Minimum wage – You want it or not?

Our dear Prof Tommy Koh has sung a different tone yet again from the government, and this time, it’s on the government’s resistance on having minimum wages implemented in Singapore, during a roundtable discussion on wages in the age of disruption by The Straits Times on Friday (30 Nov).

Prof Koh had called out the government for having “fake ideological arguments” to support its rejection of implementing minimum wages here. Earlier in Oct, Minister for Manpower Josephine Teo had specifically said that implementing a minimum wage in Singapore to address concerns about inequality could ultimately lead to lower levels of employment and workers. So I suppose Prof Koh’s words were meant for Mrs Teo’s ears. *ouch*

Prof Koh argued that based on the experiences of Japan, South Korea, Taiwan, and Hong Kong – all of which have introduced minimum wage – there were no such consequences of unemployment or illegal employment.

A Google search would show the following minimum wages in the countries Prof Koh mentioned (roughly converted to USD for quick comparisons):

  • Japan: 848JPY/Hour ≈ US$7.50/hour
  • South Korea: 7,530 KRW/hour ≈ US$6.80/hour
  • Taiwan: NT150/hour ≈US$4.89/hour
  • Hong Kong: 34.50HKD/hour ≈ US$4.44/hour

So then, what does this really mean for us? We should ask ourselves, as Singaporeans, are ready for the minimum wage here?

Since Hong Kong is the closest to us in terms of size and being very much a city-type of place, let’s take US$4.44/hour. That’s about S$6/hour (and the lowest among the countries Prof Koh mentioned).

Say, a cleaner works 5 days a week, 9 hours a day. That means $1,080 a month, I suppose before CPF. It does sound okay, considering that that’s barely over $1,000 and if they opt to take extra hours, they could get a bit more based on an hourly computation. Plus CPF contributions from the employer.

If only life was so simple. 

But not everyone’s wages can be computed hourly. Think about the live-in maids who live and are provided food and lodging but also have no clear knock-off time; and the white-collar and PMETs who are constantly clocking long hours without overtime pay (a toxic culture in Singapore) because of the increasing load at work in the name of “productivity”. Many companies here have long done away with overtime pay, and workers of this era have come to accept that work will encroach on our down time, no thanks to emails, WhatsApp and connectivity and the hanging unspoken threat of, “If you don’t want to do, someone else out there is waiting for your job”. Arguably, for some who earn above this theoretical $1,152 a month, if you factor in their REAL number of hours spent on work, you are earning less than a toilet cleaner sometimes.

How do we figure out if they are being paid below minimum? And how would the enforcement or penalties be like?

Implementing a minimum wage here would not resolve the fundamental issue of the stressful, toxic work culture here, where the unspoken rule seems to be “someone out there is waiting for your job if you don’t want to put in a bit more”.

The other question we need to ask is whether we can accept all the impact of implementing a minimum wage here.

  • Domestic helpers’ wages will now be approximately $1,200 per month (currently $700-$750).
  • Delivery costs (SingPost, Rocket Uncles, Ninjavans) will go up now that your courier man draws a minimum wage.
  • Cost of construction for your HDB, Condos, office buildings all will go up now that construction workers will draw $6/hour.
  • Childcare fees for your more affordable centres now will go up, as even the childcare assistants and the cleaning aunties wages will need to be over $1,000 per month each.
  • Bus rides may cost more too, since bus drivers including the PRC ones will be drawing a minimum wage.
  • The sales assistants, counter staff in shops and F&B places including coffee-shops and hawker centres will draw a minimum wage, so our char kway teow uncle and hokkien mee aunty may have to either do more themselves or jack up the price of the food they sell.

Perhaps it does seem like a fair price to pay, but if cost of living would go up across the board, the impact would be felt most by the lower income right? They now earn a bit more, but everything else also costs more, so in the end, maybe they end up not better off.

And with having domestic helpers or sending the kids to childcare more expensive and out of reach for borderline families, the downstream impact would be women who used to perhaps earn around that marginal line of minimum wage deciding to drop out of the workforce to be caregivers. So who benefits from that minimum wage? The foreign workers who come here and earn that $6/hour (when maybe they get $1/hour back home), or the Singaporean core?

Also for small companies, productivity could only do so much for certain areas, and most certainly, the result of raising workers’ pay may see companies cutting headcount and perhaps overloading the existing ones with the work of those that have been laid off. So those we got the minimum wage end up working like octopus and spiders.

Prof Koh may have a point that Workfare may not be enough, but we also need to realistically ask ourselves if we are prepared for the impact that may come about, especially if eventually, it is just benefiting foreigners working here, more than us.

Perhaps we should simply look into whether there are ways to subsidize the costs of living of those who are earning below the median income.

Or maybe MOM should do a study and a public consultation on this before any conclusions are made. Afterall, other countries’ situation may not always be the same as us, and who knows, if there are underlying problems that Prof Koh does not know about in those countries. Or maybe they can engage his services to figure out how to implement this minimum wage that he is all for. After all, talk is cheap, right?