Tuesday, September 14, 2010

Minister responds to calls for a minimum wage

The MOM has responded to calls for a minimum wage on its blog:

http://momsingapore.blogspot.com/2010/09/of-minimum-wages-and-productivity.html

In a reply by Minister Lee Yi Shyan, he wrote that minimum wage "distort market mechanisms and also makes the labour market more rigid. In fact, it can even hurt employment opportunities for low-skilled workers, making it harder for them to find jobs". 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. If the govt had achieved growth in the economy by raising productivity and fostering innovation, the number of low wage workers will be small and setting a minimum wage will only affect the workers at the margin by pushing up their wages. The PAP govt is unable to implement a minimum wage because a large segment of the workforce does not make enough for decent living. Why do we have this problem? The PAP govt opened the floodgates to cheap foreign labor to grow the GDP disincentivising businesses from making investments to raise productivity and retained industries dependent on cheap labor. It is disingenuous now for the Minister to say he is worried that a minimum wage will "hurt employment opportunities for low-skilled workers"....they have already hurt these workers by importing cheap labor causing their wages to be depressed.

The minister also cited workfare as alternative to minimum wages. If you go to bus interchanges these days, you see big posters telling workers they can get up to $3200 per annum from the Workfare Income Supplement (WIS) subject to various conditions. Workfare is a pro-business scheme because it uses tax dollars to supplement income and businesses pay the same low wages to workers. The result is businesses have no incentive to improve productivity and workers are locked into menial jobs. For this reason, the harshest critics of workfare call it "slavery"[Link, link, link].

The minister wrote that the unemployment rates in western countries with minimum wages were high (8%)prior to the current recession. There are countries without minimum wages and high unemployment and there were periods when countries had low unemployment and minimum wages (US, 1996-2006). High employment rate itself does not deliver quality of life when a large segment of workforce(20% of workers) don't make enough for decent living and many who now make a decent living won't make enough to retire at an advanced age.

Unfortunately due to PAP own past policies which caused the income inequality to be the highest among developed countries and the economy to become dependent on low wage imported foreign labor, the PAP govt will now strongly resist having a minimum wage.

43 comments:

Social Justice said...

i support minimum wage on the basic principle that a person working full-time should have the means to support at least himself and one dependent.

one might argue that it is a distortion wrought by greedy businessmen and incompetent government that individuals putting in a honest day's work may have a decent living these days.

Anonymous said...

The government cannot implement minimum wages becausse :
a) they will have to formularise a pay strutcure based on factors such as inflation rate, standard of leaving ....etc
b) companies might not be able to pay very low salaries because it will contravene ILO policies on min.wages

These are just 2 clear examples of why Singapore will never implement min.wages. If the pro PAP acedemics claimed that market forces will eventually takes care of itself, it will never happen. Many years ago when we do not have many PRs and FTs, wages of Singaporean workers shoot skyhigh due not primarily to labour market forces, but largely due to financial instruments implemented by the government which co-relate to surge in salaries. Examples are price of houses, rental charges or operating costs of companies investing in Singapore.
But currently, as predicted by many neutral trade unionist years ago, that the presence of FTs will depress wages. However the government will always proclaimed average salaries of workers in Singapore is above $2500 and is more than sufficient to cope with the cost of living. Unless one forgets, the average salaries of workers includes that of ministers.
But lets ask ourselves this...is $2500 enough or maybe $5000 (for dual income) enough? Look at all the prices of basic necessities. From cost of food to resale HDB flats to transportation to utility bills etc. Calculate if you may, and you will end up with very low savings.
Well for PRs and FTs, they wouldn't care because their ultimatum is to squeeze the cow's milk as much as possible and be millionaires in their country of origin and perhaps retire early to enjoy his or her new found wealth.
As for those who have average children...I feel sorry for them. They may have to work perhaps until 70 05 75 in order to pay for the roof over their heads and to educate their children to compete with the FTs and PRs. In Singapore, life is a vicious cycle....sigh

Amused said...

The argument for and against minimum wage can be found on Wikipedia. ("Minimum Wage")

That said, all major developed countries have minimum wage and anti-discrimination laws (sex, age, race, etc.)

I am not sure why Singapore, given its high per capita income and stage of development, still resists such laws that generally help its citizens. Why is it still competing at the level of developing countries?

Anonymous said...

Hong Kong had spent 10 years debating about minimum wage and finally implemented the minimum wage policy.
Malaysia is going to implement minimum wage soon.
The US, European and most of the East Asian nations had implemented minimum wage for years and decades.

Could all these nations be wrong in implementing minimum wage policies for a long time?
The collective wisdom and intelligence of the peoples who decided to implement minimum wage system in these nations should not be less than us.

Look from the probability point of view. The chance they can be all wrong is almost zero.

So the conclusion is that there must be more good than bad to have minimum wage implemented.

Anonymous said...

The US had the most number of Nobel Prize winners than any countries.
Not forget that we have to use their top universities, Yale, MIT, John Hopkins, Stanford, etc, to leverage our universities.
Most of the peoples who decided minimum wage came from these universities. They can't be that childish when they decided to implement minimum wage.
There ought to be more advantages to have minimum wage.

Anonymous said...

Taken to its extreme conclusion, without a minimum wage scheme we may actually "progress" to the status of 3rd world sweatshop conditions, meagre subsistence pay, long long hours working and living hand-to-mouth, while the owners of capital enjoy living to the fullest....

Anonymous said...

problem is people who set policies are all living on top of a mountain. they do not understand what is happening on the ground. law here only protects the rich and powerful.

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

The pre-requisite of income equality is we have some control over the means of production.

Which MNC will set up shop here if we force them to socialize their profit. Those Nordic countries are able implement socialism is because they have their own technology or in case of Norway, natural resource.

The lack of indigenous industries will lead to income depression so as to remain attractive compared to China and India.

Ultimately we need to re-industrialize; and to restructure our financial sector in order to get rid of "license tycoon" like Wee Cho Yew, Ng Teng Fong's families....etc who prosper because they have access to government favor under a market that restrict new entrance.

Next we need to kick many of the status quo elites out of GLCs like Semcorp, Keppel, DSTA, ST...etc

I see PAP a hindrance to our advancement.

Anonymous said...

Minimum wage would only be considered if the PAP were to lose a couple of seats at the next GE. For now, it is wishful thinking as the FT policy is casted in stone. The numbers of FT might even increase if the ruling party were to cruise along at the next GE. Minimum wage is more a political instrument, rather than economic.

Anonymous said...

Dear Mr Lucky

Lim Chin was my Prof. So I am a bit biased.
Let's just say that he was quite proud of his work with COE and the liberalization of the energy market.

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

To have equality, we must be able to produce something ourselves because MNC is here to look for something cheaper than at home.

I am pessimistic about developing indigenous industries in Singapore because PAP is really the mother-fxxker who hate merchant. I cite an example below.

We could have developed our own casino industry by financing one of our tycoon and forcing Genting and the Jews from sand to hold minority stake if they want to set up shop here.

Instead, PAP simply gave casino licenses to foreigners without wink.

LKY knew inherently that a strong merchant class would be his enemy, and what he and Goh Keng Swee(another asshole) did was the suppression of our local merchants.

The old PAP import foreign capital and MNC in due process crushing all local entreprise, reducing Singaporean to be working class for foreigners.

Those few merchants who survive the onslaught are not the most capable or especially talented. They are rather the "license tycoon" who prosper in case of Wee Cho Yew, when PAP hand out no banking license since 1972. The rest belongs to the blood sucking property tycoon.

Those who tried to built our technology or to produce something for society ultimately got crush.

We MUST get rid of PAP.

Anonymous said...

Education is useless if a lot of graduates hv to become taxi drivers or security guards after hiting 45 or 50.
Just imagine a person may spend $200,000 and 2 years to get an MBA, but he has to drive 20 years of taxi to get back just $200,000.

Anonymous said...

It is clear that the government does not have a good strategy to make the country a first world nation with first world benefits for its people. So it is running it like a 3rd world country, but building things (owned by them) to look like 1st world. We will continue to be like that unless we make them change.

Anonymous said...

I don't support a minimum wage. It is better to have more jobs available than to have fewer jobs at the minimum wage. If FTs are holding down wages, then reduce the quota or raise the levy. A minimum wage across the board will hurt the employment opportunities of low-wage Singaporean.

Anonymous said...

The only thing in Singapore that minimum wage will distort is PAPies and towkays' salaries. They are scared to lose their super-normal bonuses and pay increases.

TokyoSingaporean said...

Minimum wage should be a basic human right issue. Is it humane that an entreprise uses up a man's life and leave him bare in his later years? The real issue is that the capitalistic model has its misgivings and this is one of it - depriving others of a decent means of living. Singaporeans need a paradigm shift to understand what it means to be a human being. It is not far-fetched to notice that when the spurs are not in the Singaporeans' hide, then it's their own problem. There is a likely parallel here to neuter the lower-income Singaporeans from among us. I do not know what it means to be a Singaporean. PAP has now dropped to the level of cliches. The main problem with us is that we lack innovation. Too much political oppresion has created a climate of apathy which dilutes creativity. Look at Japan and Korea. They have their own industries and "Made in Korea" or "Made in Japan" products. The only "Made in Singapore" products we have are the souveniers that tourists buys from Mustafa Centre, and they are "Made in China", by the way.

Japan lacks creativity in innovation but they are smart to take new inventions and improved on them. After being with the PAP administration, what have we produced?

Local industies would provide support for its citizens in times of slow growth. But we don't have that.

Many countries that have minimum wage have developed their own industries and products. Why are we still seating in the passengers' seat? When are we taking the lead? Our government needs a mindset change because they are gotten too comfortable and obsessed at staying in power to the expense of what matters.

For a better future, I'm reconsidering voting them next year.

Cheers!

Min Wage Does Not Work said...

It is dangerous to argue that min wage must offer more pros than cons simply because developed countries worldwide practise it.

Firstly, min wage is often more of a political tool to secure votes than an economic tool to help low-wage workers.

Secondly, there are important differences between SG and other countries that may cause min wage to not work here.

For one, SG has an almost non-existent social assistance scheme. Any local that loses his job due to the higher wage requirements is going to end up worse off.

Another difference is that SG imports far more FTs than any other developed country. It is more effective to control wage levels by controlling the supply of labor (i.e. by controlling these FT numbers).

At the end of the day, min wage will not work for SG if that is the only thing we do.

Yes some locals will benefit from the higher wages. But by and large, companies will still choose to hire the hordes of FTs at the min wage level, so a significant number of locals will lose their jobs or remain unemployed. For them, the situation will have just worsened.

Lucky Tan said...

anon 15:04,

When people say implement min wage in Singapore, it has to mean that the govt put in place the pre-requisites so that it can work properly. Like you mentioned, Singapore does not have social safety nets and has become dependent on the foreign influx...so to implement min wage would require a sea-change that the PAP govt will not be willing to undertake.

Anonymous said...

to have a min wage - does it include domestic maids. Should we remove the foreign maid levy and pay these to the maids. Can we have a min wage that excludes maid? I do not see this happening soon.

Lucky Tan said...

anon 15:51,

The HK min wage excluded maids.

Anonymous said...

Looks like your pet doctrine has come up against the gov more rational approach to wage issues.
Nice try anyway

yours almighty said...

Minimum wage will throw us into the stone age. Singaporeans are already overpaid as it is. Minimum wage will simply erode any chance a teenager will have of temp employment.

If we give you minimum wage, whats next? unemployment benfits? and the list goes on. people who demand such free loafing lunch are like a virus. we need to nip in its infancy.

Sgcynic said...

If we want to stick spurs Singaporeans' hide, then make it ALL Singaporeans. Why do ministers get pension and cpf and high salary concurrently? Best of all worlds!?

Anonymous said...

Sir,

There is already a minimum wages in place for many years. It is for the MIW only plus pension plus.....

The ordinary peasants like myself must tighten our belts and bite the ¨bullet¨ and be gracious to FT who wants to settle in Sin.

Anonymous said...

http://en.wikipedia.org/wiki/Immigration_tariff

Anonymous said...

//
Looks like your pet doctrine has come up against the gov more rational approach to wage issues.
//

Do you mean the minister's pay peg to GDP growth or NTUC's "cheaper, better , faster" recommendation for workers?

Would it be more acceptable if we call it "living" wages?

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

Re Min Wage Does Not Work
Re yours almighty

First we have to ask ourself is Singaporean well paid? The answer is a big NO, but our elite are certainly well paid and useless.

Next, what kind of "talent" do our society reward? Our society clearly do not reward honest and hardworking people like our Ah Ma who clean the toilet and clean the food court.

The most useless people like Ho Ching and GIC chap like Tony Tan and Ng Kok Song got rewarded.

Do you think our society should better take care of the hardworking ones? Are you blinded to the sufferings of Ah Ma who still need to work 40hrs per week at 80 years old earning merely $800.

Anonymous said...

The government is afraid of implementing the minimum wage because it act against the interest of companies which they support. They do not care for its citizens at all.

We should have a policy whereby it would be very expensive to hire foreign workers as compared to local Singaporeans by using a head count tax. Make companies pay a head count tax of $600/- for every foreign worker that they hired.

If they insist on the policy of pro companies and pro foreign workers, then Singaporeans should also take up their self interest to vote against the current government. If you do not care about us, then why should we vote for you?

Anonymous said...

Well Mr. Tommy Koh is also saying that minimum wages should be implemented according to Today Online:


Sep 14, 2010
Tommy Koh weighs in
By Zakir Hussain

SENIOR diplomat Tommy Koh on Tuesday waded into a debate on minimum wage and argued in favour of such a wage as it will improve the lot of Singaporeans in low-paying jobs.

'The growing disparity and the hardship faced by the lowest 20 per cent of our workers is a threat to our social cohesion and inconsistent with our policy of inclusive growth,' he said at a book launch.

'As a Straits Times correspondent has recently commented, Singapore is a First World country with a Third World wage structure.'

Prof Koh, special adviser to the Institute of Policy Studies, was referring to an Insight feature in May on how wages of low-income workers in Singapore had not advanced.

He made his case in a speech at the launch of a book of essays on Singapore's success story and its challenges, Management of Success: Singapore Revisited.

His remarks come in the wake of a debate between two National University of Singapore economists.

Anonymous said...

I was very fortunate that I got to vote the last election. Actually it doesnt matter to me which opposition party I chose. I was very happy to vote out PAP. I know PAP doesnt care for me! so why should I vote for PAP?


Cheers
Economist with a heart :)

Anonymous said...

As a layman, me will say Minimum Wage will work if and when our leadership has the will to look after its' citizens.

Minimum Wage that's being discussed here should only applies to citizens. Concurrently, the importation of foreigner workers should and must be properly controlled. The Authority must ensure that employers are only allowed to employ foreigner worker(s) when no Singaporeans can be found for the job.

The incomes of most citizens have not been/being able to catch up with the relentless costs of living for some years now. Many have called it inflation, this layman thinks it is artificial inflations of the prices of goods and services. It is not an inflation due to market situations, as it is there are no shortages of supplies of any good and service. In fact, the market has abundant and oversupplies of goods and services and many Singaporeans are out of jobs due to discriminations of wage, age and other nonsensical reasons.

Many applicants claimed discriminations in Race, Language and Religion. BUT, THIS IS NOT TRUE AS MOST FOREIGNER WORKERS DO NOT SPEAK THE LOCAL LANGUAGES NOR ARE THEY OF LOCAL RACES. May i even add that discrimination of the most perverse kind exists in Sin, when highly qualified Singaporeans are sidelined by employers, in favour of engaging similarly qualified or even lower qualified foreigners just because the foreign ones are cheaper.

Me am of the view that our leaders have not done enough to take care of our wellbeings. BUT, THEY ARE GIVING THEMSELVES THE BEST CARES AND WELFARES WHEN IT COMES TO REMUNERATIONS AND BENEFITS. THEY NEED TO INVOKE THEIR CONSCIENCES AND REVIEW THEIR POLICIES.

patriot

Anonymous said...

There are 197 countries and territories with official minimum wage rates.

The issue is either 197 of them are wrong or we are wrong. Who is correct and who is wrong?

Anonymous said...

I think the whole idea of minimum wage needs thorough thinking.

It is good to have minimum wage, but it has to vary according to the job / job scope. For example, we can set a minimum wage for let's say a shop assistant to be $6 an hour, which justify for the work they do. Many employers like to underpay this group of people and pay only like 4 or 5 bucks an hour.
Why should a cashier at supermarket be paid less than that at the bookshop when they both does the same job, and working in supermarket being much more stressful with higher load of customers to clear? This does not seem to follow any logic or market forces...

We cannot or should not, however, set a minimum wage across the board. Because not all jobs are the same... and it does not justify to pay someone an amount that the job don't deserves. For instance, if we force employer to pay a commission worker a minimum wage, then what motivation is there for this worker to work? He can do nothing and still gets the minimum wage. How about when the employer just want to hire for a really simple job? He would just not even hire, because it is simple not worth it!

So, I support minimum wage, but minimum wage according to job scopes but NOT minimum wage across the board.

Anonymous said...

@Anon 03:03

You obviously do not understand what is minimum wage.

"A minimum wage is the lowest hourly, daily or monthly wage that employers may legally pay to employees or workers. Equivalently, it is the lowest wage at which workers may sell their labor (Wikipedia)."

I think that sums it up and I suggest you learn more before commenting.

Anonymous said...

One of the prerequisites
of implementing the minimum wage
is that the minimum wage earner
base must be small in relation to
earners of other wage scales.
This category must be quite hugh not to affect the profitability of most companies.
Govt fear a mass out migration of MNCs
If only this Govt is willing rein in land and transport costs for eg, min wage could have a chance
of implementation.

Anonymous said...

'wei sui sing ku, wei sui mang' or
'for who you labour and for who you suffer.

The answer: All for your slavedrivers and do you know who they are ????

Alan Wong said...

Is it not ironic that we are not prepared to introduce a min. wage for those in the low income category but on the other hand, we have absolutely no qualms in paying our Ministers the kind of obscene salaries that will only make Obama feel he is so grossly underpaid ?

Shame to our LKY & his team of PAP Ministers !

Anonymous said...

The sky is the limit for the talented.

however, everyone must start

from the bottom, eh.. real bottom,

no minimum.

Especially if you are commoners and peasants.

Understand?

Anonymous said...

http://www.youtube.com/watch?v=wsDAIsVrTV0 The Job-Killing Impact of Minimum Wage Laws!

http://townhall.com/columnists/JohnStossel/2009/07/29/a_minimum_wage_equals_minimum_jobs

Rather I would rather suggest the government to cut their taxes instead of minimum wages law

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Chantell Wood said...

One of the prerequisites of implementing the minimum wage is that the minimum wage earner base must be small in relation to earners of other wage scales. This category must be quite hugh not to affect the profitability of most companies. Govt fear a mass out migration of MNCs If only this Govt is willing rein in land and transport costs for eg, min wage could have a chance of implementation.

Income Protection said...

Minimum wage implementation should be supported by acceptable facts.