SINGAPORE: A debate over minimum wage and policymaking took place in Parliament on Thursday (Sep 3), with a speech by Workers’ Party (WP) Member of Parliament Jamus Lim challenged by six MPs from the ruling People’s Action Party (PAP), including Senior Minister Tharman Shanmugaratnam.
In his response to the President’s Address, Dr Lim focused on the need for more compassionate policymaking and recommended a “simple, across-the board” minimum wage as one plausible policy. The minimum wage was also one of the recommendations that the opposition party had made in its manifesto for the recent General Election.
Following his speech, a lengthy to-and-fro ensued between Dr Lim and the PAP MPs, who challenged him on the efficacy of a minimum wage, as well as the timing and appropriate figure.
In his responses, Dr Lim acknowledged that rolling out a minimum wage in times of an economic crisis “may not be ideal”. He also said that he does not know what an appropriate minimum wage should be and proposed that an independent panel should study the issue.
In response to a question about whether he had proposals to deal with youth unemployment, he said he did not have a specific policy in mind.
MORE COMPASSION IN POLICYMAKING: JAMUS LIM
In his speech, Dr Lim, who is an economics professor, said the country’s existing approach to policymaking, which leans towards efficiency instead of equity, “can benefit from a greater injection of compassion and thoughtfulness”.
The current way of designing policies may have worked well, bringing Singapore from a third-world country to the first-world status, but he said it is time for a change given how “the gains from this progress have not been equally shared across society”.
The opposition MP said compassionate policymaking involves being more cognisant of how the policies play out “not just on the aggregate, but also how they impact different groups, especially those at the margins of society”.
Marginal changes, which are made so as not to break a system that has worked well, do little to “right the boat”, he added.
Dr Lim said policies such as the social assistance scheme ComCare have “made substantive steps towards bolstering (a) sense of opportunity and care for others in (the) society”, and show that the Government is “capable of injecting compassion” into policies.
He argued that “much more” can be done. This includes implementing “a simple across-the-board” minimum wage and an official poverty line closely linked to ComCare, among others.
In his speech, Dr Lim noted that Singapore has its own version of a minimum wage – the progressive wage model, which refers to “wage ladders” first rolled out in 2015 to help raise the salaries of low-wage workers through skills upgrading and improvements to productivity.
READ: PAP MPs call for faster roll-out of progressive wage model, higher workfare payouts for essential workers
“Yet until recently, we had deemed it unwise to make it universal and still dress the policy with so many additional conditions that employers use to retain workers on the lowest rung of wages,” he said.
Although the Government has warned that a national minimum wage could lead to higher costs and lost jobs, there is evidence to show that a majority of Singaporeans are willing to pay more for essential services and that the “employment impact of a minimum wage is likely to be very limited”, he added.
Dr Lim acknowledged that some may think it is not the right time to pursue “such soft policies” amid a pandemic-induced crisis, but said he would argue to the contrary.
“Let us commit to the principles of compassionate policymaking now and chart out plans in the moment. When the crisis has blown over, we will be prepared to implement the policies we commit to today.”
NO ONE HAS A MONOPOLY OVER COMPASSION: THARMAN
The nearly 40-minute-long debate prompted a rare intervention from Mr Tharman.
“None of us have a monopoly over compassion and I say this is not to discredit anyone. In particular, I really respect where member Jamus Lim is coming from intellectually, emotionally and so on,” he said, adding that speeches from MPs in recent days, including some from his own party, have made an impression on him.
“Not just for the very forceful proposals they were making, often going beyond what the Government is doing, but the emotional force of their conviction.
“I’m not directing this at anyone in particular – none of us should assume that we have a monopoly over compassion,” he added.
Senior Minister Tharman Shanmugaratnam speaking in Parliament on Sep 3, 2020.
Mr Tharman went on to say: “Here’s a bit of advice – try to avoid strawman arguments, like saying that the Government is only interested in efficiency, and not equity. That’s frankly laughable.”
He added that raising living standards for the poor is a “complicated matter”, with one issue being how to achieve this without losing the wage earner’s ability to have the pride of a job and earn a wage.
The Government is doing so through many policies such as the progressive wage model, and it acknowledges that more has to be done. Many speeches delivered in Parliament over the last few days echoed the same sentiment, he added.
“We are frankly not very far away from each other in that objective … There is a consensus, let me put it that way.
“That should be our objective, but just try to avoid strawman arguments and pretending that you have a … monopoly of compassion,” said Mr Tharman.
On the progressive wage model, the Senior Minister said the Government believes in the importance of raising the wages of its lowest-paid workers.
“We really believe this. We’ve achieved significant progress in the last 10 years, and in the last five years, and we think we should go further.”
He also said he would not “exaggerate the differences” between the progressive wage model and the minimum wage model, noting that the former is a “minimum wage plus” with a sectoral approach.
To that, Dr Lim responded: “I regret if it came across that I was suggesting that only I or the party, or any individual has a monopoly over compassion.
“In fact, that was explicitly why I did cite cases where I felt that existing policy demonstrated oodles of compassion. I even cited other members who are not from our party that have also talked about compassion.”
That said, Dr Lim said he did not think he was setting out a strawman argument.
“I’m not suggesting that every policy that is currently in place is only geared to efficiency. I’m not suggesting that every policy that I have laid out in my speech and elsewhere, is only geared to equity.”
Instead, it is a continuum, he added. “And I am arguing that we can move more in the direction of favoring equity over efficiency, and that was the entire point of the argument.”
WHEN TO ROLL OUT MINIMUM WAGE
Before Mr Tharman, Minister of State for Manpower and Education Gan Siow Huang was among the PAP MPs to seek clarifications.
She agreed that policymakers need to demonstrate compassion while drawing up policies, and said this is actually being done by the Government, given how some policies are “very complicated” because there is no one-size fits all approach.
But she disagreed with the opposition MP that a minimum wage can be rolled out with minimal impact on unemployment. Ms Gan argued that especially in a recession, such a policy carries a “very real risk” of causing many workers to go from “low wage … to no wage”.
Dr Lim replied: “I would argue that we should be able to think about implementing policies like a minimum wage in a time of crisis, because this concentrates the mind.”
He added that there is “no doubt that at this very moment, such a policy may not be ideal”. “But let us come together and agree that this is a principle that we want to roll out so that when we set these plans in place after the storm has passed, we can easily bring them to pass,” he said.
READ: Commentary: A minimum wage isn’t the answer to inequality
Following up on that, MacPherson SMC MP Tin Pei Ling asked if Dr Lim recognises that implementing a minimum wage in the current climate will have unintended adverse economic consequences. She also wanted to know if the minimum wage should be a policy that is withdrawn during an economic crisis and re-introduced during better times.
“I did say that this is not an ideal time but I do not know if we were to rule out the minimum wage, whether this would result in actual adverse consequences so it is a necessary but not sufficient condition,” said the WP MP.
Responding to Ms Tin’s second question, Dr Lin said that is not the case and he would argue “the complete opposite”, as the point of a minimum wage is “to provide a social safety net”. To remove the policy during a crisis will “pull the rugs out from under those workers that rely on the minimum wage in times of crisis”, he added.
WHAT SHOULD A MINIMUM WAGE BE?
Sembawang GRC MP Vikram Nair asked what level of minimum wage Dr Lim would propose, and if there are other countries with a minimum wage and have a lower unemployment rate than Singapore.
Senior Minister of State for Manpower Zaqy Mohamad had a similar question on the WP MP’s definition of a minimum wage.
In his clarification, Mr Zaqy said that work on the progressive wage model has been under way since 2012, and is “not a new concept where … it’s thought of just after elections”. He added that the progressive wage model is “differentiated across sectors – a fundamental difference compared with a national minimum wage – and takes into account “what is bearable by every sector”. It also helps to raise productivity among workers.
In his reply to Mr Nair, Dr Lim said he does not know what an appropriate minimum wage should be, which is “exactly why what we need is a national commission to understand (and) study this”.
He proposed that an independent panel, consisting of university professors and tripartite representatives, be formed to study this issue “year after year after the minimum wage policy is rolled out because that will allow us to continually evaluate whether the level of the minimum wage is actually appropriate”.
Dr Lim went on to say that instead of comparing raw unemployment rates across countries, his argument that a minimum wage policy has minimal impact on unemployment is based on “reams and reams of studies … that have repeatedly shown that in almost every instance, the unemployment impact is either very minimal or statistically insignificant”.
As for Mr Zaqy’s question, he replied: “As long as you have the possibility that another sector has a minimum wage that is different from the first, you run the risk that that there is going to be substitution between one sector versus another.
“You want to shut out this possibility of substituting between workers in one sector and another such that employers end up gaming the system in that fashion.”
Some other questions raised by the PAP MPs, who included Potong Pasir MP Sitoh Yih Pin, ranged from how Dr Lim would suggest improving youth employment in Singapore, the feasibility of being compassionate without considering how to pay for these policies, as well as the use of the Government’s reserves.
On youth employment, Ms Tin asked Dr Lim if he has specific proposals to improve youth employment in Singapore.
He replied that this is a “tricky” issue as youth unemployment tends to have a “very cyclical” nature. This as youths may delay their entry into the labour force to pursue further studies in times of crisis.
“So you actually see an increase in unemployment in a time such as this when we’re in crisis, but it’s actually not a bad thing. You want these people to actually go in and build up their human capital,” Dr Lim said, when he was interrupted by Senior Minister of State for Health Janil Puthucheary.
“Mr Jamus Lim was asked a question. While I appreciate his erudition in economics and I’m learning quite a lot from him, he hasn’t answered Ms Tin’s question,” said Dr Puthucheary, adding that Ms Tin had asked if Dr Lim had a proposal and “not the principles under which employment changes or doesn’t change”.
To that, the opposition MP responded that he was laying out an “important context”.
“We do not want to rule out … specific proposals to address youth unemployment in a time when we are in a recession because we are not sure if the unemployment is justified or not. That’s the reason for me stating that context.”
He added that he did “not have a specific policy in mind” as he had not thought about the matter.
In between, fellow WP MP Leon Perera jumped into the debate by asking a series of questions, which included what the PAP MPs would say to workers earning below S$1,300 a month – the amount that the Government estimates to be what is needed to meet basic needs.
