There’s been a lively debate in Parliament this year over Singapore’s minimum wage (or lack thereof). The minimum wage is the lowest salary that employers can legally offer their staff.
Here’s a primer for those who are interested in learning more about Singapore’s minimum wage or just want to understand what those angry comments flying around on Facebook are talking about.
Does Singapore have a minimum wage?
No, there is no minimum wage in Singapore. This means that technically speaking, most employers are able to pay workers as little as they like. In bad economic times like the present, when workers are more desperate, that means that employers can seriously undercut them.
We do have something called a Progressive Wage Model (PWM), which the government likes to promote as their alternative to a Minimum Wage, and which we’ll cover in the next section.
Most developed countries in the world have a minimum wage, but these do not: Sweden, Denmark, Iceland, Norway, Liechtenstein, Switzerland and Austria.
Interestingly enough, with the exception of Austria, all of the above countries actually pay their lowest wage workers very high wages relative to the rest of Europe and the rest of the world. In addition, most of the above countries have very strong labour unions that set wages by the industry, so their lowest wages aren’t exactly on a race to the bottom.
Probably the only other developed country in the world without a minimum wage, Singapore stands out as our lowest earners make much less than their counterparts in other countries on the list.
What is Progressive Wage Model (PWM)?
The PWM only applies to workers in three industries: cleaning, security and landscape.
It sets wages for workers based on their skill levels. The idea is that a worker starts at the base salary being paid to entry-level workers (a kind of ‘minimum wage’, if you will). As he undergoes training and becomes more skilled over time, wages will rise according to the scale set out by the framework.
For instance, here’s the PWM scheme for cleaners.
|
Role |
Wage must be more than or equal to |
|
General cleaner |
$1,236 |
|
Table-top cleaner |
$1,339 |
|
Dishwasher / refuse collector |
$1,442 |
|
Multi-skilled cleaners / machine operator |
$1,648 |
|
Supervisor |
$1,854 |
The PWM operates in tandem with the Workfare Income Supplement Scheme, in which the government supplements low-wage workers’ incomes and CPF savings. There’s also the Workfare Skills Support Scheme which subsidises training programmes for people earning below a certain amount.
The case for minimum wage: simpler & wider coverage
The biggest flaw of the PWM is that it is very limited in scope. It does not cover workers beyond the cleaning, security and landscaping industries, nor does it cover non-Singaporean, non-PR workers.
In addition, it only covers people working in cleaning, security and landscaping agencies or companies. So in-house cleaners, security guards and landscape maintenance employees do not benefit from the PWM.
An across-the-board minimum wage would cover more people who would otherwise fall through the cracks.
Also, the PWM is notoriously complicated to implement. When it was first launched, there was a lot of resistance from businesses as it meant they had to pay workers more, bother to train staff and also, in the case of cleaning and security companies, be subject to licensing and regulation.
Minimum wage is much simpler — just pay everyone at least a certain amount.
But of course, the government will also have to deal with the thorny issue of whether the minimum wage should be extended to everyone working in Singapore, or only citizens and PRs. And if it is only for citizens and PRs, would this make employers pick cheaper foreign workers over them?
The case for Progressive Wage Model: business-friendliness
One of the main reasons for the government’s reluctance to implement minimum wage is because it would significantly raise the cost of doing business, which could lead to companies going under and jobs being lost. It would have an impact on Singapore’s attractiveness as a place to do business.
In addition, the effects would be felt more strongly during an economic downturn like now, when companies are shuttering up quickly and people are losing their jobs.
A counter-argument is that companies that need to rely on underpaid labour to survive are not competitive enough, and should not exist in the free market. Having a minimum wage discourages businesses from innovating to stay competitive, since they can just cut costs by paying their workers peanuts.
But there are other issues that need to be addressed…
There are some other issues that tend to put Singaporeans in one camp or the other.
The biggest of which is probably that consumers will need to get used to paying more for goods and services. The only reason hawker food is so cheap is that older hawkers get rent subsidies, and labour is cheap.
There’s also the issue of whether the government should be backing businesses or employees here. Singapore has always tried to take a pro-business rather than a pro-worker stance, but many people want that to change.
Finally, there’s the issue of our weak unions and labour laws. As mentioned earlier, most developed countries that do not have a minimum wage make up for it by having strong unions who can bargain for higher wages, as well as labour laws which protect workers.
As we seem to fall short of having both, workers here are open to a great deal of exploitation, as there is nothing stopping employers from underpaying, making wage cuts and firing on a whim.
Ultimately, minimum wage is an ethical issue
The biggest argument for a minimum wage is, ultimately, a moral one. Is it fair to have somebody work full-time for you without paying them a living wage?
As robust and detailed as the Progressive Wage Model is, it does not fully resolve the plight of manual labourers who toil day and night for barely enough to get by.
If you’re not happy with the status quo and support a minimum wage, educate yourself further on the issue and talk to others about it.
If you find enough popular support, you can also think of raising the issue in a way that will make the higher-ups take notice, without getting yourself thrown in jail or sued, of course.
Are you for or against implementing a minimum wage in Singapore? Share this article with folks who care.