On 1 April the UK Minimum Wage was raised to £10.42 per hour. At current exchange rates of around £1=$1.65 that works out to over $17 an hour. There is a lower minimum wage for younger workers aged 18-20 of £7.49 ($12.36) but this contrasts with Singaporean men between those ages earning probably lees than $1 per hour during NS unless of course they are a Government scholar whose ranks are normally reserved for the children of the PAP elite. While no one would describe the UK as a paradise for lower paid workers and there has been an unprecedented in recent times squeeze on real incomes, $17 an hour is more than twice as much as lower paid workers in Singapore earn.

The PAP Government wants lower paid Singaporeans to believe that they are much better off than workers in other countries. Back in 2012, in a Marie Antoinette moment at the World Economic Forum in Davos, LHL remarked that while it was “no fun” being poor, Singapore was probably the best place to be poor in, even better than the US or the UK, or words to that effect. Marie Antoinette was the French queen and wife of Louis XVI, who was overthrown and executed during the French revolution. As every schoolboy knows, when told that the poor were starving and there was no bread, she is supposed to have said “Let them eat cake”.

At least Marie Antoinette lived in ignorance of the conditions of the poor, whereas LHL knew he was being mendacious. The whole PAP economic model has been built on low wages. I have pointed out since at least 2012 that it is based on a very simple model developed by the Nobel Prize winning Caribbean economist W A Lewis entitled “Economic Development with Unlimited Supplies of Labour.” (see here, here, here and here) During the initial stages of industrialisation in the 1960s there was a big pool of unemployed or underemployed labour but as the economy boomed and this pool was used up wages should have risen. Instead the PAP looked around at what were then vast supplies of underemployed labour in the region and decided to make it easy for employers, of which they were the major one, to bring in workers from these countries and pay them very little. This pressure on wages from foreign entrants to the labour market has helped to drive the share of consumption in GDP below 40% and boost the surplus owned by state-owned companies and thus the reserves. LHL. While the PAP claim that the growth in the reserves benefits Singaporeans, I have repeatedly shown that this is at best disingenuous and at worst an outright lie. Except for the pandemic year of 2020, the Government has run a surplus every year and has run up a cumulative cash surplus since 2004 of nearly $400 billion while GIC’s, MAS’s and Temasek’s assets have grown anywhere from twice to three times that amount.

So it can continue exploiting low wage workers from Asian countries and accumulating surpluses from the economic growth fuelled by the rise in the workforce, the PAP have always sought to fool Singaporeans into thinking that a minimum wage will be harmful (for my article refuting this see here). The standard lie is that a minimum wage will cause unemployment. But it is hard to see that this is true. Most econometric studies of the impact of minimum wage in developed countries have shown that it has little effect on employment and if there is any it is usually positive (presumably because higher incomes lead to higher consumption expenditures and thus greater demand for goods and services). In Singapore there is good reason to think that a minimum wage, applied across the board to Singaporean and foreign workers, will actually lead to employers substituting Singaporeans for foreign workers and thus to lower unemployment among Singaporeans. As I have shown (see here), the PAP claim that jobs are plentiful for Singaporeans is another of their lies. In fact the labour force participation rate is probably well below 60% once account is taken of NS, which removes men in that age group from the work force.

Instead of minimum wage, the PAP have introduced something called the Progressive Wage Model (PWM), which only applies to SIngaporean citizens and PRs. This is an attempt to have their cake and eat it since foreign workers can continue to be paid very low wages with no theoretical floor. To an economist this is a fundamental flaw because employers will choose to have as many foreign workers per Singaporean as they can get away with. However salaries under the PWM range from $1350 to about $2200 per month. Average hours worked per week in Singapore are about 45 so on a per hour basis (assuming 4.3 weeks per month) that works out to a range between $7 and $11 per hour. This compares with $17 in the UK. However it is only really fair to take the lowest level wages and compare these to the UK minimum wage since those in supervisory positions will earn more than the minimum wage rate. Also many of the jobs are in sectors where the nature of the work is physically demanding or dirty (such as refuse collection) and thus considerably more than minimum wage will have to be paid to attract workers. Salaries under the PWM are scheduled to be raised in annual increments but so is minimum wage in the UK.

Ah, the PAP will retort, but Singaporeans pay much less tax than workers in the UK and other developed countries, though with the likely exception of the US. I remember Josephine Teo putting forward this elitist out-of-touch argument at one of the first seminars I attended where she was the PAP speaker (in case you are wondering the PAP ensure that I am not invited to any more seminars as they know they would be shown up and not able to answer my questions). My first point would be that while the marginal tax rate starts at 20% in the UK this is not paid till they earn over £12,570 ($20,740) so the average tax rate would be much lower for low income workers. Also UK workers have to pay National Insurance which is capped at higher levels. For workers on minimum wage this is likely to be between 5-10% of their incomes but UK residents receive free medical care, disability benefits, low income credits and an old age pension. Singaporeans have to pay 20% of their salaries in CPF contributions which funds Medisave and Medishield but still end up forking out large out of pocket expenditures for items not covered. The PAP are even reducing the range of cancer drugs covered under Medishield and Medisave because of alleged snowballing costs. Singaporeans can use their CPF to buy the Government’s overpriced HDB (which are then subsidised as a way of transferring money from current spending to the reserves) but low income UK workers would be eligible for council housing which is generally of better quality and larger size than HDB rental flats.

Also, as I have shown, Singaporeans get a raw deal when it comes to the prices of basic foodstuffs and household staples compared to consumers in the UK, Europe and the US. Fresh chicken costs maybe two to three times as much as in the UK and eggs, rice, bread and cooking oil are also more expensive (see table below for comparison).

The result of much lower wages per hour and higher costs for basics means that Singaporeans have to work the longest hours in the developed world just to make ends meet. The average working week is 45 hours and many low paid Singaporeans have to take two or three jobs just to pay the bills. There are efficiency consequences too as low pay has resulted in a poor productivity record, though the UK has a problem with low productivity growth as well and even US productivity growth has slowed markedly in recent years. Nevertheless Singapore’s output per hour worked is mediocre in comparison to other developed countries and even more so if it is compared with global cities like New York, Paris or London.

In the past when international comparisons of purchasing power have revealed the fact that Singaporeans are badly off compared to the inhabitants of other large cities, the PAP solution has been to get Singapore dropped from the comparison. They did this when in 2011 the UBS survey of global cities showed Singaporean purchasing power to be on the level of Moscow or Kuala Lumpur. Questions were asked in Parliament and the PAP used their stock response when anything goes against them of whining that it was an unfair comparison. It must have been particularly galling because the whole raison d’etre of the PAP has been how much better off Singaporeans are than Malaysians who allegedly suffer from a corrupt and racially biased government. Certainly the PAP’s ranks are now filled with Malaysian immigrants, many of whom have cleverly evaded NS like Khaw Boon Wan and Janil Puthucherry. The PAP obviously quietly put pressure on UBS behind the scenes because In subsequent years Singapore was no longer considered a global city.

It is a mystery why, considering the PAP’s appalling track record in making low to middle-income Singaporeans better off, even in comparison with supposedly failing countries like the UK let alone the US or Switzerland, whose living standards Goh Chok Tong infamously said Singaporeans could aspire to soon, the electorate continue to give the PAP a free pass. Even more when LHL and his wife have raked in billions over the years in salaries that they arrogantly refuse to disclose and this frenzy of grabbing of state resources extends all the way down to Ministers, MPs, and their spouses, relatives and friends. Hopefully, in the not too distant future, the scales will fall from Singaporeans’ eyes and they will pluck up the courage to vote out this bunch of self-serving hypocrites sententiously droning on about public service and lecturing us about supposed “meritocracy.” while they line their own pockets handsomely and secure the best posiitions for their children.

Published by kjeyaretnam

I'm a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That's why I've never been sued in any civil or criminal court no matter how hard hitting my criticism. I'm quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don't work. The Right and the Conservatives hate me because I'm a liberal. I'm not sure what the middle think of me. I don't think there are more than a handful of people in the middle, here in Singapore. I'm a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I'm not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean. View all posts by kjeyaretnam