Minimum wage, sharp words and no easy answers


WHAT'S clear enough is the common goal across the political divide to uplift poorer Singaporeans. What's clearly in contest is how to get there, and resolution is unlikely to come anytime soon.

A speech by Workers' Party Member of Parliament Jamus Lim, who raised the minimum wage when making a broader point about more compassionate policy-making, triggered blistering exchanges between Dr Lim and government MPs. This was even as Senior Minister Tharman Shanmugaratnam noted that both sides are not very far away from each other in their objective to help Singapore's poor

Half a dozen ruling People's Action Party MPs took on Dr Lim, during the fourth day of debate on the President's address to the new Parliament. The minimum wage was one of several proposals that had been in the WP's manifesto in the recent General Election.

The exchange was enough to make Mr Tharman, who said he had no intention to speak, to rise to make what he called "a very brief intervention". Saying that no one "has a monopoly over compassion", Mr Tharman told Dr Lim to avoid making "straw man arguments".

"Raising the standard of living of the poor is a complicated matter," Mr Tharman said. "How do we do it without losing the wage earners' ability to have the pride of having a job and earning a wage?"

His answer: through the progressive wage model, Workfare, and other subsidies. "And it's not a job that's done for good - we have to do more."

He pointed out that the existing progressive wage model (PWM) and its sectoral approach enable the minimum rung to be set at suitable levels for each sector, whereas a single national minimum wage would force a decision on where to place it - which could be too low or too high.

But Mr Tharman also noted that he "would not exaggerate the differences between the PWM model and the minimum wage model", calling the PWM model a "minimum wage plus".

In his speech, Dr Lim said that although the government has warned that a minimum wage could mean higher costs and lost jobs, studies show that Singaporeans are prepared to pay more for essential services, and that a minimum wage is likely to have only a minimal impact on unemployment.

Some might say that this historic crisis is not the right time for "soft policies", Dr Lim noted in his speech. But he argued that on the contrary, with Singaporeans being called upon to make sacrifices, they need the reassurance that the fruit of such sacrifice will not only accrue to certain winners in the aftermath. Improving social protections can also help to blunt the populist, nationalist pressures that have surfaced in other countries, he added.

PAP MPs tore into the speech. Minister of State for Manpower and Education Gan Siow Huang rebutted that particularly in a recession, a minimum wage would cause workers to go from low-wage to "no wage".

Dr Lim replied that the topic is still worth discussing now, even if implementation comes later. "We should be able to think about implementing policies in a time of crisis, because this concentrates the mind," he replied. If an agreement can be reached, in principle, on the idea of having a minimum wage, then this can be rolled out "after the storm has passed".

Asked by MP Tin Pei Ling whether he would then withdraw the minimum wage when another crisis happened, Dr Lim said that that would not be the case - rather, "the complete opposite". The point of a minimum wage is to provide a social safety net, so removing it during a crisis would be to pull the rug out from under workers' feet.

MP Vikram Nair asked Dr Lim what level of minimum wage was being proposed, and if there are countries with a minimum wage that have lower unemployment rates than Singapore.

Dr Lim replied that he did not know the appropriate level, which is "exactly why we need a national commission to study this". He proposed an independent panel that would study and continually evaluate the right level. Rather than simply compare unemployment rates across countries, he said that academic studies have repeatedly shown that the unemployment impact of introducing a minimum wage is either very minimal or statistically insignificant.

To MP Zaqy Mohamad's point that the current PWM is set at a level which is "bearable" by each respective sector, and also aims to improve workers' productivity, Dr Lim said that "over-engineering" a system could make it fragile and lead to multiple points of failure. Having different minimum wages for different sectors would also lead to labour substitution.

Fellow WP MP Leon Perera also entered the debate, asking PAP MPs what they would say to workers who are earning below S$1,300 a month - roughly the government's own estimate of what is needed to meet basic needs. He asked rhetorically whether such workers should be simply told to wait until the progressive wage model is rolled out to their sectors.

Outside of Parliament, the question of minimum wage is unlikely to find easy consensus too, even among businesses who some may expect will resist any rise in cost.

Singapore Business Federation chief executive officer Ho Meng Kit said: "We welcome a more thorough discussion on establishing a minimum wage for Singapore given the anxieties of both businesses and workers during the current economic climate." But he noted that consensus among firms is unlikely, adding that some companies will support it, as they are also in other markets with minimum wage requirements, while others will be alarmed.

"How large a group are these employers? Which sectors are they from and are they a significant part of our economy? We do not know yet as there are unknowns, like what is the minimum wage level."

He added: We believe the discussion on minimum wage should not just be a cost and benefit issue for businesses. It should also be approached if companies have a sense of social justice how to reward their workers for decent work. If we pursue this approach of developing and enabling strong corporate values, then the changes that we want in society will be more lasting and sustainable as we would have businesses motivated to act appropriately not because it is the lawful thing to do but it is the right thing to do.

In any case, if the existing progressive wage model is rolled out to other low-wage sectors, as is in the works, then a national minimum wage may simply not be needed, said CIMB Private Banking economist Song Seng Wun.

Amendment note: An earlier version of this story referred to Jamus Lim as Mr Lim. It should be Dr Lim. The story has been amended accordingly.