What I realised from Gerald Giam and Koh Poh Koon’s debate in Parliament

In Parliament last week, NTUC Deputy Secretary-General Koh Poh Koon and Workers’ Party MP Gerald Giam had an interesting exchange on the Progressive Wage Model. The PWM and minimum wage have been hot-button topics that have come up many times in the past year.

“Since the PWM is a ‘minimum wage plus’, we should focus on implementing the ‘minimum wage’ portion of the PWM across all industry sectors as soon as possible, then roll out the ‘plus’ portion only later where practical,” Mr Giam said.

Minimum Wage – Do it “right now”?

Back in October 2020, Sengkang MP Louis Chua said that WP is keen to do it “right now” when asked if there is consensus in the party on how soon Singapore should implement a minimum wage. I imagine how it would be like for the small business owners who were already struggling amidst the pandemic. Wouldn’t a minimum wage “right now” just be the final stake?

There is urgency to uplift our most vulnerable workers. And that is why Dr Koh Poh Koon has suggested that the Workfare Income Supplement (WIS) be adjusted to provide low-wage workers with an immediate uplift while waiting for the PWM to be expanded to more sectors. If you have been following the news, you would know that the income inequality in Singapore has dropped fell to a historic low in 2020 due to massive transfers and schemes towards supporting lower income groups. Dr Koh also suggested that the income assessment period for WIS eligibility be shortened.

Currently, in order to qualify, a worker must not earn more than the stipulated income ceiling in the previous 12 months. Dr Koh highlighted that this delays much-needed support for lower-wage workers and his proposal for the shortening of the income assessment period (for WIS) will ensure that we continue to support our lower-wage workers in a timely manner leaving no one behind.

From the debate between Mr Giam and Dr Koh, I realise there is fundamentally not much difference in what both parties want for low wage workers! There is a huge emphasis to support the most vulnerable in our society. Manpower Minister Josephine Teo and Senior Minister Tharman have both referred to PWM as “minimum wage plus” previously, a point which union leaders have supported. Some of Workers’ Party proposals can be considered (not so sure about the one on expunging criminal records though) – that said, I do think that they should be more well-thought out to prevent unintended consequences. A wage increase should not result in disincentives for employment, and a universal minimum wage across all sectors, and all job types just doesn’t make sense.

Minimum Wage – A blunt, one-size-fits-all policy instrument?

Just look at the US, President Biden and many Democrats are pursuing legislation to more than double the current federal minimum wage. A nonpartisan study has warned that raising minimum wage would lift 900,000 people above the poverty line, but cost 1.4 million jobs. Not an economist, but sounds like a mere transfer of problems to me?

Minimum wage in US

Who bears the unintended consequences of a minimum wage?

“We ought to bear in mind that the cure we’re proposing cannot be worse than the disease itself.” – Dr Koh Poh Koon, NTUC Deputy Secretary General

Is the minimum wage the only way to go in supporting the poor? Or is it merely a blunt, one-size-fits-all policy instrument that will merely transfer a particular group’s problems elsewhere?

Even as a layperson, the “plus” bit of the minimum wage plus (as PWM has often been referred to) seems to be the most laborious. But it will unquestionably help to prevent the unintended consequences of a universal minimum wage. I would think that employees will be more receptive when wage increment corresponds with improved productivity?

The Labour Movement Presses On – Not An Easy Task

Kudos to the team at NTUC for pushing through with the PWM as opposed to taking the easier way out. If you ask me, a simplistic, universal minimum wage is just not the solution to lifting poverty. The debates will probably continue till the cow comes home.

As shared by Labour Chief Ng Chee Meng, “While these debates can continue, NTUC will focus on action and focus on implementing PWM across more sectors, in two different ways – faster implementation and wider implementation.” And that, coupled with more immediate uplift via the Workfare Income Supplement, would make for a sounder approach.

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