Singapore GE2020: Why Progressive Wage Model is better than a minimum wage

Mr Tharman argued that the Progressive Wage Model is working. ST PHOTO: JOEL CHAN

The Progressive Wage Model which Singapore has in place is better than a minimum wage, Senior Minister Tharman Shanmugaratnam said at a live talk show yesterday.

It is a ladder, of which a mini-mum wage would only be the first rung, he said.

Opposition parties such as the Workers' Party and Singapore Democratic Party have lobbied during the hustings for a mini-mum wage to better support low-income earners.

Mr Tharman, however, argued that the Progressive Wage Model is working.

The model, which was first made mandatory for the cleaning sector in 2015, sets out the minimum pay for different job levels and pegs wage increases to a skills ladder for cleaners, security officers and landscape workers. There are plans to extend it to the lift maintenance and bus industries, and eventually to all sectors.

Mr Tharman said low-wage workers in the 20th percentile of the income ladder have seen an increase in wages of close to 40 per cent in real terms over the last 10 years.

The pay of these workers used to be about $1,500 a decade ago, but is now $2,500. Adjusted for inflation, he said, it is close to a 40 per cent increase.

On top of this, the Government adds Workfare benefits to their wages, which, in addition to the Special Employment Credit, is an extra 40 per cent on top of what their employers pay them.

"This is not growth at all costs, as is sometimes claimed," the minister said. "It is growth to provide quality jobs for every Singaporean, and particularly for those who start off with low-paid jobs.

"It is growth to enable them to move up the ladder, with skills, better respect for the job and a sense that they are able to contribute together with everyone else."

He cautioned that this has to be done not drastically - which could cause businesses to shed workers and cost people their jobs - but with great care.

"We are doing something that not many countries do," he said. "Some countries achieve low unemployment by having everyone at work, but not seeing much improvement at work. Some countries go for restructuring of the whole economy, technology replaces workers, workers leave the workforce, unemployment goes up.

"You have got to avoid both those options. We have got to keep unemployment down, keep people at work, but help everyone move up a ladder in the course of their careers, where technology improves the job, where people's skills go up, where wages go up."

He said that costs, too, will have to increase over time as low-wage workers are paid more, whether it be the fees for cleaning an office or conservancy in a condominium.

"But that is a small cost to pay for building a fairer and more equitable society where everyone is moving up together," he added.

"We pay a much larger cost if we end up with a divided society."

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A version of this article appeared in the print edition of The Straits Times on July 08, 2020, with the headline Why Progressive Wage Model is better than a minimum wage. Subscribe