Progressive Wage Credit Scheme (PWCS): What Businesses Need To Know

Over the past few years, Singapore has been moving progressively uplifting our lower-wage workers. As a society, this is a collective goal we should all work towards. However, businesses may find it hard and need more time and support to adjust to the wage increases.

To help businesses transit, the Government introduced the Progressive Wage Credit Scheme (PWCS) in 2022.

The PWCS is meant to support employers to adjust to mandatory wage increases for lower-wage workers covered by the Progressive Wage and Local Qualifying Salary requirements; as well as support employers who voluntarily raise wages of other lower-wage workers.

Under PWCS, the Government will co-fund wage increases for eligible resident employees from 2022 to 2026. This co-funding support was enhanced during the Singapore Budget 2024 announcement.

Read Also: Progressive Wage Model: How Much Will Singapore Employers Have To Pay Their Workers

Employers Automatically Qualify For Eligible Wage Increases

Employers will automatically qualify for wage increases are given to employees who:

  1. Singapore Citizen and Permanent Resident.
  2. Received CPF contributions from a single employer for at least 3 calendar months in the preceding year. The contributions need not be in consecutive months.
  3. Have been on the employer’s payroll for at least 3 calendar months in the qualifying year (i.e. employer must have paid CPF contributions to employees for at least 3 calendar months in qualifying year). The contributions need not be in consecutive months.
  4. Have an average gross monthly wage increase of at least $100 in the qualifying year
  5. Have wages below the stipulated wage ceilings for PWCS First Tier ($2,500 and below) or Second Tier (above $2,500 to $3,000)

Employers do not need to apply for the Progressive Wage Credit Scheme (PWCS) and can expect to receive their PWCS payouts for each year by the first quarter of the following year. Payouts will be titled “Progressive Wage Credit Scheme” (GIRO) or “GOVT” (PayNow Corporate) in your bank account – and there will not be any payouts made via cheques.

As the scheme is intended to support wage increases for employees, wages paid to business owners i.e. sole proprietors of sole proprietorships, or partners of a partnership, or both a shareholder and director of a company, will not be eligible for PWCS.

Companies on the employer exclusion list are also not eligible for PWCS:

  • Local Government Agencies including Organs of State, Ministries and Departments, Statutory Boards
  • Government and Government-Aided Schools
  • PA Services and Grassroot Units
  • High Commissions, Embassies, Trade Offices, Consulate
  • Unregistered Local/Foreign Entities
  • Foreign Military Units
  • Representative offices of Foreign companies, Foreign Government Agencies, Foreign Trade Associations/ Foreign Chambers/ Foreign Non-profit Organisations/Foreign Law Practices
  • Bank Representative Offices/Insurance Representative Officers/Other Financial Representative Offices (registered with MAS); News Bureaus (which are representative offices);
  • International Organisations
  • Entities which pay CPF but are not registered in Singapore

Read Also: Progressive Wage Model: How Much Will Singapore Employers Have To Pay Their Workers

Government Provides Up To 75% Progressive Wage Credit Scheme (PWCS) Co-Funding For Wage Increases

The Government will co-fund the wage increases of lower-wage workers between 2022 and 2026. The co-funding rate to support wage increases for workers earning up to $2,500 (PWCS First Tier) will be 75% for the first two years (2022 and 2023), then progressively reduces to 50% in 2024, 30% 2025, and finally 15% in 2026.

Additionally, the government will also support wage increases of up to 45% in the first two years (2022 and 2023) for workers earning more than $2,500 and up to $3,000 (under the PWCS Second Tier). This support will be reduced to 15% in 2024.

The government set aside $2 billion in 2022’s budget and a portion of the $1.5 billion support package announced in June 2022 to fund this co-sharing support. This scheme was further enhanced in Budget 2023 by setting aside $2.4 billion, and in Budget 2024 by setting aside $1 billion more.

Progressive Wage Credit Scheme (PWCS)
Source: IRAS

Changes To PWCS That Was Made In Budget 2024

In Budget 2024, the Government enhanced PWCS co-funding support. This will apply to wage increases given in the qualifying year 2023 and sustained in 2024.

Source: MOF

Wage Increases In Each Qualifying Year Is Supported For 2 Years Under Progressive Wage Credit Scheme (PWCS)

To help employers manage the compounding effect of wage increases year on year, the government is co-funding wage increases in each qualifying year for two years.

For example, an employee earns $1,800 in 2021 and is given an $100 increment annually from 2022 to 2026 (the qualifying period of PWCS). This employee would automatically qualify for the First Tier support. The 2022 wage increase will be supported at 75% in qualifying year 2022, and this 75% support will continue in 2023.

In the following year of 2024, as the wage increases again from $1,900 to $2,000, the new wage increase will also be supported.

The qualifying wage increases are highlighted in the coloured cells. Co-funding for the first year of wage increase is sustained in the second year. Source: IRAS
Total PWCS payouts you will receive
Source: IRAS

Employers Will Receive Progressive Wage Credit Scheme (PWCS) Payouts Automatically

There is no need for employers to apply for PWCS, as the wage information is automatically computed. Eligible employers will receive the payouts through the employers’ GIRO bank account for Income Tax/GST. For those without GIRO accounts, the payout will be credited to their bank account that is registered with PayNow Corporate. Employers who are not already on these direct crediting modes will have to sign up for these modes to receive their payouts.

For each qualifying year, eligible employers will be notified by IRAS of the PWCS payout payable to them and the payout will be disbursed by Q1 of the subsequent year.

Qualifying YearPayout Period
2022Q1 2023
2023Q1 2024
2024Q1 2025
2025Q1 2026
2026Q1 2027

Read Also: 5 Ways Businesses Need To Think About Hiring In 2022 (After Budget 2022 Statement)

This article was originally published on 25 February 2022 and has been updated with new information.

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