We need a minimum wage in Singapore

August 26, 2009 by admin
Filed under: Current Affairs, Financial Matters

(This is an elaboration on a recent article by the Singapore Democrats, which I have attached below.)

Quick Snippets from the Editor
26 Aug 2009

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.

But in my opinion, such arguments fail to take into account the responsibility of a Government to provide for its citizens by making sure there is always a level playing field for all, including working class Singaporeans. Such arguments also neglect to consider the unique circumstances Singapore is in and the failed economic policies of the PAP.

Firstly, the Singapore economy has become uncompetitive over the years due to the entrenchment of GLCs which currently make up 60% of our economy, and the Government allowing costs to balloon out of control and allowing our economy to become increasingly rent-seeking. In economic parlance, rent seeking occurs when an individual, organization or firm seeks to earn income by capturing economic rent through manipulation or exploitation of the economic environment, rather than by earning profits through economic transactions and the production of added wealth. (See wikipedia.)

In particular, office rentals in Singapore are very high due to lack of market regulation and the steep rise in property prices due to large inflow of foreign funds into Singapore. High rentals pose the heaviest burden to businesses next to wages, and is in fact a more fundamental reason why the Singapore economy has become uncompetitive over the years. It is therefore in my opinion far more justified to increase the competitiveness of our economy by addressing the issue of incredulously high office rentals rather than allowing our wages to be kept artificially low by resisting a minimum wage whilst importing a large number of lowly skilled foreign workers.

High rentals are just one aspect of Singapore’s rent-seeking economy. Other significant aspects include the flourishing of middle-men like employment agents who import foreign workers into Singapore and charge high commissions to those workers, pushing them severely into debt and forcing many of them to borrow from loan sharks just for the chance to come to work in Singapore.

Secondly, instituting a minimum wage in Singapore is not likely to lead to a wage-inflation spiral due to the fact that inflation in Singapore is influenced more by import prices rather than domestic demand.

The wage gap in Singapore has grown very wide over the years. In my opinion, it is truly a lack of social justice for the Government to allow corporations to pay their workers less than would be needed for their families to live a humble but decent life, and yet pay their top executives fat bonuses year in and year out. If corporations refuse to pay their workers a decent living wage, I feel they should also force their top executives to forgo their bonuses.

It must be remembered that the absence of a minimum wage leads to exploitation of not just local workers, but foreign workers as well.

The institution of a minimum wage in Singapore would not necessarily lead to businesses relocating their operations, because countries like China, India, Vietnam and Thailand have much lower cost structures even without us having a minimum wage. If businesses wished to relocate due to cost factors, they would have done so already, with or without minimum wages for employees.

Ultimately, I believe the question should boil down to the kind of society that we are trying to create and the kinds of businesses and models of free enterprise that we should encourage in Singapore. If a business or a corporation has to close shop simply because it is compelled to pay a minimum wage to its workers, perhaps we should ask if this is the kind of business or enterprise that we would like to see flourishing in Singapore. Shouldn’t we be compelling private enterprise to move up the value chain and reduce their dependence on cheap labour?

The Government believes that it is more practical to assist low income workers through tax relief or direct cash subsidies instead of instituting a minimum wage. However, these measures have thus far been quite ad hoc, and it is not clear whether low income families have been sufficiently helped by the Government in this regard.

Much more needs to be done to help our working class citizens secure jobs and lead a decent life, beginning with eliminating GST for essential items like food and giving them a head start in the job hunt against foreigners who neither have to serve National Service nor support their families in high-cost Singapore. In my view, a minimum wage would also go a long way toward helping them and would not be detrimental to our economy.

The Government has pursued a “growth at all cost” model of economic management that relies on the heavy import of foreign labour to depress wages at the lower end of the wage spectrum. This model of economic management is clearly unsustainable given the limits of population growth. It has benefitted GLCs and multi-national corporations whilst pushing working class citizens into economic hardship and despair. Until such policies change, the vaunted social cohesion that the Government keeps talking about will never be fully realized.

Minimum wage and not “handouts” is the answer

By Gandhi Ambalam, for the Singapore Democrats
25 Aug 2009

Original link

As the debate rages on over the humongous multi-million-dollar salaries for PAP ministers, it would be of interest to know how our workers are faring in their earning capacity.

The latest set of figures from the Ministry of Manpower on wages throws some interesting nuggets, laying bare how the PAP government’s exploitative, anti-worker policy has become.

In the past decade, ending 2008, the hardest hit in earnings are the rank-and-file workers engaged as cleaners, labourers and related workers. In fact, over the past ten years, these category of workers have seen their earnings drop. In 1998, the average wage for this group was $1,389 but it declined to $1,270 last year due to the influx of cheap labour from other countries.

It’s not uncommon to see our elderly and senior citizens working as cleaners and hawker attendants to eke out a living without any old age security from a Government that is prepared to throw $100 billion into troubled foreign banks, financial institutions and other toxic products.

It’s clear that the Government deliberately allows foreign workers to compete for jobs in all categories, leading our workers’ wages to be suppressed further and further. It is common to find our workers, even in those employed as clerks and other white-collar jobs, to be placed on contract and temporary terms without any job security, resulting in tension and anxiety among workers.

Long working hours, far exceeding the stipulated 44-hour work-week , has become the norm. Also it’s not uncommon to see our workers holding more than one job to make ends meet.

While PAP ministers retain their million-dollar pay which is recession proof, contractualization and temporary nature of employment for our workers have become commonplace.

Not only is employment for our workers uncertain, but they are also denied minimum wage and left to the whims of employers.

To bring back the dignity of labour and not to reduce our workers into depending on “handouts” and workfare, the Singapore Democratic Party has been calling for a Minimum Wage policy (click here and here).

Our call for greater protection for Singaporean workers should not be interpreted as xenophobia. What’s the use of indiscriminately allowing foreigners to come into Singapore where they are exploited. Are we really helping them?
(Watch video here)

What we are advocating is a rational and sustainable policy where we strike a balance between having guest workers in Singapore and at the same ensure that our people earn enough to lead meaningful lives so that the benefits of economic grwoth is shared by all.

What we have now is just people existing in a society working in order that we can allow the Government to say that we have achieved x percent of GDP growth. Is that life?

Gandhi Ambalam is the chairman of the Singapore Democrats.

Tags: minimum wage

Comments

3 Comments on We need a minimum wage in Singapore

The Singapore Daily » Blog Archive » Daily SG: 27 Aug 2009 on Thu, 27th Aug 2009 11:19 am

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not happening on Thu, 27th Aug 2009 2:48 pm

min wage is never going to happen as long as maids are in every household earning less than $500 per month.

The thousands of households will never allow this to happen

Anonymous on Mon, 11th Jan 2010 12:08 am

I cannot believe that Singapore has no minimum wage law. This is utterly ridiculous; this is the 21st century! Australia and New Zealand introduced this law in the late 19th century and here is Singapore, claiming to be up with the times and so forth, failing to be one of the countries to have a minimum wage law. Minimum wage laws helps to stop the exploitation of workers; I can now see why many foreign domestic workers in Singapore appear in the newspapers after having “been mischievous.” Who would be motivated to be loyal and hardworking when they get paid so poorly?

I feel that this is extremely unfair, especially to those who have a physical and/or mental disability. The lack of this law simply allows employers to potential fluctuate the hourly wage, thus disadvantaging the employee. Minimum wage laws protects the employee; no country should be without it.

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