Climbing the wage ladder: Progressive Wage Model ‘is not a magic wand’

The Progressive Wage Model (PWM) has benefited workers in the cleaning sector such as Ms Joey Wee (right) and will be soon be implemented in the security sector to help other individuals such as Mr Wan Teruna (left).
The Progressive Wage Model (PWM) has benefited workers in the cleaning sector such as Ms Joey Wee (right) and will be soon be implemented in the security sector to help other individuals such as Mr Wan Teruna (left). PHOTOS: AZIZ HUSSIN FOR THE SUNDAY TIMES, GIN TAY FOR THE SUNDAY TIMES

Four years after the Progressive Wage Model was mooted, The Sunday Times looks at how it has benefited workers in the cleaning, security and landscaping sectors, and what challenges it faces.

For many years, they - cleaners, security guards and gardeners - toiled hard for low wages that scarcely rose.

These wielders of brooms, clipboards or pruning shears were often parents, or even elderly grandparents, sometimes supporting whole families on their flatlined wages alone.

But a new wage model - the Progressive Wage Model (PWM) - introduced by the Government after the labour movement first championed it four years ago is changing that. It was made compulsory for Singaporeans and permanent residents in the cleaning sector nearly two years ago, where it set entry-level basic monthly pay at $1,000. Previously, the going rate was $850.

The PWM kicks in for the landscaping sector at the end of this month, and for the security sector on Sept 1. It is paying off for some.

Median wages for full-time resident cleaners, labourers and related workers rose from $1,000 a month in 2012 to $1,200 a month last year, a 20 per cent hike compared with the 16 per cent experienced by workers overall, says UniSIM economist Walter Theseira.

  • Timeline for Progressive Wage Model

  • JUNE 21, 2012

    Then Labour chief Lim Swee Say first moots the idea of a wage ladder for cleaners tied to skills and career progression.

    JUNE 10, 2013

    The National Trades Union Congress (NTUC) announces that all cleaning companies must pay workers at least $1,000 a month in a year's time in order to be licensed.

    SEPT 10, 2013

    Talks between NTUC and security associations to get the Progressive Wage Model (PWM) applied to security guards stall.

    SEPT 1, 2014

    PWM takes effect in the cleaning sector.

    OCT 29, 2014

    PWM for the security sector announced.

    APRIL 25, 2015

    PWM for the landscape sector announced.

    JUNE 30, 2016

    PWM takes effect in the landscape sector.

    SEPT 1, 2016

    PWM takes effect in the security sector.

Ms Joey Wee, 40, reaped a $500 pay rise when she switched from being a linen attendant on $1,300 a month last October, to a $1,800 job as supervisor/cleaner at a hospital.

Under the PWM, a cleaning supervisor's minimum-level basic wage is $1,600.

She says: "It has been challenging to make the switch. But the pay is a big part of what attracted me."

The PWM also puts lowly-paid workers on the ladder to improve their skills and use technology that makes them work more efficiently.

In the three sectors, a total of about 74,500 resident workers will have benefited from the PWM, including 40,500 cleaners, 31,000 security officers and 3,000 landscape workers. 

But problems have emerged too.

Some cleaners say that while the PWM raised their basic salaries from as low as $600 a month to $1,000, their pay has been stuck there since.

Cleaner Jamilah Palora, 69, who cleans corridors and scrubs toilets at a tertiary institution, says in Malay: "I do a lot of work but my salary doesn't go up. It's very disappointing. It is like we have no value."

Indeed, her salary is $100 below the $1,100 bar set by the National Wages Council (NWC), which recommends increments for workers earning up to that amount in basic monthly wage.

The tripartite partners - employers, unions and the Government - are in talks to review the wage ladder for cleaning, labour MP Zainal Sapari revealed to The Sunday Times.

Mr Zainal, who is National Trades Union Congress (NTUC) assistant secretary-general, declined to say what sort of wage increase is being considered.

To make matters worse, employers bidding to retain a contract with established workers due for a pay rise are undercut by rivals who base their tender price on entry-level pay rates.

If the newcomer takes over the workers at the site, the new employer can then reset their wages to the minimum, along with any other benefits, such as leave, that they might have accrued during the previous contract.

Says Mr Zainal: "The PWM is not a magic wand in terms of pushing wages up. We have to look at other aspects to improve the productivity of workers to make wage increases sustainable."

BIRTH OF THE WAGE MODEL

It has not been an easy run from June 21, 2012, when then NTUC secretary-general Lim Swee Say - now Manpower Minister - first mooted the idea of a "progressive wage" for cleaners.

The aim was part of an overall target of lifting the pay of low-wage workers in a way that ensured their skills and careers progressed too.

The labour movement wanted to structure career ladders in low-wage sectors, with pay benchmarks for each rung.

As workers climbed the ladder, they would earn more.

Today, the PWM is touted as a central means by which the Government, labour movement and employers can transform whole low-wage sectors .

Back in 2012, the cleaning sector was first targeted.

Mr Lim wanted 10,000 cleaners to earn wages of at least $1,000 a month by 2015.

Those already earning that sum would have their wages gradually scaled up as they upgraded their skills.

But this proved an uphill task as employers, concerned about rising costs, dug in their heels.

When the labour movement first tried to push the model into the security sector as well in 2013, talks stalled when security associations rebuffed the timeline to raise guards' pay.

However, legislation worked where moral suasion failed.

By September 2014, all cleaning companies had to be licensed to operate after a law amendment, and to be licensed, they needed to abide by the wage guidelines.

Mr Lim tells The Sunday Times that he was "heartened by this first breakthrough".

"It is never an easy task to push through any new wage system," he says. "It takes many years."

Similar licensing requirements will follow for landscaping and security.

Elsewhere, the model has had success in voluntary adoption in sectors such as transport and healthcare. In 2013, SMRT brought in the scheme for more than 2,000 bus drivers, raising their wages by as much as $1,000 a month.

About 5,000 low-wage healthcare workers also got a 15 per cent pay hike in 2014, two years after public hospitals, polyclinics and national health centres voluntarily adopted the model.

Sectors such as pest control and environment management ought to be next to adopt the PWM, says Mr Lim.

DID IT WORK?

On paper, the PWM would seem to have had a positive effect on pay.

Certainly, the years of its implementation have coincided with significant wage growth.

Singapore Management University (SMU) economics professor Hoon Hian Teck examined the average growth rate of gross wages, including employers' Central Provident Fund contributions, for full-time resident cleaners, labourers and related workers.

From 2008 to 2012 - the year the wage ladder was first announced - this was 2.6 per cent. From 2013 to last year, it was 7.3 per cent.

However, Prof Hoon, along with UniSIM's Dr Theseira, both caution that other factors could be at play, such as fewer foreign workers in the same period.

Says Prof Hoon: "This could also have put an upward pressure on wage earnings."

Dr Theseira theorises that the scarcity of manpower, thanks to foreign labour controls, set the stage for the PWM's effectiveness.

He says: "Low-skill labour is, to a considerable extent, substitutable across different kinds of low-skill jobs. Therefore, anything which increases wages in one sector will have some spillover effects, simply through the higher labour supply in that sector drawing away manpower from other sectors.

"This would pressure employers in uncovered sectors to also raise wages."

In the security sector, where foreign worker regulations are strictest, the manpower shortage is so severe it could be artificially inflating wages, says Association of Certified Security Agencies president Robert Wiener.

Manpower Ministry data shows that last year, there were 2,010 vacancies for security guards, and 1,440 stayed unfilled after six months.

"That's a big problem, you're getting wage escalation that is maybe a little unrealistic," says Mr Wiener. "Hopefully the PWM encourages more people to come into the industry, but we have not seen that happening yet."

MP for Bishan-Toa Payoh GRC Chong Kee Hiong agrees that companies could be pressured into adopting the PWM to attract or retain a shrinking pool of workers.

Mr Chong, who is a member of the Government Parliamentary Committee for Manpower, says: "Under current conditions where the labour market continues to be tight, employees will choose employers who can offer not only a fair wage but also opportunities for training and career progression.

"Employers should not just view productivity as using fewer resources at a lower cost to achieve the same output.

"They should also have a vision of how to achieve higher and better output with more and better-quality resources."

PROBLEMS FOR EMPLOYERS

According to NTUC, 473 companies had adopted the PWM by last September, whether because it was mandatory they do so, or whether it was a voluntary move by them.

That is over 200 more than in November the year before, which was just two months after the model was introduced for cleaners.

But much more could be done.

Indeed, only 18 per cent of companies followed NWC recommendations in giving their low-wage workers a pay rise of at least $60 last year.

Company bosses in cleaning, security and landscaping say they welcome the PWM in principle, but repeat gripes that they are being squeezed by those who hire their services.

They also lament that even as they try to adjust to the higher wages and training requirements, they do not see a concomitant increase in productivity.

Mr Dennis Tan, general manager of cleaning firm LS 2 Services, says that his attempt to follow the wage model has cost him "so many contracts, I lost count".

Of rival firms which undercut him in tender bids, he says: "I don't know how they arrive at the price while still under the PWM. Maybe they lose money, or miscalculate."

Mr John Tan, who runs landscape firm Esmond, says clients are reluctant to recognise they need to fork out more to invest in better quality.

"If you look at the tender price from 10 years ago, it hasn't gone up," he says. "We keep paying our workers higher and higher, yet you never change."

For LS 2, investing in technology such as in two scrubbing machines it spent $15,000 on last month, has helped meet faster turnaround times demanded by clients.

But Mr Tan is unsure he can say the same for training his workers.

"Most of my cleaners are senior citizens aged 60 and above," he says. "They are not keen on training, so they just go through the motions."

Staff must do their part to stay on top of the productivity drive, says NTUC. It tells The Sunday Times: "Workers must embrace lifelong learning to be future-proof. They must go for continuing training to remain relevant."

Employers are not short of help when it comes to funding to step up training and technology, with a slew of schemes they can tap, such as the Inclusive Growth Programme.

The $100 million fund, started by the labour movement in 2010, is meant to help industries redesign and improve productivity, while gains are shared with workers through higher wages.

But for some firms, especially in security, it is often hard to convince clients that technology, not warm bodies, is the way to go.

Says Security Association (Singapore) president T. Mogan: "Buyers want a more hands-on effect, they want to see three people guarding day in, day out.

"If somebody breaks in, they will say, 'Look what happened because you asked us to depend on systems.'"

Mr Mogan has in the past disagreed with the labour movement over the PWM, although he now insists his comments were misconstrued. It was not that he did not want the wage hikes, he says, only that he thought firms needed more time to make them happen.

Has the Sept 1 deadline for the security industry given them that breathing space?

"No," he says. "We need at least another year and a half."

THE ISSUE OF CHEAP SOURCING

One thing the PWM has failed to solve is "cheap sourcing", a phenomenon prevalent in all three sectors.

Companies bidding for service contracts often suppress workers' wages so they can keep prices low and win tenders.

Some workers thus find their wages being "reset" whenever contracts are renewed every three years.

The wage increments they received in those years, along with additional days of leave or benefits such as annual wage supplements, are cut back to what they were originally.

Mr Zainal points out that those purchasing these firms' services hold the upper hand in determining how much the latter can afford to pay their workers.

He has repeatedly called for the Government to lead the way and show "concrete proof" that when the Government itself outsources services, it takes into consideration not just price, but how responsibly the service provider treats workers.

In the latest NWC guidelines last month, the Government said it will lead by example and "strongly encourages suppliers to the public sector to adopt NWC recommendations on wage increments for their workers".

Mr Zainal calls this a positive step. "There is still the challenge of the private sector, but we hope they can take their cue from the public sector," he says.

Mr Milton Ng, president of the Environmental Management Association of Singapore, suggests service buyers build a "cost-escalation clause" into their contracts, one which takes into account yearly wage increments.

Buyers could also consider longer-term contracts so that companies and their workers would be in less of a state of flux, he says.

LOOKING AHEAD

Might a gloomy economic forecast rain on the PWM's parade, as companies tighten their belts for leaner months and use this as an excuse to cinch workers' wages?

Mr Desmond Choo, who is director of the PWM at NTUC, begs to differ. Slackening growth, he says, could in fact be a boon for companies that might have been unable to spare workers for training during the upturn.

"The better and more progressive companies will see this as an opportunity to restructure and transform to capture future growth," he says.

"When some of these weaker companies fall off the scene, stronger companies will come in and say, 'I can do it better.'"

Mr Lim, meanwhile, feels that there is still much scope to further strengthen the scheme by, for instance, creating tiers within tiers to help weaker workers climb.

"Besides helping workers to move up the PWM from one job grade to the next higher job grade... we also want to help workers to progress within the same job grade," he says."This is a good start, but we are just at the beginning of a long journey."


Maximum result, 'minimum' input

It was meant to be Singapore's answer to the much-touted "minimum wage" policy adopted by some countries, but which the Republic rejected back then. This is the Progressive Wage Model (PWM) concept introduced by the labour movement in 2012.

Its emphasis is on increasing the salaries of workers through upgrading their skills and improving productivity.

But four years on, the very success that the PWM is now enjoying could ironically be due in part to what it drew from the minimum wage structure, say economists.

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The security guard: $400 pay hike in six months


Mr Wan has spent just over six months at security firm Soverus, but he has a decade's worth of experience in the industry. He now earns $1,500 a month in basic wages, but overtime raises this to $2,600. PHOTO: AZIZ HUSSIN FOR THE SUNDAY TIMES

Asked to describe the job of a security guard, one might say " "tedious", perhaps, or even "boring".

But security supervisor Wan Teruna calls it "fast-paced".

The 37-year-old says: "I'm always walking around, clocking in, talking to people."

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The cleaner: Lower-wage staff lose out


Under PWM, a cleaning supervisor earns at least $1,600 a month. Ms Joey Wee earns $1,800, making her better off than some low-wage workers whose wages are "reset" to the minimum $1,000 monthly salary when they renew their contracts. PHOTO: GIN TAY FOR THE SUNDAY TIMES

Every day, Madam Lee Yew Tin lugs bags of garbage a distance of two Olympic swimming pools, a journey she makes at least twice a day.

When the 68-year-old became a cleaner about three years ago, she earned a basic wage of $1,000. Since then, she has had a pay rise of... Nothing.

She works nine hours a day, five days a week, sweeping corridors and clearing rubbish.

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Correction Note:    An earlier version of this story stated that the total number of resident workers is 85,500, and the number of security officers is 42,000. This is incorrect. The figure should be 74,500 and 31,000, respectively. We are sorry for the error.

A version of this article appeared in the print edition of The Sunday Times on June 19, 2016, with the headline 'Progressive wage model 'is not a magic wand''. Print Edition | Subscribe