The perennial debate in Singapore on minimum wage

A cleaner mopping the floor of a mall in Bedok on June 9, 2020. During a debate on the Resilience Budget in April, Workers’ Party chief Pritam Singh called for a thorough review of what constitutes a living wage in Singapore. — TODAY pic
A cleaner mopping the floor of a mall in Bedok on June 9, 2020. During a debate on the Resilience Budget in April, Workers’ Party chief Pritam Singh called for a thorough review of what constitutes a living wage in Singapore. — TODAY pic

SINGAPORE, June 13 — Over the past decade or so, calls for a minimum wage system in Singapore has not gone away, with public debates being reignited every now and then.

In recent weeks, the proposal has again been mooted by some, as Singaporeans rethink the value and role of low-wage workers in essential services, whose importance has been thrown into sharp relief more than ever amid the upheaval caused by Covid-19. 

This is despite the Government’s repeatedly making clear its stance on the issue: Among other things, it has argued that having such a system would adversely affect the Singapore economy’s competitiveness.

For example, in July 2013, Prime Minister Lee Hsien Loong said at the inaugural DBS Asia Leadership Dialogue that a minimum wage will not solve the problems of low-wage workers in Singapore.

“My belief has been that a minimum wage is not going to solve the problem. If it is modest, it won’t do harm, neither will it do a lot of good. If it is high, well, then it is going to cause costs to employers and it is going to cause unemployment to the low-wage workers. So you are not really solving his problem, you are just going to transfer it somewhere else,” said Lee, who added that the Government’s strategies to assist low wage workers include providing training and implementing wage top-up schemes that incentivise their employment.

Months earlier, in March the same year, several Members of Parliament put forward a case for a minimum wage policy during the Budget debate.

Among them was then-Ang Mo Kio GRC MP Inderjit Singh, who asserted that a S$1,500 (RM4,599.88) figure was needed for more Singaporeans to bump up workforce numbers sufficiently and quickly enough so as not to hamper the country’s economic restructuring efforts.

Then-Tampines GRC MP Irene Ng suggested a variation — a “living wage”, which is computed based on the basic cost of living here and used as an informal benchmark, without being legally enforceable — while then-Non-Constituency MP Lina Chiam, who proposed S$4 as the lowest hourly rate, also backed the idea of a minimum wage.

In response, Lim Swee Say, who was the labour chief and a Minister in the Prime Minister’s Office at the time, acknowledged that “one option” to quickly improve the plight of workers is to introduce minimum wage. But he reiterated that a minimum wage policy can be a “zero-sum game” between employers’ cost pressures and low-wage workers’ pay cheques.

 “Minimum wage is highly attractive. In fact, more than 90 per cent of countries in the world have already adopted minimum wage. Singapore, we belong to the minority. Why is this so?” said Lim, who had flatly rejected the idea on several occasions previously.

He added: “Minimum wage ... as a policy, has upsides and downsides. You cannot have high upsides and, at the same time, low downsides.”

The Government has rolled out the progressive wage model as a more sustainable alternative to a minimum wage policy.

Implemented in 2014, the progressive wage model mandates that workers be paid a basic monthly wage based on the level of skill they possess.

It has been introduced in the cleaning, landscape and security sectors so far.

Speaking to TODAY, Zainal Sapari, assistant secretary-general of the National Trades Union Congress, noted that under the progressive wage model, the salaries of workers in these sectors have increased substantially between 2013 and 2018.

Cleaners had seen their real median wages go up by 30 per cent, while the increases were 31 per cent for security officers and 32 per cent for landscapers, he added.

Nevertheless, Zainal, who is also a Member of Parliament for Pasir Ris-Punggol Group Representation Constituency, acknowledged that the increases were from a very low base. 

Prominent advocates

Outside of Parliament, some of the most prominent advocates of a minimum wage policy include Ambassador-at-Large Tommy Koh and Professor Lim Chong Yah, who is a former chairman of the National Wages Council (NWC).

In 2012, Prof Lim ignited a public debate — which also drew a response from the Government — after he called for the Singapore economy to be put through “shock therapy” to address the widening income gap. His proposals then included freezing the salaries of top earners for three years and instituting the minimum wage system.

In fact, Prof Lim had advocated the introduction of a national minimum wage in a memorandum he submitted to the NWC back in 1972, when it was formed. But he could not get the support of all tripartite parties.

“(Minimum wage) is not a panacea to solve all ills, but it can be helpful under certain circumstances,” Prof Lim said in January 2014 on the sidelines of the launch of his book, Singapore’s National Wages Council: An Insider’s View.

More recently, Prof Koh pointed out during a 2018 Institute of Policy Studies dialogue with Manpower Minister Josephine Teo that Japan, South Korea, Taiwan and Hong Kong have implemented a minimum wage without the consequences of unemployment or workers turning to illegal jobs.

CNA reported that in response, Teo recalled that during her visit to Hong Kong, soon after a minimum wage was implemented, she learnt of an elderly condominium security officer who was displaced by a younger person. The building management had “expressed a preference” for the younger employee for the same minimum wage, she said.

But she stated that the Government is “not ideologically opposed” to a minimum wage and that in certain areas where the labour market is tight, “there is room for us to do something”.

Prof Koh revisited the issue in a Facebook post on Oct 27 last year, where he described the income distribution of Singapore as a “moral disgrace”, in that it currently resembles the shape of a pear, whereas founding prime minister Lee Kuan Yew had envisaged one that resembles the shape of an olive.

“Many of our working people do not earn a living wage and live in poverty”, he said, adding that the progressive wage model in force in three sectors — starting with the cleaning sector in September 2015, followed by the landscape and security sectors in 2016 — did not change the situation.

With the Covid-19 pandemic crippling economies around the world, including in Singapore, and severely affecting livelihoods, the issue again found its way into Parliament earlier this year.

During a debate on the Resilience Budget in April, Workers’ Party chief Pritam Singh called for a thorough review of what constitutes a living wage in Singapore as the Covid-19 pandemic has exposed how certain sectors should have a higher proportion of Singaporeans to increase the city-state’s resilience.

Minister of State for Manpower Zaqy Mohamad replied: “In times like these, no minimum wage or living wage system can help low-wage workers. When there is no work, there is no salary, there is no minimum wage to talk about when firms are unable to pay their low-wage workers.”

Instead, he pointed to the Government’s initiatives, including the Workfare Income Supplement scheme and the Jobs Support Scheme, which would be more helpful.

“So we complement that approach with the Progressive Wage Model for our cleaners, our security officers and landscape workers, and unlike minimum wage or living wage, we take a multi-layered approach to support our low-wage workers and which is effective especially in these times of needs,” he said. — TODAY

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