Commentary: Value placed on low-wage workers is a price Singapore should pay for shared future
SINGAPORE: With eyes gear up on Singapore's post-COVID future, Prime Minister Lee Hsien Loong's National Day Rally on Sunday (Aug 29) set out the Government's plans to tackle emergent societal fault lines.
The first highlighted was the stresses on lower-wage workers (LWW).
Even before the COVID-xix pandemic swept the earth, LWWs in Singapore and elsewhere have been under considerable strain for several years now because of new technological trends, disruption and globalisation.
Merely the pandemic has accentuated the situation gravely, impacting sectors with huge concentration of non-PMET workers similar retail, F&B and accommodation more forcefully, leaving sales, services and clerical staff most prone to retrenchment, the Ministry building of Manpower's Labour Market Written report 2022 pointed out.
LWWs in economically important sectors such as aviation, hospitality and tourism as well lost their jobs and had to find alternative employment.
Meanwhile, many LWWs constitute themselves on the frontline of the societal response to the health crisis - essential workers fundamental to keeping basic services going.
Without appropriate support, the setbacks to this vulnerable group could lead to a permanent underclass emerging, and seriously derail social cohesion and Singapore'due south prospects of emerging stronger from the crunch.
Such a distinct separation of society into winners and losers damages the social compact that binds a society together.
Information technology was timely therefore for PM Lee to ready out several significant steps to better the economical security of LWWs focused specifically on their employment income.
The major policy announcements for LWWs were in 3 disquisitional areas: First, an extension in eligibility for the Workfare Income Supplement Scheme (WIS). Second, several measures to aggrandize the Progressive Wage Model (PWM) to more industry sectors and specific occupations, and tertiary, a more comprehensive Local Qualifying Salary government.
INCREASING Accept-Dwelling house PAY FOR Low-WAGE WORKERS
When implemented in the next two years, these measures volition collectively increase the take-home pay of a larger number of LWWs and potentially propel productivity gains for businesses adopting the PWM.
In particular, the extension in eligibility for WIS to workers aged 30 years and in a higher place (from the electric current 35-year-old threshold) increases the financial back up for younger LWWs, cushioning them from the ill-furnishings of heightened precarity and increasing their ability to salvage for tough times and provide for their retirement security in the long term.
The expansion of the PWM and more comprehensive Local Qualifying Salary authorities to more industry sectors and occupations will allow more workers to climb productivity-supportive wage ladders to increment their earnings, while their employers do good from productivity gains.
The coil-out of a Progressive Wage Mark (PW Mark) for businesses employing LWWs will send a powerful signal to both buyers of goods and services likewise as potential job-seekers of the alignment of accredited businesses to the goal of progressive wages for their workers.
This bespeak will exist reinforced by the Government (a major procurer of goods and services) buying only from suppliers with the PW Mark.
PROGRESSIVE WAGES KEY PART OF SINGAPORE'S Work Landscape
There are two take-aways from this emphasis on progressive wages in this year's National Day Rally.
The showtime is that the Regime has decisively declared its position in the universal minimum wage versus incremental PWM contend and has doubled down on rolling out more aggressively the latter policies.
This Government has been consequent in its rejection of a universal minimum wage for Singapore, believing it will be too distortionary for the labour market place and far too blunt a tool to effectively balance welfare gains for LWWs with the impact on economic dynamism.
However, with more than sectors and occupations covered by PWM, and other foresighted businesses adopting such policies getting accredited with the PW Marking, de facto minimum wage floors would in any case be established by what is paid to workers in those sectors and occupations with progressive wages.
This effect would be enhanced if at that place are few barriers preventing workers shifting to jobs covered by PWM from those that are not.
Society PREPARED TO PAY THE Price
The 2nd point was highlighted past Prime Government minister Lee in his speech when he noted that higher wages would need to be accompanied past productivity gains underpinned by workers upgrading their skills and employers absorbing some of the increased costs.
While the Government tin can assist defray some of the transitional costs of adopting PWM, a significant part of the increased costs would likely have to be shared with consumers.
This repricing of labour will lead to a gradual reset of all associated goods and services where labour is an input, and result in higher costs of living.
The Regime's support of LWWs, through larger WIS payments and other schemes to promote training and skills upgrading may also necessitate increases in taxation in the time to come.
The Prime Minister likened WIS to a negative income tax. But these transfers to LWWs would have to be financed by higher taxes levied on those with the all-time power to pay, with higher incomes or wealth.
(Economists discuss how businesses tin heighten wages of low-income earners - without raising prices or passing costs to consumers on CNA's Center of the Matter podcast published in Oct 2020.)
Higher prices for goods and services too as higher tax rates demand not exist a bad thing, peculiarly if accompanied by greater productivity and the creation of better jobs.
Singapore has experienced and thrived through numerous rounds of toll adjustments alongside economic growth over the past 56 years.
Although the price of virtually goods and services including that for standard meals like bak chor mee take increased, real incomes have too risen substantially, between five to half dozen times in the five decades from 1965.
But if some Singaporeans continue to be unable to earn enough to sustain themselves here and pb purposeful lives, national prosperity can come at a cost to unity and social cohesion.
With the declaration of key measures to uplift the wages of LWW, which will inevitably put pressures on cost structures, social club has to agree on the price to pay to ensure the lowest rungs of our workers are duly protected.
We will need to accept the accompanying higher prices and taxes if we are to value each person in Singapore fully then that no one is willingly left backside, to ensure a shared future with happiness, prosperity and progress for everyone in our nation.
Christopher Gee is Senior Research Fellow at the Institute of Policy Studies, National University of Singapore.
Source: https://cnalifestyle.channelnewsasia.com/commentary/lower-wage-workers-incomes-raised-progressive-wage-model-national-day-rally-282371
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