WP is wrong about Minimum Wage

WP manifesto

The Workers’ Party in releasing their Manifesto for the coming GE 2015 proposed a national minimum wage. The minimum wage, it said will be pegged to the average expenditure of a four-person household on essential items such as food and clothing.

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New WP candidate Leon Perera suggests that the minimum wage start at 80% of $1,250, which is the Average Household Expenditure on Basic Needs for a household of four based on the 2013 Household Expenditure Survey.

People always talk about Minimum wage as though it is the best system for Singapore. But this is because they are either not well-informed, or they are in denial about what the Singapore has.

Yes, Minimum wage has been implemented around the world. But it is not sustainable. And here’s 7 reasons why the WP, including Mr Perera is wrong and the NTUC’s Progressive Wage Model (PWM) is a better wage structure:

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1.) Progressive Wage Model is better

Someone once said the PWM is Minimum Wage plus, because it is minimum wage plus other components. And IT IS More Than Minimum Wage.

Also, Progressive Wage has levels of minimum wage within the framework. This means that an employee would be able to climb up to the next minimum wage level, much like a ladder

2.) Minimum Wage is not sustainable

It is not sustainable for a company to implement a minimum wage alone. Minimum wage results in sticky wage. Meaning, the wages of the employee will remain the same even after the employee works for a few years with the company.

Hence, there is a need for other components, such as skills, career and productivity. The employer pays a base minimum and at the same time, builds in a framework where the company must  increase salaries over the career of the worker in a sustainable manner.

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3.) Minimum Wage applies to more people

 

Mr Perera added that the PWM was a step in the right direction but added that the national minimum wage would apply to more people. Again, this is where he’s wrong. PWM is for all! Not just for low-wage workers.

The PWM is a wage structure that not only fits low-wage workers, but PMETs (Professionals, Managers, Executives ad Technicians) as well.

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4.) Minimum wage is not for all workers

Yup! In fact, PWM as it is for all types of workers, is for all kinds of industries. However, the only difference, is that the model differs from industry to industry. This gives flexibility to the company.

skills training

5.) Minimum wage has no skills-upgrading

Yes! The PWM with the skills ladder allows an employee the chance to upgrade his or her skills with each rung of the ladder he or she ascends.

This builds on the morale of the worker allowing him or her to also progress in the career with more skills and the pursuit of better skills, thereby creating a ‘virtuous cycle’.

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6.) Minimum wage is not long-term

PWM ensures higher wages for the worker in the long run. Again, climbing up the career ladder and progressing in a career takes time, hence, in the long run, higher wages can be assured.

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7.) Minimum wage is not portable

The PWM allows for social and wage mobility, meaning its flexibility gives you room to move into a job with a progressive salary range and career path.

So now, which wage model do you think is sustainable in the long run? You can come up to say Minimum wage is the way to go today, but would you still be able to say the same in the years ahead?

Image Credits: Own Matters, STJOBS.

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Arthur Lee

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