Parliament: WP's Jamus Lim quizzed by PAP MPs on minimum wage and 'compassionate policymaking'

Sengkang GRC MP Jamus Lim speaking in Parliament on Sept 3, 2020. PHOTO: GOV.SG

SINGAPORE - Workers' Party (WP) MP Jamus Lim (Sengkang GRC) made several suggestions on minimum wage and compassionate policymaking in his maiden speech in Parliament on Thursday (Sept 3), drawing a string of questions from People's Action Party (PAP) MPs, including Senior Minister Tharman Shanmugaratnam (Jurong GRC).

During the debate on the President's Address, Associate Professor Lim argued, among other things, that many problems faced by segments of the population such as low-wage workers, the elderly and single mothers, could be attributed to "insufficient compassion in our policymaking process".

While he acknowledged that Singapore has a form of minimum wage in the Progressive Wage Model (PWM), he noted that it was not universal and suggested Singapore could implement "a simple, across-the-board minimum wage".

The employment impact of such a minimum wage would "likely be very limited", he added.

Following the quizzing, Prof Lim agreed that it was not the right time to implement a minimum wage given the ongoing fallout of the Covid-19 pandemic. He also said he did not have specific policies or figures in mind when making his proposals, but added that he was simply offering suggestions for further consideration and study. He noted that he did not know what level of minimum wage would be appropriate for Singapore, and suggested an independent panel be formed to study this.

Jamus Lim concedes minimum wage "not ideal" during recession

Ms Gan Siow Huang (Marymount), who is Minister of State for Manpower, said she agreed with Prof Lim that policymakers must exercise and demonstrate compassion in policymaking.

"In fact, I think that is what the Government has been trying to do in many of the policies and as a result, sometimes our policies become very complicated, because we understand that there's no one-size-fits-all policy that treats all problems."

She took issue with Prof Lim's suggestion that a minimum wage would have little impact on unemployment.

Said Ms Gan: "I beg to differ. I think under current times, where businesses are being challenged and we're in a period of recession, there is a very real risk that if we were to introduce a universal minimum wage across all sectors, I think many of our lower-wage workers may lose their jobs.

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"From low wage, they become no wage. There are unintended consequences of some policies with good intent."

Prof Lim agreed that implementing a minimum wage would not be ideal in an economic crisis, but he suggested that the policy could be rolled out "after the storm has passed".

Other PAP MPs who questioned him included Mr Zaqy Mohamad (Marsiling-Yew Tee GRC), Ms Tin Pei Ling (MacPherson), Dr Janil Puthucheary (Pasir Ris-Punggol GRC) and Mr Sitoh Yih Pin (Potong Pasir).

Mr Zaqy, who is Senior Minister of State for Manpower and Defence, said the key difference between the PWM and a universal minimum wage is that the PWM is differentiated across sectors.

He pointed out that he had previously announced in Parliament that there were plans to expand the PWM without turning it into a "blunt tool" that applies across all sectors.

"There are different considerations and things that need to be worked out across sectors, but it's not a new position. It is something that we've been working on since 2012."

Prof Lim replied that the differentiation in wages under the PWM could result in a "substitution" between workers from different sectors with different minimum wages.

He said a universal minimum wage would prevent employers from "gaming the system".

Fellow WP MP Leon Perera (Aljunied GRC) later stood up to ask Mr Zaqy how the Government would respond to individuals earning less than the $1,300 average household expenditure on basic needs and who do not fall under the PWM.

"Should this group wait until the PWM comes to them? How long will that take?" he asked.

Vikram Nair: What is appropriate minimum wage for Singapore?

Mr Vikram Nair (Sembawang GRC) asked Prof Lim what level of minimum wage would be appropriate for Singapore and whether he is aware of any country with a minimum wage that also has a lower unemployment rate than Singapore.

Prof Lim replied that he did not know what level of wage would be appropriate and suggested an independent panel be formed to study this. He reiterated his claim that minimum wage would have a limited impact on unemployment and added that this was based on "reams and reams of studies".

Mr Perera also addressed Mr Nair's second question, saying that the fact that another country has a higher or lower unemployment rate than Singapore may not be causally related to its minimum wage policy.

Ms Tin asked if Prof Lim was suggesting a minimum wage should be implemented but withdrawn whenever a crisis hits. She also asked what wage was paid to cleaners in Sengkang Town Council.

Prof Lim replied that a minimum wage is meant to provide a social safety net and it would be wrong to "pull the rug out from under those workers" in a time of crisis.

He said the Sengkang team is still in the process of taking over the town council and has not made decisions on a minimum wage for its cleaners.

Ms Tin had also asked if Prof Lim had specific proposals to improve youth employment in Singapore, a topic he did not bring up in his speech.

As Prof Lim was explaining the "cyclical" nature of youth employment, in which young people tend to delay their entry into the workforce by pursuing further education, Dr Puthucheary cut him off.

"Mr Jamus Lim was asked a question. While I appreciate his erudition in economics and I'm learning quite a lot from him, he hasn't answered Ms Tin's question," said Dr Puthucheary.

"Ms Tin asked if you had a proposal for youth employment, not the principles on which you say employment changes or doesn't change."

Prof Lim responded: "We do not want to roll out... specific proposals to address youth unemployment in a time when we are in a recession because we're not sure if the unemployment is justified or not. That's my reason for stating that context."

He added that he did not have a specific policy in mind as he had not considered the matter.

Chiding from Speaker of the House

Mr Sitoh took issue with Prof Lim's comparison of the Government's use of the reserves for investment in areas like education amid an economic downturn to a household's decision to remortgage its home while interest rates are low.

Prof Lim had said: "If I may argue, what we want is to make the best use of financial resources and not cling to some rigid ideology that we should never touch (the reserves).

"We are stewards, and as stewards we are responsible not just for ensuring that the pot will grow over time. We're also responsible for taking the right financial decisions, which in certain times may involve spending for higher investment things (like) education.

"These are things that we can actually extract a higher return for in the future. We will be able to get higher tax revenue that will more than pay for the expenses that we incur today."

Mr Sitoh, an accountant, said he was "perturbed" by this argument.

"If I heard you correctly, you said given the low interest rate, it is now time to remortgage your properties. As an accountant with over three decades of experience, I can tell you that is how people start getting into trouble. I hope you're not teaching that in your classes."

He added that Singapore is one of the few countries in the world that has not had to borrow during the pandemic and that having savings "is not a sin".

Prof Lim replied that he used the mortgage analogy to show that there are instances where borrowing against low interest rates to invest in something that gives higher returns "is not just financially prudent, it is in fact going to be better for your balance sheet in the long run".

To this, Mr Sitoh said: "You are always assuming that tomorrow will be better than today... You are assuming there is a better return, which may never come."

Prof Lim replied that it was possible for a Government to over-save. He also said he was not assuming that there would be better returns in the future.

"I'm saying if there are projects that give you better returns today, you should engage in those, substitute out the lower returns that are already locked in, by your ability to borrow at low interest rates... It is recognising that there are higher-return projects today, unless you're saying that the youth of today in Singapore are not worth investing in."

This drew a chiding from Speaker Tan Chuan-Jin who said: "I don't think that was the point that was made."

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