What We Owe To Each Other When We Talk About The Minimum Wage

During recent debates on the minimum wage in Singapore, there appears to be bipartisan endorsement of the normative principle that low wage workers should be paid a sustainable wage. The Worker’s Party’s position is to advocate for a minimum wage of $1,300 a month for full- time work, and a pro-rated wage for part time-work. The governing party, the PAP, has rejected the minimum wage and is doubling down on their current policy suite of the progressive wage model (PWM) and Workfare income supplement.

To summarise, the PWM is a sectorial determined wage floor with wage increment frameworks tied to supposed productivity increases (measured through the completion of training courses).1 The implicit commitment here is that wage increases must be commensurate with productivity increases. The workfare income supplement scheme is a “top-up” function of the state, where the state will supplement the wages of lowest-income workers.

The Worker’s Party’s suggestion of a universal minimum wage for citizens was mooted partially in response to the shortcomings of the progressive wage model. Most significantly, the PWM is extremely limited in its reach. The sector-based approach takes an inordinate amount of time, which continues to leave more than 32,000 full-time employees in Singapore earning less than $1,300 a month.2 The PWM, first introduced in 2012, took 8 years to only cover low wage workers in the cleaning, security, and landscape sectors. It currently does not cover any other sector other the these 3. Additionally, the PWM’s requirements also appear to encourage inefficiencies in the labour market where low wage workers have to commit to long tenures within their sectors to qualify to be enrolled in the program.3

Despite disagreeing on the means, both parties appear to be committed to the same end: Worker’s should be paid a sustainable wage.

Crossing swords in parliament, PAP backbencher Edward Chia challenged the Worker’s Party’s suggestion for a minimum wage, warning that because of increased labour costs to businesses “low wage (could become) no wage”. He argues that there is a real risk that companies, when forced to pay a higher wage to their lowest-wage workers, will choose to fire them and perhaps turn to automation instead.

This argument seems quite reasonable when offered in what American philosopher, G. A. Cohen would consider a “blandly impersonal” manner.4 If businesses would indeed fire some workers and turn to automation if forced to pay a minimum wage, then it does sound reasonable that to prevent low wage workers from losing their jobs entirely, we should scrap the proposed minimum wage proposal.

However, Cohen argues that the value of normative arguments change when we consider who is making the argument, and to whom the argument is addressed. Leader of the Opposition, Pritam Singh’s rejoinder to Mr Chia gives us a perfect example of what Cohen terms the “Interpersonal Test”.5 This tests the robustness of the policy argument by changing who is making the argument, and to whom the argument is being made to. Singh asked Chia, as a business owner himself, if he would be agreeable to pay workers who are currently earning less than $1,300 the proposed minimum wage of $1,300. Singh in effect forced Chia to rearticulate his argument in an interpersonal way instead. Chia cannot just speak of businesses as an impersonal third party, but has to answer the question in his capacity as a business owner.

Disappointingly, Chia evasively cites concerns such as a commitment to other employees, shareholders, and the vague notion of “scalability” to say that no, he does not want to pay low wage workers the minimum wage of $1,300. Even on this level, the argument appears a lot less palatable than its first articulation. “I will fire workers if I am forced to pay them the minimum wage” sounds a lot more reprehensible than “Businesses will fire workers if forced to pay the minimum wage”. Prima Facie, it does not appear to pass the interpersonal test.

By articulating the argument in the first person, Chia gives us the opportunity to make him justify his stance. His argument, comprehensively reconstructed in the spirit of Cohen’s Incentive Argument, further shows weak Chia’s commitment to paying workers a sustainable wage.6
Chia’s argument can be reconstructed as follows:

Major, Normative Premise: Workers should be paid a sustainable wage.

Minor, Factual Premise: If forced to pay a minimum wage of $1,300 to low wage workers, I will choose to lay off workers, causing them to have no wage.

Conclusion: There should not be minimum wage legislation.

The reason why his argument, once reconstructed in a personal form, becomes so unpalatable lies in the minor, factual premise. Originally, the argument, in its impersonal form, invites us to treat businesses as if they were Martians whose predictable behaviour is something that we should take steps to adapt to, but whom we should not expect to engage in justificatory dialogue.7

In this interpersonal form, however, we can clearly see that the minor premise is not a fact of nature that happens; Chia chooses to make it true, and in doing so, makes the already badly-off low-wage workers, worse off. As Chia and his employees are members of the same community, his employees are entitled to ask Chia to justify why he would choose to make the minor premise true. Only if he is able to comprehensively justify why he should make the minor premise true, can we accept the argument as valid. I shall run through 3 possible justificatory scenarios and argue that it is unlikely that Chia can justify the minor premise satisfactorily.

The first scenario, which happens to be the scenario that business owners advancing positions similar to Chia’s would be pleading for, is the “Special Burden” scenario. They argue that the additional burden from having to pay the minimum wage would be so onerous on their competitiveness that if businesses do not indeed dismiss (some of) the low wage workers, they would be in dire straits. If the special burden holds, then I concede that Chia and other business owners are justified in making the minor premise true.

However, I suggest that it is extremely unlikely that the special burden holds. In developed/affluent Singapore, the main source of competitiveness of our businesses is high productivity and innovation rather than low costs.8 Additionally, low-wage labour is a small constituent component of total costs to businesses.9 Taken together, it is highly unlikely that a small increase to a small portion of their total business costs that primarily compete on productivity and innovation will represent a death knell to their competitiveness, operations, and viability. At best, the special burden might only hold for a small minority of businesses in Singapore, and even this effect is dampened considering that the minimum wage legislation would affect all of their local competitors as well.

The two most likely scenarios are “Bluff” and the “Standard Case”. In the “Bluff”, Chia will not actually dismiss low-wage workers if forced to pay the minimum wage. In other words, he will not make the minor premise true. In this case, Chia is merely bluffing in the rent-seeking hope of preventing the implementation of the legislation. If this is true, Chia reveals a weak commitment to the major premise by choosing rent accumulation over paying his workers a sustainable wage.

I suggest, however, the most likely scenario is the “Standard Case” where Chia fully intends on making the minor premise true, in the absence of special burdens. Subsequently, the low-wage workers would be fully entitled to ask Chia “Why would you choose to make us worse off when you and the company would still be so much better off than us with the minimum wage legislation?”. I don’t imagine Chia having a justification that can satisfy these workers, or in fact, society at large. In this case, Chia’s insistence on making the minor premise true despite it making the badly-off worse off, in the absence of special burdens, reveals not only a non-existent commitment to the major premise but also a consequent moral reprehensibility.

But why is it reprehensible that a Member of Parliament so clearly holds such a weak commitment to the major premise? Issues of hypocrisy aside, we need to understand that as a nation with democratic aspirations, mere elections does not a democratic country make. Democracy needs to be understood more substantively as a set of political values working in concert with democratic institutions. Chief amongst them is the affirmation of democratic equality; where citizens owe to each other the capabilities needed to functionally participate in civil society as equals, and for each to accept the obligation to justify their actions by principles acceptable to the other.10 A sustainable, living wage is one of the basic tenets that help guarantee these capabilities. A weak commitment to paying workers a sustainable wage actively denies the badly of their capabilities to participate in society and shows a disregard for mutual consultation, reciprocation, and recognition.11

I further submit that the PAP and Chia’s position puts the cart before the horse. No one is denying the importance of productivity gains. But we cannot make conditional our obligations to each other. Instead of trying to peg wage increases to productivity increases, society should provide for all a living wage. We can then start helping these workers increase their productivity after securing their wage. The order of this is of supreme importance. The PAP’s current position treats people as labour to be exploited, where unadulterated market forces determine one’s wage. The minimum wage affirms the citizenship of each member not in a nativist but a communitarian way. It declares that we exist as a society of democratic equals with rights and obligations to each other by guaranteeing the basic capabilities of all workers through securing them a living wage.

 

Endnotes:

1 What is the Progressive Wage Model. Ministry of Manpower. (2020). Retrieved 25 November 2020, from https://www.mom.gov.sg/employment-practices/progressive-wage-model/what-is-pwm.

2 YUEN-C, T. (2020). 32,000 take home less than WP’s proposed $1,300 minimum wage. The Straits Times. Retrieved 25 November 2020, from https://www.straitstimes.com/singapore/ politics/32000-take-home-less-than-wps-proposed-1300-minimum-wage.

3 Low, D. (2020). Tackling our labour market woes requires a diverse set of tools – Academia | SG. Academia | SG. Retrieved 25 November 2020, from https://www.academia.sg/academic-views/ labour-market-woes/.

4 Cohen, G. (2008). Rescuing Justice and Equality. Harvard University Press. pp. 35

5 ibid. pp. 41
6 ibid. pp. 34
7 ibid. pp. 44

8 Lim, L., & Kwan, J. (2020). The economic case for a Minimum Wage: a conversation with Linda Lim – Academia | SG. Academia | SG. Retrieved 23 November 2020, from https://www.academia.sg/academic-views/minimum-wage-conversation/.

9 Ibid
10 Anderson, Elizabeth S. (1999). What Is the Point of Equality? Ethics, 109(2), 287–337. https://doi.org/10.1086/233897. pp. 316 11 ibid. pp. 313

 

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At Yale-NUS College, we are thinking about ideals of equality and democracy, and how they relate to practice, in Singapore and in the wider world.

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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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