The Straits Times says

Addressing low wages at the bottom

Low-wage workers should not be seen as an inevitable part of society. It is within Singaporeans' means to ensure that the work they typically do is not underpaid. Low wages result when, for instance, employers in some sectors compete for contracts by slashing labour costs and neglecting skills and productivity. That causes wages to race to the bottom. Left unchecked, these workers will be left behind as the rest of society progresses.

Not for Singapore the flourish, favoured by politicians elsewhere, of a big hike across the board through the setting of a minimum wage by law. The fear is that such a measure might inadvertently dampen hiring and lead to job contraction. Instead, the National Wages Council (NWC) - comprising representatives from the Government, employers and unions - has since 2012 issued quantitative guidelines on what it considers to be fair and sustainable increases for workers on low wages. This year, it called for workers earning a basic salary of up to $1,200 a month to be given a raise in monthly pay of between $45 and $60 - a range which takes into account the fact that some sectors have recovered better than others.

At the same time, the NWC has sent a clear signal that difficult times are no excuse for profitable companies to neglect their lowest-paid employees. A major drawback is that the NWC's guidelines are non-enforceable and employers can disregard them. Last year, only 21 per cent of employers adopted the suggested pay hike for low-wage workers. That calls for more efforts to persuade employers to do right by their workers.

The approach of the unions has been to target sectors where the Progressive Wage Model can be applied, like security, cleaning and landscaping. It has been enforced via a licensing regime. The cluster of measures to address wages at the bottom, which also includes quotas on foreign workers, has reaped results. The share of full-time resident workers with a basic monthly wage of up to $1,000 fell from 10.6 per cent in 2011 to 6.8 per cent in 2014. The proportion of those who earned up to $1,100 fell from 8.2 per cent in 2014 to 5.7 per cent last year.

Efforts in this area must continue unabated in spite of salary hikes stalling and more workers taking a pay cut as corporate earnings sputter generally. Workers on low wages deserve unflagging attention as they are not yet out of the woods and will continue to struggle to keep up with better-paid peers and rising living costs in the years ahead.

Singapore's goal must be a corporate ethos which values fairness to workers, especially those who are vulnerable, and takes steps to shrink the income gap between the highest- and lowest- paid employees. That is the only sustainable way to grow an economy and build a society where all workers feel that they have a place.

A version of this article appeared in the print edition of The Straits Times on June 14, 2017, with the headline 'Addressing low wages at the bottom'. Print Edition | Subscribe