Minimum Wage Bill:

Thank you Mr Speaker.

Christina Romer, a former Chair of the Council of Economic Advisers in the
Obama Administration, argued that, raising the minimum wage, as President
Obama proposed in his State of the Union address, tends to be more popular
with the general public than with economists.

Indeed, implementing a minimum wage easily scores a political point, but it does
not solve the root cause of the problem, low productivity, or at least skills
stagnation.

Today, the opposition seeks to raise the productivity of employees and the
standard of living for lower-income families through the passing of a Minimum
Wage Bill for ALL employed persons.

And of course, we being humans with empathy have to agree that issues of
equity should and must be resolved for us to prosper as a society.

My greatest contention with this Bill is the inclusion of the words all persons
employed and I will list my concerns below:

Firstly, the imposition of a minimum wage for all persons disregards the
intricacies of each industry.

Damned by tough competition with established local companies and
MNCs to recruit and retain talents, SMEs faced greater obstacles last year
when the government implemented tough foreign labour curbs.

SMEs would struggle to survive with the new minimum wage, owing to
the surge in labour costs.

Understandably, the rhetoric that sunset industries that cant even afford
to pay their workers reasonable wages should leave the market is
permissible. Nonetheless, with the emergence of Iskandar Malaysia, SMEs
may choose to outsource their production/services to that region,
ultimately causing retrenchment of currently employed individuals.

Why are we punishing local businessmen, who provide jobs for our
people? If we really want to help them, we should push for a reduction of
rents from government landlords, or reduce the taxes on commercial
vehicles, instead of raising labour costs.

This lowers the cost of production for SMEs, thus allowing them to
reward their employees with higher wages.

Instead, we are giving the SMEs a double whammy, where we punch their
already bruised cheeks with a demand for higher wages. The injured
fighter would definitely leave the ring for shelter, and ultimately leave his
gloves (employees) behind.

Is it not better to implement the minimum wage for MNCs/large local
companies who can afford this wage increment?

Secondly, the inclusion of all persons disregards the level of
productivity of different groups of individuals, namely the teenagers,
adults and the old.

As Singapore does not have statistics of the age composition of
individuals earning the Minimum Wage, I shall use the U.S. as a
comparison.

Now, I know the infamous quote, there are 3 kinds of lies: lies, damned
lies and statistics, but these statistics do emphasise a point, and I will get
to it shortly.

The US Government has just announced that it will raise the minimum
wage from US $7.25 to US $10.10. According to the Bureau of Labour
Statistics, of those earning the minimum wage, 31% are teenagers
working part-time, and 55% are younger than 25.

Although these percentage points may vary in Singapore, it does
emphasise that the benefactors of the minimum wage may not be our
stereotypical low-income families.

If we have the minimum wage, teenagers flipping burgers at McDonalds
would definitely have the money to enjoy reasonable standard of living.
No offence to anyone flipping burgers.

But, do they need this money? Is having a reasonable living standard
equal to owning the latest iPhone 6 earned from the minimum wage?

Im sure the majority of us, though benefactors, would say no. Our
sentiments are as such because we feel they do not deserve it. Part-time
workers do not deserve to be paid the same wage as full-time workers.
Their productivity levels are different! we say.

Yet, having the minimum wage for all disregards such distinctions.

In fact, most of us would find ourselves jobless during the holidays
because no employer would like to hire an inexperienced teenage-kid for
a month on the minimum wage. We can all say goodbye to that new
iPhone6.

I look forward to responses from the opposing bench about the points raised,
and I hope they consider amending the bill to exclude all persons.