Should Singapore Implement the Minimum Wage?

A minimum wage is the lowest remuneration an employee must receive. In US, the federal minimum wage is USD $7.25/hour; in UK, the minimum wage is £7.50/hour; in France it is €9.76/hour[1]. In Singapore, however, there is no minimum wage. This government rejects minimum wage for three reasons. First, employees are paid more for the same amount of work. Thus, they may cut back on work or see no need to work more. Thus, productivity and subsequently economic competitiveness decreases. Second, it is now more expensive to employ people. Thus, with a fixed budget, businesses will employ fewer employers. Thus, there would be retrenchment and unemployment. Third, increased labor costs are passed on to consumers. Thus, there is a higher cost of living. Politicians often claim that a poor economy, unemployment, and high costs of living will then harm the poor, whom minimum wage proponents are trying to help.[2]

If the above were unequivocally true, no one would support the minimum wage and we would not need to consider its philosophical implications. However, there is another side of the story. Proponents of the minimum wage would rebut the opponents’ points as follows. One, the minimum wage is merely a living wage, not a luxury. Thus, minimum wage employees would not productively stagnate. Instead, they would still attempt to be more productive to make more. Two, from Singapore’s copious numbers of migrant workers, it can be seen that Singapore already has a labor shortage in low-wage work. Therefore, raising wages would not lead to unemployment. Three, the cost of living is already increasing – the increasing cost is in fact what propels the minimum wage debate. To say minimum wage causes higher costs of living would be a misnomer.[3]

Proponents would point to the mass of low-wage workers who are unable to make a living wage despite working too many hours. Especially in Singapore, where collective bargaining is effectively outlawed, these low-wage workers lack bargaining power and need to be protected by the state against capitalistic masters. As Singaporean economist Lim Chong Yah says, as long as the minimum wage is pegged to the “national productivity level” (in other words, if it is not too low as to be useless nor too high as to cripple the economy), it would be beneficial.[4]

If the minimum wage were unequivocally harmful to the poor, we would not need to give it a second thought. This essay will therefore focus on the scenario where it were true that it benefits the poor. Then, philosophically speaking, is it justifiable? This essay will argue that yes, it is, considering the issue from Rawlsian, Nozickian, and Cohenian perspectives.

Rawls’ theory of justice starts from the purely hypothetical original position (102), wherein there is a veil of ignorance over individuals. Individuals are unaware of their particular identity, like their place in society, class, or social status. They are only aware of general facts, like general facts about human society, political affairs, and the principles of economic theory. Thus, individuals are unaware of how different principles of justice apply to their particular case (118-119). As such, all positions in society are equally accounted for and arbitrary contingencies are not favored. Under these circumstances of pure procedural justice, any agreement reached is fair. (104)

Because individuals would not agree to a principle that either advantages or disadvantages a particular group, they would agree to equal distribution – specifically equal liberties, fair equality of opportunity, and equal division of income and wealth. However, for economic efficiency, inequality can be permitted. However, the least well off would only agree to this if it were to their advantage. Since everyone could be the least advantaged, all would only agree to permit inequality only if it were to the advantage of the least well off. This is the difference principle – that inequality is permitted only if it were to the advantage of the least well off (130).[5]

Singaporean politicians appear to oppose the minimum wage because it disadvantages the least well off. The implicit assumption is Rawlsian – that any change should benefit the least well off. Thus, if it is true that it benefits the poor, who are the least well off in terms of the primary social good of income, then minimum wage is justifiable from a Rawlsian position. Politicians who claim to subscribe to a Rawlsian principle should support the minimum wage.

However, business owners could claim the liberty to freely and consensually trade their entitlements in the free market. This can be justified by Nozick’s entitlement theory of justice, which states that one is entitled to a holding if three conditions are met. One, there is justice in acquisition. Two, there is justice in transfer from someone else who is entitled to the holding. Three, entitlement is derived only through (a repetition of) these rules. The societal distribution of holdings is just if everyone is entitled to their holdings (151).

Nozick uses the Wilt Chamberlain example to demonstrate the justice of distribution derived from just transfer. Here, he assumes that the original distribution is just. Wilt Chamberlain is a popular basketball player who signs a contract wherein in each home game, twenty-five cents of the ticket price goes to him. People buy tickets and drop twenty-five cents into Wilt Chamberlain’s box. In a season, Wilt Chamberlain draws a million home game spectators and earns $250,000. Nozick argues that because spectators freely and consensually contributed their entitlements to Wilt Chamberlain in a free market, there is just transfer. Thus, the new distribution is just. As such, it should not be disturbed through governmental redistribution efforts, like taxation. (161-162)[6]

Business owners could claim that, assuming their holdings are justly acquired (which they frequently are not, but that is a separate debate), the transfer of holdings between the owner and employer is free and consensual, just like that between Wilt Chamberlain and the spectators. Thus, it is just. Wilt Chamberlain’s example demonstrates that as long as the three premises are fulfilled, even if there is great inequality, a distribution is just. Thus, inequality in Singapore arising from paying low-wage workers very little does not negate the justice of the distribution. Since it is just, the state should not interfere in their liberty to make these transfers by forcing them to transfer more than what both parties would have freely and willingly agreed upon. The state should not force them to pay a minimum wage when both parties would have freely and willingly agreed upon less. This coercion is an impingement on liberty, which would make the resultant distribution unjust.

There is an obvious rebuttal Cohen contributes in response to Nozick. Cohen summarizes Nozick’s principle as N: whatever arises from a just situation as a result of voluntary transactions is just. However, he rebuts this using the example of slavery – even if one voluntarily enslaves oneself, it is unjust. (21) As such, Cohen disagrees that the process of acquisition and/or transfer entirely determines the whether something is just. We should also consider whether the ends are in themselves just. Applied to the minimum wage debate, even if low wages result from voluntary transaction, and therefore the process of transfer is just, the end of having poor workers who work too many hours but still fail to make a living wage is unjust. Therefore, the government needs to interfere and restore a just end. This is principle support for the minimum wage.

Cohen then proceeds to analyze Nozick’s freedom as applied to the poor worker in the capitalist society, whom we could imagine as the low-wage worker. In the modern capitalist state, laws protect people’s right to choice to employment, such that everyone is entitled to work for no one. Yet, this right is unequally realized. Some can survive unemployed, most cannot.

Cohen gives the example of Z, who is faced with working or starving. If Z has to do A or B, and it would only be reasonable for him to do A, and Z does A for this reason, then he is forced to do A (35).[7] This can be applied to case studies supporting the minimum wage. For instance, in 2014, the Straits Times reported that Bangladeshi construction worker Hossain Iqbel made a meager SGD $280 monthly despite working seven days a work, fitting pipes underground on Jurong Island. This was because his per hourly wage was an inhumane SGD $1.50. He did not complain because of the power imbalance between him and his employer in the latter’s favor. Complaining could get him repatriated, wherein he would lose his income and have to repay debts because he borrowed heavily to pay for recruitment fees to come to Singapore. Here, Hossain is faced with working for SGD $1.50/hour or getting repatriated. Since getting repatriated would come with unreasonable consequences, it would only be reasonable for him to continue working for SGD $1.50/hour. Hossain continues because it is the only reasonable thing for him to do – he is forced to do it. This rebuts Nozick’s claim that it is just to pay low-wage workers little because they voluntarily enter the transaction. In modern capitalist society, few people completely voluntarily enter into an employer-employee transaction, much less low-wage workers. Since low-wage workers involuntarily enter into these low-pay transactions, it is unjust. The Singaporean government should intervene to make the transaction more palatable to the compelled party by implementing a minimum wage that would allow them to receive a living wage.

Thus, assuming minimum wage would benefit the least well off, Rawls’ difference principle would stand for it. Conversely, Nozick’s entitlement theory would oppose it. However, as Cohen points out, the latter’s theory utilizes an extremely accommodating definition of “voluntary”, which Cohen shows to be unreasonable, especially when applied to the modern capitalistic society. Thus, if Nozick could recognize the coerciveness of modern capitalism, he too would support the minimum wage. (1649 words)

Bibliography

Chow, W. (2017, November 10). Minimum wage only makes things worse in the long run. The Straits Times. Retrieved December 1, 2017, from http://www.straitstimes.com/forum/letters-in-print/minimum-wage-only-makes-things-worse-in-long-run

Cohen, G. A. (1995). Robert Nozick and Wilt Chamberlain: how patterns preserve liberty. Self-Ownership, Freedom, and Equality,19-37.

Jagdish, B. (2017, June 10). Singapore should have minimum wage, says economist Lim Chong Yah. Channel News Asia. Retrieved December 1, 2017, from http://www.channelnewsasia.com/news/singapore/singapore-should-have-minimum-wage-says-economist-lim-chong-yah-8928862

List of minimum wages by country. (2017, November 29). Retrieved December 1, 2017, from https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

Nozick, R. (1999). Anarchy, State, and Utopia. Oxford: Blackwell.

Rawls, J. (1999). A Theory of Justice. Cambridge: Belkinap Press of Harvard University Press.

  1. (2017, November 13). The Case for Implementing a Minimum Wage in Singapore. Retrieved December 1, 2017, from http://www.jeraldinephneah.com/minimum-wage-singapore/

 

[1] List of minimum wages by country. (2017, November 29). Retrieved December 1, 2017, from https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

[2] Chow, W. (2017, November 10). Minimum wage only makes things worse in the long run. The Straits Times. Retrieved December 1, 2017, from http://www.straitstimes.com/forum/letters-in-print/minimum-wage-only-makes-things-worse-in-long-run

[3] W. (2017, November 13). The Case for Implementing a Minimum Wage in Singapore. Retrieved December 1, 2017, from http://www.jeraldinephneah.com/minimum-wage-singapore/

[4] Jagdish, B. (2017, June 10). Singapore should have minimum wage, says economist Lim Chong Yah. Channel News Asia. Retrieved December 1, 2017, from http://www.channelnewsasia.com/news/singapore/singapore-should-have-minimum-wage-says-economist-lim-chong-yah-8928862

[5] Rawls, J. (1999). A Theory of Justice. Cambridge: Belkinap Press of Harvard University Press.

[6] Nozick, R. (1999). Anarchy, State, and Utopia. Oxford: Blackwell.

[7] Cohen, G. A. (1995). Robert Nozick and Wilt Chamberlain: how patterns preserve liberty. Self-Ownership, Freedom, and Equality,19-37.

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This website showcases our reflections.

Articles were originally submitted as course papers for Professor Sandra Field’s classes Contemporary Egalitarianism and Democratic Theory.

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