14 Sep 2011 Wed
Commentary by: Pipi Indocham
Extracts of ST Interview, Republic of Singapore
THE MEANING BEHIND ‘MINIMUM WAGES’ FOR A NATION
As reflected in the ST Interview article, professor Aneel Karnani advocates that minimum wages for a nation is of no harm because per capita GDP often does not reflect the true wealth distribution of a nation. And in a developed nation, not all sectors of trade & business could achieve Productivity growth, up to a point. (See the attached portion of the interview).
Such argument cannot be settled once and for all easily. Each nation has its own peculiarity about economic, social and political systems. But, as a whole, to achieve a more balanced society in terms of fair distribution of wealth and economic output, the following equation is a sober one:
Fairness of Wealth Distribution = Productivity + Value System + Adequacy of Basic Social Security Net
Economists should strive to recommend practical approaches towards the achievement of the above formula. Either side of extreme measures for the Western and Eastern value systems will not yield optimal results. Productivity remains an important tool for measurement of individual contribution to the economy of nation; but it is NOT the only tool to be based upon for solving the wealth gap of rich and poor. Ultimately, any government per se, has the responsibility to ensure that the bottom 10 – 15% of its population do not end up in the trash! That’s the meaning of providing adequate social security net to everyone. Based upon its social or cultural values, nations should define What’s Basic Needs to be provided for its people.
Productivity can raise overall competitiveness of economic state BUT it cannot fulfill value system that’s also needed for nation-building and long term survival.