Pay of lower-wage workers rises faster than median amid progressive wage moves

SINGAPORE – The salaries of lower-wage workers here have risen at a quicker pace compared with those of the workforce as a whole, signalling recent measures to uplift this segment could have brought about tangible results.

Lower-wage workers may include cleaners, security officers and retail assistants.

A “big part of this growth” took place over the last three years, in line with the expansion of the Progressive Wage Model (PWM) to cover more sectors, said Senior Minister of State for Manpower Zaqy Mohamad in Parliament on March 7.

Real wages at the 20th percentile rose cumulatively by 5.9 per cent from 2019 to 2024, higher than those of median workers at 3.6 per cent.

This means that even though the cost of living rose, the wages of lower-wage workers rose even more, he noted.

Mr Zaqy added during the debate on the Manpower Ministry’s budget that the wage gap between lower-wage workers and median workers is also narrowing, even while median wages continue to rise.

He was responding to Mr Melvin Yong (Radin Mas) who asked about the impact of progressive wage efforts.

The PWM was first rolled out in 2014 for the cleaning sector, followed by security and landscaping jobs. In 2021, this was expanded to the retail, food services and waste management sectors.

Occupational progressive wages were also announced for administrators and drivers. For workers not covered by the PWM, employers are required to pay all their local employees at least the local qualifying salary (LQS) if they hire foreign manpower.

The PWM – including the LQS and Progressive Wage Mark accreditation scheme for companies that pay their workers progressive wages – now benefits up to nine in 10 full-time lower-wage workers, Mr Zaqy said.

To provide lower-wage workers with additional support, the Workfare Income Supplement scheme has been enhanced. From January 2025, the qualifying monthly income cap went up from $2,500 to $3,000.

The maximum payment has also been raised from $4,200 to $4,900 per year. Those aged 60 and above will benefit from this highest payment tier, as well as all individuals with disabilities regardless of age.

These enhancements will benefit around half a million lower-wage workers. In total, payments will increase to $1.4 billion in 2025, Mr Zaqy noted.

He also responded to Mr Edward Chia (Holland-Bukit Timah GRC) and Mr Mohd Fahmi Aliman (Marine Parade GRC) as well as Nominated MP Neil Parekh who highlighted that the key to raising wages sustainably over the long term is for both workers and businesses to become more productive.

Businesses also have to transform lower-wage jobs for higher value-add and improve the efficiency of their operations, Mr Zaqy said.

“At the same time, with better jobs created, there will be demands for new skill sets and competencies. Workers will need to upskill to seize these opportunities, and we will step up our efforts to help them do so,” he noted.

This is especially in the area of long-form courses, which can provide more robust upskilling that leads to more significant wage increases but comes at a greater cost, Mr Zaqy said.

The Workfare Skills Support (WSS) scheme will have an additional tier that provides higher training allowances to lower-wage workers aged 30 and above who go for long-form training.

Full-time trainees will receive a monthly allowance set at 50 per cent of their average monthly income, with a minimum monthly allowance of $300. Part-time trainees will receive a fixed monthly allowance of $300.

This will benefit workers aged 30 and above, earning up to $3,000 per month.

This means that trainees under this scheme will receive up to $18,000 per year for full-time training, and up to $3,600 per year for part-time training – more than three times the current training allowance provided.

For those who want to go for multiple rounds of long-form training, the scheme will cover up to 24 months of long-form training done before the age of 40, and another 24 months of long-form training from the age of 40.

This new initiative, termed WSS (Level-Up), will be rolled out from early 2026.

Businesses will also get more help in uplifting their lower-wage workers. Through the Progressive Wage Credit Scheme, the Government will raise its co-funding of salary increases from 30 per cent in 2025 to 40 per cent, and from 15 per cent in 2026 to 20 per cent.

“The upcoming enhancements will continue to provide short-term relief, but I strongly urge employers to make good use of this to accelerate your transformation, so that we can uplift lower-wage workers sustainably over the long term,” Mr Zaqy said.

For example, environmental services company BNL Group has been able to build career development plans for all its workers through the PWM. This has led to better retention as workers see their salaries increase yearly, and higher productivity because workers are regularly trained.

BNL managing director Lee Hsin Chong said: “We invest in the training of our employees beyond the required training for the Progressive Wage Model. We also digitalised our workflows such as human resource systems and reporting functions on the ground, minimising the use of manual functions and paper.”

This has led to productivity gains of 20 per cent through the use of automation, he added.

Mr Zaqy noted that efforts must be made from various groups to reduce income inequality, which has the potential to cause societal rifts if left unchecked.

Another segment of workers to receive more support is the seniors, especially with their retirement adequacy.

Speaking at the same session, Senior Minister of State for Manpower Koh Poh Koon said: “We want to enable seniors to continue working if they wish to, so that they can contribute their expertise and accumulate more savings for retirement.”

To this end, the Central Provident Fund (CPF) contribution rates for those aged above 55 to 65 will increase further by 1.5 percentage points in 2026.

The Senior Employment Credit also provides up to 7 per cent in wage offsets to employers who hire Singaporeans aged 60 and above and earning below $4,000 a month. This credit will be extended to 2026, and the qualifying age for the highest wage support tier will be raised to 69, from the current 68.

Dr Koh will also be co-chairing a Tripartite Workgroup on Senior Employment, to look into measures such as training for older workers and making workplaces more friendly for them.

Finally, more support will also be given to employers to facilitate hiring of people with disabilities.

Minister of State for Manpower Gan Siow Huang noted that the Enabling Employment Credit will be extended till 2028. It provides wage offsets to employers of people with disabilities.

To help people with disabilities save more for their retirement needs, the Matched Retirement Savings Scheme will also be extended to all eligible Singaporeans with disabilities of all ages.

The scheme currently sees the Government give dollar-for-dollar matching to encourage CPF top-ups for seniors from age 55.