Minimum wage around the world

Summary:

  • How is minimum wage applied in other countries?
  • What are some of the effects such policies have on other economies?
  • Are these effects desirable or undesirable?

 

Recent discussions on minimum wage in Singapore have got me thinking: how do other countries deal with this issue? Are there any other models we could follow to make it work here? Or should we use others’ experiences as examples of what not to do?

 

First off, let me just remind you that like many other developed nations, Singapore is a member of the International Labour Organisation, the World Bank, the Asia-Pacific Economic Cooperation, the United Nations, the Association of Southeast Asian Nations, and the Asian Development Bank, to name but a few.

 

As such, Singapore has agreed to both binding and non-binding international agreements that stipulate, in one form or another, that the government must provide decent wages and earnings, guarantee decent working conditions, ensure a just and equal distribution of the fruits of progress, and enforce a minimum living wage to all in need of such protection.

 

Is this the case for all people in Singapore?

 

Sadly, I’d have to say “NO”.

 

Whether it’s an increasing number of working poor, an extremely high income gap, a rising number of people in hard working conditions or being exploited, and a growing number of angry workers, one has to admit things aren’t as rosy as we’d like to think.

 

One of the main factors behind all these depressing developments is the simple fact that life is getting increasingly expensive (some would even say outrageously so!) while wages, salaries, and benefits either stay roughly the same or slightly dip.

 

So what’s a viable solution? Should Singapore do like most other developed nations and implement a minimum wage?

(Indonesia: Riots erupt each time minimum wages fail to satisfy)

As the name suggests, a “minimum wage” guarantees by law that all workers, no matter their background, skills, industry, or merit will receive in exchange for their time and effort a sum decent enough to cover the most basic of life’s necessities.

 

This doesn’t mean being paid insane amounts of money to do nothing or getting rich by cheating employers. This means that governments, employers, and investors all recognise that there is a minimum amount of money under which no human being can feed, house, or sustain him/her-self.

 

Basically a minimum wage guarantees that even the stingiest of the stingiest bosses cannot make you work for close to nothing.

 

Sounds humane, right?

 

The problem is that such a measure would require a major shift in priorities and practices in Singapore.

 

First, we’d have to acknowledge the fact that just because a system isn’t perfect, it doesn’t mean it shouldn’t be implemented; all over the world, minimum wage schemes have had a number of negative effects. But in other countries the schemes have proven to be very successful.

 

Whichever the case, there is no lack of first-hand evidence for specialists and policy-makers to analyse what has worked, what hasn’t, what can be tweaked for the Singapore context.

 

Second, we’d have to change the fact that employers don’t like to be told what to pay. Making sure you don’t starve is not very high in their list of priorities. What really counts for them – especially in Singapore – is profits.

 

Part of the issue is the fact that the government, who in principle should have citizens’ interests at heart, doesn’t want to burden companies and employers. The government’s interests lie in making companies feel right at home, where people will work very hard and not ask for much in return.

 

According to the majority of Singaporeans opposing a minimum wage scheme, asking employers to make an effort to make sure none of their hard-working employees die of hunger is too much to ask: “With the minimum wage, we put the burden on the employer. He has to pay extra, so instead of encouraging the employer to hire more low-income workers, you are discouraging him from hiring workers and the result is not going to be what we want”.

 

(Tripartism, or Government, Unions and Employers – encourages cohesion, instead of conflict)

The government is so attached to companies setting up shop here that it’d rather absorb the total cost of a decent wage scheme rather than ask for some efforts from the ones benefitting from your hard work.

 

The Workfare scheme was designed to fill that gap: it gives cash and Central Provident Fund (CPF) monies to Singaporeans aged 35 and above who earn up to $1,700 monthly – roughly the 30th percentile of wage-earners here.

The problem with the scheme, as ingenious and useful as it may be, is that it doesn’t apply to everyone. If you are 25 with no diploma and an extremely-low paid job as a delivery boy, you can’t benefit from Workfare. If you’re 34 and you earn $700 as a toilet cleaner, you can’t benefit from Workfare. If you’re 35 and 4 months old and earn $1,701 monthly, you can’t benefit from Workfare. If you are exactly in the target audience and you receive the Workfare help, you can’t access most of it anyway because it is conveniently blocked in your CPF account.

 

Third, we should recognise and accept that building a society based on individualist and selfish values is not a very good social and moral investment.

 

We have been brainwashed with the idea that a decent life with a decent wage is something we have to earn, to fight for, instead of something employers should guarantee when they take us on as a “valued employee”.

 

Again, just to be clear, I’m not talking about lazy people sitting around and waiting for the government or companies to hand them money. I’m talking about hard working individuals who didn’t choose to be low-skilled, low-educated, or just plain unlucky.

 

As a truly tolerant and harmonious society we wouldn’t put people against each other, competing for a lowly salary, telling them that if they don’t accept it someone else will take it or that if they don’t earn more it’s because they don’t want it hard enough.

 

Fourth, we should seriously start exploring alternative schemes such as the progressive wage scheme. I’m not really a fan of putting all the stress and efforts only on the employee’s and the government’s side, as this reinforces the idea that businesses make the law, but the idea that people can gain both more skills, better wages, and more decisive power over their careers seems to be the least worse alternative out there.

 

Especially in the specific Singapore context, where everyone is afraid to tell companies that some things are unacceptable and that efforts are needed from everyone, not just those that are already putting long hours at work.

 

Sorry for the long article, it’s just that I find this to be a crucial topic for the future of Singapore society. What do you guys think?

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AlvinLee

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