PWM

Other sectors like food services, retail, and waste management are looking to introduce its own version of PWM in the coming future, according to the minister.

During the Parliament sitting on Tuesday (6 July), Singapore’s Senior Minister of State for Manpower Zaqy Mohamad addressed the House’s questions on the efficacy of Workfare and the progressive wage model (PWM) in supporting lower wage workers; to which he responded that both policies have “made a difference” in uplifting them thus far.

“From 2009 to 2019, real wages at the 20th percentile of our resident workforce grew 39% cumulatively, faster than the median worker at 33%.

“This has allowed our lower wage workers to gain ground and progress faster than the median,” shared Minister Zaqy.

Progress - Workfare Income Supplement (WIS) scheme and Workfare Skills support (WSS) scheme

He proceeded to quote one of the Workfare policies, the WIS scheme, which saw close to a million lower wage workers benefitting from approximately S$7.8bn worth of payouts.

Another S$600mn has been paid out to employers and workers through the WSS scheme which Minister Zaqy added has “helped to enhance their skills and employability.”

According to the minister, Workfare has led to an increase in employment rates, with the highest increases among older workers.

While Minister Zaqy noted that the pandemic has caused a fall in the earnings of lower-wage workers to S$2,340, schemes such as WIS and the one-off workfare special payment (WSP) in 2020 “helped to mitigate this impact”.

“After taking this into account, the incomes of the first 20% of income earners in 2020 were actually similar to wages in 2019,” he shared.

Progressive wage model (PWM)

Minister Zaqy explained: “Currently, progressive wages benefit 85,000 workers.

“The workgroup has already announced that it will introduce PWMs in three new sectors: food services, retail, and waste management. It will also bring in-house cleaning, security and landscaping workers into the progressive wage system.”

He expects this move to benefit up to 218,000 workers.

Today, the PWM is only applied to the cleaning sector via a six-year wage schedule. This was achieved by the Tripartite Cluster for Cleaners (TCC).

Such openness to the PWM and wage schedule provides employers and service providers with clarity for long-term planning. With that, cleaning firms can then price in the wage increases in their multi-year contracts with service buyers, and make use of a mid-point review check in with TCC to ensure that the wage increases remain sustainable.

The minister shared that this move allowed cleaners’ wages to rise by 26% cumulatively from 2014 to 2019, and local employment rise by 3%.

“This pandemic has shown us how the PWM approach is superior to a blunt minimum wage,” said Minister Zaqy.

“The sectoral approach has also enabled us to advance PWM for cleaners, as well as other sectors that are able to adjust to PWM progressions in the short-term. A blunt minimum wage may not have been able to achieve consensus or as ambitious a wage growth.

This is because “the essence of the PWM is tripartite negotiation and consensus”, the minister highlighted.

“Sectors such as tourism, aviation, hospitality and others, that are severely impacted would not have been able to agree to such a move.”

The implementation of PWM for lower wage workers in other sectors, according to the minister, will therefore take time and depend on “how the different sectors perform in the market.”

Be that as it may, according to Minister Zaqy, these sectors are “making good headway in developing their PWMs” and look to submit their respective recommendations by the end of this year.

Image / Minister Zaqy's Facebook

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