Should Singapore impose the minimum wage law? What are the pros and cons of it?

The spotlight has been on the topic of Minimum Wage versus Singapore’s improved version of it, the Progressive Wage Model (PWM).

One of the most memorable conversations on this in recent memory has got to be when the Workers’ Party’s Dr Jamus Lim was challenged in Parliament by six PAP MPs, including Senior Minister Tharman Shanmugaratnam.

Here are the highlights from the 35-minute debate in Parliament back in September 2020.

Here are some nuggets of golden advice and sharing from SM Tharman when he intervened in the volley of words between the MPs. A rare intervention from him, I must say.

Tharman on Compassion,

“None of us have a monopoly over compassion and I say this is not to discredit anyone. In particular, I really respect where member Jamus Lim is coming from intellectually, emotionally and so on,” he said, adding that speeches from MPs in recent days, including some from his own party, have made an impression on him.

Tharman on strawman arguments,

“Here’s a bit of advice – try to avoid strawman arguments, like saying that the Government is only interested in efficiency, and not equity. That’s frankly laughable.”

He added that raising living standards for the poor is a “complicated matter”, with one issue being how to achieve this without losing the wage earner’s ability to have the pride of a job and earn a wage.

The Government is doing so through many policies such as the Progressive Wage Model (PWM), and it acknowledges that more has to be done.

“We are frankly not very far away from each other in that objective … There is a consensus, let me put it that way.”

“That should be our objective, but just try to avoid strawman arguments and pretending that you have a… monopoly over compassion.”

Tharman on Progressive Wage Model (PWM),

SM Tharman reaffirmed the Government’s belief in the importance of raising the wages of its lowest-paid workers, and also reiterated its commitment.

“We really believe this. We’ve achieved significant progress in the last 10 years, and in the last five years, and we think we should go further.”

He also said he would not “exaggerate the differences” between the progressive wage model and the minimum wage model, noting that the former is a “minimum wage plus” with a sectoral approach.

(Editor’s Note: Separately, SM Tharman had said low-wage workers in the 20th percentile of the income ladder have seen an increase in wages of close to 40 per cent in real terms over the last 10 years. The pay of these workers used to be about $1,500 a decade ago, but is now $2,500. Adjusted for inflation, he said, it is close to a 40 per cent increase. On top of these wage increases, there also Workfare benefits.)

I stumbled across an interesting thread in Quora on whether Singapore should impose the Minimum Wage law.

In particular, one Singaporean man’s answer stood out. His name is Bill Chen, and here’s his take.

Should Singapore impose the minimum wage law? What are the pros and cons of it?

Before the haters start baying for blood, let me qualify my answer with two material factoids.

I sympathize amply with the old folk collecting cardboard or clearing dishes because I grew up poor, a child of the 80s in the bottom 10–20%. To put it simply, I’m intimately acquainted with poverty and its terrible fallout.

This is also not a “get out of my elite uncaring face” rant because I want to protect the status quo. I have supported social initiatives since I was young—I was a long-time volunteer tutor at the Boys Home and an orphanage in the central part of the island. I applaud any effort to better the lives of the unfortunate.

If you had asked the same question a decade or two ago, I would have answered in the affirmative without a shred of hesitation.

I remember visiting my grandma’s friends, several retired sor hei(梳起)majie(妈姐 ), who lived in a rented second floor room of a dilapidated Chinatown shophouse way back in the 80s. The room was lit by a single incandescent bulb, casting shadows in the dim yellow glow. The bare wooden beds, which doubled as chairs, creaked when you sat on them. The most indelible memory was the smell of charcoal fire—there was no piped gas. These elderly ladies probably didn’t have many visitors, especially a young child like me. They always had a piece of 白糖糕 (white sugar sponge cake) waiting for me, because it was their way of indulging me.

This humble Chinese confectionery is uncommon today, but memories come rushing back with every bite today.

My grandma told me very little about them, and it wasn’t until years later I chanced upon a documentary detailing the everyday lives of these unmarried old ladies. Many had meager savings, having sent much of their earnings back home to support their families in China. They were too old to work, and made a few dollars everyday collecting cardboard or selling second-hand items. They stuck together like true family, the able-bodied taking care of the infirm, getting by on donations, social aid and their daily takings. The most poignant scene was the daily rummage through the discarded vegetables at the adjoining market, before waste collectors carted them away.

Tears fell uncontrollably, when I realized belatedly that 20 cent piece of sponge cake for me meant a hour’s work collecting cardboard, while they were having discarded vegetables for the one proper meal everyday.

The burning thought that seized me in my youth was, Singapore is so prosperous, how can we allow this to happen to proud citizens who have worked themselves to the bone their whole lives?

What made me change my mind in the intervening years? Did I join the Young PAP, or perhaps I’m a civil service mandarin in disguise?

Unfortunately, I am a boring disappointment to conspiracy theorists. I am but one of the many thousands anonymous nobody bats an eyelid at. What I do have are unusual thoughts. I have come to love the land of my birth, but I am one of the odd ducks with rather un-Singaporean notions, despite my authentic kiasu, kiasi, kiabor upbringing. Even my family doesn’t know how I turned out this way. My sister and I—we may as well be from different planets.

The Chinese have a saying: 一种米养百种人 (a hundred different people grow up on the same rice).

A minimum wage is universal, and irrevocable. Once legislated, you cannot take it back—the bar will only be raised and not lowered down the line.

Isn’t it a good development? After all, many advanced economies have bitten the bullet, and many of them deign to criticize the lack of a minimum wage as a gaping hole in our social safety net.

Even some of our eminent citizens agree. The accomplished Professor Tommy Koh also added fuel to the fire with his forum remarks: Tommy Koh’s post on ST report sparks online debate.

It is hard to disagree with the likable Ambassador-at-large but this is one of the rare occasions we don’t see eye-to-eye.

The more I study Singapore’s economy, the greater my surprise at her uniqueness. No other economy even comes close to what we’ve engineered over half a century.

The one statistic that stands out: 2 in 5 workers are transient.

A good proportion of imported labor is low-skill. There are no barriers to entry, except willingness, vitality and for certain roles, gender. These are jobs Singaporeans don’t want, or are too numerous to fill. The equation works because the strong Singapore dollar translates poverty-level local wages into white-collar bonanzas back home, even after subtracting hefty agent fees and airfares. A minimum wage will cause a seismic shift across huge swaths of our economy, for no good reason. We already reject many more than we take in at current wage levels.

Paradoxically, a minimum wage will probably do more harm than good for the people down at the very bottom—the ones we’d like most to uplift with the policy shift. These bottom-dwellers are mainly older citizens without an education.

From an economic standpoint, they occupy the same pool with the unskilled or low-skilled foreigners, except they lack the youth prized by employers.

There are plenty of jobs available for this pool, but we cannot expect the elderly to compete for the exhausting positions of maid, construction worker, or garbage collector. Instead, the Singapore solution is found in tripartism, and foreigner levy to create (and protect) suitable jobs for the pioneer generation.

If we implement a minimum wage, the levy will have to be dismantled to maintain our competitiveness and consequently reduce or eliminate the opportunities available to the most vulnerable citizens today.

The low-skill pioneer generation are products of an era of deprivation, conditions which have been eliminated since the economy took off post-independence. After my parents’ generation fade into the twilight, they will go extinct, because we don’t make them anymore. Within one generation, there will be very few unskilled Singaporeans in the workforce. 

(Featured image from Labourbeat | NTUC)

Leave a Reply