Monday, July 8, 2013

Minimum wage used to curb discontent over widening wealth gap

Factories in China, Malaysia and Vietnam are battling rising costs as governments in Asia increase minimum wages to curb discontent over a widening wealth gap. Many companies have started shifting their factories either to areas where there is no minimum wage, or lower minimum wage.

Does it help? Well, it depends whether they take into account the costs of relocation to justify the move. My guess? It doesn't make sense, unless you're heavily into manual labour instead of using technology to help to make production more effectively. As long as you're not doing anything to reduce heavy reliance on manual labour, you will lose out to those that make use of process optimisation and technology to make their process more efficient.

Singapore has always been emphasising on productivity, too much in fact in my opinion. However, Singapore's version of minimum wage is by increasing the foreign workers levy and subsidising lowly paid Singaporeans. Does it have the same effect? If you look at the pay and maths perspective, actually yes.

However the issue is the enforcement of the foreign workers levy and the passes that companies used to justify the hiring of foreign workers do not seem to be heavily enforced. Once better enforced based on the current rules, I believe Singaporeans will start feeling the difference. Often when we go to work, we find ourselves in a "foreign land" where we rarely see Singaporeans. This needs to change.

I believe this is the main sense of our discontent. Why do we feel like a foreigner even in our own country? Doesn't makes sense right?

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