Application of Minimum Wages

Recently, NTUC Chief Lim Swee Say was reported to have said that minimum wages would have no effect in helping the lower income families. Perhaps, he had mistaken their values and importance of safeguarding the basic rights of low-wages workers and do not understand the purpose of minimum wages. In a modern and progressive society, it would be unethical to sacrifice the workers’ rights and benefits, especially when one is within the “first world” environment.

While Singapore’s GDP may have appreciated by about 15%this year, the general wages of most workers have remained stagnant and symptom of declining especially the lower and unskilled workers. Last year in 2009, average wages have decreased by 3.5%. Since we have free competition in the local labour market, it is important that we recognise and safeguard the rights of our entire workforce.

A recent study on Minimum Wages in the US (the Annuals of Economics and Finance) had shown that it disadvantages were actual exaggerated. The most common objection to any increment in the minimum wages was that mainly from small business owners. They felt that the increment in labour costs would ultimately lead to reduced employment and eventually leads to the failure of business. However, a growing number of new studies showed that the flexibilities of employees and employers were being overlooked, whenever the minimum wages changes. Studies also noted that those States that increased their minimum wages, have shown stronger job growth instead, when compared to those whose the minimum wages remained static. Moreover, the risk of business failure did not increase whenever there is an increment to the minimum wages.

Many countries have already implement the Minimum Wages Policy in their labour market, though in practice they do vary considerably. The pertinent points include:

• The Minimum Wages Policy prevents the wages of lower income workers from further downward revision, due to the huge availability of foreign workers, or from the increased business overheads,

• It helps to improve workers’ confidence in the seeking of viable jobs, and encourages the unemployed to seek alternate employment such as contract work, instead of waiting for more permanent and higher paid positions,

• It establishes a fairer employment environment for all workers,

• It motivates the low-wages labourer to perform better to achieve a higher productivity which would contribute towards better economic growth,

• It helps to reduce the income gap between the rich and the poor, by increasing spending power.

• It reduces the number of families requiring social assistance from the Government, and therefore reduces the volume of social problem.

It is undeniable that Singapore would continue to reply on foreign labour to feed its industries, for the sake of economic growth. Thus, some form of Minimum Wages guideline should be put in place to protect the interest of the unskilled and lower-income workforce.

Since the levels of Minimum Wages would depends much o the performance of the National economy, such statistic can be used to help Government to gauge the impact of the labour demand. The success of such a scheme would also depend on the level of collaboration between the Authorities, the Employers and the Business community. At the same time, skills enhancement training should be extended and easily made available to all workers, with generous subsidies.

Singapore needs to develop a better infrastructure and a more conducive environment for the growth of its workforce. A skilled workforce is more productive than unskilled one. The current influx of cheap foreign workers reflects poorly on our productivity and on the success of the Government’s program to enhance productivity. It is therefore essential that we do not step backwards to accept the low productivity performance of those foreign labourers, if we are to sustain ourselves as a “first world” nation.

By Elvin Ong

Minimum Wage Controversy

(adapted from an article by Richard Thomas, eHow Contributor)

The issue of “minimum wage” is familiarly referred to those unskilled services many youngsters take on in their teens to earn pocket money. However, few are aware that the minimum wage is actually an imported concept found in most countries, and that its effects are the subject of a long-standing debate among economists and labour experts.

Identification
The minimum wage is the lowest rate at which a worker can be paid. There are minimum wage laws pegged to hourly, daily and even monthly rates. Also, a minimum wage law usually makes it illegal for a person to sell his labour for less than the minimum rate.

Function
The general purpose of a minimum wage law is to guarantee a living wage to all workers who work a standard period of time, whatever that may be. In theory, any labourer who works 40 hours a week on minimum wage should be at or above the poverty line. However, the minimum wage has not kept pace with inflation and cost of living increases, and is now well behind that standard.

History
Minimum wage laws were first passed in Australia and New Zealand in the 1890s. They are now present in most countries, although how well they are enforced and the degree to which they guarantee a reasonable living is highly variable.

Effects
In USA, the minimum wage is set to rise to US $7.25 per hour by 2010. However, numerous states and even cities have laws that specify higher wages than are established according to the Federal minimum wage. This is sometimes done by stating that the local minimum wage is the Federal minimum wage plus an additional amount. For example, the District of Columbia has a wage rate that is always $1 higher than the Federal minimum. Other states pass laws that supersede the Federal minimum (almost always replacing it with a higher rate) or by adjusting the existing, state-mandated rate for inflation.

Considerations
Determining the real social and economic value of the minimum wage is tricky. Migrant labour, for example, is often done by illegal aliens who are rarely paid the minimum wage. At the same time, most citizens would want to do that work, given the same rate. Studies reveal that almost 75% economists think that the minimum wage increases unemployment, and only 10% believe that the minimum wage has a beneficial effect in combating poverty. However, there are clearly unskilled service industry jobs that are filled by minimum wage workers, workers who would obviously receive less were it not for the minimum wage.

Elvin Ong

Rights And Dignity of Singaporean Labours

In many years, Singaporean labours have gradually lost their rights and dignity over the years. During the economic downturn, this problem has once again surfaced and many have raised this question to the government of the unions. But nevertheless, labours in Singapore is to be slash when operational cost in Singapore continuously to go up as lack of recognise voice from union is found. As lack of workers protection and long term operation cost reduction schemes, employers are been force to choose an option and alternative ways to survive. That is why lower salary foreign labours comes into the picture of all industries including the highly skills.

Due to that circumstance many Singaporean have fall into this situation of carrying the burden of heavy debt causes by inflation even when holding the position of high paid but unstable jobs. It is foresee that our next generation will be facing even tougher challenges and uncertainty. Till now, the present government still does not have any solution or taking a step to put Singaporean labour as priority in making of policy. This is why the important of have an alternative power in parliament has to come in to secure for what we have any take control of the downfall of Singaporean labours. To achieve that, the public be involve in the political influence by joining the opposition. As a member of the Opposition Party, I sincerely hope that the opposition camps have to strengthen and toughen by take challenges and responsibilities.