Minimum Wage vs Progressive Wage Model: An Andersonian Approach of Comparison

The debate of having a minimum wage, as compared to the current Progressive Wage Model (PWM), has become one of the key issues in this year’s general elections, after the sole parliamentary opposition party, the Worker’s Party (WP), included the minimum wage in its manifesto. Jamus Lim, a first-time candidate and an economist, became the party’s chief proponent of the policy due to his academic background. Consequently, his ensuing popularity allowed him to win the Sengkang Group Representation Constituency (GRC), a political upset which ousted the Secretary-General of the nation’s only trade union congress (a major PWM arbitrator) from Parliament. This opinion piece seeks to establish a philosophical framework with which to compare the minimum wage and the PWM. Using Elizabeth Anderson’s democratic equality framework, I opine that the PWM is structurally superior when complemented with the Workfare Income Supplement Scheme (WIS) but is insufficient. To secure citizens’ basic capabilities, the PWM and the WIS need to be expanded; the minimum wage is hence not necessary.

Minimum wage, pegged to the living wage, is said to guarantee the lowest income-earners a living wage, regardless of their productivity and skills. The minimum wage is meant to secure the basic capabilities of the lowest-paid workers, so that they can adequately spend on food and water, housing rental, and other necessities, and thereby achieve a standard of living sufficient to function as human beings. The suggested monthly minimum wage differs: while the WP proposes $1,300, which is the monthly cost of basic needs for single elderly household, the Singapore Democratic Party proposes $1,760, which is the monthly cost for single persons aged 55-64. [1][2][3]

The People’s Action Party (PAP) and the National Trade Union Congress (NTUC) have concurrently argued against the minimum wage, however, for various reasons that shall be elaborated later. The ruling party and the sole coalition of local trade unions instead touts the current PWM as an effective policy in securing the basic capabilities of workers in the lowest rung. The PWM guarantees career and wage progression for workers in the cleaning, security, and landscape sectors only. The progression is tied to the worker’s productivity and skills, which is enhanced through government-subsidised skills upgrading courses, in which the worker shall participate after working hours. The WIS further complements the PWM, by topping up the annual income of all workers earning below $2,300 per month to support current and future needs. [4][5]

Anderson provides us a philosophical framework, with which we can analyse both the proposed minimum wage and the PWM policies in their efficacies in securing Singaporean workers’ basic citizenships. Anderson argues that every citizen deserves equal standing in society, and thereby each citizen owes to every other citizen the right to function as equal citizens. Intuitively, every citizen owes to every other citizen access to basic capabilities necessary to function as equals in society [6]. If we accept the argument that the state represents its people and its people act through it, then it is responsible for delegating and fulfilling these responsibilities that each citizen owes to every other; consequently, the state is responsible for providing access to these capabilities to every citizen for them to function as such. Thus, for a policy to be just, it has to guarantee all citizens access to basic capabilities sufficient for them to participate in society as equals. Intuitively, the pre-requisite for every citizen to function as an equal citizen is securing their ability to function as a human being, and this necessitates that every citizen has access to basic capabilities to do so: food and water, housing, and medical care, among others [6]. Conclusively, we establish two indicators of whether a policy is just: it is just if the state, which is responsible for providing access to basic capabilities for its citizens to function as human beings, does so; it is just if the basic capabilities provided by the state is sufficient for its citizens to function as human beings, i.e. pay for food and water, housing, and medical care, among others. Specifically, the state should ensure that every citizen takes home at least $1,300 monthly.

The minimum wage is derided by the PAP for its inefficacy, as the cost incurred to businesses will increase, resulting in their hiring of less low-wage workers to remain financially feasible [7]. Consequently, many low-wage workers will be unemployed, their wages used to pay for the minimum wages of remaining low-wage workers or technologies that replace human labour. However, the WP has cited “reams and reams of studies” to substantiate their claims that “the unemployment impact is either very minimal or statistically insignificant” [8]. Yet, more critically, the minimum wage seeks to diffuse the state’s responsibility of securing basic capabilities for its citizens to businesses. Assuming that the minimum wage does indeed empower low-wage workers to lead creative and fulfilling lives without edging towards precarious living standards, it still theoretically subcontracts the responsibility of the state to businesses, leaving them to absorb the lion’s share of the costs of securing their workers’ basic capabilities. To agree that I am responsible for your standing in society as an equal, only to legislate away my responsibility to your employer, cannot be said as just. Therefore, structurally, the minimum wage is not ideal; the PWM could provide a better policy framework for us to secure basic capabilities for citizens.

The PWM (supplemented by the WIS) escapes this criticism. The PWM mandates employers to progressively increase their workers’ wages only if the workers display productivity gain commensurate of the wage increase. The productivity gain is subsidised heavily by the state through the Workfare Skills Support, through employer-paid skills upgrading courses available to these workers [4]. Therefore, the PWM does not compel businesses to pay for labour more than what it is worth and absorb the costs of securing their workers’ basic capabilities. The state, on the contrary, fulfils its responsibility of securing basic capabilities for its citizens by supporting them to gain enough productivity to earn a living wage. Furthermore, the WIS supplements the incomes of workers who do not earn $2,300 per month, a substantially higher bar than the minimum wage of $1,300. Yet, the PWM covers too few industries, while the WIS pays only a pittance: a maximum of $1,500 per year, of which only 40% is paid in cash [5]. The PWM, at its current form, does not provide career and wage progression, which by itself is conditional on productivity gain subsidised by the state, to all workers. Under the PWM, 32,000 workers are still unable to earn a living wage and have to live without the certainty of the ability to pay their rents nor basic necessities [7]. Consequentially, they live as second-class citizens, either working additional odd-jobs or risk losing access to food, water, and housing. If we accept the argument that the inability to secure sufficient food and water, housing, and medical care makes one unable to function as human beings, then their precarity makes them unable to function as human beings, let alone participate actively and meaningfully in society as equal citizens. Therefore, the PWM, complemented by the WIS, seems woefully insufficient presently.

Yet, most damning of both the minimum wage and the PWM is their conditionality of one being employed. The minimum wage guarantees a living wage for all workers, so that they can lead dignified lives without edging towards precarity, and can thereby participate in society as equals without the preoccupation of insufficient money to buy basic necessities or pay for rents and bills. Yet, the minimum wage does not provide these basic capabilities to all citizens, since the provision is conditional on one being employed. Through the state’s diffusion of responsibility of securing basic capabilities of its citizens to businesses, citizens become dependent on their employers for access to food and water, housing, and medical care, which could leave workers vulnerable to exploitative employers [9]. The minimum wage hence creates unequal citizenship, in which employers are responsible for and hence have control over their workers’ basic capabilities. The PWM does not even guarantee a living wage until sufficient productivity gain is achieved by the worker, while the WIS is also an insufficient complement. Intuitively, the PWM suggests that if a worker does not produce at a rate satisfactory to the employer, they do not deserve a wage sufficient and necessary for their basic capabilities as a citizen. Whereas it is unjust to tie basic capabilities to productivity gain, WIS could help the PWM escape this criticism if it is sufficient. However, as Anderson has argued, the guarantee of basic capabilities must be non-conditional, because it is what the state owes to its citizens.

While the minimum wage is partially sufficient as it at least secures basic living wages for workers, it is structurally irresponsible nor just; while the PWM, complemented by the WIS, is insufficient, it is structurally more responsible and ideal than the minimum wage. Whereas neither the minimum wage nor the PWM is able to satisfy our quest for a policy that does indeed secure the basic capabilities of our citizens so that they can participate in society as equals, PWM’s structure could guide us in our quest to do so. Intuitively, our basic capabilities must be accessible to us unconditionally. While the PWM could be a good start, where responsibility of securing our basic capabilities lies in the state, there must be enough WIS top-up by the state, such that all employed people can participate in society as equals. Whereas the PWM does not guarantee a living wage and mandates wage increases only conditional to productivity gain, basic capabilities could still be accessible to workers being paid below the living wage through sufficient WIS top-up, such that access to basic capabilities itself need not be subjected to productivity gain. Since the current PWM is still unable to provide for the unemployed, the state ought to introduce a government-mandated unemployment insurance, so that involuntarily unemployed persons can still access to the basic capabilities of a human being and an equal citizen. The voluntarily unemployed goes beyond the scope of the discussion, central to which is the adoption of a philosophical framework to compare the minimum wage and the PWM.

References

  1. Ng, Kok Hoe, You Yenn Teo, Yu Wei Neo, Maulod Ad, and Yi Ting Ting. 2019. ‘What Older People Need in Singapore: A Household Budgets Study’. Minimum Income Standard. Singapore. https://whatsenoughsg.files.wordpress.com/2019/05/what-older-people-need-in-singapore-a-household-budgets-study-full-report.pdf.
  2. Kurohi, Rei. 2020. ‘Singapore GE2020: 10 Proposals from the Workers’ Party Manifesto’. The Straits Times. June 28. https://www.straitstimes.com/politics/singapore-ge2020-10-proposals-from-the-workers-party-manifesto.
  3. Singapore Democrats. 2020. ‘Minimum Wage: SDP Policy Update’. Singapore Democratic Party. October 30. https://yoursdp.org/news/minimum-wage:-sdp-policy-update.
  4. ‘What Is the Progressive Wage Model’. 2020. Ministry of Manpower Singapore. Accessed November 25. https://www.mom.gov.sg/employment-practices/progressive-wage-model/what-is-pwm.
  5. ‘WIS Employee’. 2020. Workfare Income Supplement Scheme. Ministry of Manpower Singapore. Accessed November 25. https://www.workfare.gov.sg/Pages/WISEmployee.aspx.
  6. Anderson, Elizabeth S. 1999. ‘What Is the Point of Equality?’ Ethics 109 (2): 287–337. doi:10.1086/233897.
  7. Tham, Yuen-C. 2020. ‘32,000 Take Home Less than WP’s Proposed $1,300 Minimum Wage’. The Straits Times, October 16. https://www.straitstimes.com/singapore/politics/32000-take-home-less-than-wps-proposed-1300-minimum-wage.
  8. Tang, See Kit. 2020. ‘Tharman, PAP MPs Debate Minimum Wage, Policymaking with WP’s Jamus Lim’. Channel NewsAsia, September 4. https://www.channelnewsasia.com/news/singapore/parliament-jamus-lim-tharman-minimum-wage-13079634.
  9. Chin, Chuanfei. 2019. ‘Precarious Work and Its Complicit Network: Migrant Labour in Singapore’. Journal of Contemporary Asia 49 (4): 528–51. doi:10.1080/00472336.2019.1572209.
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Articles were originally submitted as course papers for Professor Sandra Field’s classes Contemporary Egalitarianism and Democratic Theory.

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