WHAT ARE THE BENEFITS OF THE MINIMUM WAGE SYSTEM?
Many economists such as Kenneth Arrow, Peter Diamond, Eric Maskin, Thomas Schelling and Robert Solow are supporters of the minimum wage system. Let's take a look at why this is so.
It forces businesses to be more efficientSetting a minimum wage would mean that companies have to spend more on labour costs. As such, companies will be more motivated to find cost effective ways of production. This includes an increased use of technology to substitute unnecessary human labour, and also a reduced reliance on foreign workers.
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Reduces income inequalityCurrently, Singapore’s gini-coefficient is at 0.478, which is higher than most economically developed countries. Hence, the minimum wage system will help to reduce this gap by increasing the wages of workers at the bottom of the economy.
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