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Singapore could expand progressive wage model to retail sector

Singapore could expand progressive wage model to retail sector

A general view of malls in the shopping district of Orchard Road in Singapore. (Photo: Reuters)

SINGAPORE: Singapore is considering a progressive wage model for the retail sector, Senior Minister of State for Manpower Zaqy Mohamad announced on Tuesday (Feb 23).

The progressive wage model is a policy designed to raise the salaries of low-wage workers by upgrading their skills and increasing their productivity. The scheme started in 2015. If included, the retail sector would be the sixth under the progressive wage model. 

It will cover workers such as cashiers and salespeople in the likes of supermarkets, convenience stores and fashion retail shops, said Mr Zaqy during a press briefing after speaking to workers from a retail store at Jewel Changi Airport. He spearheads the tripartite workgroup on lower-wage workers launched last October.

At the moment, about 45 per cent of full-time resident employees in retail earn at or less than the 20th wage percentile of the local workforce, which was nominally at S$2,340 including employers' Central Provident Fund contributions as of June 2020. 

READ: Non-PMETs hit harder by unemployment than PMETs during COVID-19 pandemic - Manpower Ministry

Based on gross earnings, the 20th wage percentile in the local workforce is about S$2,000 per month right now, Mr Zaqy said, noting that policymakers are currently speaking to stakeholders in the retail industry. No studies have been done yet, he added, and that more details will be given by the workgroup in the second half of this year. 

The high proportion of low-wage retail employees is the main reason why the Government is considering the sector for the progressive wage model, he said. 

Mr Zaqy highlighted two unique challenges this sector faces. Firstly, unlike other sectors covered by the progressive wage model, the retail sector is not licensed, and new regulations may have to be put in place. Secondly, policymakers will need to examine how e-commerce players can be included in the scheme. 

READ: Government launches work group to look into wages, welfare of low-wage workers

"There will certainly have to be some levers involved," Mr Zaqy said. 

The sector is also a very diverse one that ranges from high-end luxury boutiques to minimarts in the heartlands, with each business having its own remuneration and employment structure. For example, a mom and pop store might be a family business  - whether the wage ladder applies to such businesses is something to discuss, Mr Zaqy said. 

Operating costs for retail employers may rise by around five per cent if the wage model is incorporated, Mr Zaqy said, citing simulations his team had done. This could raise prices of goods and services. 

"It’s not so straightforward," he said. "Some will say, 'no problem, I’m prepared to pay'. But others, for example, those in your heartland wet markets, you (may not) want to increase costs when many of the lower-wage earners are also consumers there too."

READ: PAP MPs call for faster roll-out of progressive wage model, higher workfare payouts for essential workers

Apart from improving the wages and career prospects of retail workers, the Government hopes the progressive wage model will attract more locals into a sector that has faced difficulty in hiring, he added. 

Earlier this month, Mr Zaqy said the Government is also mulling extending the model to the food services sector. 

The progressive wage model has been enforced in the cleaning, security and landscape, affecting around 80,000 workers. The model will take effect in the lifts and escalator maintenance sector next year, and will be applied to the waste management sector next.

READ: Up to 3,000 workers in waste management sector to benefit from new progressive wage model

Deputy Prime Minister Heng Swee Keat said during his Budget speech he hopes the progressive wage model will be expanded to all sectors eventually.

Editor's note: A previous version of this story said that the retail sector’s 20th wage percentile is about S$2,000. In fact, that figure refers to the local workforce. A reference to 'salary' costs possibly rising by five per cent has been amended to 'operating' costs following a clarification by MOM.

Source: CNA/ac


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