Recently on January 8 2014, Singapore's government announced all cleaners will receive an entry-level wage of S$1,000 a month. To do this, the government will require all cleaning businesses to be licensed, and one of the requirements for the license will be that all the cleaners are paid a minimum wage of S$1,000 a month. A similar requirement for standard starting pay and progressive wage model is being worked out for the security industry as well. Mandatory the minimum wage for unskilled workers, such as cleaners and securities, is a good first step to workers' welfare. First reason is that it will guarantee a minimum standard of living for unskilled workers. Guaranteeing a minimum standard of living is the main purpose of the minimum wage in the first place. Most of the resident working as cleaners in Singapore is older workers. Without a minimum wage, these workers may be forced to work for less money. Second, it will raise the incentive to work among the lower-skilled. For example, a 50-year-old worker may not want to work for $800 a month or about $622 in cash after factoring in CPF contributions ($118) and a transport cost of $3 a day ($60 a month). On the other hand, a minimum wage of $1,000, CPF contribution of $147.5 and a take-home pay of $852.5. That difference could nudge him into taking a job. Third, without a minimum wage, the current system of low wages for some local workers has created Workfare that is expected to cost around $400 million per year to attract around 400,000 workers, and this numbers will keep on rising in the future if local wages at bottom continue to be depressed. However, with a minimum wage gives an unemployed person incentive to take a job because he knows what his minimum pay will be. Thus, a minimum wage law can stave off the need for higher government subsidies of low-wage jobs. Next, a minimum wage law would have effect of making employers more efficient to use their workers and to hire better quality workers to justify a higher wages.
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