Progressive Wage Model: Why implementation can't be rushed

The implementation of the Progressive Wage Model (PWM) cannot be rushed as negotiations are often not straightforward and the considerations of multiple parties - such as workers, employers and service buyers - need to be taken into account, said Manpower Minister Tan See Leng yesterday.

The model is a ladder that sets out minimum pay and training requirements for workers at different skill levels in various sectors.

Dr Tan was responding to criticism on the time taken for the model to be implemented in some sectors.

It typically takes three to four years from the identification of a sector to be covered by progressive wages to workers receiving the pay increases.

For example, for the cleaning sector, the PWM was announced in 2012 and took effect in 2014. Wages increased from 2017.

On Monday, the Government accepted proposals by a tripartite committee on the cleaning wage ladder, and cleaners will see their wages continue to go up each year from 2023, over six years.

In the security sector, the Government accepted recommendations to implement the PWM in 2014 and it took effect in 2016, with wages increasing from 2019.

In the landscape sector, the PWM was accepted in 2015 and implemented in 2016. Wages increased from last year.

Speaking at a virtual briefing on the behind-the-scenes workings of the PWM, Dr Tan said the aim is to implement a wage model that is not just beneficial to a sector, but also sustainable over the medium to long term.

There could be disengagement and "disemployment" over the long haul if a fast and blunt method "where we just decide and move on" is used, he said, referring to a situation where workers are laid off when employers have to pay higher wages.

This may not necessarily achieve the long-term, desired end result of the PWM, which is to help workers acquire better skills and higher productivity, and reduce income inequality, the minister added.

When contacted, the ministry declined to elaborate on its use of the term "disemployment", which has been used sparingly in the past.

During yesterday's media briefing, NTUC secretary-general Ng Chee Meng also addressed the disadvantages of a national minimum wage compared with the PWM.

A flat minimum wage that is set too high could create "disemployment" and a loss of jobs as workers are made redundant if businesses are unable to accommodate the increased costs, Mr Ng said.

"If you set it too low, then it becomes actually a wage ceiling... so even though the PWM is a more involved process that may take a bit more time, we are still going at it, to really reduce the downsides of minimum wage to PWM... (and give the PWM) a runway to raise wages."

Dr Tan noted that there will be three more sets of recommendations in the pipeline in the coming months. These will be for wage increases in the security, landscape, and lift and escalator sectors.

The newly formed tripartite clusters for food services, retail and waste management PWMs are also making headway, Dr Tan added.

The Tripartite Workgroup on Lower-Wage Workers is also looking at ways to cover the various occupational groups under progressive wages. This will benefit low-wage workers employed in similar occupations but distributed across the various sectors. More plans will be announced soon, the minister added.

The PWM for the lift and escalator sector was announced in 2018 and will be implemented next year, while the wage model for the waste management sector was announced in January without a timeline on when it would be implemented.

Plans to cover the food services and retail sectors under the PWM were unveiled in March, with the roll-out estimated to take two to three years.

Senior Minister of State for Manpower Zaqy Mohamad added that "it took us some years to understand" the cleaning, security and landscape sectors.

"(The implementation of the PWM) was a bit more cautious initially because the industry was learning - 'what is the PWM and how do we transform ourselves to meet it?'," said Mr Zaqy, who chairs the Tripartite Workgroup on Lower-Wage Workers.

"It also takes time for industries to transform... The transformation now enables them to re-engineer themselves and be able to pay workers better."