SINGAPORE - To professionalise all jobs, start by doing away with the professional, managerial, executive, and technical (PMET) job categories, Singapore's central bank chief urged on Thursday (July 22).
"If we can't abolish it, then at least drop the 'P' from the category: it suggests other jobs are not professional. We should question the premise that all Singaporeans should aim to take up PMET jobs," said Monetary Authority of Singapore managing director Ravi Menon.
Addressing the persistent stigma and low wages faced by traditional "blue-collar" workers such as plumbers and cleaners, he said people ought to question the premise that all Singaporeans should aim to take up PMET jobs.
"Any population would house a distribution of skill sets, requiring a diversity of pathways that can lead to different types of excellence. To be an inclusive society, we must value social and vocational skills as much as academic intelligence," he said, citing how skilled trades in European countries provide a middle-class lifestyle for many workers.
"These jobs provide dignity and social status. We must do the same in Singapore."
He estimated that one out of three low-wage service jobs are taken up by cheap foreign labour, a situation which "cannot be good" for local wages.
One way to resolve this, he said, is to progressively tighten the intake of low-skilled foreign labour over a few years. This will promote the adoption of technology, increase productivity, and help to sustain wage gains across a wider range of occupations.
"The demand for many domestic services like cleaning, maintenance, and cooking is inelastic, and wages will have to go up if the number of foreign workers is reduced.
"The increase in wages, coupled with improvements in work conditions and prospects for a meaningful career should gradually attract Singaporeans into these domestic services."
Acknowledging that the transition from a low-wage to high-wage economy will be challenging, he said firms which rely excessively on low-cost labour will have to exit, there may have to be some consolidation in industries such as retail and food and beverage, and there could be local job losses in the initial phase.
Mr Menon had previously suggested raising the minimum qualifying salary for S Pass holders and Employment Pass (EP) holders over time, with the minimum qualifying salary for S Pass holders pegged somewhere closer to the median monthly income, or around $4,500.
S Pass holders currently earn at least $2,500 a month, with older, more experienced applicants needing higher salaries to qualify.
He said on Thursday that he is not suggesting S Pass workers should be drastically curtailed.
Rather, when S Pass holders are available in large numbers and paid around 30 per cent less than locals, there are two possible effects: First, local wages are likely being depressed; and second, some ITE and polytechnic graduates may be competed out of these jobs.
"Why not pay S Pass workers closer to the local median and let the market settle the employment profile? In some occupations, we might see an increase in local employment at better wages; in other occupations, where Singaporeans are unable or unwilling to enter, we will continue to employ the S Pass holders," he said.
Education and healthcare in particular, he added, have scope to reclaim local jobs at good wages.
According to MAS estimates, both sectors have an elasticity of substitution of 1.5, the highest among services industries. This means that if the wages of foreign workers in healthcare or education increase by 10 per cent, the demand for local workers as substitutes will increase by 15 per cent.
"The key question for Singapore is: do we want a dual economy with high inequality or a more inclusive society with higher wages but also higher costs? The Nordic countries have strict limits on low wage foreign workers, which has facilitated a more equitable income distribution, low unemployment, and a sustained commitment to productivity and innovation.
"If Singapore wants to be a bit more like the Nordic countries, it is not just government policies that would need to be adjusted but also the mindsets of businesses, citizens, and workers. Firms must reduce their reliance on cheap labour; citizens must be prepared to pay more for better quality services; and workers must be open to a greater variety of jobs."
During the question and answer session moderated by The Straits Times associate editor Chua Mui Hoong, Mr Menon said it is not always true that wage increases will push cost structures up, even though this is the conventional wisdom. Singapore, for example, has already seen cost increases but is still able to compete.
"If we look at the experience of advanced economies elsewhere, they pay their workers well and sell their products at higher prices, but are able to sell them because the quality is high."
He cautioned, however, that the minimum wage should not be set too high as this could put some Singaporeans out of work.
"I would start with something lower. Watch how things are panning out, see if we can manage the dislocations.
"Announce this well in advance so that businesses can adjust - tell them: 'Look, we don't want you to shed your workers, but improve your processes. Consolidate your operations, so that you can pay this minimum wage in a few years'."
To ensure that workers take on good jobs instead of entering the gig economy as their first choice, unemployment support is important especially for mature workers, he said.
"Their financial resources are limited, so they're in a hurry to get another job...they have fixed outlays that limit their mobility and flexibility."
He cited Denmark as an example where people are not afraid to move from one job to another, as they have the time and support to train and prepare for the switch.
The paradox is that the Government needs to help people in order for them to become self-reliant, and this is why the old left-right ideological divide in policy-making does not make sense, he said.
"The right says people must be self-reliant - if you take care of them, they will become dependent. The left says 'no, they can't take care of themselves, you have to take care of them'. This is an endless, oversimplified debate. Over the years, I have come to the conclusion that you cannot leave these things entirely to the market."
The ideal, he said, is a work-centred, inclusive model where people must help themselves, but which also provides safety nets in the form of support from the state, the community and employers.
"You need mechanisms that help you bounce back, because these things (such as job losses) happen.
"That's the kind of synthesis of values of reliance and support (that we need). We cannot ignore inequalities in our society. We cannot look the other way."