Saturday, 26 October 2013

A minimum wage for Singapore?

Update 27 Nov 2103: Prof Koh continues to voice his support for minimum wage

Speaking to reporters at his book launch at the end of last month (30 Oct), Singapore’s ambassador-at-large Professor Tommy Koh continued to voice his support for a minimum wage or other strengthened measures to help Singapore’s poorest

Poverty in Singapore should not be ignored, Prof Koh felt.

“We all feel that it is not good for Singapore to have such a huge gap between the rich and the poor,” he said, referring to public intellectuals who speak on the topic collectively.

“It will eventually threaten our unity and cohesion, and it is certainly a source of concern to our moral conscience because we all aspire to Singapore being a good nation – and a good nation is one that doesn’t tolerate such a high degree of disparity.”

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Is a minimum wage really that bad for Singapore?


Minimum-wages is a “zero-sum game” and “an easy solution”. At least that’s what Minister in the Prime Minister's Office and National Trade Union Congress chief Swee Say says.

While more than 90% of countries, ranging from developed nations such as the US to neighbouring countries like Malaysia, have seen merits in implementing minimum-wages, policymakers in Singapore continue to insist that such a system is not suitable for the island state.

We look at some arguments commonly brought up against minimum-wages, and explore whether they are really relevant to Singapore.

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A one-of-a-kind union that rejects minimum wage
Zorro Lim
Inspiring great confidence in the union

Every good party needs a clown to provide the laughs, and it was Zorro Lim (not his real name) on the PAP roster yesterday.

At the Budget debate, NTUC Secretary-General Lim Swee Say rejected renewed calls by several MPs, including Inderjit Singh and NMP Lawrence Lien, for a minimum wage system. Instead of speaking up for the workers that he is supposed to represent, he is strangely the one voicing the objection, even if we know all along that the government is never keen on the idea.

This must be an absolute one of a kind. Nowhere in the world will you ever find another union chief who argues against higher wages for workers.

related: Govt rejects poverty line, says prosperity line better for social objective

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Singapore's approach is "more than a minimum wage"


Labour chief Lim Swee Say yesterday rejected renewed calls from Members of Parliament for a minimum wage system in Singapore.

Speaking on the second day of the Budget debate, he said that Singapore's model of Workfare Income Supplement, Workfare Training Support and a progressive wage system, works better overall than a minimum wage.

"With the WIS, WTS and the progressive wage model, we believe we have now a minimum wage model - in fact, it is more than a minimum wage model - whereby we can actually maximise the upside for the low-wage workers, and at the same time, minimise the downside," he said.

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Minimum wage is one hot topic
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Minimum wage is one hot controversial topic. Whether in the NSM or MSM, there will be robust and sometimes emotional discussion on this topic. I’ll attempt to give my two cents worth. I’ve been thinking about this topic for quite some time since it affects most of us – directly or indirectly.

I am no economist nor an expert on wages. I will just use some common sense to say my piece here. When I was in school more than 30 years ago taking Economics at A level, I was quite impressed and persuaded by the concept of “Price Mechanism” or “The Law of Demand and Supply” in the market place. “The Law of Diminishing Returns” is another interesting concept I learnt in my Economics class. Until today with so much changes in our modern society, those economic concepts still hold true irrespective of political ideology or thinking

The fascinating thing about the Price Mechanism or The Law of Demand and Supply in the marketplace is that it’s an universal eternal law throughout human existence. This fundamental economic theory remains one of the most fascinating concepts since the dawn of civilizations when man started producing and trading openly in the market whether it’s within their own community or across borders

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Why the “Minimum Wage” System is Not Possible for Singapore

Singapore's leaders had long justified their high salaries by insisting they were necessary to attract the best managerial and leadership talent to public service. They insisted that it is probably a bad idea to expect that enough good politicians and civil servants will fill these positions even though they can make a lot more money doing something else.

So why are the top earners in the private sector earning so much money? Since Gintai is quoting everyday items, I shall do the same. Let's imagine the amount of wealth generated each year as full pizza, shared among 10 people. The first man sliced the pizza into 4 quarters, gingerly place one quarter of it on a plate, smile at the 9 men and then walks away with the rest of the pizza, still warm and tucked safely in his pizza box. The remaining 9 men were left looking at each other, wondering how to divide the remaining quarter among themselves. That represents how wealth is divided in Singapore.

The above example illustrated that the only way to ensure remaining men gets a guaranteed (however thin) slice of pizza instead of fighting among one another feeding off scraps is to have the first man taking less and leave more behind for the rest. The PAP government's solutions are based on creating a bigger pizza or even a second pizza but only to see the same situation happening each time - the majority of the men left with little to share. In such a situation, talks of implementing a minimum wage is not only unnecessary but impossible.


Singapore Minimum Wage

Because Singapore does not have a minimum wage, there is no mandatory minimum rate of pay for workers in Singapore. Pay rates must be agreed upon directly with the employer through collective bargaining or other means of negotiating a fair living wage.

What is the Singapore Minimum Wage? - Singapore's Minimum Wage is the lowest amount a worker can be legally paid for his work. Most countries have a nation-wide minimum wage that all workers must be paid. Singapore has no minimum wage laws or regulations. Singapore's minimum wage was last changed in N/A.

How does Singapore's minimum wage compare to the minimum wage in other countries?
Singapore's yearly minimum wage is $0.00 in International Currency. International Currency is a measure of currency based on the value of the United States dollar in 2009. There are countries with a higher Minimum Wage then Singapore, and Singapore is in the top 0 percent of all countries based on the yearly minimum wage rate.

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We need a minimum wage in Singapore

The issue of whether Singaporeans should be entitled to a minimum wage has cropped up from time to time and sparked heated debates.

Some people have argued that the presence of a minimum wage may paradoxically lead to an increase in unemployment, due to the fact that the profit margins of companies employing low wage workers will be reduced, forcing them to either close down or relocate.

Allegedly, in response to larger labor costs, businesses will then try to compensate for the decrease in profit by simply raising the prices of the goods being sold, thus causing inflation and hurting consumers.

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Minimum Wage: Proceed With Caution

In her latest blog entry, Kitana has proposed introducing a minimum wage. A lively discussion has ensued in the comments section. I was tempted to jump into the debate immediately, but the more I read about minimum wage policy, the more I realised how complex and difficult a topic it is.

Here are some of my thoughts on the issue; my overall position is that a minimum wage high enough to alleviate poverty is also likely to hurt the very people it aims to help. Furthermore, there are more effective and more efficient ways to distribute and allocate assistance to those in need.

I apologise in advance for this article's length and for any inaccuracies or misconceptions. Comments and suggestions are welcome.


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Finally, a Minimum Wage?

Last week, these headlines were splashed across our mainstream media: “10,000 cleaners set to get pay increases” (Today); “Across the board pay increase for cleaners” (清洁工起薪全面提高, Lianhe Zaobao); “Proposed cleaners’ pay starts from $1,000” (Straits Times). Some even likened it to “a minimum wage in deed and not in name” which would then signify an about-turn for our government who, as recent as last year, was adamant that “a minimum-wage policy runs counter to the Singapore work ethic and culture of self-reliance” (source).

The plight of our poorly-paid cleaners (“My wife’s life as a cleaner”) has struck a chord in many Singaporeans and last week’s news must have brought some cheer to those of us who believe a pay raise for workers in the cleaning industry is long overdue.

But is it really as good as a statutory minimum wage? And are there any loopholes that may be exploited by unethical employers? Since these are only recommendations, what are the incentives for employers to implement the guidelines? Are there any penalties for errant accredited cleaning companies that have won tenders for government jobs? What measures are in place to prevent the exploitation of disadvantaged workers?


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Minimum wage in Singapore

In this article, I have given my reasons in support of a minimum wage to be implemented in Singapore. I have also explained why the negative aspects of the minimum wage are likely to be less serious than feared. Apart from helping the lower income workers, a minimum wage will lead to a more sustainable economy.



Can minimum wage system work in Singapore?

I refer to the current debate going on regarding minimum wages in Singapore. Its still a profound mystery why a economic powerhouse country like ours has so much reservation implementing minimum wage policy to better protect its vulnerable  rank and file workers. Most first world countries and even third world countries have minimum wage policy in place so that workers have access to reasonably decent wages when they put in their fair share of work.

I am aware of the dangers that minimum wage implemention can bring especially on the rising cost of businesses  if that particular industry is heavily dependent on human labour. Even Minister in the Prime Minister’s Office, Mr Lim Boon Heng,  has voiced out against the minimum wage proposal citing business cost as the main factor. He preferred that our low-wage workers relied on the  Workfare Income Supplement (WIS) which is paid out  to  workers that earn below $1700 a month.  Rank and file workers who continue working can have a maximum WIS payout of $2800 a year payable over several periods. This is to encourage our older vulnerable workers to continue working.

Since its inception in 2007, over 300,000 workers receive WIS benefits each year. The amount of WIS paid annually exceeds $300 million, which works out to an average of more than $1,000 per worker. For FY2009, a total of $343 million was disbursed to 320,000 workers, or an average of $1,072 per worker (source: MOM). Mr Lim said: “So we started the WIS system a couple of years ago. I think with this system, we should improve…I believe the minimum wage meets the needs of a bygone era, it does not meet the needs of today’s world.” (source: Channelnewsasia 15 Sep 2010).


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Minimum Wage

Since I became leader of the Reform Party in April 2009 I have made the introduction of a minimum wage in Singapore one of our main policy pledges (see the link below for RP’s 19 main policy pledges): http://votingrp.wordpress.com/about/

Why? Since 1998 the average incomes of the poorest 20% of households have fallen by around 20% after inflation. However this is undoubtedly a substantial underestimate of how far real incomes have fallen for poorer households.

The government measures inflation by the change in the consumer price index (CPI). This measures the change in the prices of a basket of goods consumed by the average household. This basket represents the items that the average family buys in the course of a week. However the basket of goods consumed by the poorest 20% is very different from that consumed by the average household. Food, transport, housing and other basic necessities represent a much bigger percentage of household income for poorer households. These items have risen in price much more than the average over the last ten years.

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Salary

An employer is liable to pay his employee(s) within seven days after the end of the salary period, in accordance to the provisions of Part III of the Employment Act. Failure to pay salaries in accordance with provisions of the Employment Act is an offence. Employees who are not paid for work done can report employers to the Ministry for investigation.

Employees in managerial and executive positions who earn basic monthly salaries of $4,500 and below are only covered partially on the basic payment of salary. Other types of employees covered under the Act are also covered for unauthorised deductions of salaries.

If an employee is not covered under the Employment Act, he may consider consulting a lawyer to assess if his employer has breached the terms of his employment contract.

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'Each of us can do our part'

Member of Parliament Seah Kian Peng (above), who is chairman of the Government Parliamentary Committee for Social and Family Development, shares his views on the poor in Singapore

Is there a need to define the poverty line and for the Government to make public the number of poor in Singapore?

I think it is not clear whether having a poverty line is effective in aiding poverty alleviation, from the experience of countries that have established such benchmarks.

Like many Singaporeans, I have been to the United States, Britain, Hong Kong and Japan and I can say that in many of these places, I do see more poor people on the streets and this is a less common sight in Singapore.

related:
Singapore must define poverty, say experts

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What makes a fair wage?
Fair Wages
Your next “fair and equitable” pay packet

As they say, a fair day’s wage for a fair day’s work. But what exactly constitute a fair wage? At the most fundamental level, a fair wage is one that, in exchange for, a worker willingly provides a service to an employer, and that the employer willingly compensates the worker for this service it is receiving. It is simple demand and supply coming together in the labour market where neither party is coerced into entering such a contract of service. In the financial markets, we call this price discovery.

In a closed labour market, wages should adjust to reflect the cost of living. Workers have to consider the cost of living and determine if the wage paid is sufficient for sustenance and upkeep. If it is not, they will struggle and other problems will start to crop up. They may look for other jobs or start demanding for higher pay.

It gets complicated when the labour market opens up internationally. We get bus drivers from China, construction workers from Bangladesh and maids from Indonesia, and all these workers come willingly because wages here are higher than what they can command back home. So with this new supply of workers who are willing to accept lower wages than Singaporeans, employers happily pay lower. Price discovery does not necessarily provide correct valuation, as we see here with external distortion. At this new equilibrium, can employers now claim that this is a fair wage?

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Minimum wages is a “zero-sum game” and “an easy solution”: Lim Swee Say

Yahoo! News Singapore, 24 Oct 2013


Minimum-wages is a “zero-sum game” and “an easy solution”. At least that’s what Minister in the Prime Minister's Office and National Trade Union Congress chief Swee Say says.

While more than 90% of countries, ranging from developed nations such as the US to neighbouring countries like Malaysia, have seen merits in implementing minimum-wages, policymakers in Singapore continue to insist that such a system is not suitable for the island state.

We look at some arguments commonly brought up against minimum-wages, and explore whether they are really relevant to Singapore. Full story

read more

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