November 21, 2006

Minimum wage

I was wondering how a minimum wage would affect the job market.

I have not read any economic theory by any professor. Just a layman’s view:

Workers get more pay. Good for the worker and his family.

Will this result in better morale among workers, increased productivity, lower rate of job turnover, higher service standard, attracting higher-quality workers. Not necessary. I think all these are debatable.

For employers, they might hire fewer workers. Workers will find it more difficulty to get jobs, especially the lower-skilled workers. Then, since it is the same wage, some employers might replace their existing workers with better-qualified ones. Some workers might lose their jobs. I think all these are quite possible. No?

I don't know whether it will affect foreign companies intending to set up shops or how it will affect small businesses.


Anonymous said...

salary too high, foreign firms not willing to come. pls note that salary include CPF.

another issue is currency exchange. SGD too strong, company lose out in exchange difference

Victor said...

A legislated minimum wage is used to protect lowly paid workers from being exploited by unscrupulous employers, especially in unregulated industries. The majority of workers will not be affected by it since their pay quantums would have surpassed it. Normally the minimum wage is set at a realistically low level and will not greatly affect costs. I personally think it is a good thing.