Businesses must be more cost-efficient as salaries rise under Progressive Wage Model: Zaqy

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SINGAPORE - Paying workers higher wages does not need to translate into significant price hikes for consumers, said Senior Minister of State for Manpower Zaqy Mohamad.

"We want things to be cost-effective, cost-efficient, affordable, but it should not be at the expense of low-wage workers," he said at the Ministry of Manpower, after announcing that the Government has accepted recommendations by the Tripartite Cluster for Retail on its new Progressive Wage Model (PWM) for the sector.

He urged businesses to look beyond business costs going up as a result of higher wages, and instead work towards becoming more productive and cost-efficient.

“Ultimately it is not just about wage increases, but how you continue to sustain increases over time... It is important to look at business productivity, workforce productivity, as well as job redesign and how we improve work conditions too,” he said.

Under the new PWM for companies that hire foreign workers, wages for local workers such as retail assistants, cashiers and assistant retail supervisors are expected to go up by 8.4 per cent to 8.5 per cent annually, from Sept 1 this year to Aug 31, 2025.

To help retailers cope with the increase, the Government will co-fund 75 per cent of the salary increase for workers earning gross monthly wages of up to $2,500 in 2022 and 45 per cent for those with gross monthly wages of $2,500 to $3,000.

He cited the evolution of the private security industry, which he said has seen a higher growth rate of local employees, with younger people and locals joining the sector. It implemented a PWM as a licensing condition for private security agencies in September 2016.

Additionally, as part of the latest round of recommendations accepted by the Government in November last year, the basic monthly wage of security officers who are at the bottom of the ladder will more than double from $1,650 in 2023 to $3,530 by 2028.

Mr Zaqy said that the industry, which had a high number of officers working overtime, has become more technologically ready, with the use of tools such as closed-circuit televisions and sensors.

"It shows that with higher salaries, that doesn't mean you have to be less productive... You can train your workers to undertake a lot more meaningful tasks and not necessarily work longer hours," he said.

The retail PWM is part of a range of progressive wage requirements that will take effect from Sept 1.

They include a new local qualifying salary requirement for all companies that hire foreign employees of $9 per hour in gross wages for part-time employees, and $1,400 for full-time employees, with additional requirements for overtime; and the extension of the PWM to in-house cleaners, security officers and landscape workers.

The Tripartite Workgroup on Lower-Wage Workers also recommended the expansion of the PWM to the food services sector and occupations such as administrators and drivers next March.

Beyond seeing wages rise, Mr Zaqy said he also wants to see the various sectors become attractive to locals.

"One aspect we have to think about is creating an environment where locals feel that their skills are valued and they can practise them, and that there is a future for (their chosen) sector... Then, the whole dynamics change in terms of attractiveness to many of our local workers," he said.

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