The issue of minimum wage has been thrown up for discussion quite frequently in Singapore over these past few years. Should there be minimum wage in Singapore? If so, how much should the minimum wage be?
For this article, I will use a new format to write this article. Along the way, I will make this article more interactive and ask some questions. Hopefully, you will find this more interesting.
Let’s go! There are just a number of questions at the start. Try them, so that when you get to the actual statistics, the realisation might be more interesting.
So, first question:
And if you do think there should be minimum wage,
Before we discuss further on the minimum wage, perhaps let us think about the following:
*including for food, transport, healthcare, education, insurance etc
Let’s have a guess at what the proportion of Singaporeans who earn less than $1,000, $1,500 or $2,000 is.
Now, let me show you the actual numbers:
According to the CPF Board’s annual report in 2011, there were 17% of Singaporeans earning less than $1,000 (Chart 1).
There were 26% of Singaporeans earning less than $1,500 (Chart 2).
There were 37% of Singaporeans earning less than $2,000 (Chart 3).
Note that I am not able to find the statistics for 2012, because in the CPF’s Board’s annual report in 2012, they have mysteriously decided to remove this information on the wage distribution from their report. Why this was done is anyone’s guess.
So, now that you know these statistics, for the estimate that you had made just now,
Did you think there were fewer or more poorer Singaporeans in Singapore? Were you surprised by the number?
Let’s look at the other aspects of how wage can be calculated. I hope you are finding this exercise useful so far!
**You can get this by multiplying the number of hours you think a person should work everyday with the number of days you think he/she should work every week.
Now, let’s look at how many hours Singaporeans are really working every week:
Chart 4: Ministry of Manpower
Let’s compare this to the number of hours people in other countries with the same level of national wealth work every week:
You can see that Singaporeans work the longest hours among the high-income countries.
Let’s compare the number of hours worked with some other variables.
Do you also know that the countries which work shorter hours have higher productivity (Chart 6)? (Note that not all the countries are included for comparison because of a lack of available data.)
Chart 6: Bureau of Labor Statistics (BLS)
And countries which work shorter hours have higher innovation skills as well (Chart 7).
Chart 7: Global Innovation Index 2013
Finally, you can also see that the countries with shorter working hours also have higher fertility rates, with the exception of France and Iceland (Chart 8).
Chart 8: The World Bank
So, from this, you can see that you don’t need to work long hours to more productivity. In fact, it seems like the evidence points the other way. The countries which work the shortest hours are also the most productive and innovative.
On top of that, because they have better work-life balance, these countries are also more likely to have more time to take care of the next generation, which also explains the higher fertility rate.
So, now that you know this,
If so, having looked at how many hours other countries are working and are still able to be productive and innovative,
So, the Singapore government has said many times that they will only increase wages if productivity increases. So, they refuse to increase wages and keep waiting.
But according to Seet Min Kok from the SIM Global Education, he had said that for productivity to be increased, workers should first be paid higher wages. He explained this with the following:
- Workers paid higher wages incur higher costs of losing their jobs hence inducing them to work harder, that is, they are more productive so as to keep their jobs;
- Higher wages can encourage more workers to queue up more eagerly for the higher-paying jobs thereby enabling the firm to select better, more productive workers from a larger pool; and
- Workers who are paid higher wages are less likely to quit, thus reducing the firm’s turnover and cutting down the costs of hiring and training new workers.
Also, do you know that Singapore’s productivity has dropped over the past few decades (Chart 9)?
Chart 9: The Heart Truths
Which means that it is quite unlikely that productivity will increase under the current model of working. Which also means that our wages will continue to remain stagnant, under the PAP government’s proposal. Why then did the PAP decide to tell us that they will increase wages when we increase productivity, knowing that this wouldn’t work? Clearly, for productivity to be increased, wages would need to be increased. Also, for wages to be increased, there needs to be firm political will to do so, which is severely lacking within the PAP.
Not only that, it is also clear that with shorter working hours, the fertility rate in Singapore can dramatically go up. So, why doesn’t the government want to do this?
Finally, let’s take a look at the minimum wages of some countries (Chart 10 and 11).
And as I had shown in a previous article, the countries with higher wages are also the ones with higher GDP per capita (Chart 12).
They are also the ones with higher productivity (Chart 13).
In sum, where countries pay their people higher wages, you can see that their productivity is higher and their national income is higher as well. Also, where people work shorter hours, their productivity is higher, they are also innovative, and because there’s better work-life balance, they also have higher fertility rates.
To put the nail in the coffin, do you also know that Singapore has the lowest wages among the high-income countries (Chart 14)?
Now that you have all the facts and information presented above, what do you think about the fact that Singapore has no minimum wage?
It is clear that minimum wage in Singapore is long overdue.
Working backwards, what do you think Singaporeans should minimally earn every hour in order to have a basic standard of living in Singapore? Take a look at your answer in Poll 3 and Poll 10 again.
Based on how much you think Singaporeans should minimally earn every month and how many hours we should be working,
By now, the minimum wage that you think Singaporeans should be paid every hour should be higher than what you had initially thought of at the start of this article.
Comparing with Poll 2,
You can see that clearly, there is a need for a minimum wage, right? Or rather, Singaporeans should be paid higher wages in order to have even a basic standard of living in Singapore.
Already, you can see that 17% of Singaporeans earn less than $1,000 every month, a quarter earn less than $1,500 and nearly 40% of Singaporeans earn less than $2,000. Many Singaporeans are earning just enough to get by, and this is not including having children yet! Do you think what we are earning is enough?
In fact, Acting Manpower Minister Tan Chuan-Jin had also said that “entry-level salaries … have been stagnant over the past 5 years“.
In his article last week, Leong Sze Hian had also shown that real wages for the lower-income earners had dropped again last year.
Not only that, since 2000, the richest 10% in Singapore has seen their wages shot up the most dramatically, whereas for the poorest 10% in Singapore, they have seen their real wages actually drop (Chart 15)!
Chart 15: The Straits Times
Which thus means that the highest-income earners and executives in Singapore earn the one of the highest wages in the world (Chart 16).
Whereas the junior managers earn one of the lowest wages among the high-income countries (Chart 17).
Now, remember – the wages of the PAP ministers are pegged to the rich, which means that the ministers are also one of the highest income earners in Singapore. In fact, you can see that the ministers earn approximately 108.3 times more than the lowest-income earners in Singapore (Chart 18)!
Do you think that this is acceptable when there are nearly 40% of Singaporeans earning less than $2,000 in Singapore?
As a taxpayer, where the money you pay goes towards paying the wages of these ministers, do you think you want your money to be used like this? Do you want them to pay them lower wages, because what goes to them actually comes from your own pocket?
Not only that, do you know that the rich pay one of the lowest taxes in the world (Chart 19)? Singapore’s tax structure is one of the least progressive among the developed countries.
And, if you are the richest richest in Singapore, you pay even lower taxes, than the rich (Chart 20).
What this means is that the income inequality in Singapore has kept growing and growing over the past decade (Chart 21).
And Singapore is now the most unequal country among all the high-income countries (Chart 23).
Looking at all these, do you think there should be minimum wage in Singapore? It’s not that Singapore doesn’t have enough money, you know. And it’s not that we cannot increase wages because it will be detrimental to the economy. It’s not, because look at the richest – they can afford to pay themselves the highest wages, which means there’s a lot of money to go around in Singapore. But why are the poor so lowly paid? And why is there no minimum wage? Why is it that the ministers, whose wages are pegged to the rich, have decided to pay themselves such high wages, without seemingly any cap, but which has refused to share the wealth with the poor, to ensure that the lower-income earners in Singapore also see their lot increase?
Perhaps you might think that this might be a temporary issue. Maybe the government will turn it around. Let’s take a look at the example of America. Since 1970, as wage growth stopped following productivity growth, the rich started earning increasingly more and more over the poor, such that the income gap has widened and has never been closed (Chart 22).
Chart 22: Economic Policy Institute
This means that for more than 40 years now, the income inequality has kept growing in America and is seeing no signs of closing. This is the exact same thing that is happening in Singapore since 2000.
In Singapore, this turn where the rich-poor gap started growing began in 2000.
Since 2000, the gap between the rich and the poor has widened (Chart 23).
Chart 23: The Straits Times
The “skilled” workers started earning more and more, over the “unskilled” workers (Chart 24).
Chart 24: The Straits Times
All in, you can see that things have become very unequal in Singapore, and it is quite arguably the case that the PAP has its hand in this. So, the PAP might pay lip service as to how they believe Singapore should be more equal but you can see from the statistics, that clearly, they are not interested in seeing equality happen in Singapore.
The Singapore society is now being segmented to a group of very high-income Singaporeans and the rest of Singaporeans, who are made to earn stagnant wages, which are not catching up with increasing prices.
Progressive Wage Model vs Minimum Wage Law
Finally, the government had introduced a “Progressive Wage Model”. According to Minister without portfolio Lim Swee Say, he had said that the progressive wage model is better than minimum wage.
But do you know that the Progressive Wage Model is just a beautiful name for a promotion pay scale? Which means that this “model” already exists in every company in the world – when you get promoted, you get a pay rise. This is just it.
How is the “Progressive Wage Model” going to allow workers to earn higher wages? You need to be promoted to earn higher wages. If you don’t get promoted, you don’t earn higher wages. How many people actually get to be promoted?
To put it clearly for you, look at the Progressive Wage Model that the NTUC had shared (Chart 25).
Chart 25: NTUC
Now, I compared the wages outlined in the “Progressive Wage Model” with the recommended salaries of workers in 2012 by Adecco and the actual salaries earned by workers in 2012 (Chart 26).
Do you see that workers in these industries are already earning not only the wages as propounded by the “Progressive Wage Model”, they are already earning even higher wages!
What progressive wages is the PAP talking about? The workers are already earning more than what is set out in the Progressive Wage Model. In fact, the model is not “progressive”. It is regressive.
What is needed is not some fancy model that the government had created which is simply a promotion pay scale, where if you don’t get promoted, and most people won’t, you won’t get an increment.
It is conniving of the government to claim that by using a “Progressive Wage Model” or by increasing productivity to increase wages, that the wages of Singaporeans will be uplifted, when this will never happen under their proposals, and in all likelihood, they are not interested in increasing the wages of Singaporeans anyway.
Then, in the first place, why are you increasing prices beyond the increase of Singaporeans’ wages and beyond the reach of Singaporeans? Is what the government doing fair, when they allow prices to overshoot and allow the rich to be paid higher and higher incomes, while for the lower-income earners in Singapore and the majority of us, we are made to settle with wages which haven’t grown?
Do you think this is right?
Now, before we end off, let me ask some final questions:
I think the answer is quite clear, isn’t it.
Then, my next question is:
So, Singaporeans, the facts and statistics speak for themselves. What choice would you make for yourself, so that you would be able to live the life that you want, and so that your children and your children’s children will be able to grow up in a Singapore that is truly fair, just and equal?
The choice is in your hands. It’s up to you now. Make a choice that will respect yourself and your children. It’s time.