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Response to Adjournment Motion on Progressive Wages and the Revaluing of “Low-Wage Work” by NMP Raj Joshua Thomas

Mr Zaqy Mohamad, Senior Minister of State for Manpower, Parliament

Employment practices
  1. Mr Speaker, I thank the Member for his support Singapore’s Progressive Wage Model (PWM) to improve the livelihoods of our lower-wage workers, and hopefully in future, just “workers”. I also thank the Member for affirming the importance of tripartism in contributing to the success of PWM.


    Progressive Wages on Track to Uplift Lower-Wage Worker

  2. Indeed, our lower-wage workers perform essential jobs and should be recognised for their contributions. They form the backbone of our economy, and provide many important services that we should not take for granted.
  3. This is why we must ensure they are paid meaningful wages. A decade ago, tripartite partners recognised that wages in some jobs were stagnating, especially in outsourced sectors like cleaning, security and landscape. At the same time, workers found themselves entrenched in the same job with little opportunity for skills upgrading and progression.
  4. In response, NTUC conceptualised the PWM to chart out better wage, skills and career pathways. Tripartite partners implemented the first mandatory PWM in 2014 in the Cleaning sector, followed by Landscape and Security in 2016. Today, we have seen good outcomes. Real cumulative wage growth of locals in these PWMs grew by 31% from 2014 to 2019, outpacing wage growth of the 20th percentile worker at 23%.1 This gave us confidence and we further expanded PWM to the Lift and Escalator Maintenance sector in 2019.
  5. When I chaired the Tripartite Workgroup on Lower-Wage Workers (TWG-LWW) in 2020, I recall we had several challenges to overcome. First, the lowest-paying jobs were in domestic sectors, like kopitiams, heartland retail, cleaning, security – this presented the dilemma of how to uplift lower-wage workers significantly, while convincing consumers and businesses to pay more.
  6. The second challenge was raising the coverage of Progressive Wages – from only 10% of low wage workers in early days of the first few PWMs – and making wage increases meaningful to narrow the gap between the bottom 20 percent and the median worker.
  7. To address these challenges, then PM Lee Hsien Loong in his NDR speech 2021 announced> the Government’s acceptance of the Tripartite Workgroup’s recommendation to expand PWM to more sectors, like Food Services and Retail, and occupations including Administrators and Drivers. And back then if you recall, we were in the midst of Covid-19. Despite Covid-19 and business uncertainties, tripartism prevailed and delivered significant boosts in PWM wages. For example, the basic wage requirement for entry-level cleaners will increase from $1,312 in 2022 to $2,420 in 2028.
  8. The security sector will see even stronger growth, as the Member has highlighted. Today, Security PWM wage requirements are minimally $2,650 – higher than the 20th percentile wage level. By 2028, entry-level security officers will earn at least $3,530 – a 56% increase from 2022.
  9. These significant wage increases are possible for the security sector, in part because of its high potential for productivity gains – through deployment of digital technologies, more efficient work processes, and robust skills certification framework to guide officers in improving their productivity. But of course as the member also shared, we’re still working out how to improve their work environment and reduce reliance on work hours.
  10. Beyond PWM, we also require employers to pay all their local employees at least the Local Qualifying Salary (LQS) to qualify for foreign work passes; and we implemented the Progressive Wage Mark accreditation scheme to encourage consumers to support employers who are paying progressive wages. Collectively, these measures benefit up to 9 in 10 local full-time lower-wage workers today, up from where we were, 1 in 10, prior to 2021.


    Raising the Value-Add of Lower-Wage Jobs

  11. We agree with the Member that if we want wages to continue to increase, workers and businesses must become more productive.  
  12. This is why the PWM is not just about raising wages, but also raising the value-add of the jobs. Tripartite partners regularly review the skills ladders, while workers are required to go for training and encouraged to take on higher-value roles. Businesses too have a significant role, in transforming business models, improving operations and redesigning jobs. And they can take reference from the respective Industry Transformation Maps to do so.
  13. We recognise that uplifting lower wage workers is a journey. The Government has thus provided employers substantial transitional support through the Progressive Wage Credit Scheme, which partially offsets employers’ costs of paying lower-wage workers better wages. The Government disbursed around $1 billion to 70,000 employers who gave wage increases to more than 345,000 employees in 2022.
  14. Employers must take advantage of this transitional support by accelerating business transformation, such as adopting technology and refining processes to improve productivity. And the security sector has shown that it can be done.


    Shaping Perceptions of Lower-Wage Jobs

  15. The Member is right that the success of PWM rests in part on public recognition that PWM jobs are important jobs, and society must support fair remuneration for workers. 
  16. When I speak to our lower-wage workers, across sectors, it is clear they want their work to be recognised by society. They prefer the dignity of earning a fair salary, over receiving handouts any day. This is fundamental to our social compact in Singapore. In this regard, Tripartite partners agree with the Member that service buyers and consumers play important roles.
  17. Tripartite partners have been promulgating good industry practices among service buyers, such as outcome-based contracting, to specify clear deliverables in a contract rather than the number of workers. This allows service providers to redesign work processes holistically, to deliver quality outcomes with lower labour intensity, enabling employers to pay higher wages.
  18. It is also important for consumers to treat fellow Singaporeans with respect, and recognise that paying a little more for goods and services goes a long way towards rewarding their efforts and improves the livelihoods of our lower-wage workers.


    Future of PWM

  19. The Member spoke on the future of PWM. I agree that we should regularly take stock and make adjustments. In fact, this was why we had convened the Tripartite Workgroup in 2020 – to take stock and to refresh our approach. 
  20. I thank the Member for his suggestions for PWM 2.0. Currently, there is some flexibility in the PWM for market forces to play a role. In jobs where the skills levels are higher and wages have risen to an appropriate level, we recognise that their wages could then be decided by market forces. Examples are the Retail and Food Services sectors, where jobs such as Retail Managers and Senior Cooks are part of the PWM job ladder, but their wages are not mandated by PWM. Of course, we hope to see the wages in more jobs rise sufficiently, such that there is no longer a need to mandate PWM wage increases. As PWM sectors negotiate wage requirements over the next few years, we hope more workers can see significant uplift, and over time more higher-level job roles can have their wages left to market forces. But for now, the majority of PWM workers still need the support and uplift from PWM requirements. We will certainly continue to monitor, and review PWM together with tripartite partners.


    Conclusion

  21. Mr Speaker, as the Member has affirmed, our Progressive Wage approach is a triumph of tripartism. It will continue to be a vital pillar of support and uplift for our lower-wage workers. For now, having extended the coverage of Progressive Wages, we must double down on our efforts to implement PWMs effectively.
  22. Employers must recognise that they have the largest influence on work-productivity outcomes – in transforming businesses and jobs, and supporting the continuous upskilling of workers. At the same time, workers too, need to do their part by embracing change and being open to work with technology.
  23. If we get this ecosystem right, we will not just uplift our lower-wage workers, but also enable our businesses to thrive and our economy to grow.
  24. To conclude, I would like to thank our tripartite partners; our employers, our union leaders who have done a lot and certainly our members of public. Beyond just paying more, I think what we’re doing is to give lower-wage workers respect and dignity for the work that they do. I think it is key that we value all our lower-wage workers for all they do for us and the economy. So with that, I want to say a big thank you, and certainly this is a
  25. whole-of-society effort to uplift lower-wage workers, for stronger social compact for Singapore.

 

FOOTNOTE

  1. Tripartite Workgroup on Lower-Wage Workers Report 2021