Wages on steroids: Paying our low wage workers a lot more

 

It sounds like a simple solution: adopt the policy of paying more money to unpopular jobs, especially for low wage workers, and our employment situation would improve.

To demonstrate that this would work, advocates brought up examples such as Australia, where cleaning jobs earn you almost US$3-4k, or Norway, where bus drivers take home about US$4-5k. (I did not verify the figures, this is just common knowledge I hear from friends)

Is this the magic pill that Singapore needs? Would it solve manpower deficiency? Would it help to increase mean national wages?

This is not a discussion about minimum wage. This is a bold idea in increasing salaries very much more. I am not convinced and have several questions of my own.

 

Where is the manpower coming from?

Labour is a finite resource, each industry, each company is fighting for talent and raw labour. At 98% employment, there is little left for employers to chose from. If there are (about) 2m foreigners here to augment local labour, would a dramatic increase in wages help reduce the numbers?

 

How are you going to get employers to pay this much?

Even if there was minimum wage, you can’t expect companies pay >100% wage increase without giving them a copious amount of time. Their businesses will make losses, or the clients will find services unaffordable. Do you fancy a $5 bus ride? And on that note…

 

Would Government be able to do this without collecting more taxes?

The biggest employer in Singapore is the Government. If wages were required to go up across all sectors, someone needs to pay for it. Eventually, it would be the tax-payer. Eventually taxes have to increase – the question is, when?

 

But the government is so rich, surely they can subsidise it without raising taxes?

Maybe the government can do this…but for how long? I would be concerned if the G had to rely on reserves meant for preserving this nation’s sovereignty, to fund for short term gain.

 

There are only two ways to reduce the number of foreingers here considerably. The first is to reduce the performance of our economy, which is not responsibly possible. Actually, it may not even be possible at all, GDP is not a dial that you can push up or down at will.

The other would be to increase the level of productivity. To do the same or more work, with less people. To do this, businesses must either employ the use of machines, or re-design jobs (like this hotel here).

There are only 60,000 unemployed persons in Singapore. The labour needs of this country made us bring in about 2m more. Whilst increasing salaries is a good thing – it is not enough to solve our manpower problems.

 

 

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About the author

Benjamin Chiang

Benjamin Chiang is an enthusiast of good advertising, deep thinking, labour issues and chocolate. He writes also at www.rangosteen.com and occasionally on Yahoo!

The views expressed are his own.

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1 Comment

  • “Would Government be able to do this without collecting more taxes?”

    The point is to increase the income of low-wage workers. If the Singapore govt cannot fit additional public wages into their budget, the money will have to come from high-wage workers. So increase capital gains tax, make income tax more progressive, problem solved. Just a matter of whether they’re willing to do it.

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