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Wednesday, 14 March 2012

Minimum Wage In Singapore? On One Condition

Now that Malaysia is going to introduce minimum wage, I guess the call to introduce the same here in Singapore will be even strident during the next General Election.

I myself have no use for minimum wage as I belonged to the generation of workers that started work during mid-80s onwards. We were the job-hopping happy-go-lucky generation. 

The government, employers, and the press frequently lambasted us for our lack of loyalty and patience. For a few hundred dollars more, we would job hop to another employer without any due regard or thanks to the trainings our former employer had invested on us. What? No promotion after 2 years? Bye!

Therefore, I have always preferred the small government approach - believing people can and should take care themselves. No need "Big Brother" interference.

However, I had a change of heart recently when I read that some older workers did not have a pay raise for years... There are employers who preyed on the ignorance and meekness of our disadvantaged workers... Not all workers can defend and negotiate what's fair for themselves.

So on this epiphany, I would vote "Yes" in any referendum that promotes minimum wage in Singapore - on one condition:

It applies to ALL job positions in Singapore. 

Yes, that would mean the same should apply for jobs that are filled by foreign workers. And yes, it should apply to domestic maids too. 

ALL JOBS. Period.

What? Do I hear howls of protest?

Sorry, can you explain why you are supporting minimum wage in Singapore again?

Can you imagine vociferous Singaporean supporters of human, gay, women, and animals rights turn around and whimper that it only apply to humans and animals that are born in Singapore? Huh? Say that again?

I think there's a label for people with such attitudes and mindsets...

(It's so damn hard not to label people. Here I go letting myself down again...)



  1. Hi SMOL,

    I totally agree with you. To call for minimum wage, we must also agree to the fact that cost of living will necessarily be higher, since we have to pay a higher salary to those poorly paid road cleaners, toilet cleaners and other lowly jobs that are usually taken up by foreigners. It's not fair to have a minimum wage for just singapoeans. Doing that is not only unfair, but will result in companies hiring only foreigners.

    It's not a simple decision to make.

  2. LP,

    It's so easy to throw rocks; forgetting we live in glass houses ourselves.

    We fight for work/life balance. Clamour for better care of our aged.

    Provided of course it does not apply to our maids and heaven forbid the building of palliative care centres near our homes!

    1. We need both minimum and maximum wages for everybody working in SG. LOL

    2. CW8888,

      Now who would want a cap on their own salary?

      Perhaps that's why no one bitch about insurance, property agents and remisiers earning millions.

      We know in our hearts they deserve it. There's little entry barriers (O levels can already) and you don't need political connections - meritocracy at it's best!

      No sale; no money. No kill; no dinner.

  3. Frankly I don't quite understand how Malaysia's minimum wage requirement is going to work. I'm more in favour of a more robust and extensive labour movement that represents lower wage workers in negotiating acceptable pay than a blanket minimum wage requirement. Blankets can be smothering.

    1. plumerainbow,

      We have a free test case to watch and learn. Let's see how many Malaysian SMEs simply relocate to Vietnam, or any other lower cost countries. Hey! Some may come to Singapore despite the higher costs - we are business friendly ;)

      Oh you so speak my mind! Bottom-up self-help collective actions are so much better than top-down blunt instrument decrees.

  4. 'It's not fair to have a minimum wage for just singapoeans. Doing that is not only unfair, but will result in companies hiring only foreigners.'

    ah but you forget, the government can also restrict the hiring of foreigners. ;)

    but it remains to be seen whether singaporeans will do these same few lowly paid jobs if there is ever a minimum wage. personally, i think minimum wage goes against the spirit of the free market.

    http://newasiarepublic.com/?p=16920 (i agree with this article, and angry doc's comments)
    http://newasiarepublic.com/?p=20857 (a subsequent article by the same author)

    1. quirkyhill,

      Singapore survives on free flow of goods and services. I would assume foreign help is considered "services" ;)

      If we limit our borders to foreigners, other countries can do the same to us.

      I wonder what will some parents say if they were told that their children can't go to Harvard or Cambridge due to the quota for Singaporeans that year is up...

      Hey! Thanks for the links! I think I better read up on Austrian economics. It seems I share the same small government view with the Austrians economists!

  5. Hi SMOL,
    A coin always has 2 sides. Is minimum wage really able to lift the living standards of all lowly paid workers and bankrupt some barely surviving companies? And PAPPIES going to increase GST, "hidden taxes",etc....? Are there going to be more jobs or less?
    How are HK and other countries with minimum wage doing? i say if Malaysia can do it what is the LITTLE RED DOT going to do?
    ??? No use lah, just do it. Sigh.....PAPIES is the largest employer in town---Prepare to paid all-round higher taxes.

    1. Temperament,

      I belong to the small government camp. If we always expect Big Brother to take care of us and solve our own problems, we can't act surprised that we are being patronized and have to pay more taxes to feed the expanded bureaucracy.

    2. In most matters, I also prefer government to play a smaller role. The free market will do a better job most of the time. But, the government should help those who are born unfortunate or slipped into bad times through no fault of their own despite their best efforts. Leaving these group of people to the free market is too cruel and hardened the hearts of the rest. I do not mind paying higher taxes for such people because who knows, when bad luck strikes, I may be one of them.

      People living in a you-die-your-business, no-money-no-talk society become very selfish, including the kind ones.

    3. hyom,

      Perhaps that's one reason why I am very impressed with Hong Kongers - with their almost non-existent social safety net.

      Having worked with Hong Kong bosses during my Montgomery Ward Trading days and Hong Kongers in factories at Dong Guang, that's where we should go to benchmark leaner, meaner, quicker!

      Now that's small government! Laissez faire.

  6. It is very hard, almost impossible, for bureaucrats to set the optimum minimum wage for the economy.

    If the minimum wage is set too high, it will create unemployment to people who are worth less than the minimum wage. No employer (unless he is your father) will pay a worker more than what he thinks the worker is worth. Anything more will be charity. The vulnerable groups of people are the inexperienced young, the depreciating old and the unskilled. The young will be hit because they still have not accumulated enough work experience to be worth more than the minimum wage. The old will be hit because their market value has depreciated below the minimum wage over the years. The unskilled obviously do not have the skills to be worth the minimum wage. Despite the kindest intentions to help these vulnerable people, we end up causing more harm by condemning them to permanent unemployment because they will not be employed in the first place.

    By protecting workers against exploitation with minimum wage, more potential damage is done. It is exploitation that allows low-paid workers to have on-the-job training opportunities that hopefully will raise their worth later on. They can job-hop to higher-paying jobs after getting enough experience, thanks to exploitation. I think if people recall their job history, some probably felt exploited during their younger days with low salary. But it was this exploitation that allowed them to job-hop to higher-paying jobs later on. Surely, temporary exploitation is better than permanent unemployment.

    If the minimum wage is set too low, one might as well not have this rule in the first place. Why scare off investors and businessmen unnecessarily and create new administrative inconvenience?

    Because it is so hard for governments to set the optimum minimum wage, I think it is better to leave wages to the invisible hand of the free market.

    I wrote an article on minimum wage some years ago. Most of what is written above is extracted from the article.


  7. http://www.youtube.com/watch?v=IFbYM2EDz40&feature=player_embedded

    1. This is a good video on minimum wage. Although it does not support minimum wage, it does mention one advantage of minimum wage that is particularly relevant to Singapore today.

      A minimum wage will force Singaporean employers to invest in plant and equipment to raise productivity. Raising productivity will raise the value of the low-paid workers above the minimum wage which then makes sense to employ them. Today, our local employers are taking the easy way out to hire cheap workers who are mostly foreigners. These foreigners are not talents but cheap replacements. I wonder how desirable it is to have too many low-paid workers in a high-cost country. Hmm... perhaps Singapore should indeed consider minimum wage to force employers to invest in machines to raise workers' productivity.

    2. Thanks Patty!

      All communist countries except North Korea have decided to move towards free market economies. Top down central planning has failed.

      While western democracies are moving towards socialism with all the government bail-outs.

      The irony!

    3. Hyom,

      I hear your point. I've been to huge factories in Sweden and Germany. All automated with a few engineers and technicians hardly doing anything. They only "sweat" during re-tooling time. Their products beat the prices from China and Vietnam - that's why my ex-company still buys from them ;)

      But that would also mean unskilled or labour intensive jobs are forever moved to other countries.

      And that's the unintended consequence of messing with the free market with minimum wage. Those we think we are helping becomes unemployable.

  8. Nice blog. However, I don't think Singaporeans are against paying foreigners a minimum wage. In fact it's the opposite, because part of the purpose of a minimum wage is to ensure employers do not rely on cheap foreign labour by making them pay these foreign workers a salary equal to that for Singaporean workers. But I'm sure there will be a heavy tax on the foreigners' salaries that replaces the levy on employers, such that there is little change in the net amount that the foreign workers take home even after minimum wage is implemented. Instead, I think other than Singaporean businesses who are naturally resistant to having a minimum wage, Singaporean consumers are against minimum wage because it pushes up the costs of services e.g. eating at hawker centre, foodcourt or restaurant, watching movies, shopping, spa etc. As a consumer and small-time investor, my selfish side will of course also tell me to oppose minimum wage because it will mean I have to cut back on eating out, massages etc, and the stocks prices of companies I invest in may take a bit of a hit during the restructuring forced by the minimum wage. But as a person, ultimately I think I have to be able to answer to my conscience and hence like you, I support having a minimum wage.

    1. Anon 9:30,

      Thanks for sharing!

      We all have our own passionate views on this topic.

      I prefer small government.

      My post is in fact a "gentle poke" to those who talks about Singapore for Singaporeans only.

      My humble view on citizenship is that it's a responsibility; not an entitlement.

      I've been poisoned by JFK...

    2. I too prefer small government, especially in areas like media censorship, People's Association... But government has to step up to the plate when basic livelihoods are at stake. Not everyone can become a professional, manager or executive like you or me and take sabbatical from work way earlier than most. But I believe that as long as you are working an honest full-time job, you ought to be able to raise a family on basic living standards (food, shelter, healthcare, education) even if you and your spouse are just working as lowly cleaners. Alas, this is not possible today and I think that's not right.

    3. bluexpresso,

      I hear and share your concern and point of view.

      Especially on living and working with dignity and pride irregardless of the kind of jobs we do.

      I've experienced the Scandinavian example and it's closest to what we are thinking. But I must admit I have no desire to contribute 1/2 my pay in taxes and live with 20% or more GST...

      There lies my dichotomy - my brain is not aligned with my heart...

      In my shame,

    4. The Scandinavian model is a bogeyman, a false choice. Nordic folks pay high taxes not because of minimum wage but because of ridiculous welfare subsidies. Setting a minimum wage doesn't mean giving welfare handouts to lazy bums who do not want to work. In fact it's the opposite, because with a minimum wage, fewer people need welfare handouts.

      That said, the government still needs to step up its redistribution of revenue to increase support for education and healthcare, which is currently way too low. Socialising basic services does not mean giving ridiculous levels of subsidies like the nordic countries. Don't be frightened off by the Scandinavian bogeyman that the government likes to put in front of citizens. The government needs to re-prioritise. I don't remember the Singapore government being in debt even during the days when there was no GST. I don't buy the government's recent statements that Singapore's taxes must increase.


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