PAP ministers don’t make sense about minimum wage

October 31, 2003
Singapore Democrats

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The Singapore Government has again rejected minimum wage for workers here. In a recent dialogue session staged by the Southeast CDC, Minister of State for Trade and Industry Raymond Lim explained that market forces, instead of the Government, should decide minimum wage as this would give businesses in Singapore the flexibility to compete. This is seductive argument.

It is also foolish talk. Market forces can only exist when two parties have the freedom to bargain prices. A buyer will bargain for lower prices and, depending on the demand for the commodity, the seller can decide to either hawk his goods at the price demanded or he can choose to take his business elsewhere. But when the authorities step in and decide that one or the other party does not have the freedom to walk away from a deal, market force ceases to exist.

Similarly, workers must be free to collectively bargain with management and, upon failure of negotiations, have the right to strike. It is this bargaining power that allows the market to play its role. In Singapore, the labour movement has been swallowed whole by the PAP Government, which is itself the biggest corporate player in the country. You dont need to be Einstein to see that Mr Lims exposition about letting market forces in Singapore set the minimum wage is compost.

Not only does the PAP not allow market forces to work, it actively suppresses wages. The NWC, a body that comprises representatives of government, business, and labour (which, by the way, includes German, Japanese, and American businesspeople) has an annual pow-wow during which they recommend the wage levels of Singaporean workers.

The result? While Singapores GDP per capita income is 25 times more than that of our neighbour Indonesia, labour costs are only 1.6 times as great. This suggests that Singaporean workers are grossly underpaid for all their sweat and toil. In another survey conducted by the World Economic Forum, it was found that Singaporeans are one of the worst paid workers in the world when productivity is take into account.

To maintain the downward pressure on wages, the Government brings in cheap labour from neighbouring countries through the euphemistically named Foreign Talent Policy, skewing further the supply side of labour in favour of employers.

NTUC deputy secretary-general and Senior Minister of State Matthias Yao, who was another speaker, weighed in and argued that setting a minimum wage would drive up business costs and lead to higher unemployment.

This argument is simplistic as it is fallacious. Wages is but one component of business costs. Other factors such as land price, telecom charges, GST, transport costs, utility rates, etc. all contribute towards the high cost of doing business. Perhaps Mr Yao was just careless when he failed to mention the spate of price hikes the Government introduced recently and instead chose to focus only on workers wages as the reason for high business costs. But perhaps not.

For ministers like Messrs Lim and Yao, who draw princely salaries, to pontificate on the welfare of workers and tell them to accept wage cuts seems like a cruel joke. With the cost of living continuing to increase, Singaporean workers have to make do with even less, if that is possible. Already the number of bankruptcies are at a 17-year high, family violence is on the rise, divorces are at an all-time high, young working adults are reported to be vulnerable to suicidal thoughts (an average of more than one person a day successfully carried out those thoughts in 2002), and a survey found that, among Asians, Singaporeans were most likely to suffer from depression, stress and fatigue.

All this is attributable to the loss of income and finance. We dont have the exact numbers, but more people are now calling in with anxieties over retrenchment and friction in their relationships and with families over financial stress.

Leaving aside the personal tragedies of lost lives, broken minds and homes, and wrecked marriages, how much is all this costing our economy? Is this not a case of penny wise and pound absolute stupidity? Is it any surprise that a study found that our economy lost billions of dollars as a result of Singaporeans being disenchanted with their jobs?

To compound the problem, Singapore has one of the lowest birth rates in the world, a trend that has serious implications for our future. Repeatedly, Singaporeans tell the Government that the kind of stressful lifestyle and the high cost of living here make couples reluctant to make babies. Not only does the PAP ignore this message, our esteemed Deputy PM Tony Tan tells us that we are more highly paid than Americans and therefore should have our wage levels reduced further!

Does the Government see how low wages and high living costs affect the reproduction rate of Singaporeans which will eventually carry significant economic costs? If it does, then it will be persuaded not to make economically myopic decisions of continuing to suppress wages but instead take the responsible path of introducing minimum wage.

If there is some kind of magic that can be worked when one suppresses wages in order for businesses to stay put the Americans, Europeans, Japanese, Koreans, Taiwanese, and Australians would have discovered it by now. Instead these economies all have minimum wage to ensure that workers are paid their due and to prevent the kind of exploitation that prevails in this island of ours.

Mr Yao continues: “In fact, [minimum wage] will cause more unemployment, because businessmen who do not wish to pay $2,000 for workers doing better jobs, will not employ workers at all. Pray tell, then, what is he going to employ? Elephants?

Developed economies that guarantee their workers minimum wage continue to thrive. Shouldnt we be looking into how these countries manage the problem instead of just shoving it down workers that they have to take pay cuts or risk losing their jobs?

Ironically, it is our economy – petrified of minimum wage – which is so dependent on Americas, which embraces minimum wage. Take also the cases of Taiwan and Korea. These countries have strong labour laws and unions that insist on a minimum wage for their workers. Yet, they have produced MNCs like Hyundai, Samsung, Tatung, Acer, LG, Evergreen, Taiwan Semiconductor that compete with the big boys on the international stage. As far as one can tell, these MNCs are still operating in the two countries.

And Singapore? We continue to produce politicians who spout gibberish like minimum wage will cause more unemployment because employers will not employ workers at all. If this is the shape of things to come, Singaporeans have much to fret. Every year that our scholar-politicians say such things is every year that we lose in our effort to be competitive, time that we can ill-afford.

Mr Yao suggests that one way to push wages up was for employers to redesign jobs and train workers to become productive. No arguments there. This will, however, take time. Our education system, not just jobs, needs to be redesigned.

Its easy for a politician perched behind his desk to exhort workers to retrain and become more productive. It is a nations curse when lawmakers cannot grasp the psychology of the people. When confronted with less, or zero, income workers, rather than think of retraining and upgrading their skills (which provide no income and, worse, do not guarantee employment when the training is completed), will turn to second and even third jobs to supplement their finances. Faced with the immediacy of having bills to pay and mouths to feed is it realistic to expect someone to put everything on hold while he seeks to self-improve?

When workers turn to extra shifts and jobs, fatigue and stress sets in which, in turn, affects productivity. Their quality of life is lowered. How does this help in the overall performance of our economy? Besides, where in the world does a people support a system that works them harder and harder while asking them to expect less and less?

The PAP may give excuses about not wanting minimum wage in Singapore. But it will ultimately be the cause of harder times for the nation and the people it purports to care about.

The SDP has set the minimum wage as one of its core policies in helping workers live meaningful and productive lives as well as in building a sound foundation for our economy. We campaigned on this during the 2001 GE and since then we have repeatedly stated our stand and backed it up with compelling arguments. If only the PAP could do the same for its case without resorting to inane pronouncements from its ministers.