Progressive Wage Model and Low Wage Workers

I asked the Acting Manpower Minister (on 14 April) how his ministry planned to bridge the gap between the 110,000 workers earning less than $1,000 per month (a figure I obtained from a previous Parliamentary question) and the 80,000 workers expected to benefit from the Progressive Wage Model, which will be applied to only the cleaning, security and landscaping industries.

I asked the Acting Manpower Minister (on 14 April) how his ministry planned to bridge the gap between the 110,000 workers earning less than $1,000 per month (a figure I obtained from a previous Parliamentary question) and the 80,000 workers expected to benefit from the Progressive Wage Model, which will be applied to only the cleaning, security and landscaping industries.

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Mr Gerald Giam Yean Song asked the Acting Minister for Manpower how does the Government plan to raise the wages of local low-wage workers in industries other than cleaning, security and landscaping given that that there are around 110,000 employed residents in Singapore earning less than $1,000 per month (excluding part-time workers) and the enforcement of the Progressive Wage Model in these three industries is expected to impact only about 80,000 low-wage workers.

Mr Tan Chuan-Jin: I have talked about the need to raise the incomes of lower-wage Singaporeans for a few years now and we have been putting in place measures to do so. It requires a holistic and wide-ranging effort. As a key first step, we need to keep the economy healthy, competitive and vibrant so that a wide range of jobs is available.

Secondly, our tightened labour market helps to keep unemployment low and put some upward pressure on wages.

Thirdly, we have enhanced Workfare, which now supplements the incomes and retirement savings of more than 400,000 Singaporean workers earning less than $1,900, and encourages them to work regularly and up-skill. Through the Inclusive Growth Programme, low-wage workers benefit from companies’ productivity gains through higher wages. MOM has also raised the full-time equivalent (FTE) salary for full-time local workers from $850 to $1,000 in July 2013. The FTE salary is used to determine how many local workers a company has, as a basis to calculate the foreign worker quota that the company is entitled to. It also ensures that local workers are employed meaningfully, and are not paid token salaries just to pad the numbers.

However, it is important to also understand that raising incomes has to be based on productivity improvements, to be sustainable in the long-run. Mandating the Progressive Wage Model (PWM) to support wages at the very low end is a highly targeted intervention applied to specific sectors where there is a particular problem with the labour market, such as prevalent cheap-sourcing coupled with a lack of union representation for the workers. We are applying the PWM requirement through legislation in the Cleaning, Security and potentially the Landscape Sectors. But this legislation approach will not be appropriate for all sectors and occupations. A better approach for other sectors is NTUC’s on-going efforts to work directly with employers to develop progressive wage structures and career progression pathways for rank-and-file and even PME workers.

We also support the low-income earners through a range of other support schemes whether in the form of housing, medical and education subsidies.

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Source: Singapore Parliament Reports (Hansard)

2 thoughts on “Progressive Wage Model and Low Wage Workers”

  1. Are you sure progressive wage is only applied to the cleaning, security and landscaping sectors?

    http://www.channelnewsasia.com/news/singapore/progressive-wage-model/985216.html

    http://www.spwu.org.sg/wps/portal/up2/home/areasofinterest/spotlight/spotlightdetails?WCM_GLOBAL_CONTEXT=/content_library/ntuc/home/areas+of+interest/spotlight/73a49a804c2c0b75af91af8604ddad5b&allowDuplicateResults=false&spotlightkeyword=SPOTLIGHT_CLUSTERS

    http://www.stjobs.sg/career-resources/money-matters/adopt-progressive-wage-model-companies-urged/a/116644

    Go read, this includes furniture industry , hospitality, 61unions of different clusters. Tell me how many sectors are there?

    Next time please do more research on the topic you want to talk about before making stupid assumptions like this.

  2. I don’t understand why is it so complicated as explained by Minister Tan. It’s economics, demand and supply. Over the years, the oversupply of foreign low skill workers are the cause of depressed wages. WP has been calling for a calibrated approach and I support this policy. We need to carefully calibrate each industry to make a balance between reasonable wages and tight supply.
    It’s clearly a mismanagement of the supply and demand that causes this issue if not the other possibility could be a deliberate move by the government to ensure that our cost is low enough so that it is competitive? If this is the case, then we are done because our government has ran out of idea how to move the economy to a higher level of efficiency.

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