Incomes of low-wage workers at 10th percentile rose by over 50 per cent in past decade, says Zaqy Mohamad

Real incomes have increased by around 30 per cent in the sectors the Progressive Wage Model has been implemented.
Real incomes have increased by around 30 per cent in the sectors the Progressive Wage Model has been implemented.ST PHOTO: DESMOND WEE

SINGAPORE - The incomes of Singapore's workers at the 10th percentile increased by more than 50 per cent over the past decade, to $1,517 in 2019, said Senior Minister of State for Manpower Zaqy Mohamad on Thursday (Oct 15).

Full-time resident workers at this percentile had earned $1,000 in 2009, he noted.

"So there certainly has been progress if you look at our measures and how the whole eco-system works," he said during the debate on the Government's strategies to tackle Covid-19.

Additionally, Singapore is progressively narrowing the income gap between its lower-wage workers and those in the middle, said Mr Zaqy.

Real incomes have increased by around 30 per cent in the three sectors where the Progressive Wage Model (PWM) has been implemented, outpacing the real income growth of 21 per cent at the median for all sectors, he added.

The PWM is a wage ladder that sets out minimum pay and training requirements for workers at different skill levels.

And for the overall workforce, including sectors that have not implemented the PWM, real incomes of full-time employed resident workers at the 20th percentile have also increased cumulatively more than the median, he said.

The Government has thus far managed to lift wages while keeping unemployment low, he said, adding it is sensitive to the risk of disemployment - workers losing their jobs.

He cited recent studies in Hungary and the United States which have shown that the "disemployment effects" of a minimum wage could be stronger for certain groups of workers, or which impact job growth.

Scandinavian countries such as Norway, Denmark, and Sweden demonstrate that it is possible for nations to have a strong social compact without a minimum wage, he added.

"In place of a single minimum wage, these countries have robust dialogues between stakeholders, resulting in collective agreements on wages at the sectoral level," he said.

To this, Associate Professor Jamus Lim (Sengkang GRC) said proposals about the minimum wage should not be made on the basis of individual studies.

The $1,300 minimum wage proposed by the Workers' Party would fall "far below" the minimum wage of almost every other developed country, he noted.

"All these studies have been based on minimum wages that are much higher than the number that we are proposing here. So I think it's important to keep that in mind," he added.

In response, Mr Zaqy said his point was that academic studies on the effects of minimum wage are hotly contested, and it is difficult to come to a conclusive position based on such studies alone.

"What's important is this - we want to reap the maximum benefits of what these studies have shown, and how others have applied it," he said.

Prof Lim also pointed out that while Scandinavian countries do not have a minimum wage, that is in part because they have high unionisation rates of 70 to 80 per cent. "So there is a very strong collective bargaining representation there," he said.

To this, Mr Zaqy said Singapore has a similar system of tripartite negotiation that has helped raise the incomes of low wage workers over time.

He added that the Government is serious about improving the lot of Singapore's low wage workers. That is why it has set up a tripartite workgroup to study how to further lift their wages.

Support for workers and businesses

On support for workers, Mr Zaqy said the Government is studying how to provide additional support to working Singaporeans, including the self-employed, should they have prolonged income loss.

He added that more than $1.1 billion has been disbursed over two tranches under the Self-Employed Person Income Relief Scheme (Sirs).

The scheme is expected to cost $2 billion in total with the third and final tranche, nearly double the original $1.2 billion set aside for it.

The Government will also continue to make adjustments to calibrate the flow of foreign workers, he said in response to Mr Liang Eng Hwa (Bukit Panjang).

He noted that about two-fifths of workers who were retrenched in the first quarter of this year had found jobs by June.

"At the same time, we also see businesses changing their mindsets. Instead of looking only for jobseekers who already have industry experience and skills, businesses often find that when they widen their search, they find good candidates," he said.

He also assured Mr Yip Hon Weng (Yio Chu Kang) that the Government is aware of the challenges faced by mature workers aged 40 and above in changing careers.

To help them, the number of places in career conversion programmes have been increased to 14,000 this year, and companies are offering attachments to mid-career jobseekers.

Some 6,100 jobseekers managed to switch into new occupations this year with the help of career conversion programmes, he said.

Economic agencies are intensifying efforts to create jobs as short-term relief measures gradually taper off, he added.

And hiring is still taking place in sectors badly-hit by Covid-19, he said, pointing to how employers are looking to bring in fresh talent in sectors such as tourism and retail where business models are changing fast.

"It is therefore important to not write them off," said Mr Zaqy.