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WP MP Jamus Lim’s minimum wage, ‘compassionate policymaking’ proposals draw fire from Tharman, PAP MPs

SINGAPORE — The proposal for a minimum wage policy, a contentious issue during July’s General Election, was again debated intensely in Parliament after it became a key focus of Member of Parliament (MP) Jamus Lim’s maiden speech on Thursday (Sept 3).

During a debate in Parliament, Mr Tharman Shanmugaratnam (left) took issue with the comments made by Dr Jamus Lim (right) on the PAP Government's social policies.

During a debate in Parliament, Mr Tharman Shanmugaratnam (left) took issue with the comments made by Dr Jamus Lim (right) on the PAP Government's social policies.

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  • The maiden speech of WP’s Jamus Lim led to a fiery debate on minimum wage
  • The effectiveness of the Progressive Wage Model and how to pay for social policy reforms were discussed
  • Dr Lim’s speech called for more compassionate social policies that prioritise equity over efficiency
  • The debate saw Senior Minister Tharman Shanmugaratnam make a rare interjection 
  • Pressed by various MPs, Dr Lim conceded that a minimum wage is not ideal for now 

 

SINGAPORE — The proposal for a minimum wage policy, a contentious issue during July’s General Election, was again debated intensely in Parliament after it became a key focus of Member of Parliament (MP) Jamus Lim’s maiden speech on Thursday (Sept 3).

Dr Lim from the Workers’ Party (WP), MP of the new Sengkang Group Representation Constituency (GRC), found himself in the hot seat for more than 30 minutes as seven People’s Action Party (PAP) MPs and political officeholders questioned his call for a universal minimum wage policy and a defined poverty line. 

Under heavy PAP artillery, which saw Senior Minister Tharman Shanmugaratnam make a rare move of wading into a heated parliamentary debate, Dr Lim conceded that a minimum wage is not ideal under current economic circumstances and he did not know if it would cause adverse consequences if implemented. 

Among other things, Mr Tharman took issue with Dr Lim’s characterisation of the PAP’s social policies, highlighting the Progressive Wage Model, Workfare and other social support schemes over the years.

Mr Tharman, who is also Coordinating Minister for Social Policies, said: “Raising the standard of living for the poor is a complicated matter… It's not a job that's (completed) for good. We have to do more.” 

 Dr Lim, in his speech, also called for “compassionate policymaking”.

While past policies have brought Singapore from the third world to first, he critiqued the ruling party’s policymaking as putting efficiency at the expense of equity and as insufficiently compassionate — describing the Government’s policies as  “tentative, incremental (and) kiasu”.

Instead, he held up WP’s proposals for an across-the-board minimum wage, negative income tax schemes and more flexibility in accessing monies in the Central Provident Fund as examples of “actionable” policies.

The associate professor of economics at Essec Business School said: “What I am suggesting, Mr Speaker, is that the sort of decisions we make as a society and as a country should no longer privilege efficiency at the sheer expense of equity.

“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.”

MINIMUM WAGE NOT IDEAL RIGHT NOW

Among the PAP parliamentarians who jumped into the debate were Ms Gan Siow Huang, Minister of State for Manpower and Education, and Mr Zaqy Mohamad, Senior Minister of State for Manpower.

Rebutting Dr Lim’s proposal on minimum wage, they said that it cannot be introduced without affecting people’s jobs, contrary to what he said about “reams of studies” suggesting that minimum wage had a limited impact on employment.

Ms Gan said: “Businesses have been challenged and there is a recession. There is a very real risk that if we were to introduce minimum wage or universal minimum wage across all sectors, I think many of our low-wage workers may lose their jobs.

“From low wage, they will become ‘no wage’.”

To this, Dr Lim conceded that in a time of crisis, such a minimum wage policy “may not be ideal”.

“But let us come together and agree that this is a principle that we want, so that when we set these plans in place after the storm has passed, we can easily bring them to pass,” he continued.

This led MacPherson MP Tin Pei Ling to quiz him on whether this was an admission that a minimum wage policy will have unintended adverse effects on the economy and jobs.

He responded: “I did say that this is not an ideal time, but I do not know if we were to roll out the minimum wage, whether this would result in actual adverse consequences. So, it is a ‘necessary but not sufficient’ condition.”

THE PROGRESSIVE WAGE MODEL

During his turn to question Dr Lim, Mr Zaqy argued that the current Progressive Wage Model — which sets out minimum pay and skills requirements for certain sectors of low-wage earners — fundamentally differs from WP’s proposal because it is sectoral in nature. 

The Progressive Wage Model has also seen wages among these workers rise by 30 per cent in the past five years, and will be expanded to cover more sectors.

A single minimum wage level set across all sectors will not work out, considering that security guards are already paid more than cleaners, for example, Mr Zaqy said. There is also value in taking a sectoral look at minimum wages, with unions, the Government and employers coming to the table.

“We have to come to positions (on the minimum wage level) that are bearable, that (a wage floor) is not just a blunt tool or a straight line across all sectors that results in employment being difficult for some,” Mr Zaqy added.

Defending his suggestion, Dr Lim said the problem with the sectoral approach is that it is an “over-engineered system”, and if it is gradually rolled out to more sectors, there is a chance that subsequent schemes will differ greatly from its original aims.

There is also a risk that this inequality in wages allows employers to “game” the system.

“You want to shut out this possibility of substitution between workers in one sector and another, such that employers end up gaming the system in that fashion,” Dr Lim said.

This substitution effect is why setting minimum wages for Sengkang Town Council cleaners will be ineffective, Dr Lim added when asked by Ms Tin how much the WP-held town council paid its low-wage workers.

Both Ms Tin and Sembawang GRC MP Vikram Nair had interjected to find out what is the level of minimum wage that WP deemed appropriate.

Dr Lim said that a national commission, comprising tripartite partners as well as academics, needs to study this.

“I should be clear, I do not know (what the level should be),” he said again. “We should have an independent panel… that should continue to exist year after year after the minimum wage policy is rolled out, because that will allow us to continually evaluate whether the level of the minimum wage is appropriate.”

PAYING FOR SOCIAL POLICY REFORM

Mr Zaqy then queried Dr Lim on his plans to fund his party’s social policy suggestions: “It's easy to talk about compassion when it's just mere talk and you don’t need to put money on the table.

“You also have to consider, as a government, where the money comes from, how you manage the budget, where (we) have to raise the Goods and Service Tax.”

Dr Lim then countered by saying that households are impermanent and they thus need to save more.

Governments, on the other hand, have an “infinite horizon” and can end up over-saving — referring to Singapore’s past reserves.

The topic of using reserves was a key point in Prime Minister Lee Hsien Loong’s speech on Wednesday. Mr Lee said that the reserves should not be used to fund social policy changes as a matter of principle.

Dr Lim advocated otherwise on Thursday, stating that the Government should instead “make the best use of financial resources and not cling to some rigid ideology that we should never touch (the reserves)”. 

Instead of over-saving, money can be invested in other needs such as on the youth and education, which would ultimately pay out “higher returns” down the line, the Sengkang MP said.

He likened it to the concept of remortgaging, in which people refinance their home loans to take advantage of the present low-interest rate environment in order to expand their leverage. 

This led Potong Pasir MP Sitoh Yih Pin, a chartered accountant by profession, to challenge Dr Lim’s assumption that spending the reserves will definitely generate better returns.

“I can tell you that (remortgaging) is how people start getting into trouble. I hope you're not teaching that in your classes,” Mr Sitoh remarked.

Dr Lim’s comeback was that he was not assuming there will surely be better returns in future: “It is recognising that there are higher-return projects today, unless you're saying that it is not worth investing in the youth of today in Singapore.”

NO MONOPOLY ON COMPASSION

Circling back to Dr Lim’s statement that there has to be more compassion in policymaking, Mr Zaqy said that PAP’s measures over the years should be looked at as a whole, beyond wages alone.

Around 70 per cent of the bottom-fifth of earners own their own homes, which are subsidised, and government transfers have led to 30 per cent extra income for low-wage workers in the form of Workfare. 

The substantial transfers during the four national budgets during Covid-19, which cost S$100 billion in total, also protected jobs during this crisis.

“The proof is in the pudding,” Mr Zaqy said.  

Towards the end of the heated debate, rising to address the various speakers before him, Mr Tharman said: “I would like to suggest that none of us have a monopoly over compassion.

“And I say this not to discredit anyone in particular. I really respect where Member Jamus Lim is coming from intellectually, emotionally and so on, but no one should assume that (they) have a monopoly over compassion.”

Himself an economist, Mr Tharman affirmed that the PAP Government truly believes in raising the wages of Singapore’s lowest-paid workers and had made “significant progress” in the last decade doing so.

“Here's a bit of advice. Try to avoid straw-man arguments, like saying that the Government is only interested in efficiency and not equity. That's frankly laughable,” the senior minister said.

“We seem to have a consensus that (doing more) is our objective. But just try to avoid straw-man arguments and pretend that you have a monopoly in compassion.”

To this, Dr Lim said he was really suggesting that there was a continuum in trade-offs between equity and efficiency, and recognised that there are compassionate policies by the PAP Government, as well as members in the PAP who talked about compassion in the ongoing debate on the President’s Address.

“So I do believe, like Mr Tharman does, that there is quite a bit of daylight, and there is not as much of a gap between the thinking of the two (parties).”

Related topics

Parliament minimum wage Jamus Lim Tharman Shanmugaratnam

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