SINGAPORE: The Workers' Party's (WP) proposal for a minimum wage could leave businesses and workers worse off and also become a politicised issue, said National Trades Union Congress’ deputy secretary-general Koh Poh Koon in Parliament on Thursday (Oct 15).
The issue of a minimum wage has been in the spotlight since the General Election in July.
On Monday, WP chief and Leader of the Opposition Pritam Singh called for a universal minimum wage with S$1,300 as a base for Singaporean workers, saying in a Facebook post that this is not just a "moral imperative" but "an act of national solidarity".
READ: Universal minimum wage of S$1,300 could be considered 'parallel' to 'minimum wage plus' approach: Pritam Singh
During Thursday's debate on Deputy Prime Minister Heng Swee Keat’s ministerial statement on the Government's strategies to emerge stronger from the COVID-19 crisis, Dr Koh said initiatives such as the Progressive Wage Model have already helped to lift the wages of lower-income workers.
Dr Koh's speech drew a response from Mr Singh and other WP MPs, with People's Action Party (PAP) MPs rising to speak as well.
MINIMUM WAGE CAN BECOME "POLITICAL AUCTION": DR KOH
Dr Koh, a Tampines GRC MP, made three arguments in his speech - that a minimum wage could leave the lowest-skilled and most vulnerable workers at a disadvantage as it is difficult to find the right value; that it could become a political tool; and that it calls into question whether it should apply to the migrant worker population who make up more than 1.3 million people in the workforce.
An amount that is too low “defeats the purpose of having a minimum wage”, he said of the difficulties in setting the right minimum wage. Too high, and some businesses will not be able to afford it, causing them to either close down, shed workers or pass on the cost to consumers.
“This is a particularly pertinent consideration at this time when we are in a deep COVID-19 crisis. Many companies, especially your SMEs (small and medium enterprises), such as those in the construction sector, are suffering and not quite out of the woods,” he added.
Dr Koh also questioned Mr Singh’s comments on having a universal minimum wage as a “moral imperative”.
“Today, let’s say we can all agree to S$1,300 minimum wage proposed by the WP, a 'moral imperative' as Mr Singh puts it in his recent Facebook post. But what next? What happens next? How will this number change from this year to the next, and on what basis?” said Dr Koh, who is also a Senior Minister of State for Health.
“In a political contest, a political party will surely come along and say, well, S$1,500 will reflect a higher 'moral imperative'. Yet another will come along and say, S$1,300 is good, S$1,500 is better, but S$1,700 must surely be more divine 'moral imperative'. It can become a political auction.”
EFFORTS TO RAISE WAGES
Instead, Dr Koh emphasised the benefits of Singapore’s model of helping low-wage workers - a mix of the Progressive Wage Model (PWM), Workfare Income Supplement (WIS) scheme and training programmes - saying that it helps to improve low-wage workers’ incomes without putting their jobs at risk or raise consumer prices significantly.
The PWM, for instance, enables workers to raise their productivity, opening a pathway to promotion and higher wages, he said, noting that it will eventually be extended to all sectors.
"Workfare is another significant intervention. It acts like a form of negative income tax - the Government tops up the income of workers earning less than S$2,300 per month," he added.
Dr Koh said that there are about 850,000 workers in occupations traditionally deemed low-income, such as service staff, cleaners and clerks. The "vast majority" of them earn above S$1,300 a month.
About 100,000 earn below S$1,300, including a quarter who are self-employed and would not benefit from a minimum wage, he said.
With Workfare disbursements and Central Provident Fund contributions by employers, 56,000 earn less than S$1,300.
Out of the 56,000 workers, 32,000 - or 1.7 per cent of the local workforce - work full-time.
“So what the WP wants to achieve with the proposed minimum wage of S$1,300 a month, we have already achieved through PWM and many other policy measures.”
HELPING THE 32,000 WORKERS
Mr Singh first responded to Dr Koh’s arguments by stressing that his concern is not with the PWM, but why it is taking the Government this long to cover these low-wage workers.
“Can we not consider how we can cover them now immediately because it’s not a small number,” he asked.
“If you think of 60,000 rental units available from HDB, and you compare that with this number … it’s quite a lot of Singaporeans who need some help.”
“I don’t think it is acceptable that anyone, any Singaporean, is earning below this number. It is simply not acceptable,” he said.
As for curbing any sort of politicisation of a minimum wage, Mr Singh said that the sum could be left up to a panel of experts or the National Wages Council to decide, based on statistics like the average household expenditure on basic necessities.
He added that his party’s minimum wage proposal does not include foreign manpower as they are governed by other regulations.
Mr Singh also said he is worried that some sectors will profit off the backs of the PWM, by pricing in the wage increases even before it has been implemented in their industry. He gave the example of renewing lift contracts in his constituency, where some companies have increased their bid cost by between 5 and 47 per cent.
“If all this increase is going to the Singaporean worker, then I’m prepared to take on that burden to persuade our town council residents that we need to raise S&CC (Service and Conservancy Charges),” he said. “But my question is, is that a realistic hike in costs?”
In response, Dr Koh said the Government already convenes its tripartite partners - government officials, union representatives and employers - to study data.
“Reams and research are good, but in practice, it's always harder to do, because there are practical considerations, there are pushbacks,” he said.
READ: Commentary: Singapore’s poorest earners will benefit from expansion of Progressive Wage Model but some conditions must be met
“That’s why when we work on a negotiated outcome, there is always that balance that can be struck - where the businesses are prepared to absorb the cost. If not, they have a way to rationalise how to pass the cost on to the consumers,” Dr Koh added.
To “buck the norm” and implement a minimum wage that excludes foreign labour - when in most developed countries the policy applies to them - there must be “real strong justification” for doing so, he said.
In response to Mr Singh’s concern about companies taking advantage of the PWM, Dr Koh said since the scheme is pegged to a skills ladder, any cost increase can be checked against their skills level. Town councils should also have a proper process of evaluating tenders.
As for how long it will take to help the 32,000 workers, Dr Koh said: “I think the process will be something that we will want to do now, talk about it, discuss it, work out some schematics, but when can we implement? Obviously we have to look at the economic situation as well, because this will probably be the wrong time to push for increased wage cost onto our SMEs, who are already suffering.”
A ‘CENTRAL BANK’ FOR MINIMUM WAGE?
Other WP MPs also joined the debate. Associate Professor Jamus Lim said that studies that the minimum wage does not lead to an “appreciable increase” in unemployment were carefully conducted and not just beliefs.
The Sengkang MP added that the issue of politicisation can be resolved by convening an independent wage board to fix the minimum wage - just like how central banks that set interest rates are independent of the government.
When Dr Koh mentioned that people with disabilities make up part of the 1.7 per cent and therefore should be helped by other means instead of putting the burden on their employer, Assoc Prof Lim called it a “straw man” argument.
READ: Government accepts recommendations for progressive wage model, clearer career pathways for lift industry
WP's Aljunied GRC MP Leon Perera questioned why the minimum wage would be politicised and not the PWM - to which Dr Koh replied that it is decided by a tripartite group and not by one party.
Mr Perera also asked why helping to lift the wages of 32,000 people would hurt small businesses if this is a fraction of workers, especially when news reports have shown that many business owners are open to a minimum wage.
Towards the end of the debate, PAP MP for Holland-Bukit Timah Edward Chia, who is the managing director for F&B company Timbre Group, jumped in to say that businesses need to stay competitive, and to do so, it has to be coupled with an increase in productivity.
Mr Singh then asked: “I would like to ask the member in return, is he agreeable to pay the … 32,000 workers S$1,300 as a business employer. Is he prepared to do that? I hope he is.”
Mr Chia replied that a business owner is not responsible to a specific group of employees but the entire company. Improving the productivity of workers - which is part of the PWM’s strategy - is key.
“(An) arbitrary minimum wage may actually be more negative for a business. We need to look at it as a holistic approach, helping businesses up-skill their employees,” he said.
Dr Koh reinforced the productivity aspect of the PWM in his last response in the debate, saying that a worker’s wage increase has to be justified by an improvement in their skills.
“The problem is a minimum wage, is that it is not connected to any skills ladder. It is a number,” he said.
In his speech, Dr Koh acknowledged that there is much work to be done to help more lower-wage workers.
"Achieving social equality and enabling lower-income families to improve their lives is never a simple task. There is no silver bullet," he said.
"It is also continuous work. NTUC and the tripartite partners will focus on the real hard work of uplifting wages of lower-wage workers and seek public support for our workers while hoping to avoid all possible downsides."