Oral Answer by Senior Minister of State Zaqy Mohamad on PWM and Productivity

NOTICE PAPER NO. 1722 OF 2023 FOR THE SITTING ON 22 FEBRUARY 2023
QUESTION NO. 4238 FOR ORAL ANSWER

MP: Mr Yip Hon Weng

To ask the Minister for Manpower (a) whether the Progressive Wage Model (PWM)’s approach to wage increases is linked to an expectation of increased productivity from businesses, with the aim of reducing costs; and (b) what steps has the Ministry been taking to assist companies that have implemented the PWM and are facing difficulties in boosting productivity.

Answer:

1. The Progressive Wage Model (PWM) is underpinned by the longstanding tripartite principle that wages should grow in tandem with productivity to be sustainable over the long term. To do this, both workers and employers need to play their part, and they can tap on the range of resources and initiatives rolled out by the Government and tripartite partners.

2. Workers need to improve their skills, so that they can be as efficient and productive as they can be in their jobs, even as their wages rise. Through upskilling, workers can also put themselves in a better position to take on larger and more complex job roles. In particular, workers in PWM job roles are guided by the tripartite-endorsed PWM training requirements on how best to upskill. They are also supported by the Workfare Skills Support Scheme, which provides training support to lower-wage workers, as well as the broader SkillsFuture movement.

3. Beyond improving each worker’s productivity directly through training, businesses must take ownership in driving wider business transformation to improve productivity. Our Progressive Wage moves are complemented by the Industry Transformation Maps (ITMs), which map out growth and transformation plans for 23 sectors across the economy. Businesses can find support for their transformation journeys through various Government schemes, such as the Productivity Solutions Grant. They can also consider working with NTUC to set up Company Training Committees (CTC) and tap on the NTUC CTC grant, launched in 2022, to transform business processes, redesign jobs, and improve work prospects for their workers.

4. The Government recognises that efforts to raise productivity take time, and that in the immediate term, businesses may face cost pressures arising from Progressive Wage moves. As such, the Government has provided schemes to help businesses defray some of these costs in the transition. The Progressive Wage Credit Scheme (PWCS) co-funds the wage increases employers give to their lower-wage workers from 2022 to 2026. As announced in Budget 2023, the co-funding support for PWCS will be enhanced to up to 75% for qualifying year 2023. Meanwhile, the Workfare Skills Support Scheme provides employers with an absentee payroll of 95% of basic wages when their workers are sent for training.

5. As we expand the Progressive Wage Model to uplift lower-wage workers, we will continue to support businesses to improve their productivity.