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.

The PWM has ended up prescribing minimum wages in certain sectors. Hence, it has functioned as a sectoral minimum wage in cleaning, security and landscape, where companies in those businesses must adopt the model to be licensed to operate, they say.

This has resulted in what National Trades Union Congress (NTUC) director of the Progressive Wage Model Desmond Choo calls an “unqualified success” in those sectors.

Nanyang Technological University economics professor Chew Soon Beng says of the PWM: "It works like a minimum wage. Firms have to pay fixed wages for each grade of workers."

The lowest basic monthly wage in each sector is $1,000 for cleaners, $1,100 for security guards and $1,300 for landscape workers.

The evolution of the PWM charts, among other things, a marked shift in the way the Government and the labour movement regard wage intervention. In the past, the term "minimum wage" was practically a taboo, implying as it did a salary floor across all industries.

Instead, the parties involved preferred to stress the "progressive" aspect of their model, in which workers would not be stuck at a minimum wage but would move upwards in tandem with productivity.

They coupled this with the Workfare Income Supplement, which supplements the income and retirement savings of eligible workers aged 35 and above earning a monthly income of up to $1,900, and the Workfare Training Support scheme, which funds skill upgrading for low-wage workers.

As labour chief in 2012, Mr Lim Swee Say called the concept of a minimum wage "something we don't embrace", saying he preferred cooperation to legislation.

He argued then that a minimum wage set too low would not help lift the pay of low-wage workers. But having the minimum wage set too high would make low-wage workers unemployable, as companies would find them too expensive.

He pointed to the woes in some European countries, where high minimum wages were keeping fresh graduates out of the job market.

When the law was amended in Parliament in January 2014 to legislate the tiered wage model for cleaners, Deputy Prime Minister Tharman Shanmugaratnam noted that even in the United States, where the minimum wage is much lower than in Europe, the majority of the poor are unemployed, not in work.

Today, Mr Lim has softened his tone towards the term, referring to the PWM as a "ladder of minimum wages".

But entrepreneur and former Ang Mo Kio GRC MP Inderjit Singh still feels the PWM should be extended further along the lines of a minimum wage to other industries with low-wage earners. He named production operators, retail assistants and coffee shop assistants as those who need such help.

Mr Singh, who has criticised the PWM in previous Parliament sittings and who has called for a national salary floor of $1,500, says: "The PWM is a good start to see how a minimum wage can work, but we now have to consider making it a minimum wage system for all workers."

But outside the three sectors in which it can draw upon licensing requirements to enforce, the PWM's success hinges entirely on the goodwill of employers.

The NTUC has tried to move the model into the retail and hospitality sectors, but this attempt has yet to bear fruit because it lacks leverage - that is, industry-wide licensing requirements with which it can regulate the model's adoption.

Olivia Ho

Correction Note:    This story has been updated to reflect Mr Desmond Choo's full title.

A version of this article appeared in the print edition of The Sunday Times on June 19, 2016, with the headline 'Maximum result, 'minimum' input'. Print Edition | Subscribe