SINGAPORE - The Workers' Party's call for a universal minimum wage could leave workers and firms worse off, with the exercise to determine the wage level devolving into a political auction, said NTUC deputy secretary-general Koh Poh Koon on Thursday (Oct 15).
A single minimum wage is not a panacea for low-wage workers, and like all other policies, there will be pros and cons, with politicisation one of the big risks, he added.
His remarks come amid growing discussion on the minimum wage and drew rebuttals from WP MPs, including Leader of the Opposition Pritam Singh.
The WP has called for a universal minimum wage of $1,300 to be introduced across all sectors, and this was a key proposal in its manifesto for the July 7 General Election.
Dr Koh, who is also Senior Minister of State for Health, said that while a single minimum wage is "seemingly a quick way to raise the wages of workers", it could inadvertently put the most vulnerable low-wage workers at a disadvantage.
Wage-setting as political auction
Each sector will have a different profile of low-wage workers and different realities, Dr Koh said, adding that it will be difficult to set a single wage level that is right for all sectors.
Meanwhile, an arbitrarily prescribed wage level is likely to be either not high enough to benefit all workers, or so high that companies in some sectors pass the costs back to consumers, cut back on hiring or go under, he added.
This exercise to set the wage level will inevitably become politicised, without a basis to go on, he said.
Referring to Mr Singh's Facebook post that said a universal minimum wage is a "moral imperative" and an "act of national solidarity", Dr Koh added: "In a political contest, a political party will surely come along and say, well, $1,500 will reflect higher 'moral imperatives'. Yet another will come along and say $1,300 is good, $1,500 is better, but $1,700 must surely be more divine, more imperative. It can become a political auction."
He warned of such a process gaining momentum and becoming detached from market realities, saying the minimum wage would escalate beyond what firms can afford and imperil the jobs of low-wage workers, as seen in other countries.
"I am not so much concerned by what Mr Singh and the WP is proposing for now, but by what it portends for the future - the possibility of a political auction that will price out lower-skilled workers, our brothers and sisters, and disadvantage our smaller enterprises, our smaller SMEs."
While more can and should be done to help the lowest paid, he said "the cure should not be worse than the problem it tries to solve".
Mr Singh, who is also WP chief, said this could be avoided if the minimum wage is set by an independent panel of experts, such as the National Wages Council.
Basing the quantum on statistics such as the average household expenditure on basic necessities can make the number more realistic, added the Aljunied GRC MP.
Dr Koh also asked if the minimum wage should cover migrant workers and how this would be balanced against the "moral imperative" to help SMEs that are struggling.
Mr Singh said the WP's proposal does not cover foreign workers as they are subject to other regulatory levers, including quotas and levies.
But the Government can introduce a minimum wage for Singaporeans first, then study the situation, he added.
To this, Dr Koh replied: "I must say it's quite easy to propose a minimum wage and then when we ask questions about what it's based on and how they will implement it... (they) say, 'Government, go sort it out'."
"Very small number" earning below $1,300
Dr Koh also told the House that about 32,000 full-time workers in Singapore take home less than $1,300.
He said that among the 850,000 workers in occupations traditionally deemed lower income, such as clerical support and service staff and tradesmen, about 100,000 earn below $1,300, figures from the Ministry of Manpower show.
After taking into account Workfare wage top-ups and employers' Central Provident Fund contribution, about 56,000 earn less than $1,300. Of these, about 32,000 are full-time employees, or 1.7 per cent of the workforce, a "very small number", said Dr Koh.
He said the Government's policies, particularly the progressive wage model (PWM) and Workfare Income Supplement, already ensure the majority of low-wage workers take home more than $1,300 a month.
To this, Mr Singh said that since the Government considered it a small number, there should then be no difficulty in ensuring that all Singaporeans are paid a liveable wage.
He added: "My question quite simply is: Do we need to wait so long to cover these Singaporeans? Can we not consider how we can cover them now immediately because it's not a small number, it is a large number."
He also said he was prepared to work with the Government to make it happen in "double-quick time", as it was unacceptable for any Singaporean to be earning below $1,300.
Referring to his Facebook post on the issue, Mr Singh added that it was not to dismiss the PWM model, but to nudge the Government to move faster on those low-wage workers at the lower end of the spectrum.
In response, Dr Koh said that included in the 32,000 are workers across different job roles, including those who are helping out at a family member's hawker stall.
He added: "How do you legislate a minimum wage to say, the father who runs the store employing the son as a worker? When you go down to the bottom, there will be challenges of implementation."
Impact of minimum wage on SMEs
Dr Koh had also suggested that introducing a minimum wage now was inconsistent with what WP MPs have said about helping small and medium-sized enterprises (SMEs) amid the recession, and would be akin to adding "more frost to the snow in companies that are in deep winter right now".
Mr Edward Chia (Holland-Bukit Timah GRC), a co-founder of Timbre Group, said firms facing cost pressures could replace workers with technology, with "low wage becoming no wage".
But Mr Leon Perera (Aljunied GRC) questioned how a minimum wage would hurt SMEs, given that the Government believes 32,000 to be a small number. He added that many business owners have expressed that they "want to pay their employees with dignity".
He asked how long it would take to roll out the PWM to all sectors.
Dr Koh said the process would start now, but when it would kick in would depend on the economic situation.
Raising wages without causing job losses
Stating that the Government is not ideologically against a minimum wage, he added that the PWM is effectively one tied to a skills ladder, which takes a different approach to lifting wages.
He also said that although it now covers only the cleaning, security and landscape sectors, the PWM has helped lift wages in other sectors. Dr Koh pointed to the new work group on expanding the PWM, saying this would further reduce the 32,000 figure.
He noted that under the PWM, the Government can work with each industry to address its specific concerns and challenges, so as to arrive at a consensus and basis that the different stakeholders can support.
That the PWM has helped push up the wages of 80,000 cleaners, security guards and landscape workers by 30 per cent in recent years, without causing any job losses, is a significant achievement, said Dr Koh.
He added that veteran union leaders understood the importance of working with tripartite partners to achieve this, quoting union leader Toh Hock Poh who had said of complex issues like this: "If it was so simple, we would have done it long ago."
Said Dr Koh: "Research, reams and reams of data and research is good, but in practice, it's always harder to do because there are practical considerations, there are pushbacks, so that's why a negotiated approach with stakeholders is the most important."
This drew a response from Associate Professor Jamus Lim (Sengkang GRC), who said: "With all due respect, as much as it will be lovely to always rely on folksy wisdom and beliefs by labour union leaders, at the same time it's important to realise that when we talk about studies that show that the minimum wage does not lead to any appreciable increase in unemployment, this is based on careful consideration and not just beliefs."
"It's worth reminding ourselves that there was a time when in the 16th century when people believed that the sun revolved around the earth. But that belief is not in fact the same as evidence."
Evidence from around the world demonstrates that a minimum wage does not cause widespread unemployment, as long as it is not set too high, said Dr Lim.
WP's concerns over profiteering
Mr Singh raised a concern that companies could be profiteering off the progressive wage model (PWM) and asked if there were mechanisms to prevent it.
He gave the example of lift maintenance contractors at the Aljunied-Hougang Town Council that raised their prices, citing higher costs.
This is before the sector comes under the PWM in 2022, he said, suggesting that some could raise prices but not pass on the increase to employees.
"Now, 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," he added, referring to service and conservancy charges.
Responding, Dr Koh said unless there was collusion among the vendors, there would surely be a company that would price its services reasonably.
He added he was glad Mr Singh was prepared to raise S&CC to justify paying low-wage workers better: "I think collectively we ought to socialise Singaporean consumers to the need to up the wages of those at the lower end and demonstrate social solidarity."
Dr Koh said that the latest move to convene a workgroup on expanding PWM will further reduce the number of people earning less than $1,300 a month.
He added that the NTUC had also submitted a proposal to the Government to form a tripartite cluster for the waste management industry to introduce a PWM focusing on the waste collection subsectors.
He also suggested the setting up of a sectoral wage benchmark for sectors where there are currently no regulatory levers to mandate a PWM as a first step towards creating more awareness of wages in these sectors, and urged the Government to consider using regulatory levers to encourage firms to join the voluntary PWM Mark scheme, which recognises firms that pay progressive wages.
"We should recognise what the Government and the tripartite partners have achieved in providing a genuine uplift to the workforce, especially our low-wage workers, and be willing to adopt new approaches," he said, adding that the Government remains open to new ideas.
Noting that a core mission of the People's Action Party government has always been to uplift the lot of lower income Singaporeans, he said: "Taking care of our workers has been a critical part of our DNA. As a party we have achieved what few have done over the last six decades, but the task is never finished. It is something that we must and will keep working on."