Minimum Wages & Negative Taxes

It is significant that Singapore has pushed through some of the more targeted policies to help with low wage labour and effectively try to set floors on wages for labour. The tricky thing about productivity is that it has always been computed as a residue and tend to ignore the relative bargaining power differences between wage and labour.

Research by Thomas Piketty has long shown that return on capital can be persistently greater than economic growth which is to say that what manifests itself as poor labour productivity can just be an overall phenomena of capital gaining upper hand in bargaining power in the market economy. History have shown that the best ways to deal with the resulting inequality is greater public investments, especially in the area of public infrastructure and education.

The state will be an important player in this and the overall systems of redistribution can take place at different levels in many different ways. But ultimately, these policies will have to be anchored on the question of what we are growing for, and whom we want our growth to serve. I think Singapore continues to be open as a city state to draw the right kind of capital and labour but we are now fine-tuning the balance across the relative bargaining power of capital and labour a bit more. Especially the domestic labour force.