SINGAPORE: Local rank-and-file shop workers are set to receive wage increases over three years under the Progressive Wage Model (PWM) for the retail sector.
Wages for these workers are expected to go up by 8.4 per cent to 8.5 per cent annually, starting from Sep 1 this year up to Aug 31, 2025.
This was among recommendations announced Monday (Aug 15) by the Tripartite Cluster for Retail Industry (TCR) for workers such as retail assistants, cashiers and assistant retail supervisors.
Retail assistants, for instance, will have to be paid at least S$1,850 a month, excluding overtime, from Sep 1.
The TCR arrived at this figure after consulting extensively and considering the existing median wage of these jobs.
Retail assistants will also get a minimum pay increment of S$125 from Sep 1 next year; and another hike of S$200 from Sep 2024.
This is a total increase of more than 17 per cent, which works out to a compound annual growth rate of 8.4 per cent.
There are about 46,000 full-time and part-time employees in retail and of these, around 19,000 lower-wage workers will benefit.
For retail supervisors and managers, their wages are generally above the lowest 20th income percentile and thus should be left to market forces, said TCR.
This expansion of the PWM was announced by Prime Minister Lee Hsien Loong at last year’s National Day Rally. It is one of several measures to improve the wages and working conditions of lower-wage workers, to be implemented in recent years.
National Trades Union Congress (NTUC) Secretary-General Ng Chee Meng said the unions would continue to listen to the needs of Singapore workers through its Every Worker Matters conversations, an engagement exercise that was launched last week.
“NTUC has been championing our lower-wage workers ... they can look forward to annual growth rates in their salaries of up to 8.5 per cent over the next three years," he said on a visit to an IUIGA retail outlet to meet the employees and understand their retail operations.
TCR chair and NTUC U SME Director Yeo Wan Ling said that with its PWM recommendations, the tripartite cluster aims to uplift the wages of retail workers and provide them with a clear career progression pathway.
“It would help them to grow along with the evolving retail industry, and help retail firms retain and attract new entrants," said the Pasir Ris-Punggol MP, who also visited the IUIGA outlet.
There will be a six-month “run-in period” for employers to get up to speed on the new PWM requirements, from Sep 1 to Feb 28, 2023.
FLEXIBILITY TO ACCOUNT FOR INCENTIVES, COMMISSIONS
As there is some fluctuation due to seasonality in the retail sector, baseline gross wages will be averaged over three months to give employers flexibility in meeting the requirements.
And employers can incorporate all variable wage component - such as allowances, performance incentives or commissions - to meet the stipulated gross wages, said TCR.
TCR added that if employees' wages do not meet the PWM minimum due to a shortfall in variable components like commissions, employers may consider retraining the workers or redesigning job roles so that they can better meet their targets.
They can also reconsider how their pay is structured - such as by increasing the proportion covered by the basic wage or allowances, or both.
Other recommendations by the tripartite cluster include more structured career progression and minimum requirements for training.
It has proposed that workers take at least one Workforce Skills Qualifications training module for all job roles under the PWM.
And TCR has mapped out the frontline operational and supervisory job roles within the retail sector, to provide a career progression pathway for such workers.
WILL PRICES RISE?
When asked by reporters how consumers would be affected, TCR said that over the long term, prices would rise but businesses should continue to look at improving productivity to sell more and to offer more competitive prices.
There are more than 29,000 retail enterprises in Singapore spanning convenience stores, department stores, supermarkets and shops selling fashion, sporting, consumer electronics, furniture and household goods among others. Some of the retail workers are also in firms in the wholesale sector.
Pointing to a manpower crunch in the retail sector, the Singapore Retailers Association’s honorary secretary Helen Khoo said she hopes that wage increments and structured career pathways will help retailers retain workers and attract more people to join the industry.
Mr Chou Cheng Ngok, a TCR co-chair and representative for the Singapore National Employers Federation, said that the PWM recommendations by the TCR considered feedback from the retail industry, such as seasonal fluctuations in sales and performance incentives.
This would help employers with the implementation of the new requirements, said Mr Chou, who is also group chief executive officer and executive director of Popular Holdings.
“With the Singapore economy emerging from the COVID-19 pandemic, I strongly urge retail employers to leverage technology to transform their business, redesign their jobs and upskill their employees to stay relevant and be more productive,” he added.
TCR said there would be a review of the retail sector's PWM in 2024.
The Government has accepted the recommendations of the TCR, the Ministry of Manpower (MOM) said on Monday.
Senior Minister of State for Manpower Zaqy Mohamad said this was a "landmark PWM" and thanked employers for supporting the measures despite facing inflationary pressures.
"Ultimately it's not just about wage increases ... but how do you continue to sustain increases over time, so it's important to look at business productivity, workforce productivity and ... job redesign," he said.
MOM will enforce the implementation of Retail PWM requirements through employers’ eligibility for work passes.
Employers will need to comply with the stipulated Retail PWM requirements, and any other applicable PWM and Local Qualifying Salary requirements, in order to apply for or renew work passes including work permits, S Passes and Employment Passes.
The ministry said it will give employers time to adjust and comply with the progressive wage requirements. Instead of enforcement, MOM will focus on educating employers instead of suspending their work pass privileges during the six-month transitional period.
For retail workers employed by firms which do not hire foreign staff, TCR expects market forces to eventually push their wages up as well.
From this year to 2026, the Government will co-fund PWM wage increases under the Progressive Wage Credit Scheme, as announced during Budget 2022.
Given recent significant inflationary pressures, the Government said in June that its co-funding share in 2022 will increase from 50 per cent to 75 per cent for resident employees with gross monthly wages of up to S$2,500.
It will go up from 30 per cent to 45 per cent for employees with gross monthly wages of above S$2,500 and up to S$3,000.
Mr Zaqy said he hopes that the credits will help to buffer business costs, and that the PWM does not translate to rising costs for consumers.
"We want things to be cost-effective, cost-efficient, affordable ... but at the same time, it should not be at the expense of low-wage workers," he said, adding that businesses should improve productivity to become more cost-efficient.
The implementation of the Retail PWM is part of a range of progressive wage requirements that will take effect from Sep 1. Other measures are new Local Qualifying Salary requirements set at S$1,400, and the extension of the PWM to in-house cleaners, security officers, and landscape workers.
In addition, the Tripartite Workgroup on Lower-Wage Workers had recommended the expansion of the PWM to the food services sector and occupations such as administrators and drivers in March 2023.