Dear Editor, I sent the following letter to Ms. Nicole Seah of the NSP for her comments. I have yet to receive any, and hope that you will publish this for public comments.
Dear Ms. Seah,
I refer to your Facebook post (28th January 2013, “Thoughts of the day, on unemployment”).
I have several thoughts of my own and hope that you could share your personal views.
Purported justification for “minimal” action
A myriad of sector based wage increase actions have been initiated by various unions, through tripartite action. Of late, this includes wage increases in low-wage sectors such as cleaning. A quick check on statistics by human resource sites will reveal that wages have been increasing year on year across various sectors.
You feel that the government has initiated “minimal action” in the past with regard to raising wages beyond a certain point and/or implementing a minimum wage. I would like to point out that in 1979, Professor Lim Chong Yah (then chairman of the National Wages Council) implemented economic restructuring measures including adopting a high wage policy with the aim of easing out labour-intensive, low-paying jobs and economic activities (Alvin Chua, 2011). These policies resulted in a wage revolution colloquially known as “wage shock”. (This ultimately led to a disastrous outcome and the initiation of wage freeze measures, but that is another story).
It is for the aforementioned reason that I am inclined to disagree that “minimal actions” had been taken by the government in the past where raising wages are concerned.
Effects of this “race to the bottom”
You purpose “Unsustainable working conditions, lax enforcement of employment rights and scant wages will be the nail in the coffin that drives able workers to more attractive markets. We will also see a decrease in economic competitiveness if frequent labour disruption becomes a more pronounced trend. “
I need the following input, do enlighten me on the following:
1. What unsustainable working conditions did your post refer to?
2. What employment rights did your post refer to?
3. Is your contention a non-existence of worker’s rights or a lack thereof or lax enforcement of the aforesaid rights the “nail in the coffin”
4. What is the definition of a labour disruption?
I am in full agreement, if by frequent labour disruptions, you are referring to frequent strikes by workers, will cause a decrease in economic competitiveness, this goes without saying. However, I hardly consider the one labour disruption (Chinese Bus Drivers strike which you are well aware of) that has occurred recently a trend, especially since it is clearly an isolated incident that in no way gives rise to a trend.
There have been extensive calls, guidance, education and handholding measures introduced to help companies restructure their operational processes to help make them more productive, make wages more progressive and create better work environments for their staff. Hop on to the SPRING or EDB sites, you’ll be able to see government put their money where their mouth is. A quick search on the internet will turn up the various engagement and operations done to help companies do all this.
Give a person an inch and they’ll take a mile
It is a sweeping statement to say that the government has adopted a “give a person an inch and they’ll take a mile” attitude in formulating its wage and employment policies. Was this drawn from mere observation or were you formally a civil servant with direct know-how of the mechanisms of government?
Calibrated Minimum Wage for Foreign Workers
“Foreign workers may be willing to work for less, but it does not mean that we should pay them scant wages. We may need to look at a calibrated minimum wage that is catered according to the skill sets required by each sector. This may be calibrated according to factors such as intensity of menial labour, level of danger, complexity of skills required, etc. Wages should be competitive upwards, like white-collar jobs, not downwards. It is this opposing cycle that is forcing the income gap further apart.”
I personally believe a minimum wage would do more harm than good. In Hong Kong, minimum wages were implemented on 1 May 2011. It was noted that less than a year on, the minimum wage law severely curtailed the competitiveness of many small medium enterprises as they found it extremely difficult to hire workers.
Same for Malaysia.
Same for Indonesia.
Many countries that have implemented minimum wage found it exhaustingly difficult to keep up and yet, reeling back this policy is not as easy as implementing it.
I would like to take this opportunity to further point out that “today, 99% of all enterprises in Singapore are SMEs. They employ seven out of every 10 workers, and contribute over 50% of national GDP.” (SPRING Singapore, 2012)
There is minimum wage, and then there is also a natural equilibrium wage. If the company does not pay enough for an individual to sustain, then these people would not be here. No doubt that some bad egg companies will exploit and pay disgusting salaries (by our standards), but that is where market watchdogs such as the Migrant Worker’s Center come into use. NGOs supplement the jobs where government is unable to, for various reasons.
Where will the wages come from?
“People tend to ask, whose pockets will the wages come from. Then we will need to look at the other overheads involved in running a business that suppress the ability of employers to dole out higher wages, ie. Property rental”.
But property is another business altogether, who will pay the wages of employees in property then? I say, instead of always looking out for ways to save money, why not help these businesses make more money – and this is precisely the job of SPRING and EDB.
(And money comes from people spending… more people, more spending, everyone has more cash in their pockets…but that is another story altogether)
Here, I am in full agreement with you. It is irresponsible and unrealistic to bar foreign workers from entering the country. I also agree that there is always a need to look at how to better match people with available jobs.
However, I disagree with this following statement, “One area to look at is potentially establishing more local employment agencies within constituencies. Currently, CDC tends to match potential low-wage workers with job opportunities that are too far away from their homes.”
I find that this is a statement that is skewed as you are suggesting the CDC DELIBERATELY matches potential low-wage workers to jobs that are far away from their homes. In my experience, I have not encountered such a policy that the CDC adheres to, if such a policy exists, it would be in the interest of the public that it come to light. Otherwise, I ask you to reconsider that statement as it provides a misleading impression and would be principally irresponsible.
You also stated, “We could look into proximity-based matching of jobs for this income group. This will make it easier for lower-income Singaporeans to find suitable jobs. “
In fact, I readily believe this is currently one of the ways the CDC matches jobs to its applicants. The reality of the matter is, jobs that fit the applicants may only exist at locations that the applicant may consider far, let us take into account the CDC can only act as a job matching agency, it is by no means a job creation agency.
I note that there are other ways, sans direct intervention in employment and wage policy to provide low-income workers with altogether better standards of living and well being.
In order to close the gross income disparity gap, the government has already implemented numerous taxation and transfer measures, such as the Workfare Income Supplement (WIS) Scheme which tops up the income and CPF savings of low-wage workers and the GST Voucher Scheme which helps lower-income and middle-income households with their expenses. Government reported that in 2011, resident households in HDB 1- and 2-room flats received government transfers amounting to an average of $3,267 per household member while resident households in HDB 3-room flats received an average of $2,087 per household member. It is also not commonly known that amongst resident households living in HDB 1- and 2- room flats, government transfers were as high as 43.8% of their annual household income from work. (The Business Times, 2012)
In any event, measuring labour productivity is only one form of economic measurement. I furnish the following table which cross references the top 10 most economically competitive nations (World Economic Forum, 2011-2012) in the world and the top 10 happiest countries in the world (Happy Planet Index, 2012) between 2011-2012.
Top 10 most productive countries
Top 10 Happiest Countries
1. Costa Rica
5. El Salvador
7. The Netherlands
I believe that that we can see from the table, there is either an inverse co-relation or no co-relation whatsoever between economic competitiveness and happiness, that is of course not to say, none of us should be happy.