The Populist Minimum Wage Call By SDP and WP

If minimum wage is the answer, wouldn't you expect the problem of poverty solved in countries with minimum wages?

In the US where statutory minimum wages were introduced nationally in 1938, poverty has not declined. In fact, child poverty in the US is among the worst in the developed world. One in three US children lives in poverty according to UNICEF. (http://wapo.st/1IdtFvs)

Australia has the highest minimum wage in the world. Yet poverty is on the rise according to a report by the Australian Council Of Social Services (ACOSS). It rose from 13% in 2010 to 13.9% in 2012.

So what drives minimum wage? It's mainly politics. 

The call for a minimum wage is a populist appeal to votes and it is in SDP and WP's manifestos to call for a minimum wage.

Implementing a minimum wage is akin to treating symptoms without addressing the causes. It is just a cosmetic change that looks good on the outside but changes little on the inside.

Every revision to the minimum wage without a corresponding rise in worker's productivity adds to the cost of doing business and renders the worker with little skill more vulnerable. 

Why more vulnerable? Because businesses may compensate by cutting back on spending for workers' training. In the long run the worker with little or no skill loses out on skill training and therefore the prospect of earning more with better skills. 

Businesses may also decide to hire fewer workers. As a result, while some workers benefit immediately from a rise in income, others find themselves out of a job. 

The Singapore government's approach to social mobility is a holistic one with social and economic policies working hand to hand to lift people up. 

First it encourages the person who earns little to stay employed by supplementing their income through Workfare. Such an approach which rewards regular and productive work reinforces 'work ethic' which has been the bedrock of our success.

Complementing WIS is the Workfare Training Support (WTS) Scheme. While WIS rewards productive work, WTS encourages the worker to go for training to improve his skills and employability and earn more!

The Progressive Wage Model rolled out by NTUC recognizes that workers must be paid fair wages. Thus it has a minimum wage feature incorporated into it. At the same time, it also recognizes that the way for a worker to earn more after the starting-out wage is to be more productive and not by a revision of that minimum wage. Hence there are provisions for the worker to go for training so that he/she can progress up the wage ladder through higher productivity.

Home ownership is a very important part of lifting people out of poverty. The person who owns his home is free to focus on his job and further training to enhance his employment.
Through generous housing grants, a person earning just $1000 a month is able to afford a 2-room flat using CPF to finance it with no cash outlay. 

What many people do not realize is that the housing grants they receive are not merely a discount on the purchase price of the flats they buy. These housing grants are cash gifts which stay with them and should they sell their flat, the grants will be credited into their CPF account for their retirement. 

Children from low income families can access a range of financial assistance which include waiver of school fees, free textbooks, uniforms, and school shoes, waiver of national examination fees, transport subsidy, pocket money, free breakfast (primary schools), bursaries etc. 

Anyone can make the call for a minimum wage. It's doesn't require much effort to implement it either. You can simply legislate it and pass the cost to businesses. 

But takes more than a minimum wage to lift people out of poverty. It takes a whole lot of schemes and policies to help people and that requires brain work.