Funds, advance notice given to help companies ease into Progressive Wage Model: Zaqy Mohamad
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The Government is offsetting increases in labour costs for eligible companies through Progressive Wage Credit Scheme, said Senior Minister of State for Manpower Zaqy Mohamad.
PHOTO: ST FILE
SINGAPORE – To help companies to implement the higher wage rungs in the Progressive Wage Model
He was responding to a question from Ms Yeo Wan Ling (Pasir Ris-Punggol GRC) in Parliament on Friday on how the Ministry of Manpower (MOM) is helping companies that are facing difficulties renegotiating ongoing multi-year contracts that were signed before the PWM wage rungs were set.
The current PWM wage schedules for all sectors where outsourcing is common were announced in 2021 and 2022, one to two years ahead of their six-year implementation from 2023 to 2028, said Mr Zaqy.
The tripartite cluster committees negotiated a multi-year schedule of wage increases to provide clarity on wage raises for each PWM sector, as service providers typically enter multi-year contract with service buyers in sectors where outsourcing is common, such as cleaning, landscape maintenance and security.
The Government is also offsetting increases in labour costs for eligible companies through the Progressive Wage Credit Scheme (PWCS), added Mr Zaqy.
Under the PWCS, the Government funds up to 75 per cent of wage increases that employers provide to lower-wage workers, for five years from 2022 to 2026. This includes wage increments given due to Progressive Wage requirements.
The PWM was introduced by the National Trades Union Congress in 2012. It lays out minimum salaries for local workers in various roles along a career and skills progression framework where wages will rise in tandem with productivity.
The progressive wage schedules for each progressive wage model sector are negotiated by sectoral tripartite cluster committees, which comprise representatives from the unions, service providers and service buyers in each sector, said Mr Zaqy.
Wage schedules are announced in advance so that service providers and buyers entering new contracts have enough information before doing so, he said, adding that companies who are midway through existing contracts can discuss whether the contracts need to be renegotiated.
“Tripartite partners encourage service buyers to work closely with service providers to renegotiate ongoing contracts where reasonable,” said Mr Zaqy.
Beyond this, service buyers should consider moving towards outcome-based contracting, he added.
“This will encourage service providers to invest in productivity solutions and deploy manpower more efficiently, which is a win-win outcome as it supports sustainable wage growth and can also lead to better services for service buyers.”
Ms Yeo brought up how some business owners may be locked into contracts of up to 10 years, especially with longer-term municipal and infrastructure maintenance projects. These contracts will go beyond the five years of government support under PWCS.
As some wage increases under the PWM may be 20 per cent or more, it is critical for service providers to align this with service buyers to remain sustainable, even without government support, said Ms Yeo.
She also asked if MOM will investigate practices of service buyers who may try different ways to avoid paying wage increases to service providers.
“Business owners have told me that some service buyers have communicated that they will black mark their businesses even with successful renegotiations of the current contract in their future contracts as they were deemed to have not fulfilled the conditions of their current contracts,” she added.
Mr Zaqy responded that while it is disappointing that some service buyers could blacklist service providers when wage schedules were put out in advance, these are commercial contracts between service buyers and vendors.
“We (the Government) do not want to get in the way,” he said, adding that unions can help to mediate between both parties instead.
