Minister restates stance against minimum wage

Dear Mr Lee,

I refer to the 14 Sept 2010 Straits Times report of your blog comments on minimum wage law.

You reportedly supported Dr Lim Chin’s arguments against a minimum wage law based on the latter’s Straits Times article dated 2 Sept 2010. Dr Lim’s argument is a very common one that is based on the premise that the worker who cannot produce more value per hour than what the minimum wage implicitly requires will simply not get employed. But this argument applies only to the most unproductive of workers, workers such as those with disabilities which Hong Kong’s recent minimum wage legislature specifically excluded. Hence, minimum wage law may work if we similarly exclude those who cannot produce more per hour than what the minimum wage requires.

More importantly, Dr Lim’s argument neglects the situation where the worker is capable of producing more per hour than the minimum wage requires but is being undercut by foreigners who are willing to work for less. Depending on the amount of undercutting, workfare may not be sufficient to make up the difference between what the foreigner is willing to work for and the minimum wage necessary for a decent living. The underlying problem is the easy access that employers have to foreign workers, an access which ought to be controlled by the government. While the argument for foreign workers to keep enterprises globally competitive is one that we cannot ignore, care must be taken to differentiate between enterprises that truly compete globally on the one hand, and local enterprises like coffee shops and food courts which only compete locally on the other hand. For local enterprises, the issue has been that local workers do not like to work shifts, long hours, weekends or to be on call. There may be genuine reasons why Singaporeans shun these jobs due to family commitments. In such cases, workfare or for that matter minimum wage, will not be of much help. What these enterprises need is job re-design so that their commercial needs can be met while providing suitable work life balance for our workers. If there is any breakthrough to be had, it would be in this area, not workfare.

Also, you said that unlike the minimum wage law, work fare doesn’t distort the market. That is not necessarily true. If an employer knows that he can pay a worker less than he deserves and get the government to top up, he will in fact pay him less and get the government to top up. This is a form of market distortion which the nation ends up subsidising.

Finally, since finding jobs for our workers is such an important national prerogative, wouldn’t it be worthwhile to set up a national job website that everyone can go to find all the jobs that are currently available? It would be a sort of one stop centre amalgamating all the various job websites currently out in the market.