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Universal minimum wage could leave workers, firms worse off: Koh

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The Workers' Party's call for a universal minimum wage could leave workers and firms worse off, with the exercise to determine the wage level devolving into a political auction, said NTUC deputy secretary-general Koh Poh Koon yesterday.

A single minimum wage is not a panacea for low-wage workers, and like all other policies, there will be pros and cons, with politicisation one of the big risks, he said.

His remarks come amid growing discussion on the minimum wage, and drew rebuttals from WP MPs.

The WP has called for a universal minimum wage of $1,300 to be introduced across all sectors.

Dr Koh, who is also Senior Minister of State for Health, said that while a single minimum wage is "seemingly a quick way to raise the wages of workers", it could inadvertently put the most vulnerable low-wage workers at a disadvantage.

Each sector will have a different profile of low-wage workers and different realities, he said, adding that an arbitrarily prescribed wage level is likely to be either not high enough to benefit all workers, or so high that companies in some sectors pass the costs back to consumers, cut back on hiring or go under.

Dr Koh cited Leader of the Opposition Pritam Singh's Facebook post on Monday that said a universal minimum wage is a "moral imperative" and an "act of national solidarity".

Dr Koh said: "In a political contest, a political party will surely come along and say, well, $1,500 will reflect higher 'moral imperatives'. Yet another will come along and say $1,300 is good, $1,500 is better, but $1,700 must surely be more divine, more imperative. It can become a political auction."

He warned of such a process gaining momentum and becoming detached from market realities, saying the minimum wage would escalate beyond what firms can afford and imperil the jobs of low-wage workers, as seen in other countries.

While more can and should be done to help the lowest paid, he said "the cure should not be worse than the problem it tries to solve".

In reply, Mr Singh said this could be avoided if the minimum wage is set by an independent panel of experts, such as the National Wages Council.

Basing the quantum on statistics such as the average household expenditure on basic necessities can make the number more realistic, added the Aljunied GRC MP.

Dr Koh also asked if the minimum wage should cover migrant workers and how this would be balanced against the "moral imperative" to help SMEs that are struggling.

Mr Singh said the WP's proposal does not cover foreign workers as they are subject to other regulatory levers including quotas and levies.

But the Government can introduce a minimum wage for Singaporeans first, then study the situation, he said.