Govt to set ‘minimum wage’ for 2 industries

The government is setting “minimum wages” for the cleaning and security industries but has refused to acknowledge so because of the oidious connotation of the term “minimum wage” among businessmen and investors.

It will begin by legislating what is effectively a minimum wage for the cleaning sector.

It will introduce an amendment to the law this month which, when passed by Parliament and implemented, will set a tiered wage system for different jobs in the sector. This was announced on Wednesday (8 Jan) by DPM Tharman who is also the Finance Minister.

The new law for cleaning companies is expected to come into force by this September.

The entry-level pay (i.e. minimum wage) for cleaners will be $1,000 per month. This is about 20% higher than the current median basic wage for cleaners of $850.

Cleaning companies will be licensed. They must have a licence to operate, and they must use a “progressive wage model” to pay their workers. The model is a wage ladder with different salaries for different cleaning job scopes bearing in mind the mandated minimum pay of $1,000 monthly.

The licence itself will not spell out the salaries on the ladder. Instead, a committee of government officials, unionists and employers will negotiate the salaries. Mr Tharman said:

” Once the Act is passed, we will take non-compliance seriously. There will be penalties imposed on companies that fail to comply with the licensing conditions… (They) may have their licenses suspended or revoked. In addition, service buyers procuring from non-licensed cleaning companies will also face penalties under the law.”

A similar scheme is being worked out for the security industry as well.

The minister was at pains to deny that these soon-to-be-legislated entry-level salaries are a national minimum wage, saying that the cleaning and security sectors have been targeted because of cheap-sourcing tactics that have depressed workers’ wages.

But he neglected to say that the easy availability of cheap foreign workers – a matter of government policy – is another significant factor in depressing workers’ wages.

He took pains to explain the difference between Singapore’s approach and a national minimum wage. The difference is that in Singapore’s case, the wages are not set by “political decree”, but negotiated between the government, unionists and employers.

” This tripartite approach, and especially the involvement of both unions and employers in setting appropriate wages and a wage-skills ladder, is important. It reduces the risk that workers, especially our older and more vulnerable ones, will lose their jobs as wages go up.

Our approach is therefore different from one of legislating a national minimum wage.”

Mr Tharman pointed to problems in Europe and the US as lessons for Singapore, claiming that high minimum wages in most European countries have accompanied high unemployment and the workers with the lowest skills are the most badly hit:

” There is more than meets the eye in how minimum wages impact the poor.

Politicians are keen to take the credit for raising minimum wages, without accepting responsibility when those with low skills and experience are unable to find an employer at the minimum wage.”

Even in the US where the minimum wage is lower than in Europe, reputable economists have pointed out that the poor are the ones who are not being helped, said Mr Tharman:

“This is because the majority of the poor in the US are unemployed, not at work. Higher minimum wages will reduce their opportunities to find an employer, not help them.”

On the other hand, more than a third of those who actually earn the minimum wage are teenagers, many of whom come from better-off families.”

Mr Tharman’s explanation is quite puzzling since the government is moving to mandate a minimum floor wage for the cleaning industry. By the same argument, would not setting the entry-level pay for cleaners at $1,000 reduce the chances of lowly-skilled and old Singaporeans from being employed as cleaners?

Prominent blogger Uncle Leong blogged [Link]:

” After so many schemes like the progressive wage concept, cleaning firms’ accredition scheme for Government contracts, PAP town councils’ cleaners’ minimum $1,000 wage, etc – it would appear now that the Government has finally ‘thrown in the towel’ – to effectively legislate a minimum wage, even though we still refuse to call it a minimum wage.

What about the other workers? Since the legislation will only apply to cleaners and security guards, what about the rest of the full-time resident workers who are not in these 2 occupations? There are 114,000 ‘below $1,000′ workers.”

What about the cleaners and security guards who work part-time? At the end of the day, we should not kid ourselves that piecemeal measures will solve the problem of so many workers earning so little.”

Uncle Leong said that if self-employed persons are included, there may be as many as 600,000 residents earning below $1,500.

Once the cleaning and security industries begin to “enjoy” mandatory entry-level pay (i.e. minimum wage), workers of other industries who are earning less than $1,000 (e.g. F&B workers) will also want the same thing. The government will end up legislating different “entry-level wages” with their corresponding “progressive wage model” for the various industries. The government will end up micromanging the Singapore economy when their role is to govern. In this case, is it not easier and more honest to just legislate a national minimum wage across the industries for everyone?

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