Multiple studies show minimum wage can work, not based on 'folksy wisdom': Jamus Lim
SINGAPORE — Leader of the Opposition Pritam Singh and his Workers’ Party (WP) compatriot Associate Professor Jamus Lim engaged in sharp exchanges with Senior Minister of State (SMS) for Health Dr Koh Poh Koon, amid a parliamentary debate on the merits of a minimum wage vis-a-vis the government’s preferred progressive wage model (PWM).
In a lengthy speech to the House on Thursday (15 October), Dr Koh alluded to Singh’s Facebook post on Monday calling for a universal minimum wage of $1,3000 across all sectors, which the latter called a “moral imperative”. Dr Koh, who is also deputy secretary-general of the National Trades Union Congress (NTUC), said such a move risked generating a “political auction”.
“In a political contest, a political party will surely come along and say, well, $1,500 will reflect higher 'moral imperatives'. Yet another will come along and say $1,300 is good, $1,500 is better, but $1,700 must surely be more divine, more imperative. It can become a political auction.”
Setting a single minimum wage at national level across different industries with different skills requirements would also be difficult. Furthermore, any costs increase for a minimum wage will have to be passed to the consumers at some point.
It could also hurt small and medium enterprises (SMEs) that are already hurting amid the economic downturn.
Instead, Dr Koh asserted that the progressive wage model was superior as it is based on the consensus of the tripartite alliance, “We look at data, but incorporate the consensus of all the stakeholders, including businesses, so that they also must be prepared to price this into their business costs, and have a way to also socialise it to the consumers.”
The 48-year-old also cited a Hokkien saying by veteran union leader Toh Hock Poh, which translates to, “(If a minimum wage was) so easy to do, we’d have done it long ago.”
Workers’ Party fires back
In response, Prof Lim said it was not advisable to rely on “folksy wisdom and beliefs” by labour union leaders. Instead, the first-term Member of Parliament for Sengkang GRC cited studies that show that minimum wage does not lead to any appreciable increase in unemployment, based on “careful consideration”.
Prof Lim, an associate professor of economics, alluded to the 16th-century belief that the sun revolved around the Earth. “But that belief is not in fact, the same as evidence, and all evidence from countries all over the world, demonstrate that a minimum wage has minimal impact on unemployment, as long as it's not set too high.”
On the issue of SMEs potentially being hurt, the 44-year-old cited automobile inventor Henry Ford. “He said that he has to pay his workers enough so that they can buy his cars. So when we pay our workers enough, it need not be the case that our small businesses end up suffering as a result.”
According to official data, about 100,000 workers earn below $1,300. This number is reduced to 32,000 after taking into account the Workfare Income Supplement wage top-ups. This amounts to about 1.7 per cent of the local workforce.
“My question quite simply is, do we need to wait so long to cover these Singaporeans? I don't think it is acceptable that any Singaporean is earning below this number,” said Singh, who suggested that the National Wages Council could implement the minimum wage, in order to avoid politicisation of the issue.
Warning of “potential profiteering” in the PWM on the back of raising wages for Singaporeans, he asked what mechanisms the government had to prevent this. The WP chief also clarified that the minimum wage the WP is proposing does not include foreign domestic workers or manpower at this point
Official data not ‘clean’
Dr Koh responded to Singh’s query by noting that in a PWM, the wages are pegged to a skills ladder that can be verified by either participation in a course, or verified through an industry accredited program. With a skills increase, the individual will then be justified for a wage increase, based on a larger job scope or a more productive outcome in the work delivered.
He also noted that the official figure of 1.7 per cent of the local workforce is “not a very clean data” because it also includes people who are technically employed. “They could be employed in jobs like hawker assistant, helping a family member, they're drawing a salary, but they're happy to be just getting $700 a month, helping the father or a mother or something like that, manning a store for example.”
Legislating a minimum wage for such individuals would therefore be difficult, said the SMS, who added that this segment of workers could also include those with disabilities.
In response, Prof Lim dismissed these arguments as “straw men”. He noted, “We are not comparing these particular special cases, we are talking about individuals that happen to be working just a regular full-time work week, and without disability and are nevertheless, struggling to make ends meet.
“And even if it is 32,000 people, I do not think that any of these 32,000 people feel that they are being taken care of and I also don't feel that we should let them, in as rich a society as we are, flounder on their own.”
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