Minimum wage only makes things worse in long run

Having a minimum wage has been a widely debated topic among Singaporeans, particularly low-skilled workers who think that they are underpaid and unable to support even themselves.

What many fail to realise is that having a minimum wage could lead to conditions that are worse than what they are currently experiencing.

Some would argue that once workers have their bare living requirements met through a minimum wage, they will feel less motivated to be productive, as they are receiving higher wages without needing to increase the quality of their work.

This could lead to an overall decrease in Singapore's economic productivity, causing it to lose its competitive edge.

Having a minimum wage could also decrease a business owner's motivation to hire more workers, resulting in a decrease in job vacancies.

Businesses will also be forced to increase their prices to cover their cost increase, which then leads to a higher cost of living.

When the cost of living increases, the low-skilled workers will find themselves going back to square one, where they cannot provide for themselves despite having a minimum wage.

Throughout the years, there have been many examples of minimum wages failing to improve economies, as they often go hand in hand with high unemployment rates.

Minimum wages should be adopted only where they are proven to help in productivity and efficiency.

However, this is not so for most industries and businesses.

Hence, minimum-wage policies should not be implemented, and the decision on how much to pay workers should be left to business owners.

Chow Wen Feng

A version of this article appeared in the print edition of The Straits Times on November 10, 2017, with the headline 'Minimum wage only makes things worse in long run'. Subscribe