September has only just begun and so much misinformation to deal with already. HDB prices, consequences of smoking a joint abroad and now the evergreen topic of "minimum wage".Starting Sep. 1st companies employing foreigners in Singapore will have to pay their local employees a minimum qualifying salary of S$1400.
It didn't take long for illiterate ignorants to jump on the news trying to claim PAP is introducing minimum wage under different names, trying to rob opposition parties of the credit in promoting a blanket, national minimum wage in the years prior.
Eh...It reminded me of the meme of the unfinished horse, started really professional and going downhill from there - this is precisely what these voices want.
The reason Singapore doesn't have a nationwide minimum wage is because it's one of the dumbest policies in existence.It doesn't solve any problems, while creating a bureaucratic nightmare in the process, incentivising growth of the grey market where people get paid under the table.
To understand that, let's go back to the root of the problem - the question: why are some people paid so little for their work?In free market conditions the price of services is determined by a simple equilibrium of supply and demand. People at the bottom of the ladder have the fewest skills and tend to be the most desperate to make some money (rather than none), so they are willing to work for a very low price, that is keenly accepted by the employers (why pay more, right?).
The issue from the socioeconomic policy standpoint isn't so much that some people are paid very little - as dire conditions should, typically, motivate them to upskill and get a better job - but that these low-paid professions generally do not offer a career path in the first place, leading to thousands being stuck in unfavorable conditions where they have very limited bargaining power.
The role of any government is to create an environment which allows all residents - including the poorest and lowest-skilled individuals - to find some progress in their career and get rewarded for it, allowing them to climb the social ladder in the process.
So, why isn't just a blanket minimum wage the answer? Shouldn't everybody just be paid at least a certain amount? No.First of all, not all jobs suffer from these career roadblocks - so there is no reason to regulate how people conduct business and pay for every job and every employee they have (what could hurt young, entry level workers who primarily benefit from garnering experience not pay in their early years).
Secondly, Singapore, being an entrepreneurial nation, has many family enterprises where friends and relatives may perform tasks for each other and be paid in line with mutual agreements. There's no need for the government to impose a rigid requirement on these often very informal relations, just for the sake of appeasing loud but empty vessels making irrational demands.
Thirdly, the problem isn't that some people are paid little but that some professions are more prone to stagnation and lag behind in terms of salary growth due to the disproportions in bargaining power between employers and employees. Hence the government - having identified these sectors - is throwing its weight behind the vulnerable, while laying out a path they can follow to improve their skills and make more money - a win for them and a win for employers.
Finally, when it comes to Local Qualifying Salary, the authorities have identified a lever to use and improve basic conditions of employment of locals in companies which otherwise seek to import labour force from abroad into Singapore.
As a result, a company's ability to employ foreigners is conditional on sufficient employment of locals - and at least a minimum pay of a certain level for them.I.e. if you want to get foreigners, take care of the locals first.
Again, by doing so, the government steers clear of interfering in entirely local businesses, preserving their liberty to operate as they please (since when some state-level officials would know better?).In other words, traditional minimum wage is a hammer that is applied with disregard of complexities of the labour market.Meanwhile, Singapore's wage-related legislation is an entire toolbox, with different instruments designed specifically to tackle particular issues in the most productive way, causing minimal harmful side effects.
