A new Tripartite Workgroup for Lower Wage Workers (TW-LWW) has been formed to examine ways to raise the wages and well-being of low-income workers in Singapore. Besides studying ways to boost low wages, the workgroup – comprising the government (Ministry of Manpower (MOM)), labour movement (NTUC) and employers (SNEF) – intend to propose a new way forward for businesses and workers, given the impact of the COVID-19 pandemic.
Although a progress update will only be ready by the middle of next year and recommendations to be given by early 2022, the workgroup has already proposed some initial measures to further lift low wages. Its primary focus so far is on the Progressive Wage Model (PWM), but it said it will keep an open mind on measures beyond the PWM.
Here are 5 of the interventions and mechanisms proposed by the new Tripartite Workgroup for Lower Wage Workers:
#1 Ensure Wage Growth In Mandatory PWM Sectors Continues To Outpace Median Wage Growth
The PWM is a “wage ladder” where a minimum wage is set for different job tiers. To rise up the pay ladder, workers are required to undergo courses to upgrade their skillsets.
NTUC first introduced the Progressive Wage Model (PWM) in 2012. From 2015, the Ministry of Manpower (MOM) made the PWM mandatory in the cleaning sector with recommendations of a minimum and maximum wage ratio. PWM was subsequently made compulsory in the security and landscape sectors in 2016.
Based on the PWM, a general office/indoor cleaner, for example, is expected to receive yearly increments. From July this year, a general indoor cleaner would earn a minimum basic salary of $1,236. From next year July, his wages must be increased to $1,273 (about 3.0% annual increase) and from July 2022, he must be paid at least $1,312 (about 3.1% annual increase). Such annual salary increments were put in place to prevent wages from stagnating, which results in high turnover and labour shortages.
According to MOM, with the implementation of PWM, real income among workers across these sectors had increased by 30% from 2014 to 2019. MOM also claimed that the increase outpaced real income growth of 21% at the median across all sectors.
The new TW-LWW wants to continue ensuring that wage growth in the compulsory three sectors will continue to rise faster than the median wage growth in all other sectors. This will help to keep unemployment low and decrease the risk of labour shortage in the three sectors under PWM.
#2 Significantly Increase The Number Of Low-Wage Workers Covered By PWM
At the moment, the 80,000 workers in these sectors account for only 15% of low-wage workers here. These workers make for the bottom 20% of low income earners and there is still a majority of low-wage workers who are not covered under PWM, such as retail, F&B and non-therapeutic health and personal care.
During the announcement of the new TW-LWW workgroup, it was proposed that PWM be expanded into more sectors. In 2022, the lifts and escalator maintenance sector will be added under the PWM. This is a welcome move and timely too.
#3 Offer Progressive Wages In Occupations Not Covered By The Mandatory PWMs
According to Senior Minister of State for Manpower, Zaqy Mohamad, 52,000 Singaporeans currently earn less than $1,300. This does not include those who earn more than $1,300 but who will also benefit from a wage ladder.
While the new workgroup will look into including more sectors under PWM, thus covering more low-wage workers under the scheme, some sectors may be difficult to implement PWM. For such sectors, the workgroup said it will study other feasible approaches, such as sectoral or occupational wage benchmarks.
#4 Promote Stronger Societal Support For Firms Paying Progressive Wages
To encourage more firms from non-mandatory sectors to raise income of their workers, the government is initiating something known as a PWM Mark.
From next year, a PWM Mark will be issued to companies that voluntarily pay progressive wages and provide job progression pathways to their low-wage workers. This is to encourage firms to be progressive. But this PWM Mark will not benefit businesses unless consumers play a part too. Consumers are encouraged to support organisations that have voluntarily adopted the PWM by buying their products or services.
#5 Advance the well-being of lower-wage workers
Besides pay, providing a better work environment no doubt boosts the well-being of workers. This is another area that the workgroup is looking at.
Under the Workcare initiative that was launched last year, guidelines were issued on how to set up proper rest areas for cleaners and security officers. Recommendations such as lockers for workers to keep their items, access to drinking water and adequate ventilation were also made.
However, more can still be done to improve the well-being of lower-wage workers and the new TW-LWW aims to look at this area under their proposed interventions.
Being “sensitive to business conditions”
While the TW-LWW will look at more measures beyond PWM, MOM stated that the workgroup will be “sensitive to business conditions” so that firms will not be discouraged from hiring workers due to the recommended measures.
This is important in the current climate, as economic weakness is affecting businesses in many sectors and as unemployment – with citizen unemployment rising to 4.9% – already above the 2008 Global Financial Crisis (GFC) levels.
Need Financing Support During This Period?
From now till 31 March 2021, SMEs can enjoy extra financing support of up to $5 million through the Temporary Bridging Loan Programme.
Join The DollarsAndSense Business Community
For more content that helps entrepreneurs, freelancers, and self-employed individuals and learn to build better businesses, join the DollarsAndSense Business Community on Facebook.