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Speech by Senior Minister of State for Manpower Mr Zaqy Mohamad at Committee of Supply 2024

Senior Minister of State for Manpower Mr Zaqy Mohamad

Employment practices

 

  1. Introduction

    1.       Mr Chairman, earlier, Minister for Manpower outlined how MOM will strengthen efforts to uplift lower-wage workers.

    2.       In my speech, I will elaborate on:

    1. The positive impact of our tripartite approach to uplifting our lower-wage workers and how we will build on our efforts;
    2. Second, how we will have strengthened our HR capabilities; and
    3. Third, our progress in improving Workplace Safety and Health.

    With your permission, Mr Chairman, may I ask the Clerks to distribute a handout detailing our efforts to support our lower-wage workers. Members may also access the handout through the SG Parl MP mobile app.

    B. Uplifting Lower-Wage Workers Hand-in-Hand with Tripartite Partners

  1. Progress Update and Impact

    3.       Tripartism is at the centre of Singapore’s approach to uplifting lower-wage workers. Over the years, the Government has worked closely together with employers and unions to support the advancement of lower-wage workers in a sustainable manner so that everyone can enjoy the fruits of Singapore’s growth.

    4.       Progressive Wages and Workfare are a big part of our efforts.

    1. Progressive Wages are implemented in two ways:
      1. First, the Progressive Wage Model, or PWM, which provides career and training progression pathways for lower-wage workers in sectors and occupations with many of such workers, ensuring that wages rise sustainably. Members may refer to the infographic for PWM for the ladders and trajectories of their salaries.
      2. Second, for the remaining sectors and occupations, local workers must still be paid at least the Local Qualifying Salary or LQS, if their employers hire foreign manpower.
    2. The Government provides employers with transitional co-funding of wage increases for lower-wage workers, through the Progressive Wage Credit Scheme, or PWCS.
    3. Through Workfare, the Government further supplements the incomes of lower-wage workers to help them save more for retirement, and supports them for upskilling through training.

    5.       This year is a momentous milestone in Singapore’s journey of uplifting our lower-wage workers, as it marks the 10th anniversary of our first PWM. Together with other tripartite efforts, PWMs have supported lower-wage workers in seeing sustained and meaningful wage growth over the past decade:

    1. Real incomes of lower-wage workers at the 20th percentile have risen cumulatively by 30% from 2013 to 2023, faster than the median worker at 22%.

    6.       Over the past two years, we have expanded Progressive Wages to cover even more lower-wage workers. This follows the release of recommendations by the Tripartite Workgroup on Lower-Wage Workers in 2021.

    1. Mr Sharael Taha and Mr Fahmi Aliman asked about the progress of our efforts. Today, more than 155,000 lower-wage workers across 9 sectors and occupations are covered by the PWM. This is more than five times the coverage since 2020, so we have expanded quite significantly since 2020.
    2. In addition, over 105,000 lower-wage workers are covered by the LQS requirement.
    3. Our suite of Progressive Wage moves—comprising PWMs, LQS and the Progressive Wage Mark accreditation scheme—now benefit up to 9 in 10 of full-time lower-wage workers today.
    4. In a tight labour market, lower-wage workers who are not directly covered by Progressive Wages should also see increases in their wages.
  2. Raising the Local Qualifying Salary (LQS)

    7.       Mr Fahmi Aliman and Mr Yip Hon Weng asked how we will build upon existing efforts to uplift lower-wage workers. A key step that we will take is to raise the LQS threshold.

    1. The LQS threshold ensures that locals are employed meaningfully, rather than on token salaries for firms to access foreign workers.
    2. We regularly review the LQS threshold to keep pace with rising local wages, and maintain the effectiveness of our foreign workforce controls.

    8.       The Government last updated the LQS threshold in 2020 before the pandemic.

    1. We recognised that firms needed time to comply with the new LQS requirement, which came into effect in September 2022.
    2. Local wages have increased with our recovery from the pandemic. We are thus adjusting the LQS threshold.

    9.       As announced by DPM at Budget, the LQS threshold will be raised from $1,400 to $1,600 for full-time local employees, to better support our lower-wage workers. We will also raise the LQS threshold for part-time local employees, from $9 per hour to $10.50 per hour.

    10.      Correspondingly, foreign worker quota computation will be adjusted.

    1. To be counted as one local workforce count for the purpose of foreign worker quota for firms, or one LWC, the local worker will need to be paid at least $1,600. This is up from $1,400 today.
    2. For firms hiring part-time workers, locals who earn at least half the LQS are counted as half an LWC. With the LQS increase, such locals have to be paid at least $800, up from $700 today.

    11.      These changes will be implemented on 1 July 2024.

  3. Workfare Enhancements

    12.      On the Government’s part, we will continue providing lower-wage workers with additional support through Workfare, to complement our Progressive Wage efforts.

    1. Workfare comprises of two pillars: the Workfare Income Supplement, or WIS, and the Workfare Skills Support Scheme, or WSS.
    2. Over the years, the Government has steadily strengthened our Workfare support for lower-wage workers.

    13.      As announced by DPM at Budget, the Government will further enhance Workfare.

    1. From 2025, we will raise the qualifying monthly income cap further—from $2,500 to $3,000—for both WIS and WSS. Mr Sharael Taha would be pleased to note that this ensures Workfare continues to help workers in the bottom 20th income percentiles, with some support for those slightly above.
    2. We will also raise WIS payments.
      1. We will increase the maximum payment to $4,900 per year, up from $4,200. Those aged 60 and above will benefit from this highest payment tier, as well as all persons with disabilities regardless of age.
      2. Payments for all other qualifying age groups will also be increased.
      3. Those aged 30 to 34 will receive a maximum payment of $2,450 per year;
      4. Those aged 35 to 44 will receive a maximum payment of $3,500 per year; and
      5. Those aged 45 to 59 will receive a maximum payment of $4,200 per year.
    3. These enhancements will benefit around half a million lower-wage workers. In total, WIS payments will increase to $1.4 billion in 2025, up from $1.1 billion last year.
  4. Progressive Wage (PW) Portal

    14.      Another key step that the Government will take is ensuring employees are aware of the Progressive Wages that they are eligible for. We thus launched the Progressive Wage Portal, or PW Portal, earlier in January. 

  5. Progressive Wage Credit Scheme (PWCS) Enhancements

    15.      Chairman, even as we support our lower-wage workers, we also understand and are aware that employers face uncertain economic conditions.

    1. Many employers have done their part. They have continued paying their lower-wage workers good wages and upskilled them – even for those who are not on PWM, and despite challenging economic conditions.
    2. We need to be mindful of the impact of Progressive Wages on employers in the short run. We should ensure that as we uplift lower-wage workers, we do not inadvertently harm workers’ prospects, or risk widespread job losses.
    3. Hence, in 2022, the Government introduced PWCS to co-fund wage increases that employers give their lower-earning employees. PWCS provides transitional support for employers to adjust to new PWM and LQS requirements, and encourages voluntary wage increases for lower-wage workers.
    4. Through PWCS, the Government has supported meaningful wage increases for lower-wage workers.
      1. For wage increases given in 2022, the Government disbursed about $1 billion of PWCS funding to employers.
      2. This co-funded the wage increases given to more than 345,000 employees by over 70,000 employers.
      3. The median monthly wage increase supported by PWCS was about $300.
    5. To Mr Sharael Taha’s query, the Government will indeed continue providing transitional support to employers through PWCS over the next few years.
    6. As outlined by DPM at Budget, the Government will further enhance PWCS this year to help employers cope with PWM and LQS increases amid a more challenging economic environment.
      1. First, we will increase the Government’s co-funding for wage increases given in 2024. This builds on earlier enhancements in 2022 and 2023, at 75% co-funding. With this year’s enhancement, the Government will co-fund up to 50% of wage increases given by employers to eligible lower-wage workers in 2024 – up from the original 30%. This includes workers who are not covered by any PWM.
      2. Second, we will raise the wage ceiling in 2025 and 2026 to $3,000 – up from $2,500 per month. With this enhancement, PWCS will continue to support increases of wages up to $3,000 beyond 2024.
    7. Full details are at the PWCS website. Collectively, both enhancements will offset a significant proportion of immediate cost pressures on employers arising from our efforts to uplift lower-wage workers, and mitigate cost transfer to consumers.
    8. To provide for these enhancements, DPM has announced a top-up of $1 billion to the PWCS Fund.
      1. This brings the total PWCS budget to $6.2 billion.
      2. Together with the increased WIS payments of up to $1.4 billion per year, I am sure members can see that the Government has committed and invested significant resources into strengthening and supporting our lower-wage workers.
  6. Whole-of-Society Approach, PW Mark

    16. However, the Government cannot single-handedly drive the growth of lower-wage workers’ incomes, nor can we co-fund wage increases given to lower-wage workers indefinitely – this is not a sustainable approach. As Mr Edward Chia, Ms Yeo Wan Ling and Mr Sharael Taha said, uplifting lower-wage workers is a whole-of-society effort.

    17. Workers need to improve their skills, so that they can be as productive as they can be in their jobs, as their wages rise. Firms and industries must also transform.

    1. Lower-wage workers tend to be in frontline roles, where their productivity growth is heavily dependent on how the firms and industries that they work in operate.
    2. This means that transformation must also take place at the firm- and industry-level, as Mr Edward Chia said, so that we can narrow the wage gap in a sustainable way.

    18. Industries must therefore accelerate the pace of their transformation journeys, taking guidance from the Industry Transformation Maps, or ITMs.

    19. Employers must accelerate their individual business transformation plans and drive productivity gains within theirfirms, through better technology and processes.

    1. Employers can find support through Government schemes, such as the Productivity Solutions Grant.
    2. Employers can also consider working with NTUC to set up Company Training Committees, or CTCs, and tap on the NTUC CTC grant to transform businesses, redesign jobs, and improve work prospects for their employees.

    20. Service buyers have a role to play too.

    1. Where there is a need to renegotiate existing contracts for compliance with Progressive Wages, service buyers and service providers should work together to come to a mutually agreeable solution.
    2. Above all, service buyers should also embrace outcome-based contracting, which focuses on specifying clear and deliverable outcomes, rather than the exact number of workers for each individual task. This allows service providers to deliver quality services using less manpower, and enables employers to pay higher wages to their lower-wage workers using productivity as a tool.

    21. Last but not least, consumers can make their choices count, by purchasing from businesses accredited with the Progressive Wage Mark, or PW Mark.

    1. Today, over 4,400 businesses are PW Mark-accredited, and more are coming onboard each day.
    2. Supporting PW Mark businesses means supporting lower-wage workers. Both you and I can make our purchase matter and help uplift lower-wage workers more sustainably.

C. Strengthening HR Capabilities

22. Chairman, I move on to HR and strengthening HR capabilities. HR is a key enabler for workforce and business success, and MOM remains committed to strengthening employers’ HR capabilities.

23. Mr Edward Chia asked how MOM is empowering employers to adopt job redesign.

  1. Workforce Singapore, in collaboration with IHRP, launched the Job Redesign Centre of Excellence, or JRCoE, last November.
  2. JRCoE serves as a one-stop centre to equip enterprises with capabilities to transform their businesses and workforce through job redesign.
  3. Around 20 Trade Associations and Chambers have pledged support for the JRCoE, and will be encouraging their member companies to incorporate job redesign in HR practices.

D. Improving Workplace Safety and Health

24.   Moving on to Workplace Safety and Health, or WSH, I would like to assure Mr Melvin Yong that fostering safer and healthier workplaces remains a key priority for the Government.

25. In 2023, our workplace fatal injury rate fell to 0.99 per 100,000 workers.

 

  1. This is the first time it has fallen below 1 per 100,000 workers, aside from 2020 when Covid-19 disrupted work. Only four OECD countries have achieved this consistently – the United Kingdom, Netherlands, Sweden and Germany. If we can sustain this, this puts us among the top performers of WSH in the world.
  2. We have achieved this milestone five years ahead of target year 2028 because of the Government’s close partnership with employers and workers, as well as the help of the Labour Movement.
  3. I thank the member and my colleagues in the Multi-Agency Workplace Safety and Health Taskforce for their commitment to improving workplace safety and health.

26. The key challenge today, moving forward, is to sustain the rate below 1. This requires all stakeholders to press on with our collective efforts.

 

  1. Business leaders must continue to reinforce a strong and pervasive culture of workplace safety excellence, and invest in WSH technologies.
  2. Unions must advocate for safe, healthy workplaces and working conditions.
  3. On the ground, proper risk assessment and management must be done. Workers must continue to follow safety protocols, speak up to improve WSH practices, and call out safety risks.
  4. On our part, the Government will continue to push out the Safety Accountability, Focus and Empowerment measures announced last May, and strengthen WSH ownership of employers and workers through programmes and resources.
  5. We will continue to closely monitor sectoral WSH performance. Key findings for 2023 will be shared in the WSH National Statistics Report scheduled for release in April this year.

27. Through our collective efforts and vigilance, I believe we can sustain our achievement in 2023 over the long term.

 

28. Ms He Ting Ru asked about the compensation under the Work Injury Compensation Act or WICA.

 

  1. Insurers have to adhere to claims processing standards and guidelines, including how compensation is computed.
  2. The median time taken for designated insurers to process a WIC claim is about six months and processing time varies depending on the complexity of the case.
  3. The Government reviews the WICA system regularly.
    1. This February, MOM announced increases to WICA compensation limits to keep pace with wage growth and rising healthcare costs.
    2. These changes will be implemented from November 2025.
  4. We will continue reviewing WICA regularly to ensure that workers have access to expeditious and fair compensation in case of work injury.

E. Conclusion

29. The Government is committed to working hand-in-hand with employers, service buyers, consumers and workers themselves, to build safer and more inclusive workplaces.

30. We must continue to progress together as one people – to ensure that no worker is left behind and that all workers have the opportunity to achieve their fullest potential.

F. Malay Speech

31. Mr Chairman, allow me to recap some of MOM’s efforts in Malay.

 

32.   Selama beberapa tahun, Pemerintah telah bekerjasama rapat dengan majikan dan kesatuan sekerja NTUC untuk menyokong kemajuan pekerja bergaji rendah secara mampan.

 

  1. Bersama dengan usaha tiga pihak yang lain, PWM telah menyokong pekerja bergaji rendah dalam melihat pertumbuhan gaji yang bermakna.
    1. Pendapatan sebenar pekerja bergaji rendah atau pun “real incomes” pada telah meningkat secara kumulatif sebanyak 30% dari tahun 2013 hingga tahun 2023, lebih cepat daripada pekerja median pada 22%.
    2. Pekerja PWM, khususnya, telah menyaksikan hasil gaji yang kukuh. Dan di sini, saya teringat pekerja seperti Cik Sivamani Taigrajan. Sebagai pegawai keselamatan bantuan yang baru, apabila beliau bermula pada tahun 2005, Cik Sivamani memperoleh gaji bulanan sebanyak $800. Sepanjang kerjaya hampir 20 tahun dalam industri keselamatan, Cik Sivamani telah terus meningkatkan kemahiran dan memikul tanggungjawab yang lebih besar dan baharu, ini berpandukan rangka kerja PWM Keselamatan.
    3. Kini sebagai penyelia keselamatan, Cik Sivamani memperoleh gaji bulanan sebanyak $3,250 – ini merupakan kemajuan yang ketara daripada gaji awal bulanannya sebanyak $800 dulu. Ini bukti keberkesanan PWM dalam menyokong kenaikan gaji yang bermakna bagi pekerja kita, sambil mereka meningkatkan kemahiran dan produktiviti mereka.
  2. Hari ini,155,000 pekerja bergaji rendah merentasi 9 sektor dan pekerjaan dilindungi oleh PWM. Ini adalah lebih daripada lima kali ganda daripada perlindungan PWM terdahulu pada tahun 2020.
    1. Di bawah PWM, pekerja boleh menerima kenaikan gaji tahunan dan menjangkakan untuk memperoleh sekurang-kurangnya gaji PWM yang berkenaan.
    2. Sebagai contoh, pekerja pembersih akan melihat gaji mereka meningkat kepada sekurang-kurangnya $2,420 setiap bulan menjelang tahun 2028.
  3. Dan selain daripada itu, lebih 105,000 pekerja bergaji rendah dilindungi oleh Gaji Kelayakan Pekerja Tempatan atau LQS—iaitu firma yang menggaji pekerja asing mesti membayar semua pekerja tempatan mereka sekurang-kurangnya LQS.
  4. Bersama dengan skim pentauliahan Tanda Gaji Progresif, atau Tanda PW, set Gaji Progresif kami yang terdiri daripada PWM, LQS dan Tanda Progressive Wage—kini memberi manfaat kepada 9 daripada 10 pekerja bergaji rendah sepenuh masa hari ini.

 

33. Pemerintah sedang memperkukuhkan usaha kita untuk menaikkan gaji dan kesejahteraan pekerja bergaji rendah kita.

 

  1. Jadi kami akan meningkatkan ambang LQS daripada $1,400 kepada $1,600 untuk pekerja sepenuh masa mulai 1 Julai 2024. Kami akan juga meningkatkan ambang LQS bagi pekerja sambilan secara serentak, daripada $9 sejam kepada $10.50 sejam.
  2. Kedua, kami akan meningkatkan Workfare untuk mengukuhkan lagi sokongan kami bagi pekerja bergaji rendah dan membantu mereka membina simpanan persaraan mereka.

34.   Pada tahun-tahun yang akan datang, saya ingin memberi jaminan kepada members di chamber ini bahawa. Pemerintah akan terus bekerjasama dengan majikan dan kesatuan sekerja NTUC—untuk memastikan bahawa semua maju dan menikmati hasil pertumbuhan Singapura bersama-sama, dalam perpaduan, melalui masa senang dan masa susah.

 

35.   Terima Kasih.