A lot of ink has been spent talking about how Singapore “doesn’t have minimum and/or living wages”.
I’d like to cut short the argument right here and say, yes. We do.
1.) Progressive Wage Model: it requires you to pay a price floor, or you don’t get a licence to run your business.
Call it what you want, that is a minimum wage.
In fact, it is better than the minimum wage because it includes components to ensure the worker improves his salary over time, preventing a salary freeze.
2.) The National Wages Council is the 3-party body that makes recommendations each year on wage adjustments. Before doing so, it makes a variety of considerations, one of which is the economic conditions of the country.
Their recommendations are accepted by unionised companies and the government. In a way, you could say that they set wage levels for the country.
Doesn’t it sound very similar to the “Living Wage Foundation” of the United Kingdom? This foundation similarly sets wage levels and accredits companies which volunteer to pay at those levels.
In fact, in a tight job market environment such as Singapore, it is almost impossible to pay below a market standard and expect to hire at all. I am not saying it doesn’t exist, it does, but these would be egregious and uncommon.
Employees have a lot of power to move and seek a better paymaster. (Some don’t but there are programs and organisations to help them)
Merely discussing minimum and living wages is far too primitive. These are old and rigid ideas that necessarily passes the cost burden to employers and consumers. Now, this wouldn’t ordinarily be a problem if increased costs fill a practical need, but empty wage increases lead to empty price increases.
Singapore has a multi-pronged approach to tackling the low-wage problem. The main pillar of this support is Workfare; a program fully borne by the State.
Data from the recent Committee of Supply debates in Parliament shows us the extent Workfare is changing incomes at the bottom:
- Between 2012 and 2017, real wages of workers at the 20th percentile grew by 24% in total. Faster than incomes at the median, which grew by 21%.
- Low income Singaporean households saw household income grow by about 26% in real terms over the same years.
- Employment rate for Singaporeans and Permanent Residents aged 25 to 64 remained high, at about 80%
Workfare doesn’t stop there. It is part of an eco-system of government help that target lower waged workers.
Recipients receive Utilities-Save rebates and GST vouchers, medical and dental subsidies. And more importantly, 75% of recipients own their own homes.
And here’s the best part: the cost of all these is not passed on to employers or consumers.
Commentary and opinions frequently refer to a need to to “consider solutions”, like as if there wasn’t already a mechanism in place.
Critics would do better to turn their guns to job creation, employability, productivity, skills and upgrading. We live in a world where utility is exchanged for payment, isn’t it more important to find ideas to improve utility?
Minimum wage, living wage and other such primitive devices are a vortex that drags all economic activity down rather than lifts workers up.
Everyone has a skill. Everyone can capitalise off the skill. We ought to be encouraging technologies that allow people to monetise those skills. Grab is one such example.
We ought to be encouraging workers to be better versions of themselves. Empty experience will not cut it anymore, companies are demanding staff have real, bankable skills.
We ought to help the lowly-skilled pay or even find time to better themselves.
We ought not to sit at our desks and read old, tired ideological concepts and wonder why our country has not implemented them yet.