Hike similar to civil service's move means higher costs for contract work
By Janice Heng , Lee Xin En, The Straits Times, 7 Jun 2012
A DAY after the Government announced that lower-wage civil servants will get a pay rise next month, a number of private-sector employers say a similar move would be a burden.
Most of the 20 employers of cleaners, security guards and landscape gardeners interviewed yesterday cited the way business is done as the main obstacle.
Their services are usually provided on a contract basis. And when they bid for contracts, price is the top consideration.
So, if they raise their workers' wages, they would need to quote higher prices - and higher prices in these competitive sectors will probably mean no business, many said. 'We would like to pay our cleaners well, too, but we have to look at whether we can be successful in bidding when our prices are high,' said Mr Derek Tan, manager of cleaning firm Gladen Maintenance Services.
Already, companies are facing rising costs like rent, so it is hard for them to raise wages too, added Joaquim Garden and Landscape director Kenneth Chee.
On Tuesday, the Government said civil servants earning between $860 and $1,540 a month will get a pay rise of $60 next month.
This is more than the minimum $50 pay rise recommended by the National Wages Council (NWC) for workers whose basic monthly pay is $1,000 or less. Such workers dominate the security, cleaning and landscape industries.
Since 2006, the NWC has tried to coax companies into paying more for their services. Still, monthly wages for the average cleaner have fallen from over $1,200 in 2000 to $960 in 2010.
Mr Tai Kwang Kit, director of cleaning firm Avon Group, hopes the Government's lead in raising wages will convince clients to not simply 'clamour for the cheapest service providers.'
Aero Asia Security Systems is one company that has convinced its clients to pay more. Its guards will thus get a $50 raise this year, said general manager Selva Kumar.
But not many security firms can do the same because a basic pay rise of $50 means overtime pay will rise in tandem, said Security Association (Singapore) president T. Mogan.
As most guards work four hours of overtime a day, at 1.5 times the basic salary, there will be a steep rise in manpower costs.
In sectors that do not rely on contracts, pay rises are likely.
Coffee shop association head Hong Poh Hin expects most coffee shops to give the recommended $50 increase to their stall assistants and cleaners.
'It's quite hard to get workers nowadays, so paying more will help,' said Mr Hong, chairman of the Foochow Coffee Restaurant and Bar Merchants Association.
This likelihood will bring cheer to people like Madam Jiang Nee, 63, who clears plates at a Toa Payoh hawker centre. Paid less than $1,000 a month, she has not had a pay rise in three years.
She said she will use the extra money for her sister's medicines.
Others said any pay rise would help defray expenses such as utility bills, groceries and transport.
But stall assistant Goh Hock Chee, 50, said: 'I don't care much for such a small increase. It doesn't cover food, utilities or transport.' However, a stall assistant who wanted to be known only as Mr Wang quipped: 'Well, $50 is little, but it's enough to buy a ray of hope - a Toto ticket!'
Scope to consider minimum wage in some sectors: industry players
By Saifulbahri Ismail, Channel NewsAsia, 9 Jun 2012
As the income gap widens in Singapore, MPs, unionists and some employers MediaCorp spoke to have argued the case for some form of minimum wage.
They said there is scope for such a policy to be introduced in specific sectors, especially where there is a large pool of low-wage workers.
But for it to work, they added, the government has to come in to help.
The cleaning, security, as well as food and beverage sectors, have a considerably large pool of low-wage workers.
For example, a security guard's basic pay could be as low as S$400 a month.
The bulk of the pay comes from clocking over-time.
12-hour shifts are the norm.
The sector's union would like to see some form of minimum wage for its workers.
But it also understands that with minimum wages, there is a need for changes to the working hours.
Mr Hareenderpal Singh, an exco member of the Union of Security Employees, said: "For the security sector to implement minimum wage, it has to come hand in hand with the reduction in the working hours.
"Currently, security officers work a mandatory four hours of OT (over-time)every single day in a month. So, a major part of their salary is from the OT component.
"If you want to implement a minimum wage, the hours have to be reduced to a basic, they only work eight hours and they get a basic salary.
"For a decent basic minimum wage for a security officer, if you want to implement, it would be about S$1,200, and on the other hand they would be able to have some work-life balance."
Mr Hareenderpal Singh added that security officers working on an eight-hour shift are happier and tend to stay longer with the company, compared to an officer on a 12-hour shift.
MP from Ang Mo Kio GRC, Inderjit Singh, felt there is some merit in testing out a sectoral-based minimum wage system.
He said: "There're some merits in testing in out by sectors. So, for some sectors where we have chronic issues, like the cleaning sector and the security sector, we can think about possibly implementing minimum wage for those sectors, and then see how it goes before we fan it out to all other sectors."
MP for Tampines GRC Irene Ng agreed. She said that it is worth exploring whether setting a sectoral minimum wage for certain sectors, such as contract cleaning, "can have a positive impact on wages while keeping unemployment low".
She told MediaCorp: "We know that the wages of certain low-end jobs, in particular cleaners, have declined or remained stagnant for many years.
"Over the years, there have been efforts to improve their wages but progress has been painfully slow. It is worth exploring whether setting a sectoral minimum wage for certain sectors, such as contract cleaning, can have a positive impact on their wages while keeping unemployment low.
"The question is how to fix the minimum wage so as to maximise the benefits and to minimise the costs. We should study the experience of other countries which have implemented sectoral minimum wages and assess for ourselves what would work for Singapore.
"But one thing is certain, we have to do something drastic if we seriously want to lift the wages of those at the bottom."
The Association of Small and Medium Enterprises said a policy on sectoral-based minimum wage is long overdue.
It added the government has so far been using broad brush strokes and negative effects have ended up hitting industry clusters.
"I think to conduct policy on sectoral basis for balancing is long overdue. In fact, to implement any economic policy into industry-cluster is way long overdue," said Kurt Wee, vice-president of the Association of Small and Medium Enterprises.
"The government has been using broad brush strokes and negative effects, unintended I believe, ended up hitting industry-clusters."
On the S$50 wage rise recommended by the National Wages Council (NWC), Mr Inderjit Singh said that even though it is well-intentioned, it may not produce the desired outcomes.
""We are using the incentive approach, encouragement approach, but I'm afraid that this may not work as compared to legislating a minimum wage, simply because if you give choices there will always be companies who squeeze their workers when it comes to cost reduction, instead of looking at other areas of cost reduction," he said.
Mr Wee said that besides sectoral implementation, a policy on minimum wage can also be looked into from an industry-cluster perspective.
For example, he said, in the services industry, there is a big difference between security and headhunting services.
While the latter can absorb negative impact of a minimum wage, the former may not. Implementing a minimum wage on a sectoral basis would then allow policies to be more targeted, thereby avoiding negative impact on unintended sectors.
The reality is that any policy on minimum wage will hit employers.
Those MediaCorp spoke to said the government can step in by giving direct wage supplement to the lower-wage workforce.
One way to address this is for the government to offset some of the costs.
The Association of Small and Medium Enterprises said this could come in the form of a direct wage supplement to the lower-wage workforce.
MP Inderjit Singh offered another suggestion - that will also take into account productivity gains.
He said: "Let's say we decide that S$1,500 is the minimum wage and workers are being paid S$1,000 now, then the S$500 can be something that the government supplements, but at a declining rate, so that over a period of, say, 4 to 5 years, the companies will have to bear the full burden of the minimum wage.
"The advantage of this approach is that companies know that they have to rely on productivity improvements to bear the full burden of the minimum wage, while in the short term they will not have sudden cost increase. So I think it will be a win-win for everyone."
Labour economist Associate Professor Randolph Tan from SIM University, though, sounded this word of caution.
He said: "If the minimum wage means that workers in these targeted sectors is higher than what they would have received in other sectors, it would attract more workers (into those sectors).
"Now, that's good for employers in these sectors but it also means that the workers you're specifically trying to help may end up having to compete with more people.
"There are more competitors for a limited number of jobs in these sectors. So, these are practical issues. At the end of the day, are these workers whom you originally intended to help will be better off or worse off?"
The government's stand has always been that any wage increase must be in tandem with productivity gains.
The concern is also that a minimum wage policy may result in the country losing its competitiveness.
To help low-wage workers, the National Wages Council (NWC) this year recommended a S$50 wage increase for those earning S$1,000 and below.
Singapore has not taken to minimum wage policy so far, fearing, among other things, that such a policy would lead to higher unemployment among low-wage workers.
The government is also worried that companies will find Singapore unattractive, fold up and move out of the country.
Mr Inderjit Singh reiterated his position that this is an old argument.
"We have many other factors going for Singapore, that make us attractive to keep companies here. So, I think, let's say we have a motivated workforce that is paid well and help companies in productivity improvements and make more profits, I think these will be more important factors to look at than to worry about companies just leaving us because we have minimum wage.
"While it was true in the past, we have gone beyond that right now and we are in the situation where we have a tight labour market. So I don't think we need to worry too much about it."
He added that for companies to operate in Singapore, they have to get used to a certain minimum cost of operations.
"Many of these companies will be forced to improve productivity and move up the value chain in some cases over a period of time.
"Those who do it deserve to continue operating but those who refuse to change and still expect to pay workers low wages may not survive in a high-cost country.
"This is no different from companies in the US or in Switzerland or any other developed countries.
"There comes a time when you have to be prepared to pay a certain cost for operating in that country, and for you to make the profits you focus on productivity, on higher-value added activities and new activities."
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