Speech on Motion on Inclusive Growth

Speaker Sir,

Despite economic expansion in the past years, the 2009 report on wages in Singapore shows that the median monthly gross income for cleaners, labourers and related workers went up by only $37 to $1,307.

The GDP growth has created an uneven distribution of income and wealth the past decade. The GINI Coefficient for Employed Households has been climbing steadily since 2000, peaking at 0.489 in 2007 before easing off the past 2 years. At its peak, Singapore was reported at number 2 on the list of top countries with the biggest gaps between the rich and poor.

The wealth divide continues to widen as prices of private property continue to climb. Data released by URA shows prices of private apartments in the city centre have broken their previous peak recorded in 2008.

The average monthly income of the bottom 20 per cent of households have seen a decrease in the past decade, in contrast to about 50 per cent increase for the top 20 per cent of households. The wage gap between the top and bottom income earners has also widened from a decade ago. In 2009, the top 20 per cent of households earned 12.7 times the income of the bottom 20 per cent, which is one of the highest income gaps in the world.

The Resilience Package and other government schemes in 2009 helped push the GINI coefficient slightly lower but these measures could only provide temporal relief.

It is clear that our society is at risk of being polarized by the issue of growing income gap and uneven wealth distribution.

Uplifting of Lower Income Group/Low Wage Worker

I have noted the government’s commitment to invest in re-training our workers and encourage businesses to improve productivity. The end result is just a hope that there will be a rise in wages. Until that happens, how is the low wage worker going to face the rising costs of living?

Workfare Income Supplement
Let me start with the Workfare Income Supplement (WIS) scheme. I support the principle behind WIS, but there is room for improvement. It should be expanded to better narrow the income gap.

First, there should not be a minimum 3-month work requirement to qualify for WIS. Second, WIS should be paid out for every month that the worker remains employed, instead of the current half-yearly or yearly payouts. This will be more effective in helping them meet their monthly expenses.

The current policy requires informal workers to make Medisave contributions before qualifying for WIS payments which are credited entirely into their Medisave accounts. This policy should be revamped, as it discourages participation in the WIS scheme. Informal workers should receive their WIS payments without any preliminary Medisave contributions. A portion of their WIS payments should be in cash.

WIS payments should be increased so as to benchmark against the cost of living and an income sufficient for a decent and dignified life in Singapore. The major portion of WIS payments should be in cash.

The quantum of WIS payments for informal workers should be raised to match that of formally employed workers.

Recommended Minimum Wage (RMW)
While I believe that skills training and upgrading as well as productivity growth should have some effect in uplifting the income of some low wage workers over time, I am of the view that we should track these strategies closely to determine if they are sufficient and effective overall and not denounce the option of minimum wage too soon.

I believe not all job processes can be significantly improved to a desired productivity level to enable a worker to be paid fairly according to the value of the work done. I am also skeptical that Continuing Education and Training (CET) will eventually equip all workers with sophisticated skill sets to command higher wages.

There will come a day when Singapore will achieve significant productivity growth and skill efficiency to move up the economic value chain. When that day arrives, can our low skill workers catch up and move up the value chain as well? Based on historical data, the wages of these workers may be left stagnant again as I have highlighted in this house before. When that happens, we may have to consider a minimum wage policy.

I would like to state that the Workers’ Party is not advocating the introduction of a minimum wage at this point of time. It would be preferred if our workers can command good wages by being competitive internationally and doing higher value work. However, if our low wage workers are still not uplifted despite the efforts of productivity growth and CET, minimum wages may have to be considered.

The government has incentivized innovation and productivity improvements. It hopes that various industries can show progress in these areas. Since the aim of all these efforts is to uplift wages, the government should work with the various industries to set tangible wage benchmarks for workers to strive towards.

I propose a Recommended Minimum Wage (RMW) Advisory Board to be set up by the Government to undertake research on the recommended minimum wage for specific industries in consultation with employers and unions.

Recommended Minimum Wage can provide a tangible benchmark for the labour market to follow. It can also prevent the exploitation of labour. More importantly, it will spur the employee to upgrade his skill over time in order to reach a desired wage target. Employees will also know which employers are grossly underpaying their staff or have not upgraded their work processes.

RMW will also push employers to raise productivity in the long run. Employers who consistently underpay their workers will find it hard to hire good hands.

Meaningful Growth

As for the sharing of the fruits of prosperity, I would expect the government to give big handouts and goodies in the coming Budget, in time for the General Election. However, what is more important and pressing now is for us to formulate polices that promote meaningful growth and social cohesion.

Everyone must feel a sense of progress with the nation; not a sense that they will occasionally get scraps which fall from the table. It is not meaningful to boast about the economy year after year if the income levels of low wage workers and middle class families are not uplifted in the process. It is also not much meaning for a nation to achieve high economic growth when a growing segment of the population is finding it more difficult to own a home or a small family car with each passing year.

Let us measure the well-being of our country with a new indicator that comprises more than just Gross Domestic Product, Gross National Product and Consumer Price Index numbers. The statistics and data captured will affect the formulation of policies to run the country.

Besides being an indicator for economic performance, the proposed composite index should include measurement related to quality of life and as well as social progress.

It is written in our Pledge that we should achieve happiness, prosperity and progress (HPP) for our nation. Perhaps, a Happiness, Prosperity and Progress or in short, HPP index should be created to measure how meaningful our growth is as a nation in the next decade.