Progressive wages to be extended to 8 in 10 lower-wage workers by 2023
SINGAPORE: Within the next two years, progressive wages will cover most lower-wage resident workers in Singapore, and firms that hire foreigners will also have to pay their local employees a minimum of S$1,400.
The Ministry of Manpower (MOM) said on Monday (Aug 30) that it has accepted all recommendations by the Tripartite Workgroup on Lower-Wage Workers. Taken together, the 18 recommendations will expand the coverage of progressive wages – Singapore’s version of a minimum wage – to 82 per cent of lower-wage local workers by March 2023.
The details of the recommendations came after Prime Minister Lee Hsien Loong announced the broad outlines at the National Day Rally on Sunday.
Among the new measures: The Government will extend the Progressive Wage Model (PWM) to more sectors in an accelerated timeline, and there will be new progressive wages for certain occupations that cut across sectors.Â
The PWM has been implemented over the last seven years in four sectors, covering 28,000 workers or 10 per cent of the roughly 283,000 employees earning at or below the 20th percentile of wages in Singapore. The four sectors are cleaning, security, landscape, and lift and escalator maintenance.
Between 2014 and 2019, the real median gross wages for workers in the four sectors under PWM grew 31 per cent on average, outpacing cumulative real median wage growth of 21 per cent over the same period.
Senior Minister of State for Manpower Zaqy Mohamad, who chairs the tripartite work group, said that progressive wages will widen to cover 234,000 workers.
Who are the lower-wage workers?
Lower-wage workers refer to full-time residents earning a gross monthly salary (excluding employer CPF contributions) at or below S$2,033 in 2020. This is the 20th percentile gross monthly salary of full-time employed residents.
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Among the full-time lower-wage workers, 73 per cent are employees, while the remaining 27 per cent are self-employed. The progressive wages will only apply to employees.
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They are found mainly in domestically oriented industries, such as administrative and support services in many sectors, food & beverage services and retail trade.
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Nearly half of the lower-wage workers are aged 55 and above, of which a large majority do not have post-secondary education.
The PWM will be extended to three new sectors – retail (from Sep 1, 2022), food services (from Mar 1, 2023) and waste management (from 2023).Â
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The existing PWM for cleaning, security and landscape workers will also extend to in-house workers from September next year. The committee estimated that this will cover 52,000 workers.
Occupational progressive wages will be introduced for administrators and drivers across all sectors from Mar 1, 2023, covering another 55,000 workers. This is because there are lower-wage occupations across many sectors that cannot be targeted using sectoral progressive wages.
FLOOR WAGE FOR ALL FIRMS HIRING FOREIGN WORKERS
From September 2022, all firms employing foreign workers will have to pay all their local employees at least the Local Qualifying Salary, which is currently set at S$1,400.
The Local Qualifying Salary is used to determine the number of local employees that count towards a company’s foreign worker ratio. Different industries have different foreign worker quotas; for example, companies in the services sector have to pay 13 locals S$1,400 or more before they can hire seven foreign workers to fulfil its quota of 35 per cent.
From Sep 1 next year, any firm employing foreign workers will have to pay at least the minimum salary to all its workers before it can hire any foreigners.
This is expected to extend coverage to another 99,000 workers. Some of these workers would already earn more than S$1,400 today, but could be covered in future as the baseline wage rises.
The Prime Minister said on Sunday that the Local Qualifying Salary will be adjusted from time to time.
18 recommendations from the Tripartite Workgroup on Lower-Wage Workers
1. Expand progressive wages to new sectors – retail from Sep 1, 2022, food services from Mar 1, 2023, and waste management from 2023.
2. Extend existing cleaning, security and landscape Progressive Wage Models to in-house workers from Sep 1, 2022.
3. Introduce new occupational progressive wages to administrators and drivers from Mar 1, 2023.
4. Firms employing foreign workers have to pay at least the Local Qualifying Salary to all local workers from Sep 1, 2022. This will be so even if the firm has excess foreign worker quota, or the sectoral or occupational progressive wages do not apply to the firm’s local workers.
5. Progressive wages and Local Qualifying Salary will be converted to fair hourly rates for those working part-time or overtime. This will provide firms flexibility to hire locals on different work arrangements without losing foreign worker access, while ensuring fair wages for workers based on their hours worked.
6. Baseline progressive wage growth for workers at the 20th percentile should outpace median wage growth, so that lower-wage workers gain ground with the median. Aim for higher than baseline growth for lower-paid lower-wage workers, and lower than baseline growth for workers in wage rungs above the 20th percentile wage level.
7. Maintain the overarching principle that wages should continue to keep pace with productivity growth, but provide scope for wage growth of lower-wage workers to outpace productivity. As lower-wage workers may be in roles with limited scope for productivity improvement, businesses should continue to enhance their firm-level productivity to better support wage increases for workers.
8. The National Wages Council should set annual guidance for progressive wage growth and recommend annual wage growth of occupational progressive wages.
9. Firms employing foreign workers have to pay at least the relevant sectoral or occupational progressive wages to all local workers in applicable job roles.
10. Leverage the Work Pass system to ensure that employers pay progressive wages and Local Qualifying Salary before they can access any foreign workers, while complemented by current licensing regimes.
11. In the long-term, express progressive wages in gross terms.
12. Government should review Workfare regularly to ensure that lower-wage workers continue to be supported even as progressive wages become more pervasive.
13. Government should provide transitional support for employers, with higher support in the initial phase as businesses recover from the impact of COVID-19.
14. Beyond wages, employers should advance the well-being of lower-wage workers by (i) supporting them to upskill and progress in their careers; (ii) providing them with a safe and healthy work environment; and (iii) providing them with adequate rest areas.
15. Establish a new Tripartite Standard on Advancing Lower-Wage Workers’ Well-Being, to help more firms adopt and implement the specified practices and be publicly recognised for doing so.
16. Establish a new Progressive Wage Mark to recognise firms that pay progressive wages. This will enable corporate buyers and individual consumers to purchase from these firms to support lower-wage workers’ wage increases. In addition, confer “PW Mark Plus” to firms that go the extra mile to uplift lower-wage workers holistically by advancing their well-being.
17. Public and private sector buyers should require their suppliers to obtain the Progressive Wage Mark.
18. Grow the Alliance for Action for Lower-Wage Workers, so that uplifting lower-wage workers is a whole-of-society endeavour.
Answering a question on how the salary will not be linked to skills upgrading, unlike the sectoral and occupational progressive wage measures, Minister for Communications and Information Josephine Teo said that a balance has to be struck as implementing the PWM in every sector and occupation takes time.
“Why not we achieve at least the baseline wage first through the LQS and then build on top of it? So that is what we are planning for,” said Mrs Teo, who is the adviser to the Tripartite Workgroup on Lower-Wage Workers.
Secretary-general for the National Trades Union Congress (NTUC) Ng Chee Meng said that even with the minimum salary, new Progressive Wage Models are planned for the pest management and strata management industries, and possibly the renewable energy sector.
HIGHER PRICES FOR GOODS AND SERVICES
This leaves another estimated 50,000 lower-wage workers who are not covered by progressive wages.Â
The committee said about two-thirds of this group work in firms that should be eligible for a Progressive Wage Mark.Â
The PW Mark will recognise firms that pay progressive wages and allow consumers and corporate buyers to identify and support these companies, the report said. When implemented, the public service will procure goods and services only from firms that have the mark.
Manpower Minister Tan See Leng said that this could bump up the number of workers benefiting to 94 per cent.
With a high coverage, market forces will help to uplift the remaining workers, said the work group’s report.
The remaining group of companies not covered by the wage measures are likely mom-and-pop operations and hawker stalls that hire very few workers, and Dr Tan said that even in countries that implement a minimum wage, these types of businesses are excluded.
Higher prices for goods and services is expected with these changes but the work group said that from its public consultations, most members of the public were willing to pay more to raise the wages of lower-wage workers.
It also said that the Government should provide transitional support for employers as the changes are implemented and as they recover from the impact of COVID-19.
“We have to be prepared to pay more for goods and services if this means that our lower-wage workers can take home a better pay and provide for their families, so we can all enjoy a high standard of living,” Mr Zaqy said.Â
“Progress can only be achieved if there continues to be dynamism in our economy … we must ensure that the approach taken is sustainable, and does not inadvertently result in businesses losing their competitiveness and in workers losing their jobs.”
“PRECARIOUS WORKERS” IN A PANDEMIC
Mrs Teo said that the impetus for these changes came as the COVID-19 pandemic broke out in Singapore. The Manpower Ministry saw that lower-wage workers at the frontlines were disproportionately impacted by the crisis, echoing what the Prime Minister said during the rally.
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“They were helping to keep us all safe and healthy, but their own jobs, stability, their own prospects are not so clear. They were very much precarious workers,” said Mrs Teo, who was Manpower Minister at the time. She is now the Minister for Information and Communications after a Cabinet reshuffle earlier this year.
Despite the difficult economic conditions and uncertainty in the midst of a pandemic, Dr Tan said that this was the right time to raise wages.
“This is a very difficult time in history, it is unprecedented … it is times like this that, I think, as a country, as a nation, we come together … just to see how we can improve. We can build back better, we can rebound, we can rejuvenate,” he said.
Over the longer term, the committee recommended that income growth for lower-wage workers should outpace median wage growth and that there should be scope for their pay to grow faster than productivity, as they may be in roles with limited scope for productivity improvement.
“We have made good progress thus far and we must continue to ensure that our lower-wage workers can emerge stronger with the rest of Singapore once we emerge from this COVID-19 pandemic.
"As a society, we must take care of every worker, especially the most vulnerable, because this concerns them providing for their families and dependents, to support their children so that they can go to their fullest potential,” said Mr Zaqy.
The Singapore Business Federation and the Singapore National Employers Federation both issued statements supporting the recommendations.
Singapore National Employers Federation president Robert Yap said businesses facing difficulties are hoping for help from the Government to deal with rising manpower costs.
“One (form of help) would be support for increased wage costs … during the transition period,” he said, adding that he also would like to see more support for redesigning workplaces and jobs, and training workers to improve productivity.
