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NTUC deputy sec-gen suggests minimum wage may not be meaningful enough to workers

“The problem with a minimum wage, is that it is not connected to any skills ladder. It is a number,” said Dr Koh Poh Koon

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Ruling party politician Dr Koh Poh Koon, who is also the deputy secretary-general of the National Trades Union Congress (NTUC), suggested that may not be as meaningful to workers as the opposition claims it will be, in an online post published on Friday (16 Oct).

Dr Koh had clashed with the Workers’ Party over its proposal for the Government to implement minimum wage set at a base of S$1,300, in Parliament just a day prior. In his social media post on Friday, Dr Koh recalled how he advocated strongly for the Government’s Progressive Wage Model (PWM) initiative.

The PWM has been dubbed “minimum wage plus” by ruling party politicians since it takes a sectoral approach to raising the wages of each industry’s lowest paid workers. The , however, maintains that the PWM is taking far too long to implement and has left a significant number of low-income workers in the lurch.

In his Facebook post, Dr Koh reiterated the point he made in Parliament about how just 32,000 workers earn below S$1,300 – the amount which the Government estimates is required to meet basic needs. Asserting that the Government takes a holistic view of the wellbeing of workers, he added: “Let us stay the course in pursuing efforts that will bring meaningful changes to our workers.”

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His comment seems to suggest that the WP’s minimum wage proposal may not bring meaningful changes to workers, like how he positions the PWM has done.

In Parliament yesterday, I advocated strongly for uplifting the lives and livelihoods of lower wage workers through the…

Posted by Koh Poh Koon – 许宝琨 on Thursday, 15 October 2020

In Parliament, Dr Koh addressed WP chief ’s call for the authorities to implement minimum wage set at a base of S$1,300 and said that the Government is not ideologically opposed to minimum wage. He said that it has, however, achieved better results with other schemes like the Progressive Wage Model (PWM) which takes a sectoral approach to uplifting wages.

Dr Koh told the House that minimum wage could leave businesses and workers worse off and also become politicised. Asserting that it is difficult to set the right level of universal minimum wage, Dr Koh said that an amount that is too low would “defeat the purpose” of such a policy and an amount that it too high would cause businesses to pass the higher costs to consumers, axe staff, or even shutter altogether.

Echoing questions raised by his party members last week about whether it is wise to consider minimum wage amid the economic fallout of the COVID-19 pandemic, Dr Koh added:

“This is a particularly pertinent consideration at this time when we are in a deep COVID-19 crisis. Many companies, especially your SMEs (small and medium enterprises), such as those in the construction sector, are suffering and not quite out of the woods.”

He also said that minimum wage could also become a political tool, with minimum wage turning into a political auction over which party has moral authority:

“Today, let’s say we can all agree to S$1,300 minimum wage proposed by the WP, a ‘moral imperative’ as Mr Singh puts it in his recent Facebook post. But what next? What happens next? How will this number change from this year to the next, and on what basis?

“In a political contest, a political party will surely come along and say, well, S$1,500 will reflect a higher ‘moral imperative’. Yet another will come along and say, S$1,300 is good, S$1,500 is better, but S$1,700 must surely be more divine ‘moral imperative’. It can become a political auction.”

Dr Koh said that the current initiatives, like the PWM and the Workfare Income Supplement (WIS) scheme, have uplifted the wages of lower-income earners without risk to workers, companies or consumers.

The MP asserted that the vast majority of about 850,000 workers who are employed in traditionally low-income jobs, such as service staff, cleaners and clerks, earn above S$1,300 a month.

He added that about 100,000 workers earn below S$1,300, including about 25,000 who are self-employed and would not benefit from a minimum wage. After Workfare disbursements and Central Provident Fund contributions by employers, 56,000 workers – 32,000 of whom work full-time – earn less than S$1,300, each month.

In response, Mr Pritam questioned why the Government is taking so long to cover these workers. He asked: “Can we not consider how we can cover them now immediately because it’s not a small number. If you think of 60,000 rental units available from HDB, and you compare that with this number…it’s quite a lot of Singaporeans who need some help.”

He added: “I don’t think it is acceptable that anyone, any Singaporean, is earning below this number. It is simply not acceptable.”

Mr Pritam further proposed that the possibility of minimum wage turning into a political auction could be prevented by having an independent panel of experts or the National Wages Council to study and decide on the level of universal minimum wage.

The Leader of the Opposition also expressed concern that some sectors will profit off the PWM by pricing in the wage increases before it is rolled out in their field. Pointing out that some companies have upped their bid cost for lift renewal projects in his Aljunied GRC by between five and 47 per cent, Mr Pritam asked:

“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 (Service and Conservancy Charges). But my question is, is that a realistic hike in costs?”

Dr Koh responded that town councils should have a proper process of reviewing tenders and that any cost increase can be checked against their skills level since the PWM is pegged to a skills ladder.

On how long it will take to help the workers who are left in the lurch by the time it takes to expand the PWM, Dr Koh said: “I think the process will be something that we will want to do now, talk about it, discuss it, work out some schematics, but when can we implement?”

Referring to the ongoing financial downturn, he added: “Obviously we have to look at the economic situation as well, because this will probably be the wrong time to push for increased wage cost onto our SMEs, who are already suffering.”

Dr Koh further said that there must be “real strong justification” to “buck the norm” and implement a minimum wage that excludes foreign labour since most developed countries apply the policy to foreign manpower.

He added that the Government and its tripartite partners already gather to study data on the level of wage increase: “Reams and research are good, but in practice, it’s always harder to do, because there are practical considerations, there are pushbacks.

“That’s why when we work on a negotiated outcome, there is always that balance that can be struck – where the businesses are prepared to absorb the cost. If not, they have a way to rationalise how to pass the cost on to the consumers.”

The exchange drew other WP MPs into the fray. Sengkang GRC MP , who is perhaps the party’s best-known minimum wage advocate, pointed to carefully conducted studies that show that minimum wage does not lead to an “appreciable increase” in unemployment.

Dr Lim, an economist, echoed his party leader’s suggestion to appoint an independent wage board to ascertain the level of minimum wage. He also called Dr Koh’s comment, that full-time workers with disabilities should be helped by other means instead of putting the burden on their employer, a “straw man” argument.

Fellow WP member Leon Perera asked why the PWM would not be politicised if minimum wage would be politicised and Dr Koh responded that this is because it is decided by tripartite partners, including the Government, union representatives and employers.

Pointing to recent news reports about how business owners are open to minimum wage, Mr Perera also asked why uplifting the wages of full-time workers who earn less than S$1,300 after Government initiatives would hurt small businesses since Dr Koh pointed out that this group of workers amount to just 1.7 per cent of the workforce.

Near the end of the debate,  MP for Holland-Bukit Timah Edward Chia who runs F&B company Timbre Group joined the exchange to say that business need to see an increase in productivity to stay competitive.

Mr Pritam asked him: “I would like to ask the member in return, is he agreeable to pay the …32,000 workers S$1,300 as a business employer. Is he prepared to do that? I hope he is.”

Mr Chia responded that business owners are responsible to the entire company, not just a specific group of employees, and reiterated his point about how the PWM’s strategy of improving productivity is key. He said: “(An) arbitrary minimum wage may actually be more negative for a business. We need to look at it as a holistic approach, helping businesses up-skill their employees.”

Dr Koh acknowledged that while more needs to be done to help a greater number of low-income earners, he believes minimum wages is not the answer. Asserting that a worker’s wage increase has to be justified by an improvement in their skills and productivity, he said: “The problem with a minimum wage, is that it is not connected to any skills ladder. It is a number.”

He added: “Achieving social equality and enabling lower-income families to improve their lives is never a simple task. There is no silver bullet. It is also continuous work. NTUC and the tripartite partners will focus on the real hard work of uplifting wages of lower-wage workers and seek public support for our workers while hoping to avoid all possible downsides.”

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