Budget debate: Progressive Wage Mark scheme to start in second half of 2022

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SINGAPORE - The new Progressive Wage Mark accreditation scheme will be launched in the second half of this year, said Senior Minister of State for Manpower Zaqy Mohamad on Monday (March 7).

Employers must pay all local workers - Singaporeans and permanent residents - at least the local qualifying salary of $1,400, and follow any relevant progressive wage models, to be accredited.

The Singapore Business Federation will administer the scheme.

It was announced in the Budget statement on Feb 18 that from March next year, companies with any workers in a sector or occupation with a progressive wage model will need to have the Progressive Wage Mark in order to take on government contracts.

This will start with larger value contracts, said Mr Zaqy during the debate on his ministry's budget, adding that more details will be provided in the coming months.

"To strengthen our social compact... we must recognise that all of us have a role to play, all of us as consumers," he said.

"We want to help individual consumers and corporate buyers easily identify progressive employers that are supporting lower-wage workers, and support these employers through their purchases."

The latest move comes on top of the coming expansion of the progressive wage model to more sectors and occupations, and the requirement for employers of foreign workers to pay all their local workers at least the local qualifying salary of $1,400 from September this year.

Together, these measures will cover up to 266,000 workers, or 94 per cent of full-time lower-wage local workers, said Mr Zaqy.

Many of the remaining 6 per cent are employed in small heartland businesses such as mom-and-pop shops, or family businesses, he said in response to Workers’ Party MP Gerald Giam (Aljunied GRC).

About half of the group are already earning at least $1,400, and those in need can receive Workfare and other benefits such as Silver Support, said Mr Zaqy.

Most minimum wage systems around the world have exclusions, he added.

He also launched the Tripartite Standard on Advancing Well-being of Lower-Wage Workers, which, along with the Progressive Wage Mark, was recommended by the Tripartite Workgroup on Lower-Wage Workers last year.

Tripartite standards are good practices that employers can publicly commit to. Those who do so are listed on the Tripartite Alliance for Fair and Progressive Employment Practices website.

The new tripartite standard covers areas such as providing support - such as time off to go for training - for lower-wage workers to learn, providing access to proper and reasonable rest areas, and communicating training plans and potential career pathways to lower-wage workers.

Companies that adopt the tripartite standard and meet the requirements for the Progressive Wage Mark will be recognised with a new Progressive Wage Mark Plus.

Mr Zaqy noted that Singapore's income gap has narrowed over the last five years from 2016 to 2021.

Real incomes of locals - Singaporeans and permanent residents - in full-time employment rose at 2.7 per cent per year at the 20th percentile, faster than the increase of 2.1 per cent per year at the median, he said.

Also, more Singaporeans have been joining sectors with progressive wage models such as security and landscape, as wages and working conditions improve, he noted.

Efforts to enhance wage growth in sectors under the model, which sets out minimum pay and training requirements for workers at different skill levels, are continuing.

Wages in these sectors are set to rise by 45 per cent to over 80 per cent cumulatively in the coming years, said Mr Zaqy.

He cited the experience of Mr Mohammed Ali, who was an entry-level security officer in 2017 and earned about $1,700 a month.

Through the progressive wage model and training support under Workfare Skills Support, he picked up new skills and responsibilities. Today, he is a senior security supervisor overseeing 40 officers, earning about $3,100 a month.

His employer, APRO Asian Protection, has also adopted various tech-based solutions.

By 2028, senior security supervisors, such as Mr Ali, will earn at least $4,430, and entry-level security officers will earn at least $3,530, noted Mr Zaqy.

From 2022 to 2028, entry-level cleaners will also receive pay bumps of up to 84 per cent, to reach baseline wages of about $2,400 in 2028.

"Given the competitive labour market, we are confident that the PWMs (Progressive Wage Models) will continue to set the pace for the wage growth of our lower-wage workers," said Mr Zaqy.

"Hence, even lower-wage workers who are not covered directly by any PWM should still see good wage growth, as their employers will likely have to adjust their wages to keep pace with the market and to retain them."

The Government will co-fund wage increases for local lower-wage workers through the Progressive Wage Credit Scheme, which was announced in the Budget.

Starting this year, it will co-fund up to 50 per cent of pay increases for workers earning a gross wage of up to $2,500 a month, tapering down through to 2026. A lower co-funding ratio will apply to those earning above $2,500 and up to $3,000.

Employers must make an average gross monthly wage increase of at least $100 in a year to qualify for the support for that year.

The Government will spend $9 billion over the next five years for the scheme and enhanced Workfare Income Supplement scheme.

"We must be careful to not let our social compact be eroded by inequality. Otherwise, our society, including our businesses, will not function well and much less thrive," said Mr Zaqy.

He added that even as the Government provides direct support to firms to raise wages, employers should take the chance to speed up the structural transformation of their business processes, and workers should take the initiative to upgrade their skills and apply those skills at work.

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