This year’s National Day Rally saw Prime Minister Lee Hsien Loong spend a significant portion of his speech dedicated to the uplifting of lower-wage workers.
With reference to the recommendations by the Tripartite Workgroup on Lower-Wage Workers (TWG-LWW), Mr Lee shared how the Government had accepted all 18 of the workgroup’s proposals – including extending the Progressive Wage Model (PWM) to cover more workers; requiring companies that hire foreign manpower to minimally pay all local workers the Local Qualifying Salary (LQS); and the introduction of a Progressive Wage (PW) Mark.
If you are wondering what all the above jargon are on about, let us take you into each of the 18 recommendations, and what do they actually mean to the workers who will be affected, and us as a society.
But first, what is the Tripartite Workgroup on Lower-Wage Workers (TWG-LWW)?
Formed back in October 2020, the TWG-LWW was actually the brainchild of tripartite leaders, namely, former Manpower (MOM) Minister Josephine Teo, NTUC Secretary-General Ng Chee Meng and Singapore National Employers Federation (SNEF) President Robert Yap.
The workgroup’s goals? To ensure wage growth for lower-wage workers; that more workers are covered by the PWM; that progressive wages are offered in jobs not covered by PWM; that there is societal support for firms who pay progressive wages to their workers; and finally, that the overall wellbeing of lower-wage workers are being cared for.
The workgroup is currently chaired by Senior Minister of State for Manpower Zaqy Mohamad.
Progressive Wage Model (PWM) You Say?
First mooted by NTUC in 2012, PWM aims to increase wages of workers through upgrading of skills and improving productivity.
Think of it as a system where workers get paid more for acquiring new skills that help improve their efficiency at work.
Not only does the PWM set out to increase workers’ salaries – it also helps workers achieve better career prospects and reduces the chances of workers being made redundant by technological advancements.
And the Local Qualifying Salary (LQS)?
Before I jump in what the LQS is, one must first know about the foreign employee quota that the Government regulates in Singapore.
How the Government does this is by mandating that a company must first hire X number of local workers before being entitled to hire Y number of foreign workers.
To ensure that companies do not just pay token sums to locals in order to get access to foreign labour, that is where LQS comes in.
The company will need to ensure that a portion of its local or permanent resident workers are paid at least $1,400. This will prevent employers from “hiring” locals for say $100 just to make up the local manpower headcount.
So now that you know a little more about these terms, let us dive into the recommendations themselves.
Helping Boost Lower-Wage Workers’ Wages
Expanding the PWM
Currently, the PWM is mandatory across outsourced sectors such as cleaning, security, landscape and lift & escalator maintenance.
According to MOM, when comparing these sectors to the lowest 20th and 50th percentile – which have seen a cumulative income growth of 23 and 21 per cent growth between 2014 to 2019 respectively – fulltime workers in the PWM sectors have experienced a cumulative income growth of 31 per cent.
As such, the TWG-LWW is proposing to expand the model and making it mandatory to more sectors so that more workers can enjoy better wages and increased productivity.
They include the retail sector from 1 September 2022, the food services sector from 1 March 2023, and the waste management sector from 2023.
But what about workers who are not outsourced, who are working in pre-existing roles covered by the sectorial PWM?
Beyond sectorial expansion – to include more workers under the progressive wage – the workgroup has also proposed extending the PWM to in-house workers from 1 September 2022.
This means that in-house cleaners, security and landscape workers will also be to enjoy the better productivity and wages.
To cover more common lower-wage worker groups, a new Occupational Progressive Wage for administrators and drivers will also be introduced on 1 March 2023. This is expected to cover around 19 per cent of the local lower-wage workers.
Uplifting Those Not Covered by PWM
What was once used to regulate foreign manpower numbers will now be used to raise the wages of those not covered by the PWM.
As such, for those who the PWM misses, the workgroup proposes that all firms employing foreign workers to minimally pay the LQS of $1,400 to all their local workers from 1 September 2022.
For example, currently if a company has 20 local workers and five foreign workers, the company need only pay 10 of its workers the LQS of $1,400. After September next year, all 20 local workers’ salaries must meet the LQS of $1,400.
Working Part-time and Overtime
To ensure that part-timers and workers who work overtime are given reasonable wages for their hours worked, progressive wages and LQS need to be converted to fair hourly rates.
In doing so, this would also allow firms retain the flexibility to hire locals on different work arrangements without having to forgo their access to foreign manpower.
Not a Once-off Boost
All the proposals by the workgroup are not a once off affair either.
To ensure this, the TWG-LWW has proposed that the baseline progressive wage growth for workers at the 20th percentile should outpace the median wage growth, so that the lower-wage workers gain ground with the median.
Aside from that, the workgroup proposes that wages should continue to keep pace with productivity growth , but scope for lower-wage workers to have wage growth beyond productivity levels needs to be provided for.
Sustaining Wage Growth
Setting of Wages
To further sustain this growth, the TWG-LWW has suggested that the National Wages Council (NWC) set wage guidelines and recommendations for progressive wage growth, including that of occupational progressive wages.
The NWC is a tripartite body with representatives Government, unions and employers. The council convenes to deliberate and propose national consensus on wage-related matters annually.
For easier implementation of progressive wages and LQS, progressive wages should also be expressed in gross terms as that is how employers typically advertise wages, and how jobseekers compare wages.
This will also give the worker greater certainty of their expected monthly salary.
Regulating Reliance on Foreign Manpower
The workgroup also suggested mandating that firms who employ foreign workers minimally pay sectoral or occupational progressive wages to all their local workers in applicable job roles.
This can be done by leveraging on the current Work Pass System to ensure that employers pay progressive wage and LQS before they can gain access to foreign manpower. This can also be complemented with the existing licensing schemes.
But at the end of the day, in order for all these measures to work to help uplift lower-wage workers, they require a whole-of-society support.
Beyond progressive wages, the Government needs to review the Workfare Income Supplement (Workfare) Scheme regularly to ensure that lower-wage workers continue to be supported.
During PM Lee’s National Day Speech, he already ascertained that the Government will support this measure by increasing the Workfare Scheme amount to $1.1b annually in the next two years, and lower the qualifying age to 30 instead of 35.
The Government should also help employers make these changes internally, especially while they continue to recover from the recessionary impacts of COVID-19. This can be done by providing transitional support till the time the recommendations become legislated.
Advancing Lower-Wage Workers’ Wellbeing
Employers need to continue to extend support to lower-wage workers by supporting them in training and upskilling; providing them with a safe and healthy work environment; and provisioning adequate and proper rest areas for them while at work.
In order to encourage employers to advance the workers’ wellbeing, new tripartite standards on advancing lower-wage workers’ wellbeing should be established.
This is so that companies can adopt and implement specified practices and also be recognised for their efforts.
Speaking of recognition, a new Progressive Wage Mark (PW Mark) will be given to recognise firms that pay progressive wages. With this PW Mark, both goods & service buyers as well as consumers, can choose to support firms that have made the commitment to uplift their workers.
Paving the way, public and private sector buyers should require their suppliers to obtain this PW Mark.
And lastly, the TWG-LWW recommends growing the Alliance for Action (AfA) for lower-wage workers.
The AfA is a tripartite driven initiative, comprising corporates, community organisation representatives, youth leaders and unionists who start ground-up projects that show appreciation for lower-wage workers, as well as initiatives to improve their working environments.