The Covid-19 pandemic has cast the spotlight again on the plight of low-wage workers in Singapore (“The perennial debate in Singapore on minimum wage”; June 13), especially those in the cleaning, security and landscaping industries. 

Together with healthcare workers, they form the core of essential workers who kept Singapore going during the circuit breaker.

There have been calls to raise their wages in the past decade in recognition for their contributions to our quality of life. Covid-19 has rekindled the debate. 

Yet others are quick to oppose raising their wages by legal mandate. They argue that any such legislation may cause unemployment for the older workers among them to rise, as employers would prefer to employ younger workers to replace them, given the higher wages to be paid.

Furthermore, such wage increases would have to be passed on to consumers.

A recent survey found that the majority of Singaporeans are willing to pay 10 to 20 per cent more for essential services, provided the extra amount goes to the workers. This reflects the high civic consciousness of Singaporean consumers.

But before we jump to a hasty conclusion that consumers should absorb the full extent of wage increases to support these essential workers, perhaps the authorities could carry out further research into the distribution of the “value-add pie”.

Singapore is an open, competitive economy, and the market price for most products and services is a fair value transacted between buyers and sellers.

The transaction price less direct materials, or what is termed “value-add”, represents the pie to be distributed among the employees and management (wages and benefits), shareholders (dividends and capital gains) and debt providers (loans and bonds) and the Government (taxes).

The research should look into the distribution of this value-add among the stakeholders, specifically between employees and shareholders as well as employees and management.

The research could try to answer these questions:

Are the shareholders or management getting a disproportionate share of the value-add vis-a-vis employees?

How can the Government and civic society groups work with other stakeholders to deal with any imbalance, to arrive at a fairer distribution system?

The recent uproar over the high profit margins of workers’ dormitory operators is a case in point.

Shareholders as equity providers assume capital risk and demand compensation from company profits. But how much of a company’s profits should be shared “equitably” among stakeholders is a grey area.

No consumer would like a significant price increase for products and services, unless it is reasonably justified from a competitive market pricing and social responsibility perspective, such as to help low-wage Singaporean workers level up.

As our society matures and becomes a more caring First World society, we should have open debates about issues such as distribution and workers’ well-being.

All stakeholders can contribute to the debate and make the necessary adjustments to their expectations, so that we can become a more gracious and united society.

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