Oral Answer to PQ on Wage Growth
NOTICE PAPER NO. 2310 OF 2023 FOR THE SITTING ON OR AFTER 7 NOVEMBER 2023
QUESTION NO. 5281 FOR ORAL ANSWER
MP: Mr Edward Chia Bing Hui
To ask the Minister for Manpower (a) what is the current rate of real wage growth in Singapore; (b) given rising cost of living concerns, what is the forecast for real wage growth for 2023 and how does this compare to previous years; and (c) what measures are being considered to support businesses in ensuring real wage growth for their employees.
NOTICE PAPER NO. 2325 OF 2023 FOR THE SITTING ON OR AFTER 7 NOVEMBER 2023
QUESTION NO. 5285 FOR ORAL ANSWER
MP: Mr Edward Chia Bing Hui
To ask the Minister for Manpower (a) what is the cumulative impact of the series of price increases on wage growth; and (b) in light of these increases, whether there are concerns about the possibility of stagnating wage growth particularly for vulnerable Singapore workers.
NOTICE PAPER NO. 2337 OF 2023 FOR THE SITTING ON OR AFTER 7 NOVEMBER 2023
QUESTION NO. 5336 FOR ORAL ANSWER
MP: Mr Saktiandi Supaat
To ask the Minister for Manpower (a) whether the real median income growth has kept pace with inflation over the past five years; (b) whether the latest data on real median income growth is within the Ministry’s expected range; and (c) whether there is a need for more stratified and sectoral data points considering the impact of the recent price increases on certain vulnerable groups of Singaporeans.
I would like to assure Mr Saktiandi that the Ministry of Manpower (MOM) closely tracks the number of resident workers across finer gross income bands, with special attention given to the progress of our lower-wage workers. But let me first talk more broadly about the wage outcomes before I come back to the income growth of lower-wage workers.
2. From 2017 to 2022, income growth has outpaced inflation, with the real median income growing by about 9.4% or 1.8% per annum. This income growth was commensurate with productivity growth, measured by real value-added per worker, of 2.0% per annum over the same period. However, due to elevated inflation and weaker economic outlook, based on preliminary estimates, while nominal median income grew by 0.9%, real median income declined by 4.5% on a year-on-year basis in the first half of 2023 compared to the first half of 2022. While the economic outlook remains uncertain, we expect inflation to moderate for the rest of the year.
3. The Government recognises the impact of inflation on wages and has recently announced a $1.1 billion Cost-of-Living Support Package in September, which provides additional relief for all Singaporean households, with more support for lower- to middle-income families. In its recent announcement on 31 October, the National Wages Council (NWC) has called on employers to consider giving a one-off special lump sum payment to workers in recognition of the impact of high prices. The NWC Guidelines recommend that employers reward workers fairly based on their contributions and overall business performance, and adopt the Flexible Wage System in order to stay nimble and responsive amidst economic uncertainty.
4. To Mr Chia’s question, our strategy to sustain real income growth is to continue to raise productivity. And this is why we have embarked on the 23 Industry Transformation Maps (ITMs) to transform businesses and upskill workers for jobs of the future across the economy.
5. The NWC has also reiterated its call to employers to press on with transformation and upskilling to ensure that income growth is sustainable, and the Government will support such efforts. Employers can make use of the 16 Jobs Transformation Maps which provide actionable roadmaps to redesign jobs and reskill workers. Employers can also tap on programmes such as Workforce Singapore’s Career Conversion Programmes, which provide up to 90% salary and course subsidies, to reskill their existing workers to take on enhanced job roles or train mid-career new hires to take on new roles. As indicated in the Forward SG report, we will launch new career health initiatives to improve job matching and help Singaporeans better plan for their long-term careers, through access to better data and information about jobs and skills. This will enhance employers’ access to talent and ensure better labour market outcomes.
6. I would also like to assure members that we pay special attention to our lower-wage workers. Mr Saktiandi and Mr Chia would be pleased to know that lower-wage workers have experienced good real income growth over the last five years. From 2017 to 2022, real income at the 20th percentile has risen 15.4%, or 2.9% per annum, faster than 1.8% per annum at the median. This means that as costs of living rose, the incomes of lower-wage workers rose even more, thereby narrowing the income gap between lower-wage workers and the median worker.
7. We have recently expanded the Progressive Wage Model, or PWM, to cover more lower-wage workers, and this will boost their incomes even further over the next few years – workers covered by the PWM can expect cumulative wage increases of up to 80% by 2028. Amid a tight labour market, lower-wage workers who are not directly covered by the PWM should also see meaningful wage increases, as employers will have to respond to market forces to attract and retain workers. To reduce the impact on employers, the Government co-funds up to 75% of wage increases given by employers to eligible lower-wage workers from 2022 to 2026, through the Progressive Wage Credit Scheme, or PWCS. PWCS will soften the cost impact on employers in the near term, and give employers time to invest in upskilling workers and improving firm-level productivity so that the wage increases are sustainable.
8. The Government also enhanced the Workfare Income Supplement Scheme in January 2023 to further boost the income of lower-wage workers. We will be further enhancing Workfare as shared by PM Lee at the National Day Rally 2023 and details will be shared at next year’s Budget.