Minimum Wage Policy

by Patrick Liew on August 16, 2019

Minimum Wage Policy

While introducing a minimum wage policy has upsides and it can be appealing, it may also expose us to untold risks and unintended consequences.

If this policy can improve workers’ income and quality of life, countries that have introduced it will be crowing about their successes and will be put up as models for the rest of the world.

Why isn’t this the case?

There are evidence to suggest that unemployment rate can be attributed to introduction of a minimum wage policy and subsequent increase in income levels.

Installing a minimum wage policy may increase cost of running a business, especially for a small and medium enterprise (SME) and it may lead to an increase in prices and financial burdens on consumers.

It may erode SMEs’ competitive edge, and make it harder for them to compete with their counterparts in other similar economies, including countries around the region that are competing for the same markets and investments.

If businesses cannot compete effectively, they may generate lesser jobs and have a lower demand for workers.

To make matters worst, businesses may have to either retrench their workers or reduce their salaries to survive and succeed in a fast-changing world.

Unfortunately, the most vulnerable of the workforce are the least skilled workers, and they may be the first to lose their jobs or have their salaries reduced or frozen.

It may start a vicious cycle that will ultimately affect the workers that the minimum wage policy is trying to protect.
The enactment of a minimum wage policy is tantamount to curing diabetes with cancer.

Introducing a policy to force an increment of salary level in an increasingly-competitive market may expose us to many risks, including difficulties in upgrading skills of workers who are overly-complacent about their salary, career progressions, and their need to improve their competence and productivity levels.

The minimum wage will then become maximum wage for many workers.

Once a minimum wage policy is implemented, it will be difficult to withdraw.

Politicians vying for popularity votes will be more inclined to increase it over time.

Having a minimum wage policy will only resolve symptoms but not causes of low wages.

Workers need a helping hand and not handouts to enhance their employment and employability.

What’s more important is to focus on increasing workers’ knowledge, skills, performance and contributions.

Help them develop professionally so that they can fulfill their aspirations.

In doing so, it would help them find dignity and satisfaction in doing their jobs.

By helping them improve their abilities and productivity, it will ensure that they have a more stable, secure and sustainable income and career.


I hope this message will find a place in your heart.

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