Committee of Supply debate: Ministry of Manpower

Salary base for local workers to go up

The amount a local worker must earn to count as a full-time worker will rise from $1,000 now to $1,100 in July, and $1,200 from July next year.
The amount a local worker must earn to count as a full-time worker will rise from $1,000 now to $1,100 in July, and $1,200 from July next year.PHOTO: ST FILE

From July this year, the minimum salary firms must pay their local workers each month if they want to hire foreign workers will go up.

The amount a resident worker must earn to count as a full-time worker will rise from $1,000 now to $1,100 in July, and $1,200 from July next year, Minister of State for Manpower Sam Tan said.

Sustainable wage increases are one way to lift the lot of low-wage workers, Mr Tan said at the debate on the Ministry of Manpower's (MOM) budget, as he detailed changes to the salary threshold .

The number of foreign workers a company can hire is tied to its number of full-time local workers, under a quota system known as the Dependency Ratio Ceiling (DRC). The DRC of 60 per cent in the manufacturing sector, for instance, means an employer can hire up to 1.5 foreign workers for every full-time local worker.

This salary threshold is regularly reviewed to stay in line with income trends, said Mr Tan. "If not, it means that we are gradually loosening our foreign worker controls simply due to rising nominal wages," he added.

The figure was last reviewed in 2013, when it went up from $850 to $1,000. Then, the income of workers at the 10th percentile was $1,200. This rose to $1,300 in 2015. Given rising income levels, the ministry has decided to adopt the new salary threshold.

"If we do not update the salary threshold now, it will mean having to make an even larger increase in future," Mr Tan said.

Low-wage workers are being helped by supplementing their incomes and retirement savings, through the progressive wage model, and stepping up "best sourcing" efforts, which encourage service buyers to award contracts based not just on price.

An updated Tripartite Advisory on Best Sourcing Practices was released yesterday. MOM is also working with other agencies to review further measures against contractors that fail to safeguard basic employment rights of outsourced workers under government contracts. More details will be announced at a later date.

Mr Tan noted that measures are also in place to ensure vulnerable workers, such as the elderly and injured, are looked after. The re-employment age will be raised to 67 from July this year, so that a growing pool of older workers can contribute as long as they are able to.

A Return to Work programme - which will give personalised help to injured workers and their companies - will be introduced this year.

Coordinators will help employers make adjustments to workplaces and jobs to facilitate the rehabilitation of injured workers. This will be an effort by the Government, employers and unions, he added.

A version of this article appeared in the print edition of The Straits Times on March 07, 2017, with the headline 'Salary base for local workers to go up'. Print Edition | Subscribe