Legislating A Low Minimum Wage for 12% Of Low-Wage In Singapore

The Today newspaper reported that, “starting in September — after legislative changes are introduced later this month and passed by Parliament — cleaning companies must pay an entry-level salary of S$1,000 each month, up from the current median gross monthly wage of about S$850”.

This move, announced by Deputy Prime Minister Tharman Shanmugaratnam, is a step in the right direction and should be applauded.

However, as critical observers of our country’s sociopolitical situation, the question to ask would be – is this move significant enough?

According to a new study by the National University of Singapore’s Social Work Department, “the working poor in Singapore are not getting enough pay to make ends meet. “Working poor” is defined as someone earning less than half of the average monthly income of a Singaporean, which now stands at S$3,000.

Thus a person who earns less than $1,500 in Singapore would thus “not (be) getting enough pay to make ends meet”.

This is also echoed by the Lien Centre for Social Innovation and SMU School of Social Sciences, which had stated that $1,500 would also result in households not being able “to meet basic needs in the form of clothing, food, shelter and other essential expenditures“.

In fact, it is perhaps ironic that the government has decided to mandate $1,000 as the “minimum basic entry-level wage” since the government had also acknowledged that the poor who earn below $1,500 would require social assistance. Under ComCare, “$1,500 (is) commonly used (as the) qualifying level for government assistance schemes“. Also, the eligibility criteria for the Workfare Income Supplement “included having a monthly salary of less than s$1,500“.

As such, if the government is aware that $1,500 is the minimum wage level that a person in Singapore would require assistance at, would it be insufficient that the “minimum basic entry-level wage” that will be legislated is only at $1,000?

On top of this, when you compare Singapore’s cost of living and the “minimum basic entry-level wage” level, or what is commonly understood as the “minimum wage” in other countries, the $1,000 minimum level would be clearly insufficient as well.

When you compare the cost of living of Singapore with the other Asia-Pacific countries, Singapore is the 2nd most expensive country, after Japan. Hong Kong is 2nd, Australia, 4th and South Korea, 5th (Chart 1).

Slide1

Understandably, since Tokyo is more expensive than Singapore, it’s minimum wage of $2,437 is also much higher than Singapore’s $1,000. However, when you look at Hong Kong, Australia and South Korea, the minimum wage in their most expensive cities are $1,103, $4,323 and $1,395 respectively – all higher than Singapore’s $1,000, even though the cost of living in these cities are much cheaper than Singapore (Chart 2).

Slide2

Thus first, if the government is aware that $1,500 is the minimum wage level required for a person living in Singapore to have a basic standard of living and if in other countries which are even cheaper than Singapore, where higher minimum wage levels have been legislated to account for the cost of living, does it seem that the minimum wage level of $1,000 set in Singapore might be too low?

Also, this current minimum wage level will only be legislated for cleaners. According to The Straits Times, there are “55,000 local cleaners in Singapore will earn at least $1,000 each month from September“. However, there are currently 454,600 workers in Singapore who earn less than $1,500. The 55,000 local cleaners who will see a slight increase of their wage to $1,000 makes up only 12% of the workers who earn poverty wages. 

This means that there are 82% of the low-wage workers in Singapore who are not earning enough to make ends meet who will not see any increase to their wages in the foreseeable future.

Of course, it would be only sensible that for any minimum wage implementation that happens, that any increase should be incrementally phased in over the years, and also constantly adjusted for inflation. However, what is not apparent in the new announcement is whether this will be done, and whether minimum wage levels will be static or have built-in adjustments.

Also, what is absent was also a discussion among Singaporeans as to what a minimum wage amount should be, what the amount required for a basic standard of living in Singapore is, and how the increment in wages should be phased in. In addition, how much are the current profits that companies are earning, and how will the increase in wages impact on their profits, or not? These are broader questions that should have taken place among Singaporeans, which did not happen – but would have happen in another society which would intellectually engage their citizens in discussions that have very dear effects on their lives.

If we have had these discussions earlier on, we would perhaps have been able to come to a common consensus among Singaporeans about what a negotiated minimum wage level should be for a start, and the eventual goal we should aim for, how this should be phased in, and how a built-in mechanism for annual adjustments should be put in place to move wages upward with inflation. We would also have better knowledge on the profit-level that companies are earning, how it would compare with countries of similar financial standing, and how the wages of Singaporeans should be adjusted, in accordance with best practices.

Wages to Be Determined By Tripartite Negotiations

Today had also reported that, “Mr Tharman also pointed out that the wages will be determined through tripartite negotiations, which reduce the risk that workers will lose their jobs as wages go up.” This is a welcomed move in that the experience in the other high-income countries have shown that unions have been able to negotiate for better wages for workers over the years, without having to use the effect of laws to push companies into doing so, especially in the Nordic countries. However, what these countries also have are independent and strong unions which have real bargaining power and true tripartite structures which allow the equilibrium between profits and wages to be met.

In fact, it was just yesterday that the National Trades Union Congress (NTUC) Secretariat had announced the appointment of New Assistant Secretaries-General (ASG). The current Secretary-General (SG) and Deputy Secretary-General (DSG), and the new ASG are as follows:

With the exception of Cham Hui Fong who is a Nominated Member of Parliament, all the others are PAP politicians.

As such, as much as on paper, it is a logical move for “wages (to be) determined through tripartite negotiations”, I won’t be holding my breath – not with the representation of the secretaries-generals, as well as what past experience in Singapore has shown.

Finally, as much as the current proposed legislation to increase the wages of cleaners to $1,000 is seen as piecemeal, it is a bold move by the PAP government, known to be reluctance in even imposing any semblance of a minimum wage. Even in the announcement of this legislation, they have taken great pains to explain that “these required minimum wages are not a national minimum wage” and how “the labour movement’s progressive wage model, introduced in June 2012, is better than introducing a national minimum wage“. 

Singapore is Late In Implementing Minimum Wage

Whatever it is, this move is an important milestone in Singapore’s labour history, but even then, one which Singapore has come very late into the game. In fact, Taiwan had legislated minimum wage in 1956, Japan had done so in 1959 and South Korea in 1988, more than 20 years ago. Thus for Singapore to finally acknowledge the necessity of a minimum wage, in whatever form it is taking, is way overdue.

Not only that, the minimum wage of $1,000 would have been something to shout about in 2002 when the poverty line would have been at $1,000, where $1,000 would have uplifted the lives of Singaporeans above poverty then. But this $1,000 minimum wage is 11 years too late and would serve little now, except to compensate for the wage loss by low-income workers for over the more than one decade. Bolder and more dynamic moves would be necessary to ensure that not only are workers compensated for the loss of their wages but to allow them to finally earn decent wages which are commensurate to the current cost of living in Singapore.

Immediate steps need to also be taken to allow the unions to become independent, so that they will have real bargaining power to negotiate for the wages of Singaporeans.

As much as the PAP used to be a formidable party which had shaped the fortunes of Singapore to where the golden age of Singapore was in the 1990s, it is time for other political parties to come onboard to help shape Singapore’s way forward, and to recommend policy changes which is not currently in the PAP’s interest to do so. A more diverse and cooperative political structure would allow the changes that need to take place in Singapore happen.

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2 comments

  1. Pingback: Daily SG: 10 Jan 2014 | The Singapore Daily
  2. Samuel Tan

    I believe I am the first to reply to this article written a few months ago. But although its not purely a comment on low minimum wage, it has elements of education, university graduates salaries and income inequality. I do not know where to classify my thoughts into a mainstream thought process. So I just commented on an empty but not forgotten page.

    Hey Mr Roy, thank you for standing up for the poor and underprivileged class in Singapore, a city state known to the world as being progressive and prosperous economically, yet certain aspects have gone unnoticed unwittingly or wittingly by the public eye. Sometimes even ignored by the government. Its great to see someone stand up for the rights of those who cannot even meet the basic living standards in a cosmopolitan city, where inequality is fast becoming a stark reality.

    According to your research findings and quotations by the 2 universities professors who have stated unequivocally that $1500 or approximately $50 a day is not enough to get by the most rudimentary and basic of stuff, government officials have also stepped in to voice their opinions albeit in a softer and less determined stance on this poverty matter affecting some of our citizens,even though majority are considered the sandwiched class. Do you think that the mandatory minimum wage supplementary assistance program by whatever tripartite parties and relevant organisations would have to again review this $1000 and $1500 value in the near future because of inflation and rising cost of living?

    It does not appear to be just a isolated problem to the lowest caste in the socio-economic hierarchy because the others are also feeling the heat from plentiful financial inadequacies,not increasing in tandem with the costs of living. I have asked around friends who are in their early thirties who concurred with the opinion that graduate salaries are rising on the department of statistics website or on regular surveys done by MOE graduate employment survey. Many current students hold high hopes of being able to adequately provide for themselves and future families after spending their youthful years joining in the paper chase. Soon it will be the rat race and “climbing the corporate ladder”. How justifiable do you think the young graduates’s salaries are upon graduation all the way through their career progression, being already destined for greatness through the very methodical education system.

    The reason why I asked this is because there have been so far an article like this one- https://thehearttruths.com/2013/12/16/riots-and-wages-in-singapore-part-3/ which talks primarily on how academic qualifications can dramatically affect one’s livelihood throughout the career lifespan and of course economic sustainability. In light of more singaporeans becoming more well educated because of increasing affluence to pursue university education overseas and create more social mobility because generally college education puts one ahead in the wealth creation ladder, more topics dedicated to discuss and debate how much should university graduates be compensated fairly for their position in society vis a vis other white collar or lesser qualified individuals.

    Or how much should each percentile/quintile or decile of income hierarchy received as a fair compensation for working locally, taking important factors into consideration like housing,education, food, medical bills, transportation,entertainment, travel and recreation, shopping for basic things, expenses on luxury etc.So we try to cover everything that matters to a singaporean in its totality, and based on various income groups, such that the rich will not be antagonised by seeing the erosion of their hard work seeing an equalisation of wealth by the other income groups. While the poorest will still be fed and taken care of, not thrown into a bewildering predicament of a survival game and outcasted by society. Middle class problems have surfaced during the 2011 general elections with plenty of hatred and unhappiness expressed by many including myself a 24 year old university student because I feel the intensity of such realities.

    While the bottom-line remains intact, more people are getting paper qualifications and landing themselves the dream job, the inevitable topic dealing with fairness and justification of the income which young graduates are receiving will be hotly debated and challenged-are our brightest people getting what they deserved or is their salaries watered down because of oversupply versus demand?This has a repercussion on the kind of “re-calibrated salaries” throughout the whole social economic system because if the brightest are not getting paid well/or conversely overpaid, going down the social hierarchy wages would become also inflated or depressed accordingly-like a bell curve or normal distribution. I understand that the older generation still places a very strong emphasis on studying hard and getting a good job then climb your way up the corporate ladder etc.

    But I think we need the numbers to speak for themselves, not some half truths immortalised in the social fabric rehashed after every batch of student graduates and perpetuates the genealogical cycle. Because to me reality is not skin deep, we must uncover the true value of what education truly brings to social progression in terms of wage growth and levelling the playing field, raising productivity and ensures that hard work gets remunerated correctly. hahaha! Otherwise we might need for another article on how the marginalised poor can be expanded as an umbrella definition to include graduates who face a glut of competition in the workforce,stagnating salaries and creates a ongoing “diminishing marginal utility of education” which will be the new social ill. Graduation now creates a new form of slavery so it seems.

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