The National Day Rally (NDR) is often regarded as the most important political speech of the year. This year’s speech has been long in the waiting; we had missed the 2020 NDR speech and delayed this year’s speech due to the COVID-19 pandemic.
This year, Prime Minister Lee delivered both in the content and in his humour. *Cues the legendary language-switching cup* The full speech can be viewed online at PM Lee’s Facebook Page or PMO’s YouTube. Here’s a summary of the key announcements that will affect Singaporean workers financially.
#1 Earlier Eligibility For Workfare Income Supplement Scheme
The Workfare Income Supplement Scheme (Workfare) is a permanent scheme that helps lower wage workers (no more than a gross monthly income of $2,300) in Singapore by supplementing their income in cash and CPF top-ups.
Currently, Workfare benefits almost 500,000 workers with a total of $850 million a year. To help younger workers, the qualifying age for Workfare will be lowered to 30 instead of the current 35. This means more lower wage workers will qualify for the support.
Additionally, the Government will increase its spending on Workfare to $1.1 billion in two years’ time, which will increase the payouts to recipients.
Read Also: Guide To Workfare Income Supplement Scheme And How Much Those Who Are Eligible Will Receive
#2 Progressive Wage Model (PWM) To Be Rolled Out To More Sectors And Occupations
To help uplift lower wage workers, the Progressive Wage Model (PWM) will also be rolled out to more sectors (starting with retail, food services and waste management) as well as specific occupations across all sectors (starting with administrative assistants and drivers).
Introduced in 2012, the Progressive Wage Model states that a minimum wage for workers in specific industries. The minimum amount also increases as workers progress in their careers, whether that’s through work experience or by upgrading themselves by attending accredited courses. Currently, it is already in place for cleaners, security guards, landscaping workers and lift maintenance workers.
The change indicated in NDR is significant because it moves beyond sectoral implementation of the PWM to tackle the issue of low wages in jobs that are common across multiple sectors. For example, drivers are not just limited to the logistics sector but are commonly employed by many different sectors.
Read Also: Is The Progressive Wage Model An Alternate (And Better) Form Of Minimum Wage?
#3 Implementation Of Local Qualifying Salaries and Progressive Wage Mark
The government will also be requiring all companies who hire foreign workers to pay all their local employees at least the local qualifying salary (LQS, currently set at $1,400).
Currently, companies are only required to pay their local employees the LQS if they are using the headcount as part of the quota to hire foreign workers. This means that it is possible for some local employees to be paid lower than the LQS if the company only hires a few foreign workers (fewer than their allocated quota). This would mean more lower-wage workers working in companies with foreign workers will see an increase in their salaries to at least the LQS.
Additionally, to ensure workers are paid decently and to uplift lower-wage workers, the government will introduce a new accreditation scheme: Progressive Wage Mark. This will accredit companies that are paying all their workers “decent wages”. Lending weight to the accreditation scheme, the public sector would only purchase from businesses that have received the Progressive Wage Mark.
While PM Lee did not elaborate on the figures that constitute “decent wages”, we would expect MOM to release more information and we can also infer that the LQS of $1,400 is likely to be one of the threshold figures. With these changes, we are likely to not just see the effect on the wages of lower wage workers, but also see an effect on us as consumers. We would likely see an increase in the prices of everyday items that goes into the better wages.
#4 TAFEP Employment Guidelines To Become Enforceable
Currently, to ensure fair hiring practices (including hiring of foreigners), the Tripartite Alliance For Fair and Progressive Employment Practices (TAFEP) has a set of Tripartite Guidelines on Fair Employment Practices. However, these are merely guidelines and the TAFEP has no enforcement powers to ensure companies actually adheres to these guidelines. Companies that do not abide by the Tripartite Guidelines would face scrutiny from the Ministry of Manpower (MOM), but the TAFEP itself cannot police nor enforce the guidelines.
With the enshrinement of the TAFEP guidelines into law, there will be more resolutions options for workplace disputes. PM Lee also emphasised that workplace disputes should aim to be resolved through conciliation and mediation first before it goes before the tribunal which will be set up to deal with workplace discrimination.
This is a major step in better labour protection for workers against workplace discrimination based on nationality, gender, age, race, religion and disability.
Read Also: Understanding The Tripartite Guidelines On Fair Employment Practices & Fair Consideration Framework
#5 Gig Economy Workers Such As Delivery Drivers May Enjoy Benefits That Currently Applies Only To Employees
PM Lee also indicated that the government is cognisant about the increasing number of gig workers and the lack of basic employment or job protection for this group of workers. While he said that “delivery workers are, for all intents and purposes, just like employees”, PM Lee stopped short of announcing any policy changes. He did indicate that MOM is already studying this issue and would be carrying out consultations.
Currently, about 190,900 Singapore residents are engaged in self-employed work and about 73,500 of them use online matching platforms. According to MOM, the top 3 occupations of these workers who used online matching platforms are private-hire car drivers, taxi drivers and car & light goods vehicle drivers. These occupations earned a median gross monthly income of $1,500 in 2020.
As these gig workers are classified as self-employed, they do not have access to the basic employment protections of employees, such as workplace injury compensation, union representation and employers’ CPF contribution despite their job nature being so closely tied to the platforms they are working for. Given PM Lee’s strongly worded concern, we would expect the Government to implement some form of basic employment protection for this group of workers in the near future.
Listen to our podcast, where we have in-depth discussions on finance topics that matter to you.
Bonds and Fixed Income
6 Investments In Singapore That Provide Guaranteed Principal And Returns
Credit Cards
Complete Guide To Trust Bank’s Products And Services
