SINGAPORE — The maiden parliamentary speech by Workers’ Party (WP) MP Jamus Lim on Thursday (3 September) covering minimum wage and compassionate policymaking drew a flurry of questions and robust reactions from several People’s Action Party (PAP) MPs.
Associate Professor Lim, who is the MP for Sengkang GRC, argued the root of some challenges Singapore faces, such as low-wage workers and the elderly poor, is “insufficient compassion” in its policymaking process.
The decisions Singaporeans make as a society and country should “no longer privilege efficiency at the sheer expense of equity”, he stressed during his 18-minute debate on the President's Address.
Acknowledging Singapore’s “form of minimum wage policy” – or the Progressive Wage Model (PWM) – Prof Lim called for the government to look instead at implementing “a simple, across-the-board minimum wage”.
He pointed out that the employment impact of a minimum wage will likely be “very minimal or statistically insignificant” based on empirical evidence from all over the world.
“Because we are no longer a third-world nation, we cannot continue to operate as if we are blind to the consequences that tough-nosed policies carry for our people.”
He also expressed his belief in Singaporeans not being inherently “anti-foreigner”. “But what has inspired recent resistance to foreigners is concern about unmitigated population expansion, a sense that they are not getting a fair shake, of feeling discriminated against in their own country,” Prof Lim said.
Minimum wage model not ‘ideal’ now
Minister of State for Manpower and Education Gan Siow Huang agreed with Prof Lim that compassion must be exercised in policymaking, which is what the government has been trying to do.
But in doing so, policies may become very complicated as there is “no one-size-fits-all policy”, said the Marymount SMC MP.
She took issue with Prof Lim’s suggestion that the minimum wage model will have minimal impact on unemployment, especially in the context of the current recession.
“...(There) is a very real risk if we were to introduce a universal minimum wage across all sectors (now), many of our lower-wage workers may lose their jobs. From low wage, they become no wage,” Gan said, of what she described as “unintended consequences of policies with good intent”.
Prof Lim acknowledged that while the policy may not be “ideal” in the present, policymakers can agree on its principle now so that plans can be set in place “after the storm has passed”.
But this does not mean that he believed it would result in “adverse consequences” if it were to be rolled out now, he stressed, in response to MacPherson SMC MP Tin Pei Ling’s question on whether he agreed with Gan’s statement.
Tin also asked if this meant that the minimum wage model would be retracted during economic crises and of the minimum wage of cleaners in the Sengkang Town Council.
Prof Lim countered that the whole point of the minimum wage is to provide a social safety net, and if it were to be removed during such times, it “will pull the rug out under those workers”.
Stating that the WP team has not made decisions on the minimum wage of the Sengkang Town Council, he noted, “Can we just roll out a minimum wage in a given town council? No...substitution (will occur).”
Other PAP MPs who questioned Prof Lim are Marsiling-Yew Tee GRC MP Zaqy Mohamad, Potong Pasir SMC MP Sitoh Yih Pin, and Sembawang GRC MP Vikram Nair.
Zaqy, who is also Senior Minister of State in the Ministry for Manpower and Defence, outlined the fundamental difference between the PWM and the minimum wage model: that it is different across sectors.
When asked by Vikram what is his proposed minimum wage level for Singapore, Prof Lim conceded that he does not have the answer and stressed the need for a national commission to study the issue.
This independent panel should be staffed by university professors, union representatives, and firms – “our famous tripartite arrangement” – as well as continually evaluate the situation after the policy is rolled out.
Household vs govt budgets
Zaqy noted that compassion currently exists in actions taken by the government, notably when it announced four Budgets from February to May totalling $92.9 billion to help businesses, workers and households cope with the impact of the COVID-19 crisis.
“It is easy to talk about compassion when it’s just mere talk...as a government you need to consider about where the money comes from,” the Deputy Leader of the House said, while acknowledging it can do more. “Where the PAP government made the difference, we put the money where our mouth is.”
Touching briefly on the issues of the reserves, Prof Lim said that government budgets should not be thought of in the same fashion as those for households.
“Households have finite horizons, people can bequest things on to the next generation, by and large, households eventually perish,” said Prof Lim. “Governments have an infinite horizon and because of that we can think in much more longer term.
“We want to make the best use of financial resources and not cling to some rigid ideology that we should never touch (the reserves).
“The way we should think about our expenses, such as our reserves...we are stewards and we are responsible not just for ensuring that the pot will grow over time...but also for taking the right financial decisions, which certain times may involve spending for (things of) higher investments, such as education.”
Sitoh said he was “rather perturbed” by Prof Lim's comparison of such usage of the reserves to a household's decision to remortgage its home while interest rates are low.
“As an accountant with over three decades of experience, I can tell you that is how people start getting into trouble. I hope you're not teaching that in your classes,” he noted, adding that Singapore is one of the few countries that have not have borrowed during the pandemic.
Prof Lim said the analogy was used to illustrate that there are instances where borrowing against low-interest rates to investing in something that gives higher returns “is not just financially prudent, it is in fact going to be better for your balance sheet in the long run”. It is also possible for a government to over-save, he added.
Sitoh retorted, “This is living in a stage of euphoria...you are assuming that there is a better return that may never come.”
Prof Lim countered he was not assuming a “future euphoria” but recognising there are higher return projects in the present.
“Unless you are saying that the youths of today in Singapore are not worth investing in,” he added, prompting speaker Tan Chuan-Jin to say that that was not the point being made.
Avoid ‘strawman arguments’; no one has ‘monopoly’ over compassion
Senior Minister Tharman Shanmugaratnam, the last PAP MP to respond to Prof Lim’s speech, made repeated calls to avoid “strawman arguments” as well as assume one has a monopoly over compassion.
“A bit of advice: Try to avoid strawman arguments, like saying the government is only interested in efficiency and not equity. That is frankly laughable,” said Tharman, who is also Coordinating Minister for Social Policies.
"I would like to suggest that none of us have a monopoly over compassion, and I say this not to discredit anyone, and, in particular, I really respect where member Jamus Lim is coming from, intellectually, emotionally and so on...no one should assume that you have a monopoly over compassion," he added.
Tharman stressed the government’s strong belief in raising the wages of Singapore’s lowest-paid workers. “We've achieved significant progress in the last 10 years, and in the last five years, and we think we should go further.”
On the PWM, he said he would not "exaggerate the differences" between it and the minimum wage model.
The former’s sectorial approach, which he described as "minimum wage plus", allows the government to set at “a level that is not so low and not so high”.
“How to do it without gaming is an issue that policymakers grapple with – not such a complicated issue in practice to be frank. We have to watch what happens at the edges, but it is a very sensible approach,” Tharman added.
But raising the standard of living of the poor is a “complicated matter”, as it would entail a balance between retaining the wage earner’s ability to have a job and earning a wage, he conceded.
“I say that by the way of an economist and someone who studies overseas experiences very carefully, and – who together with my colleagues – as a practitioner,” said Tharman.
He also took aim at Prof Lim’s citation of a study by the National University of Singapore to bolster his argument.
“I've never heard economists cite a university as a source of research, be it a well-regarded or not very well-regarded university. Individuals do research, and it may be very credible research, but universities don't publish research,” he said.
Prof Lim, in response, expressed regret in coming across as if he, his party, or an individual had a monopoly in compassion.
“In fact, that was explicitly why I did cite cases where I felt that existing policies demonstrated oodles of compassion. I even cited other members who have, not from our party, also talked about compassion,” he stressed.
But he argued that he was not setting out a strawman argument in talking about an efficiency-equity trade-off.
“I am not suggesting that every policy that is currently in place is only geared towards efficiency and likewise, I am not suggesting that every policy that I have laid out in my speech and elsewhere is only geared towards equity,” Prof Lim concluded.
“Rather it is about a continuum, I am arguing that we can move more in the direction of favouring equity over efficiency.”
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