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Written Answer by Mr Tan Chuan-Jin, Acting Minister for Manpower, to Parliamentary Question on Applying the Progressive Wage Model to Benefit More Low-Wage Workers

Notice Paper No. 112 Of 2014 For The Sitting On 14 April 2014
Question No. 792 For Written Answer

MP: Mr Gerald Giam Yean Song

To ask 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.

Answer:

  1. 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.
  2. 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.
  3. 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.
  4. We also support the low-income earners through a range of other support schemes whether in the form of housing, medical and education subsidies.