$3,000 a month for a dishwasher?
Is the Sakae offer bad for business?
For years, Singaporeans have bemoaned the situation of employers paying low wages for unskilled jobs, saying that low-skilled workers deserved more.
But when an employer comes out to say that he intends to pay way over market rates for the low-skilled worker, it gets a torrent of abuse.
Damned if you do, damned if you don’t.
Sakae Sushi boss Douglas Foo said earlier this week that he is offering to pay $3,000 a month to hire a dishwasher.
So much for a lowly dish-washer? That’s insane, according to netizens who expressed disbelief.
Not only did they pour scorn on the idea, they even started to attack the firm, saying it was hiding the truth and that the offer was nothing more than marketing gimmick.
To be fair, the firm did itself no favours when it flip-flopped on its statements to the media.
Mr Foo said in an interview with radio station UFM 100.3 that he was offering $3,000 a month for a worker to work 9 hours a day, 5.5 days a week.
Later he told Singapolitics, that it was 9 hours a day, 6 days a week.
This was then revised further upward to 12 hours a day (with breaks), 6 days a week, with overtime, said his communications man Gregg Lewis.
The explanation? They only decided what the actual work hours were late on Wednesday night after enduring a torrent of abuse on their Facebook page that day.
OK, yes, the firm’s public relations strategy was pretty much a disaster, and yes, the offer does sound too good to be true - but is it?
First, the math.
At $3,000 a month, it is true that Sakae is paying over the odds to hire a Singaporean, or Permanent Resident.
The Manpower Ministry’s report on wages said that dishwasher’s median wage was about $930 a month.
This means that Sakae’s offering is three times the market rate.
But working out the numbers, the $3,000 figure is actually not a lot of money.
At $3,000 a month for 72 hours of work a week, the average hourly rate is $8.09. This assumes that the worker works the 44 hours at this $8.09 rate and the other 28 hours as overtime, defined as 1.5 times the regular hour rate.
Is this high? Yes. Is this crazy high? Nope.
So yes, Sakae is paying higher than usual but not so high that it does not make business sense.
The firm could possibly afford to pay higher wages because it has invested in productivity improvements.
For instance, it has a mechanised dishwasher which takes care of the actual washing and drying of dishes. This could make it operate at a much more efficient level compared to other restaurants who use just manual labour.
So it would be premature to predict that the higher wage will be passed onto customers, as some people have started to speculate.
Even if the worker does not work the full 72 hours and chooses instead to stick with the legal limit of 44 hours a week, without overtime, the worker still gets about $1,543 a month, 50 per cent higher than the median salary of a dishwasher.
Others have also questioned why Mr Foo wants to hire only Singaporeans and PRs, when foreigners can do.
Some of the more incredulous claims say that the media is colluding with Mr Foo.
This is to make him sound desperate so as to generate public sympathy for business owners, so that the Government can ease the policy on tightening the flow of foreign workers.
The simple truth is probably self-preservation.
In basic labour economics theory, there is supply and there is demand.
In the job market, supply is generated from households who suppply workers. Demand is generated from employers who want labour so as to run their business.
The job is also a menial one. It is hard, it is tough; it involves wet dishes, standing on your feet and dealing with other people’s saliva-coated half-eaten rice cakes.
In other words, as UniSim Associate Professor Randolph Tan says, it’s a dirty job that no one really wants.
But that’s precisely why a food and beverage company like Sakae has to offer a premium for dishwashers in order to get Singaporeans to work in a menial job.
The problem here is that for far too long, low-skilled jobs got too little pay.
The conventional thinking has always been that if you are lowly educated and low-skilled, you do not deserve a wage that a degree holder can earn.
This is because an education costs money and degree holders start working at a later age in life. Plus, degree holders tend to do higher value jobs.
But with more and more of Singapore’s population getting more educated and aspiring to work in a bank or as a lawyer, fewer people want to work as dishwashers.
The numbers bear this out.
In 2000, 11.7 per cent of the population had a university education.
Today about 27 per of each school cohort goes to the university. And when the two new universities start to offer additional places, this will raise the university participation rate of each cohort to 40 per cent.
In 2009, professionals, managers and executives formed 54 per cent of the workforce. General labourers as well as clerical, sales and service workers formed just a quarter.
One big reason why over the past decade, the wages of low-skilled workers have not risen in proportion to the higher demand for such workers is because employers have had access to cheaper foreign labour.
But this too is changing. The Government has signalled that it is tightening the flow of foreign workers.
And all this means that pure demand and supply mechanics are now coming to the fore, says Prof Tan.
With supply falling and demand still strong, the price (or in this case wages) can only start to go up.
He believes that employers will have little choice but to pay higher wages for menial jobs.
“It’s happening in other countries. Employers have to pay high wages for dirty jobs,” he says.
For labour intensive industries like retail and food and beverage, they are faced with little choice but to increase their wages so as to attract people to take up the jobs.
In fact, maybe the discussion now should be whether $3,000 is even enough.
As my colleague Yong Chuan notes, many dishwashers don’t end up working full-time. Many just work half the shifts.
Indeed, even at this salary level, Mr Foo said, up till this week, there have been few takers and that those who do get the job, drop out soon after.
Maybe they should be paid even more. But how much more to pay is a decision business owners, through market forces, will have to decide.
But for now at least, it does look like employers are becoming more willing to pay higher wages.
I am giving the benefit of the doubt to Sakae that they are doing this, partly as a move to adopt to new realities of the job market, but hopefully because they want to give a decent wage for workers in such jobs.
Higher pay is a good thing for the thousands of low-wage workers out there and it really is not something we should be opposing.