Top photo by Pandora Wong

Ervin is a former civil servant. He is currently unemployed and kaypoh'ing GE rallies. :(

Growing up, I used to play SimCity. Quite shiok to start with a blank slate, and can pretty much build anything, anywhere. But the further you get into the game, the more you think, aiyah shouldn’t have built this train line here, shouldn’t have made that a commercial zone there. When that happens, never mind, can restart. Or wait for the new version – 13 in the series at last count, not even counting spin-offs. #simisaialsoSIM

Unfortunately, Singapore is now pretty far into our SingCity game, and we can’t just hit reset and semula. There are many existing structures and policies – some maybe a bit outdated now, but were correct for their intended time and context. Where it makes sense, we try to build around, or on top of, existing structures. If die die must tear down and start over, no problem. But will have consequences, lah.

This is why I get increasingly annoyed by the harping on Minimum Wage (*cherubs playing trumpets*). It appears fashionable to speak reverentially of MW as the magical solution.

It is not.

Minimum Wage (MW) is a highly-charged issue, so let’s first leave aside the ideological arguments both for and against.

Second, let’s also avoid comparisons with other countries – we shouldn’t compare ourselves with other countries only when we look better; but then when we look worse, just say paiseh Singapore is a unique flower, cannot compare (there’s that old JC econs quote about using statistics like a drunk uses a lamppost – more for support than for illumination).

To my mind, the first question to ask is not the level of the MW. It is: who should be covered under the MW?

Option 1: Include foreign workers

This sounds like the righteous thing to do, but with about 1 foreign worker to every 2 locals, wage bills would rise significantly. The lowest paid workers in Singapore are not locals, but foreigners, particularly in the manpower-intensive construction and domestic helper sectors.

Work Permit Holders, who are foreign workers at the rank-and-file job level, do not have a minimum entry salary. Instead, their inflow is calibrated by a combination of: i) levies (to price them to the next alternative, i.e. locals); ii) quantity controls (dependency ratios/quotas); and iii) source countries (to ensure that reservation wages aren’t too low).

It is irresponsible to say that rank-and-file jobs are non-exportable, hence will not be lost even if there is a MW. Because labour is importable. Last I checked, Singapore is an open economy with trade volume more than 3 times our GDP. And if we slash foreign manpower supply, many local businesses would uplorry and close shop.

Option 2: Exclude foreign workers

If we exclude foreign workers from MW, I imagine we’d come under some heat from the international community. Even if we don’t care about Singapore’s global standing (I do, but it sounds like some parties don’t), excluding foreigners from MW would not result in better employment outcomes for locals. Foreigners would look even cheaper – by law somemore!

The fact is that Singapore’s rank-and-file workforce has a significant proportion of foreign workers, in large part because these are the jobs Singaporeans don’t want – besides construction and maids, you have F&B, retail, hotel service jobs, etc. So if you leave out foreign workers, having a MW would simply be like pushing sand upwards with your fingers splayed open – far too much leakage.

But hey, what about excluding sectors from MW – say construction and foreign helpers – on the basis of their low wages or high foreign reliance (often correlated)? Then I think we would be going down a slippery slope provided by the Good Intentions Paving Company.

Jialat, so like that how?

Pro-tip: there is already the concept of a minimum wage (small m, small w) in Singapore. Just maybe not as sexy-sounding, and rather more complex. Besides Workfare, which helps supplement the bottom, we have:

1. The Progressive Wage Model, which has set a mandatory $1,000 minimum for cleaners, security guards and landscapers – incidentally sectors with a large proportion of low-wage local workers.

2. The 2015 tripartite National Wages Council has recommended a quantitative wage recommendation for those earning a basic monthly salary of up to $1,100 (an increase from $1,000 for 2012 to 2014).

3. The Full-Time Equivalent salary, which is the minimum gross salary you must pay a local in order for him/her to count towards generating your FW quota. This was raised from $850 to $1,000 in 2013, which *surprise surprise*, has coincided with strong wage growth at the bottom quintile. There is also such a thing as 0.5 FTE ($500), to accommodate Singaporeans who work multiple jobs.

So these overlapping structures combine to help establish a “market rate” of around $1,000 for full-time employed workers. Naturally, levers like FTE are more effective for companies that hire foreign workers, but it also has a ripple effect on those who don’t. As things stand, 93.2% of full-time employed locals earn a basic monthly salary of more than $1,000 (an even higher proportion if you use $1,000 gross instead of basic) – this one is public info hor.

Sure, the current system isn’t perfect. That’s still 6.8% of the local workforce earning below $1,000 basic salary. We can discuss whether the current “market rate” should be higher, or which other sectors we ought to intervene more urgently in. And regardless where the threshold is, there will always, by definition, be a bottom 10% and 20% whom we need to pay special attention to.

But the point is, there already is a system in place, with levers that can work. There’s really no point comparing Singapore with other countries. We are a city-sized country that is able to make surgical interventions. So forgive me if I’m skeptical of a blanket MW policy. Responsible MW proposals ought to consider how it fits into our existing framework, and the implications.

[quip float="pqleft"] But the point is, there already is a system in place, with levers that work. There’s really no point comparing Singapore with other countries. We are a city-sized country that is able to make surgical interventions. So forgive me if I’m skeptical of a blanket MW policy. [/quip]

My brows furrow even more when looking at the specifics. It is pretty curious to seek a MW set as a monthly rate, not an hourly rate. Because you must then set the threshold number of work hours to qualify for the monthly rate, which would in turn result in rational workers bunching right around that threshold. Likewise, it is strange to peg the MW for individuals to a 4-person household’s average expenditure – after implementation of MW, wouldn’t households with more than one working individual skew the average expenditure?

I am not ideologically opposed to a MW. It is after all one of many means to the end of respectable wages for low-wage workers – I just think there are other, better ways of getting there.

I’m all for improvements. But if I’m gonna let someone else play with my SimCity game for a while, it would be nice for them to take the time to understand what has already been built, and why. It's taken much time and effort to reach here; would be quite sian to game over.

As for our SingCity, it has been compared to a unicorn. Not sure I’m so keen for Singapore to be either a vain rhinoceros, or a horny horned horse. But I sure as heck don’t want us to become another equally rare animal – the extinct dodo bird.

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