All you need to know about the new Progressive Wage Model for Singapore's retail industry

Retail firms that hire foreign manpower will be allowed a six-month implementation 'run-in' period to understand and adhere to the PWM, from 1 September 2022 to 28 February 2023.

The Tripartite Cluster for Retail Industry (TCR) has released its recommendations for the introduction of the Progressive Wage Model (PWM) for Singapore's retail sector on 15 August 2022.

The recommendations, which have since been accepted by the Government, outline the wage and career progression as well as training for over 46,000 full-time and part-time retail employees – including retail assistants, cashiers, and assistant retail supervisors – starting 1 September 2022. 

At a media briefing, attended by Human Resources Online, the TCR shared a brief overview of the retail sector at a glance. Currently, there are 29,025 retail enterprises in diverse sub-sectors such as supermarkets, department stores, fashion & sporting goods, and other non-specialised/internet sales. Further. 4.5% of all resident employees are employed in the retail sector, amounting to 87, 000 resident employees involved in a variety of occupations in the retail sector. 

The retail workforce sees 34,00 full-time workers in firms that hire foreign workers, of which 19,000 are lower-wage workers. Meanwhile, there are a total of 12,000 part-time retail workers in firms that hire foreign workers.

In deciding the PWM for these workers, the TCR had kept in mind several key considerations:

• Stiff competition from global and regional players who have direct access to end consumers through a myriad of online shopping platforms. As a result, traditional brick-and-mortar stores are under immense pressure to keep their costs low in order to retain their customers and market shares.
• As more customers gravitate towards different buying behaviours and have greater access to a wider choice of merchandise, expectations of value-for-money become an increasingly top consideration for them. Given this backdrop, retail employees had raised concerns about the rising costs of running a business, higher customer expectations, and a perennial manpower shortage.
• COVID-19 in the last two years had also significantly impacted many retailers which saw a reduction in footfall due to border closures, and various precautionary safe-distancing measures.
• While Singaporeans regard shopping as a favoured pastime, this also means that retail workers had to put in long working hours when retail stores are open for business for longer hours to meet shoppers' needs. The nature of retail work entails the need to stand for prolonged periods and to work on weekends and public holidays. This inevitably discouraged many jobseekers from joining retail.
• The perceived poor image and lack of progression opportunities were also cited as reasons why younger people are reluctant to choose retail as their preferred career option. There are also other service industries that offer more attractive compensation packages and working conditions in comparison.

With this, the PWM covers three areas in brief:

1. PWM career ladder: Coverage of job roles and clear progression pathway to provide meaningful job and advancement opportunities and to encourage more entrants to the sector.
2. PWM skills ladder: Minimum training requirements to equip workers with necessary skillsets to competencies, align with Skills Framework for Retail.
3. PWM wage ladder: Baseline gross wages from 1 September 2023 to 31 August 2025 and a set of Gross Wage Requirements to account for overtime pay, implemented on a three-month rolling average basis due to seasonal fluctuations and a six-month 'run-in' period.

Senior Minister of State for Manpower, Zaqy Mohamad, who spoke on the recommendations at a separate briefing, commented: These moves will complement the Food Services and Retail Business Revitalisation Package and retail industry transformation map in developing a future-ready retail sector that can adapt to shifting trends, technological advancements, and the rapidly changing needs of consumers."

Here is everything you need to know about the PWM for Singapore's retail industry:

Sustainable wage increases

With guidance from the Tripartite Workgroup on Lower-Wage Workers' (TWG-LWW) recommendations for wages to be expressed in gross terms, Total Monthly Gross Wages, the TCR tripartite members recommend the following for the retail sector:

• Annual wage increments to the PWM Baseline Gross Wages (before overtime) at a Compound Annual Growth Rate (CAGR) of between 8.4% and 8.5% for the next three years for the three lowest job rungs from 1 September 2022 to 31 August 2025.
• A three-month averaging of PWM Baseline Gross Wages to give employers some flexibility in meeting PWM requirements due to seasonality fluctuations and yet ensuring fair wages.
• Six months of implementation 'run-in' period to allow employers to understand and adhere to the PWM, from 1 September 2022 to 28 February 2023, applicable to retail firms that hire foreign manpower. Instead of enforcement, MOM will focus on educating employers on the various progressive wage requirements. Employers who do not comply with the requirements during this transitional period will not have their work pass privileges suspended.
• PWM Wages are expressed in gross terms which allow employers to incorporate all variable wage components (e.g. allowances, performance incentives/commissions) to meet the stipulated gross wages.
• Safeguarding workers' overtime pay by setting higher gross wage thresholds (i.e Gross Wage Requirements) for PWM compliance.

Upskilling: Minimum wage requirements

As a start, the TCR recommendations include one Workforce Skills Qualification (WSQ) training module as the minimum PWM training requirement for all job roles under the model.

Career progression pathway

The TCR recommendations mapped out the frontline operational and supervisory job roles within retail to provide a clear career progression pathway for the retail industry workforce and to attract new entrants.

Recognising that some PWM roles may evolve as the retail industry undergoes business and workforce transformation, TCR will review the job descriptions periodically.

To help employees adjust to the retail PWM and other progressive wage measures, the Government introduced the Progressive Wage Credit Scheme (PCWS) in Singapore Budget 2022 to co-fund wage increases of eligible resident employees from 2022 to 2026.

To help businesses address immediate-term labour cost concerns, given recent significant inflationary pressures, it was announced in June 2022 that the co-funding share in 2022 will increase to 75% from 50% for resident employees with gross monthly wages of up to S$2,500, and from 30% to 45% for employees with gross monthly wages above S$2,500, and up to S$3,000.

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 for any other applicable PWM and local qualifying salary requirments in order to apply for new work passes (e.g. work permit, S Pass, Employment Pass), or renew existing work passes. 

Minister Zaqy commented: "This is a landmark PWM, and we are heartened that the Tripartite movement has continued to push for breakthroughs in the progressive wage model."

Image / Provided by NTUC

Follow us on Telegram @humanresourcesonline or click here for all the latest weekly HR and manpower news from around the region!