Implications of MW

Question 1

Positive Implications (low wage workers)

Answer 1

• They will have a living wage to have dignified living, enough to cover transport, medical, living, etc. (assuming the MW is pegged at a living wage level that is decided after some research done by qualified personnel).
• Dignified because they do not have to justify their wants/needs to different authorities.
• Low wage workers do not have to “wait” for the government to work out the training, accreditation and progressive schemes and “help” in the form of a living wage comes quickly enough to solve their immediate problems.

Question 2

Negative Implications (low wage workers)

Answer 2

• Minimum wage becomes maximum wage - no incentive for employers to increase wages of employees over time
• Both workers and employers are not encouraged to increase productivity because 1. For the workers, it awards monetary gains despite productivity being the same or decreasing, while 2. for the employers, it takes a toll on the companies/employers because they would have to raise wages to the minimum wage floor, and may result in them not being viable (such that they can become bust) and may have to lay off workers.
• With MW for Singaporean workers only, employers could choose to hire foreign labour which might be cheaper than local labour.

Question 3

Positive Implications (employers)

Answer 3

There are clear guidelines from MOM about the MW to pay workers, and this will likely reduce any dispute about (starting) pay.

Question 4

Negative implications (employers)

Answer 4

• Increasing manpower cost
• An increase in wages will increase the costs of operation for businesses in Singapore if they maintain the same number of employees. Businesses generally have two options. They could offset these costs by absorbing the costs themselves, or by passing the costs on to the customers. The paper cited by Lim found that firms did a mix of both: 75% of the increase in salary was passed on to the customer while 25% was absorbed by the business.

Question 5

Positive Implications (service buyers)

Answer 5

It might be easier for the service buyers to calculate the contractual costs associated with the contracts.

Question 6

Negative Implications (service buyers)

Answer 6

Increased manpower costs might be passed on to the service buyers (if they are the end consumers; if they are the middlemen, then they pass on the costs to the end consumers).

Question 7

Positive Implications (consumer)

Answer 7

Consumers can enjoy the services with “peace of mind” knowing that they are paying a dignified living wage

Question 8

Negative Implications (consumer)

Answer 8

Increased manpower costs might be passed on to the consumers

Question 9

Positive Implications (government)

Answer 9

Clear guidelines for enforcement (MOM) when it comes to labour disputes concerning pay because it is common across sectors.

Question 10

Negative Implications (government)

Answer 10

• MW could create at first an unstable economic environment in which there is some “economic correction” whereby some workers are laid off or retrenched because the companies become unviable and may go under. The hopeful result is that these laid-off workers will be subsequently hired by viable companies, thereby “correcting” the situation. Otherwise, the government may have to provide financial aid to the retrenched workers or to companies that have difficulties coping with the increase in manpower costs in order to help these companies retain as many workers as possible. Both are, however, not long-term sustainable solutions.
• May not be the fairest way because some workers may be laid off and then hired back at minimum wage. (Minimum wage becomes maximum wage) so there might be disputes and complaints to be handled by the govt when employees complain about being fired unfairly.
• Difficulty in determining a suitable minimum wage level
• There may be pressure on the government to keep on increasing minimum wage over time (and this increase in minimum wage may not necessarily correlate with an increase in productivity) [can further elaborate on the knock-on effects but be wary of slippery slope].