Hooray! Wages Increase for Low Wage Workers!

Channel NewsAsia reported that, “Cleaners in some sectors can expect to take home a bigger pay packet and enjoy higher starting basic salaries of between S$1,000 and S$1,200, as part of efforts to raise productivity through the Progressive Wage Model (PWM).”

First, the good news – Finally, one group of low income earners will be able to earn a higher income – 23% to be exact!

According to the news, the increase in their incomes can be achieved “as part of efforts to raise productivity through the Progressive Wage Model (PWM)”. I don’t think anyone quite get what this means.

Increase productivity to increase wages? Really? You still want to champion this proposal? Nevermind that our productivity growth has seen one of the lowest in recent years. Nevermind that Singapore has one of the lowest productivity in the region. And nevermind that no one quite understand how you can increase productivity though the news reported that “the cluster is also pushing for a “wage ladder” to give more “wage points” to cleaners who pick up new and better skills, or take on bigger responsibilities.”

The news further reports that, “these include what the cleaners’ wages would have been if they had kept pace with productivity growth, the nature and working conditions in various cleaning jobs, as well as input from those in the cleaning industry.”

What this suggests is:

  1. In the past few years, the wages of the cleaners have not kept pace with productivity, and so they are finally matching up with this increase.
  2. But with productivity growth hovering around 1% and sometimes dipping 0% growth, what this suggests is that for all us – our wages should increase by only 1% or sometimes dip, if our wage growth is to follow productivity growth. Obviously, this is not the case. So, what’s the deal with typing wage increases to productivity increases?
  3. Truth is, the cleaners’ wages have been unfairly depressed over the past few years and this increment is to actually push their wages up to match up with what inflation has taken away over the past few years. 
  4. Truth is, if we account for inflation, their wages would increase even further. But if it does, then this will bring them closer to the wages of other workers, which mean pushing wages up across the board further. For now, $1,000 to $1,200 seems like something we can stomach for now. 

Fine. Whatever you want to put out. Doesn’t matter – as long as you increase the wages of the lower income earners. 

Obviously, with an uncontrolled labour growth policy and wage stagnation which wasn’t stopped in its tracks, the pool of low wage earners in Singapore has grown and has seen their wages stagnate or drop, in relative terms, over the past few years. This increase isn’t one pegged to productivity gains. Any mathematician will tell you that.

What this actually means is that finally we have acknowledged the inhumane way we continue to utilise the services of cleaners while treating them unfairly, and the adjustments are aimed at:

  1. Bringing the wages of cleaners to being on-par with inflation and other financial burdens, such as increase in CPF payments, Medishield etc.
  2. Bringing the wages of cleaners to one that can provide a basic standard of living, in realistic terms.

As Deputy Secretary-General of the National Trades Union Congress Heng Chee How himself had acknowledged, “the current situation as unsustainable, noting that the widening income disparity would create social tensions, and has increased the reliance on foreign workers.” So, NTUC has acknowledged that the truth of the matter is this – the widening income disparity is one key factor for the increase in wages, even as they do want to push out the ideology that wage gains has to be tied to productivity gains. 

Here, you have to understand why the government is doing this. Our government does not want to be a welfare government. They want to be a government that operates on economic principles. So, they do not want to be seen as increasing the incomes of people because it is “the right thing to do”. They know it is the right thing to do, but they won’t just to do it which they think will make it look like they have become weaker. So, they conjure up the idea that it’s all because of productivity – once productivity increases, wages will increase. The maths say otherwise, but it doesn’t matter.

They need to tie their policies to economic ideals and we need to increase wages, so this is a win-win ideology.

Similarly, they had not want to put in a minimum wage law, because another principle that the government operates on is that it doesn’t want to tie itself unnecessarily to laws that cannot be reversible – and a minimum wage law is one that they are uncomfortable with, in the current uncertain economic climate. So, they purport the idea of negotiating with companies to push the wages of low income earners organically. There are mechanisms behind how the government can intervene with wage changes. So, it cannot be as simple as companies suddenly agreeing to respecting people’s rights.

But does it matter? Yes and no. But, at this point, no. The government wants to save face and want to look strong, and economically-focused. We will give them that. As long as you treat people fairly – doesn’t matter how you do it.

Indeed, Mr Zainal Sapari, director for NTUC’s Unit for Contract and Casual Workers had said that, “if the cleaners working for the government sector are earning wages according to the progressive wage model, it will have a ripple effect on cleaners working in the private sector.” Ripple effect, yes?

In effect, the government in instituting a minimum wage policy without calling it one – without having to tie itself to welfare governance principles.


Fine. But it’s silly. If you do something good, you want to let people know. You obviously know people aren’t happy with their wages prior to this. You obviously know you have to institute minimum wage in some way, even if not as a policy. But why would you seemingly to do something which caters to the welfare of the people, but choose not to acknowledge it? Of course, the government has this train of thought – what I do has to be purely aligned to economic strategies. But this is an excellent opportunity for the government to showcase its soft side, its caring, understanding and empathetic side and the government is just going to let it go – firstly, by instituting wage increases in seemingly ad-hoc and piecemeal ways and in not taking credit for it. 

Maybe, once again, the government’s PR team isn’t the smartest again. Instead of putting out enforced propaganda such as what was done in The Straits Times Forum yesterday, the government can take credit for this real improvement, by launching a large scale campaign to showcase their efforts in increasing wages, and allowing some 300,000 Singaporeans to immediately change their mindsets of the government. But then again, what do I know? I am not the government.

They want to be Singapore Inc., and their inflexibility in mindset requires them to stick to a structured uncaring strategy. Pity. It’s a lost opportunity for the government, but they want to stick to their guns. Well played?


Afterthought: I had a further think through on the government’s rationale for laying low on championing any news on wage increase:

  1. Currently, there is a huge pool of low wage earners who earn below $1,000. The strategy of increasing the wages of those earning less than $1,000 is to life this group into the next income bracket. This is so that the government can make the statistics look beautiful – we do not have a huge proportion of low wage earners, if we are able to push them into the next bracket. So, the government has done its calculations and know it does actually have the money to provide for this little increment, just so that they do not look like they treat low wage earners in a mean way.
  2. But this doesn’t take into account the income inequality. Even as the wages of low wage earners are uplifted, the wages of the higher wage earners will continue to rise more rapidly. Thus the income gap will only continue to draw further, as wages for low wages earners will never match up. This also means that the government would naturally have more money in their coffers, which would moderate the effects of any financial contribution they need to provide to increase the incomes of the low wage earners. In effect, the government doesn’t really lose much.
  3. Even if the wages of low wage earners are increased, they are still accessed for their economic value more than their human value. Of course, the other Asian countries are similarly paying for human labour according to their economic value. It will be a long time before Asian economies will learn to respect human worth according to their human value, where workers are paid according to what they need to lead a respectable life, rather than what the value of their work is economically value – as the Nordic countries do. 
  4. Finally, and most importantly, even as incomes rise, there are also increases for other financial contributions that Singaporeans have to fork out for. In recent months, the government has announced that Singaporeans would need to top up their CPF account to a higher Minimum Sum before they can draw out their CPF monies. MediShield premiums have also been increased. A monthly increase of $100 to $200 will hardly be enough to cover for these increases. After factoring in inflation, higher prices of goods and services and increases in these nationalised insurance plans, so to speak, the wages of the lower income earners actually continue to be devalued and eroded. their lot isn’t that much better. 

And this is the main reason why the government doesn’t champion any wage increases they are able to negotiate for – they know they are collecting back these monies they give out. As fast as they give out the money, they take it back as quickly. No loss on their side. In fact, they gain because the amount of money they take back is higher. And too bad no one is doing the calculations to realise this. 

Is the lower income earner better off? Not necessarily. So, the government has actually come out with an effective strategy of spreading out the announcements of the wage increments, and intersperse within them the announcements of the financial increments for the nationalised insurance plans, so that hopefully the good news (of wage increments) can hopefully cover up for the bad news (of increments to contributions to nationalised insurance plans). When the dust blows over, hopefully, what people will remember are the wage increments, where the announcements should be staggered for a longer period of time, a few months after the last announcement of this batch of financial contributions increments ends. Before another starts. 

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