Minimum skills, not minimum wage

Dear Professor Augustine Tan,

I refer to your 18 Nov 2010 Straits Times article.

You said immigration curtailment will lead to us having to pay burdensome taxes to support ageing relatives in the future. However, population ageing is only delayed and doesn’t go away even if we free up immigration. Because the additional people we let in now will eventually grow old too and will require the import of even more people to support. Thus, yours is a non-argument. We have to accept the fact that our population will age up to a certain point and not cheat ourselves with the fallacious argument that it can be arrested through the never ending import of even more people in a small, finite space that is Singapore.

The economy of Japan, like that of Europe’s, is matured rather than stagnated. Only a fledgling economy can grow by leaps and bounds through greater use of capital and better education of its people. But once matured, growth through productivity improvements can only be much slower. To cheat this outcome by the mass import of people would be to delay the inevitable.

The use of computers, robots, software and the rapid fall in communication costs will only lead to the outsourcing of manufacturing and IT jobs, not service jobs that require direct human interaction. Service jobs such as those in food courts and supermarkets are unaffected by such outsourcing pressures. No amount of computerisation or fall in communication costs can lead to the outsourcing of a waitering job. How is the waiter in China going to serve a cup of coffee to a customer in Singapore? Fax the coffee over? Email the coffee over?

The supposedly plenty of empirical studies that point to the increase in unemployment due to minimum wage mostly refer to teenage workers that can be excluded quite easily from any minimum wage law.

What evidence do you have to suggest that minimum wage will detract us from productivity improvements? Would you apply the same argument to workfare?

Productivity improvement should not be seen as the panache that will solve all our low wage woes, especially in the context of service jobs. The waiter is simply not an octopus who can do eight things at one time. Even if he succeeds in doing so, there is no guarantee that the quality of his service would be good.

It is sad that you have mostly regurgitated arguments expounded by the authorities, arguments that have already been soundly rebutted without contributing anything new or useful.


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