In this posting, I'll tell you why the PAP will never ever
establish a minimum wage.
In this recession, the US unemployment rate soared to 9.4%....and
Singapore's resident unemployment rate is 4.9%. These unemployment
numbers are however not an apples to apples comparison. Before I
drill into the numbers lets start with a story.
In the 1980s recession, one of my seniors who was about to ORD took
leave to attend an job interview. He was a poly graduate. A few
days later he received the job offer but instead of looking happy,
he had this frown on his face. "I can't believe it but the pay is
$400 a month!", he said. Before the recession, people with his
qualifications were paid $750 a month. He took the job anyway
because he couldn't get another one. At that time, it was possible
for a single person to live on $400 a month. The moral of the story
is there is almost always a job available when you are willing to
accept any pay. If you're willing to work for free, send me a mail
and I'll get you a job and you don't have to be unemployed. It is
completely meaningless to talk about employment level alone without
talking about wages. When you compare the umemployment rate of a
country with minimum wages with one without a minimum wage, you're
not comparing apples to apples.
The minimum wage in the US depends on where you live but the
average is US$7 per hour. If a person works full time, say 8-6pm
every weekday, the month salary is US$1400 or S$2000.
The bottom 10 lowest paying jobs in Singapore are:
Lowest paid jobs*
1. Office cleaner $600
2. Manufacturing labourer and related worker $760
3. Kitchen assistant $991
4. Plastic product machine operator $994
5. Hospital attendant $1,000
6. Travel agency and related clerk $1,016
7. Waiter $1,080
8. Pre-primary education teachers $1,100
9. Lorry attendant $1,102
10. Pest exterminator $1,106
* Based on median starting salary ...data from The New Paper.
See Obama has a more difficult task creating jobs in his economy
because of the minimum wage - he has to create jobs that pay better
than the minimum wage. All our leaders need to do to get the
unemployment rate down is to tell the people not to be 'fussy'
about salary. In other words, you can say Singaporeans always have
employment as it is just a matter of accepting whatever pay that is
offered.
However, what good is a job if you do make enough to feed your
family? If our economic system is equitable, a person working full
time should be able to raise a family, afford a home have and all
the basic necessities. When you have people working full time and
not able to make ends meet, you have poverty. To make sure people
are paid decent salaries, many developed countries set a minimum
wage.
The
frequently cited problem with a minimum wage is that it will result
in higher unemployment. The above graph illustrates the problem.
The way to keep unemployment from becoming higher is to make sure
your equilibrium point is close to the minimum wage. Govts can do
this by having a robust economy with well paying jobs and making
sure the cost of living is contained. With massive imported labor,
the Singapore govt has caused the supply curve of labor to shift to
the right. This moved our equilibrium point further down from where
our minimum wage is. Also, the cost of living increase over the
years means our minimum wage has been going up....moving further
form the equilibrium point.
The reason why the PAP govt does not set a minimum wage is
simple. Unemployment will escalate if they do that. What this means
is a large number of Singaporeans are employed at wages way below
what they need to live decently. We see this from the stats - 20%
of the population make something like $1300 or less.
Being able to establish and enforce a minimum wage says a lot
about a govt. If they have created a system in which people who
work full time jobs can make a decent salary, setting a minimum
will not be problematic. If a govt creates an economy that is
dependent on cheap labor and cannot keep the cost of living down
because of its other interests, it will never be able to set a
minimum wage without creating problems for itself.
Hong Kong aims to introduce a minimum wage by early 2011
[Link]. South Korea already has mimum wage
[Link]...so does Japan[Link]...so
does Taiwan[Link]...and all developed western countries.
But Singapore? The govt has created a system in which we can
never establish a minimum wage....because of the sheer number of
people working at income levels that are so low relative to cost of
living....a natural consequence of our large income gap.
Next time someone tells you things are better in Singapore
because unemployment rate (among residents) is low remember that is
only half the story.