NTUC chief opposes minimum wage

Dear Straits Times,

I refer to the 13 Jan 2011 report on Mr Lim Swee Say’s arguments against the minimum wage.

Mr Lim says that a person earning $800 per month is more likely to lose his job if the minimum wage is set at $1200 when the employer can only pay $1,000. This is not necessarily true. For service sector jobs like waiters, cashiers, cooks and cleaners, the employer cannot fire his worker without also closing down his business. If he fires his $800 per month worker, who is going to serve customers, man the cashier, cook food or clean tables and plates? Furthermore, if the employer can pay $1,000, why is he only paying $800? Doesn’t this show that there is some form of exploitation by employers who are paying lower than they can?

Mr Lim says that an employer who can only pay $1,000 but is compelled to pay $1,200 will simply not give any more annual increments over and above $1,200. But since the employer can only pay $1,000, without the minimum wage, why would he even pay anything more than $1,000? With the minimum wage, the worker gets $1,200. Without the minimum wage, the worker gets at most $1,000 and $800 currently. So your example shows that the worker does get more with the minimum wage.

In a climate of depressed wages, the minimum wage helps boost wages. The so-called ‘maximum’ wage of $1,200 is still higher than the $800 that the worker is currently getting.