It worries me that many are calling for a blanket minimum wage policy in Singapore.
Should we be arguing for minimum wages?
I was an idealistic person. I still am, in some ways.
2 years ago, a naïve, younger version of me would have argued for minimum wage policies. If it can help to raise the incomes, and hence standard of living, of lower-wage workers, why not? Minimum wages will contribute to a fairer society – or so I thought.
I’m not an economist, and cannot make arguments based on the overall advantages and disadvantages. You might want to read what Dan Kopf, John Phelan and Thomas C. Leonard (caution: it’s an academic paper) have to say about it.
But living in another country with minimum wages for the last 1+ year has made me consider the topic more. Especially from a first-hand perspective.
Minimum wage sounds good in theory
When I was doing my research on the part-time jobs available, I was excited when I realised that because of minimum wages, I potentially could work within my student visa requirements (less than 20 hours per week) and still cover bare minimum living expenses.
But that was just wishful thinking. In reality, there may not be that many hours of work available.
While I’m not working in a minimum wage job, my wife did. And we’ve experienced how the business cuts your working hours on the day of work itself because of lesser customers that day. Why? Because it’s just too expensive to keep you around for another hour when there’s not a lot of work to be done.
Which leads me to the next point.
I have seen jobs disappear overnight
The unprecedented widespread lockdowns throughout the world this year have caused many businesses to close. With many unable to sustain themselves throughout the entire length of the lockdowns. As a result, many employees have also lost their jobs. Overnight. And my wife lost hers too.
The arguments against minimum wage due to increased risks of businesses closing down and increased unemployment? We’ve seen both in the last 6 months. Yes, the minimum wage might not have caused the chaos directly. Lockdowns were probably the main culprit instead.
But the prevalence of casual employment contracts in minimum wage jobs here makes me wonder whether there’s a high degree of connection.
Now, I do not know for sure whether minimum wages lead to more casual forms of employment contracts without other benefits (such as paid sick leave). But I think there is a high correlation.
And with more casual employment contracts, it’s much easier for businesses to shed employees when a crisis hits. Because you are not guaranteed any minimum number of working hours per week.
The problem is, we can’t settle for anything less than the prescribed minimum wage to tide us through. Because there are no such jobs available. Low wages is better than none. But we are denied the option of choosing low wages even if we are willing.
Displacement of older workers
This is simply a pure observation. And there is a huge cultural difference when it comes to working while studying for young people between Singapore and many countries in the West.
But I think it is very likely that minimum wages are going to cause young people to displace older workers in many different sectors.
The caricature of an elderly person cleaning tables at a hawker centre (or collecting cardboards) is often sensationalised. We judge things quickly without understanding the full picture. And this is one area where we like to think that some social justice needs to be done when we see something like that.
But consider this: if the minimum wage is high enough, will it attract young people to work in such areas? Will it cause employers to favour a younger person over an older person?
And what if the elderly want to continue working instead of retiring completely? Where are they going to find employment, especially if they do not know much English and hence can’t work in an office environment?
There are better things we can do
Many who argue for minimum wage are likely to be in a financially more comfortable position. Maybe we can think of better things that we can do.
1. We can give more
Singapore ranked 46th overall on the World Giving Index 2019. The survey found that while we did better in giving financially, we lagged behind in helping a stranger and volunteering our time.
Perhaps those are better things that we can do. To set aside a portion of our incomes and time to give and volunteer.
We might not be able to impact a lot of people as individuals. But all we have to do is just to impact a few. And if more people can just help better the lives of a few people, we can do so much more together.
2. We can solve it ourselves
It’s funny how we think that the government is the solution to all societal problems. But we know from history that all governments who centralised decision-making and had total control over the entire society, including the economy, have failed.
Much better, I think, would be to find the solution yourself as an individual or a group of individuals.
Use your ingenuity to provide a solution if this is an area of interest to you. You don’t have to wait for others to do something.
Set up a company. Or a non-profit. Or combine the two and become a social entrepreneur. Change the lives of those you want to impact.
Oh, and by the way
I found this interesting fact while doing research for a school assignment. For those of you blindly believing that Singapore is still facing rising inequality, it’s Gini coefficient (which estimates the amount of income inequality) has actually decreased over the last 10 years.
In other words, we reduced income inequality over the last 10 years.
Yes, we can do better. After all, it’s a reversal of the rise in income inequality from previous decades.
But maybe we should look at the policies that have contributed to such decrease and see how to do more of those instead. Why should we argue for a policy that sounds good in theory but have not shown conclusive evidence of its success anywhere else in the world?
By appealing to our moral conscience (or perhaps ego when we feel good when we are championing social justice), ideas such as minimum wages have the potential to sneak socialism into our society.
And that’s what worries me more than the policy itself.