradesmen. I know thousands of "engineers" that has Secondary 2 education but went through apprenticeship and climb their way up. There are also many that did not pass Primary 6, but made it such that their jobs are pretty secured. As long as there are machines, appliances, automobiles, trains, ships, aircraft, etc., that require maintenance, repairs or mods, tradespeople will be required to get them done. Trade Specialists are highly paid and are needed everywhere their skills are needed. They can easily migrate too. Furthermore, like swimming or cycling, once learned, one never forgets.

Anonymous said...

Dear Mr Lucky

"Minimum Wage - How long must we wait?"

The answer is when the opposition has secured significant political power at the election ballot. That means the likes of you, Chee Wai, Alex Au and all the smart people have to step forward. Blogging have a part to play eventually. But first there have to be a significant opposition.

Yet NSP's Mr Goh just had Mr Brown's fans spit in his face (metaphor).

Btw, could you persuade your militant pro-LGBTs atheist fans to tone down a little? Lincoln, Jefferson and probably Obama are all atheists but that never stopped them from invoking the Abrahamic God. And if you want to push your agenda, you need to win political power 1st. Besides, Darwin, while an atheist himself, would disapprove of the Dawkin's aggressive nonsense (check wiki).

And Dear Anon 13/9/10 16:09

The min wage no good theory has long been debunked. Pls read more.

Anonymous said...

.... and Dear Mr Lucky

STI 3066.81. time to review your model/prediction?

Anonymous said...

As with Towkay, I also hire only those so called FT's. This is SINGAPORE! Minimum wage has got no meaning.

AHA HA HA HA HA!

Towkay Ong

p.s. If any FT's become Singaporean, then I will respect them as Singaporean -- i.e. I kick them out!

Anonymous said...

According to PAP, minimum wage is no silver bullet. They point to the 8% or so unemployment rate in minimum-wage countries.

Of course, the minimum wage policy in Singapore is only for ministers, whose minimum wage is $1 million a year. Either that, or wear gunny-sacks.

Anonymous said...

The boss of a company in the financial, manufacturing, logistics, biomedical, retail, shipping, information technology, construction, real estate industry needs to recruit about 100 more peoples for his company due to the increase in sale.

He put up a job advertisement for the various posts. When the boss receives many job resumes, he filters off Singapore Citizens from the job applicants, practically rejecting all Singapore Citizens job applications. The boss only chooses foreigners and permanent residents for job interviews.

The boss follows his principle of selecting job applicants based on this thinking:

Singapore Citizens need NOT apply, ONLY Foreigners and Permanent Residents can apply.

The boss reasons that he can get CHEAPER foreigners and CHEAPER permanent residents to fill the job vacancies.
The FIRST priority for the advertised jobs go to foreigners and permanent residents.

When the boss cannot fill any job vacancies by foreigners and permanent residents, only then he will consider Singapore Citizens for the remaining unfilled job vacancies.

This is how Singapore Citizens are treated in Singapore.
Do you feel this is a terrible and lousy experience?

Anonymous said...

The general S'pore pschye is we are ahead of Msia in everything. If M'sia adopts minimum wage, first time we lag behind them. Ho say liao.
Min wage will reduce the number of foreigners (labourers and "talents") and force employers to be bloodsuckers and treat workers better (no more putting labourers in lorries, even Dubai is busing them).

Anonymous said...

Sorry, I meant to say "force employers NOT to be bloodsuckers and treat workers better..." in my previous post.

Anonymous said...

Minimum is not going to work as long as there is an easy supply of labour from oversea. what you will get is that employers will work out a scheme with the employee to get back the extra wages had minimum wage not been in place.

Hordes of employers are already doing that to S pass holder. pay them 1800, get back 700 on payday and withhold their passport. come on, do you guys really think all the s pass is being paid 1800/mth. some are paid just 950.

Anonymous said...

" Trade Specialists are highly paid and are needed everywhere their skills are needed."
Anon 13/9/10 21:43

Not really true they are highly paid here lah. Maybe in England where plumbers earn more than engineers or even managers. So better emigrate to Western countries to be a tradesman.

I tell you, if road sweepers are as highly paid as managers, I don't mind being one even though I got degree.

Pay the right salary and you will get the people, no matter what kind of jobs.

Of course if you pay peanut salary you will get those 3rd world people as tradesman, but not necessarily they are bad, but still can do lah. Or else why they they want to get them, right?

So blame those 3rd world people for being cheap and good lah.

Or blame our opposition for not being able to defeat the PAP lah.

Anonymous said...

To Anonymous 13/9/10 23:34 and all who read this:

"Hordes of employers are already doing that to S pass holder. pay them 1800, get back 700 on payday and withhold their passport. come on, do you guys really think all the s pass is being paid 1800/mth. some are paid just 950."

This practice, as stated by Anonymous 13/9/10 23:34, is illegal and against Singapore Law.
If you know of any such illegal practice, please report to MOM.

Towkay said...

@13/9/10 23:46

Don't talk cock lah. If you report Towkays who flout S-pass and employment pass rules, we will simply convert our foreign talent to PR or give say that the cashback is for the employee's housing expenses.

Anonymous said...

I did on research on various viewpoints on minimum wage.

The main concern by several economist is minimum wage would priced some of the workers out of a job and reduce employment opportunities. They favour a tax credit, indirectly raising their wages by giving them back some money.

Singapore implements this policy in the form of workfare supplement. However its stringent criteria renders it ineffective.

On the CPF website, workers staying in housing with annual housing in excess of $11,000 disqualifies them from Workfare. The Annual cut-off of $11,000 covers about 90% of households, and includes virtually all HDB flats.

Hence the old uncle/auntie that cleans your table but stays in a 2 room HDB is deprived of the benefit of workfare that the govt is claiming to give to low wage workers.

hyom said...

Hi Lucky Tan,

I am sure minimum wage proponents like you have kind intentions. However, I am doubtful if it is really beneficial to the people it is meant to help.

If the minimum wage is set too high, it will create unemployment to people who are worth less than the minimum wage. No employer (unless he is your father) will pay a worker more than what he thinks the worker is worth. Anything more will be charity. It is not fair to expect charity from bosses because they set up companies to make money, not give away money. In a capitalistic economy, a minimum wage which is set too high will lead to higher unemployment among the young, the old and the unskilled. The young will be hit because they still have not accumulated enough work experience to be worth more than the minimum wage. The old will be hit because their market value has depreciated below the minimum wage over the years. The unskilled obviously do not have the skills to be worth the minimum wage. They will be condemned to permanent unemployment because they will not be employed in the first place. Not being employed denies them the opportunities to acquire useful skills on the job which can lead to higher salaries. At least exploitation gives the low-wage worker hopes of gaining useful skills which allows him to command a higher salary later.

If the minimum wage is set too low, one might as well not have this rule in the first place. Why scare off investors and businessmen unnecessarily?

Even if the optimum minimum wage is set accurately initially, it will not stay accurate for long. The optimum level will be fluctuating with economic conditions. It is impossible for bureaucrats to adjust the minimum wage optimally with changing economic conditions. If they can do that, they might as well speculate in the financial markets and make a bundle.

Because it is so hard to set the optimum minimum wage, I say we had better leave it alone.

Perhaps the minimum wage will force employers to go hi-tech and buy equipment to make their workers more productive. But, what if not enough employers respond as expected? What if many of them decide to pack up and leave? Then, the consequences could be higher unemployment among the very people we are trying to save. I would rather not have the country take the risk and implement a minimum wage system.

Anonymous said...

"Because it is so hard to set the optimum minimum wage, I say we had better leave it alone."

Nothing is too hard for our ministar millionaires

Anonymous said...

"fair competition" in the system although there may be "unequal outcomes".
It started with 4 legs good, 2 legs bad...
then 4 legs good, 2 legs better

Min Wage Does Not Work said...

Minimum wage seems to be an emotional subject, and I understand the intentions are good, but the truth is minimum wage does not work!

Let's see what happens if a minimum wage of say $1000 gets implemented.

1) The total number of jobs available decrease, as some jobs simply aren't worth that wage. Employers will also choose to hire less and make 2 do the work of 3.

2) The supply of FT is left unaddressed, and there are still hordes of them fighting for a lesser number of jobs. There is nothing ensuring that locals get employed instead.

3) As inflation continues, the nominal wage of $1000 loses real value until it becomes less and less relevant. Meanwhile, the govt can happily point to the useless min wage to "prove" that they are doing a lot to help locals.

Clearly, setting a min wage does nothing much to help needy locals, and might even worsen the situation for them.

The better solution, is to tightly control the supply of foreign labor. When employers can't find enough workers at $XXX, market forces will force them to raise their offer. And these jobs with higher wages will go to locals, as long as the inflow of FTs is controlled tightly.

Countries worldwide have a minimum wage because it appeals to the electorate that do not know better. The truth is that there are far better methods to achieve the same objective of reducing the income gap.

http://vonhayek.blogspot.com/ said...

Goh Keng Swee mother of these trouble. Many people think anything good is Goh and anything bad is LKY, but in actual fact Goh is just another asshole.

During the 70s when Singapore started to industrialized, Goh is the architect who relentlessly pursuing economic growth by selling Singapore to MNC-- all at the expense of local industry. This create a situation of job lost when Singapore labour become too expensive.

In short without indigenous enterprise, we will never have high wages which is evenly distributed.

http://vonhayek.blogspot.com/ said...

Singapore is the only country in the developed world that--

--Got herself industrialized, without her own industries.

--the first and fastest to be de-industrialized when China opens up

Goh Keng Swee is the asshole bringing in Foreign companies in such a manner that local industries got killed. (We could have gone the way of Taiwan who now have one of the strongest industry)

LKY is one step further by bringing in FT which ties our wages to the level of Bangladesh.

The root cause of unequal income distribution is that in SG someone must sacrifice to entice MNC for setting up shop here.

Setting minimum salary or stopping FT will only solve part of the problem. Ultimately, its the boss of MNC who decide whether we have meaningful job. And our workforce do not really have much advantage compared to Shanghai or Bombay.

So long as our wicked and stupid elite are not able to bring up local industries, the income inequality will be here to stay.

Lucky Tan said...

vonhayek,

You have a good point but don't be so harsh on GKS.

Singapore made a trade off attracting MNCs and FDI as much as possible. S. Korea and Taiwan went the other route and try to do "everything themselves". It was a slower route but there were advantages - you go to the IT show today you see LG, Samsung, ...Acer, Logitech, Via , HTC etc. Almost no Singapore brands except Creative? The once despised as too slow too inefficient approach to substitute import (import substitution) yielded fruits down the road for S. Korea - they make their own cars, Fridge, TVs, LCD TVs, military wares, and have low dependence on FDI and foreign multinations. But the price they paid is they took much longer than Singapore. Their workers are mostly unionised in independent unions and they have full democracy...S. Korea is a world beater in many things including culture i.e. movies, pop songs and TV serial.

Anonymous said...

@Min Wage Does Not Work

Your argument is baseless and full of holes. From your points 1) and 2) you conclude there will be inflation without any explanation.

Then you conclude that: "The better solution, is to tightly control the supply of foreign labor. When employers can't find enough workers at $XXX, market forces will force them to raise their offer. And these jobs with higher wages will go to locals, as long as the inflow of FTs is controlled tightly." We are already past the point of no return with regards to the inflow of FTs, if you have not noticed. The dependence on cheap labour has enabled many companies to prosper. From which point do you suggest controlling the inflow, at the present population or reduce them now, making it harder for companies to get their source of cheap labour? Causing companies to go bust is an option?

There is no simple solution, but imposing a minimum wage is one step to dismantling the work structure that Singapore has long relied upon. Slowly but surely, the way business will be conducted will need to change. Using the latest technologies and equipment will increase productivity as less labour will be needed. For example, digging of trenches need only a few machines compared to what we see happening now, 10 foreign workers with changkuls happily digging away in the heat of the sun.

Anonymous said...

The minimum wage will equally benefit foreign workers too.

It may not necessarily stop the import of foreigners by the gov which the author of this blog hates a lot.

But at least everyone in SG can enjoy the minimum wage benefit :)

Anonymous said...

I'm tired of reading comments that say, "If we impose a minimum wage, MNCs will pack up and leave."

Look around you, who needs a minimum wage. These are blue collar workers that perform services consumed locally - construction, cleaning and retail etc. These jobs ain't going anywhere unless the users have left.

How about inflationary effects of imposing a minimum wage, one might ask. To get a good perspective on that, look at the main culprits contributing to inflation - rental, housing, transport, food etc. Assuming the low-wage workers get an increment, what do you think they might buy and thus push up inflation??? A Good Class Bungalow???

Have a heart, think of our 60, 70, 80-yo Singaporeans pls.

Min Wage Does Not Work said...

Dear Anon 06:48,

I cannot claim 100% that inflation will happen, but it is much more likely than not for the following reasons.

1) Inflation has been the norm in many places except for in Japan.

2) Governments worldwide have been relaxing their monetary policies in response to the last economic crisis, and that will probably lead to more global inflation in the long run.

3) If a minimum wage is implemented, costs of production will rise, and logically this will lead to greater inflation.

I am NOT saying that we should avoid min wage as it will cause inflation. I am saying that inflation will erode the significance of any min wage law, and there is no easy solution to that.

If you ask me what I'll do, I will immediately stop the inflow of FT for jobs that Singaporeans are willing and able to do, and over the next few years, gradually reduce the number of FTs in Singapore while our infrastructure and wages catch up.

You argue that such a move will cause companies to have trouble securing cheap labor and thus go bust, which is not an option. But how is this different from setting a minimum wage and causing companies to go bust?

Be default, some companies will no longer survive in a higher wage environment, and that is totally reasonable and good. We do not need these companies that rely on cheap labor. The fall of these companies will create space for companies that move up the value chain.

Setting a min wage will similarly force companies to move up the value chain, but if we don't temper the inflow of FTs, companies will still widely employ FTs at the min wage level, as FTs are more willing to work in harsh conditions.

Thus how will setting a min wage help the needy locals that we are trying to target?

Anonymous said...

@Min Wage Does Not Work

After prospering in their business due to having cheap source of labour, to immediately stop the flow of foreign labour as you contended, means they will go bust. That is something we need to avoid, but due to having a minimum wage, all employers will start reducing their dependence on cheap labour. In doing so, they need to strategise the way they do their business, like automation for example. Here, we are referring to minimum wage at $XX.00 per hour and not as you said $1000 per month. Minimum wage only applies to the lowest salaried worker, and not to higher paid employees. How many thousands of these foreign labour will be affected?

Therefore my argument refers to implementation of a minimum wage level that will weed out companies heavily dependent on foreign labour to stay afloat. If they are unable to survive so be it but the numbers will be small, as many will seek higher productivity through various means. You also state that space will be created for innovative players to come in to fill in the gap.

You state that having minimum wage does not work, therefore I put across to you why it will work. The end result will be the slowdown of foreigners flocking here as there will be no jobs. If there is no demand, the supply will dry up.

Therefore, imposing a minimum wage will work and it will be good for Singaporeans.