Progressive Wages has uplifted the salary of lower-wage workers and is expected to benefit 94% of lower-wage workers 

By February 23, 2023Current

TL; DR – Labour MPs (Member of Parliament) reiterate the importance of uplifting the lower-wage workers in today’s Budget Debate and cite how Progressive Wages that was first mooted by NTUC (National Trades Union Congress) in 2012 is expected to benefit 94% of lower-wage workers with its expansion into new sectors, occupations and affiliate schemes.  

Helping lower-wage workers has always been the heart of our policymakers’ discussions. And it is heartening to know that by this year, progressive wages will cover most lower-wage resident workers in Singapore.  

Even with rising inflationary pressures in recent years, the Progressive Wage Model (PWM) has proven itself effective in helping workers. Lower-wage workers now achieve sustainable real wage increases that outpace median wage growth, have a clear career pathway and improve productivity through skills training and technology use with the PWM. 

Who is covered under the PWM?  

The PWM was first implemented in 2014 for the cleaning sector, followed by the security and landscape sectors in 2016, and the lift and escalator sector in 2019. In September last year, it made its foray into the retail industry.:  

Sectoral / Occupational PWs (Progressive Wage)  PWM requirements took effect from  
Cleaning sector Extension to in-house cleaners  1 September 2014  
1 September 2022  
Security sector Extension to in-house security officers  1 September 2016  
1 September 2022  
Landscape sector Extension to in-house landscape maintenance employees  30 June 2016  
1 September 2022  
Lift and escalator sector  1 May 2019  
Retail sector  1 September 2022  

Effectiveness of the PWM in increasing real wage growth of lower-wage workers  

Between 2014 and 2019, the real median gross wages for workers in the cleaning, security, landscape, and lift and escalator maintenance sectors grew 31 per cent on average, outpacing cumulative real median wage growth of 21 per cent over the same period. Additionally, the progressive rollout of PWMs (Progressive Wage Model) in the different sectors every 2-3 years is also indicative of the scheme’s success, hence its replication across various sectors. 

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In more recent studies, the Labour Force in Singapore Advance Release 2022 published by the Ministry of Manpower’s Research and Statistics Department (MRSD) has also found that workers earning lower wages saw stronger income growth than the median worker, in lieu of tripartite initiatives such as the progressive wage model.   

Real income for the 20th percentile workers recorded a 4.8% increase in the year, which the report noted is “faster than the previous year (4.4%) as well as the pre-COVID years (2014-2019: 4.4% per annum). With this, the P20 to P50 income ratio rose from 0.53 in 2021 to 0.55 in 2022, the highest since 2004.   

Notably, this is not a one-off event but rather a continuation of a decade-long trend, during which the bottom 20th percentile has consistently narrowed the gap to the rest of society.  

Example of real wage growth across PWM sectors  

Citing the landscape sector as an example, Labour MP (Member of Parliament) Desmond Tan shared during the Budget debate on 23 February 2023, how landscape workers’ wages have moved up by 3.5% per year, from $1,300 in 2016 to $1,650 in 2022, more than twice the median wage increase of 1.4%. Wages of landscape workers will also continue increasing to $2,385 in 2028.    

Also standing in support of the PWM at the Budget Debate today was Labour MP Mohd Fahmi Aliman. He shared how skills upgrading — a crucial component of the PWM — has a significant impact in sustainably uplifting the wages of workers, citing the case of Senior Escalator Specialist, Jeremy Yap. Hoping to advance to become a foreman after being in this industry for 20 years, Jeremy took a course to become a lift and escalator inspector to bring him one step closer to his goal. Under the Lift and Escalator PWM, his salary is expected to increase from $2,600 to $3,820 by 2028. And as he moves on to become a foreman in the future, his wages are set to be even higher. Jeremy’s ideals show how workers can benefit from the clear progression pathways set out via the various PWMs, with some like Jeremy setting their sights to achieve even more.  

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“An important facet of the PWM is how wages are linked to skills upgrading and productivity gains – workers are equipped with the required skills to be better and more efficient in their jobs and empowering them to scale up the career ladder.”   

Director of NTUC Operations and Mobilisation Division, Mohd Fahmi Aliman 

Through these statistics, the Progressive Wage Model has proven and will continue to benefit lower-wage workers and assure them of wages and work prospects on a sustainable basis. This is especially crucial in an era of the rising cost of living as the welfare of every worker matter, especially the ones who are the most vulnerable as it may boil down to their ability to put food on the table for their families.  

On the same note, Labour MP Mohd Fahmi Aliman also emphasized NTUC’s resolve in narrowing the wage gap between the 20th percentile and the 50th percentile of workers with the introduction of the PWM to the Retail, Food Services, Waste Management and the occupations of Administrators and Drivers. Cumulatively, PWMs will cover around 135,000 full-time lower-wage workers, which represents almost half of the total number of lower-wage workers.     

Establishing a stable methodology for raising wages  

Labour MP Desmond Tan also shared how PWM, coupled with affiliate schemes such as the LQS (Local Qualifying Salary) and the Progressive Wage Mark (PW Mark) accreditation, will benefit up to 94% of lower-wage workers in terms of real wage growth and a clear career pathway. 

LMP Desmond Tan also cautions the need for a sustainable and systematic mechanism to set and review the salary floor to ensure that it does not lead to dis-employment as some companies might struggle to balance rising wages and business growth if a blanket minimum wage scheme is imposed. 

“We all want wages to be higher. In NTUC, this is our raison detre, for better wages, welfare and work prospect. But we must also do so sustainably, without causing unintended consequences, like dis-employment. We want higher wages, but we also want higher employment rates. While it is inconclusive that MW necessarily causes work loss, it also means neither can we assume it doesn’t, especially in a small economy in SG where SMEs employs the bulk of our workers. PWM has a proven track record of raising wages without the risk of job losses.”  

Deputy Secretary General of NTUC Desmond Tan  

Acknowledging the importance of the need for a stable methodology in raising wages, Labour MP Mohd Fahmi Aliman calls on the Government at the Budget Debate, to annually review the LQS to ensure that wages keep pace with wage convergence targets for our lower-wage workers. He suggests that this can be done through a mechanism like the National Wages Council, which already provides annual guidance on the range of Progressive Wage growth for lower-wage workers. 

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Progressive Wage to impact all workers in time to come  

More are in the pipeline for Progressive Wage. The Tripartite Workgroup has also opined that with such a high coverage (94%) of lower-wage workers benefiting from Progressive Wages, market forces will help to uplift the remaining (6%) of lower-wage workers.  

In their speeches, Labour MPs credited the success of PWM to the strong spirit of tripartism efforts with focus on renewing the social compact with workers. Labour MPs have also implored the workers of Singapore to join in the #EveryWorkerMattersConversation to help NTUC understand the dreams and aspirations of workers so that they can champion the interest of workers and help them achieve better wages, welfare and work prospects in every step of the way. 

 

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Zahra

Author Zahra

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