I REFER to the letter, 'Cut dependence on foreign labour' (my paper, Sept 18).

Although the writer suggested that the implementation of a minimum- wage policy - like that in Australia - may help Singapore workers earn a decent wage, such a policy would cause an increase in unemployment and a decrease in our competitiveness and productivity.

If a cleaning-services company has to pay a higher wage to local workers, it would have to pay higher Central Provident Fund contributions. It would hire fewer workers, which would hinder competitiveness and contribute to unemployment.

The company would then pass on the extra costs to the companies hiring its services. Those businesses, in turn, would pass on the costs to the consumer,making them less competitive as well.

The writer also suggested that the reason there are unemployed Singaporeans is that service jobs do not pay enough for someone to support his family.

This assumption is incorrect as most households have more than one working adult. Besides, most Singaporeans are educated, and overqualified workers in such jobs would create an under-motivated workforce, which would lead to a loss in productivity.

The worst effect a minimum-wage policy would have is the creation of an unreported market of illegal workers willing to earn a lower wage. Australia depends heavily on its natural resources but we do not have that luxury.

The best system for Singapore is our current flexible-wage system, which allows the market to set the wage.

Ms Angie Lin Huei Chi

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