Wage increases must be left to market forces once PWM corrects wage suppression: NMP

SINGAPORE – Even as the Progressive Wage Model (PWM) continues to make inroads towards closing the wage gap, pay increases must be left to market forces again once the PWM succeeds in correcting wages that are wrongly valued, a Nominated MP said in Parliament on Oct 14.

The PWM is a wage ladder tied to skill and productivity improvements currently in place for lower-wage workers in seven sectors and two occupations, with wage floors at each rung that are increased according to a pre-determined schedule.

Mr Raj Joshua Thomas cautioned in an adjournment motion speech lasting nearly 20 minutes that the PWM could backfire if the wage schedule is set out for longer than needed.

“This is critical because otherwise the PWMs may become a crutch to workers – who will only be able to achieve wage growth due to interventions by the tripartite partners and not through themselves showing the value of their work, nor negotiating for it,” said Mr Thomas, who is president of the Security Association Singapore industry body.

“If we fail to do so, then these vulnerable workers will remain vulnerable forever,” he added.

Mr Thomas noted that each company will also have to reconcile the PWM job roles and wages with its own internal pay scale and advancement route for all the staff it hires.

Hence, employers may need to increase wages for non-PWM roles as well to maintain pay equity, compounding the impact of scheduled PWM wage increases, he noted.

“While increases in non-PWM job wages are, of course, a good thing, the question is sustainability and consequent effect on increases in costs, and overall inflation in the economy.”

Mr Thomas also mooted “PWM 2.0” for jobs where wages have grown sufficiently, such that employers can pursue productivity growth without needing mandated wage increases as motivation.

“My view is that it should not mean that the PWM would be removed or no longer apply,” he said.

This evolution of the PWM aims to preserve the wage levels already achieved, as well as provide a base from which the value of these jobs will continue to be enhanced, Mr Thomas said.

While year-on-year wage increases, as is current practice, will not be mandated, he said the prevailing wage floors at the point of transition would continue to apply to this end.

“This is important to ensure that wages do not make a U-turn,” he added.

The possibility of a U-turn is especially concerning in sectors involving outsourced services, which have historically tended to suppress wages of lower-wage workers to lower costs and clinch tenders, he noted.

But the skills required at each rung of the ladder should also remain and be periodically reviewed for potential updates to ensure skills remain relevant and productivity continues to grow, he said.

“Third, and perhaps most importantly, the PWMs would not be inactive – they would merely be dormant.”

If wages in a PWM 2.0 sector stagnate for some time after they are returned to the market, then the tripartite partners can step in again to prescribe wage increases, he said, referring to the three-way partnership between the Government, employers and the labour movement.

Each tripartite cluster tasked to oversee a given progressive wage ladder should also “continue to look at matters ancillary or related to the value of work in their sector”, he added.

“This would include factors like working conditions and workplace safety and health,” he said, citing as an example the security industry’s efforts to reduce working hours in a sustainable manner, while adhering to the prescribed PWM wages.

Among other topics, Mr Thomas also spoke on the continuing social stigma lower-wage workers like security officers face, despite the wage increases that have given these workers a greater sense of dignity and desire for self-improvement.

On this, Senior Minister of State for Manpower Zaqy Mohamad said: “It is also important for consumers to treat fellow Singaporeans with respect, and recognise that paying a little more for goods and services goes a long way to rewarding their efforts and to improve the livelihoods of our low-wage workers.”

In response to Mr Thomas’ suggestions for PWM 2.0, Mr Zaqy said the majority of PWM workers still need the support and uplift from PWM wage requirements for now.

However, he did not rule out phasing out these requirements, echoing what he told The Straits Times in an interview in September to mark the 10th anniversary of the model’s roll-out.

He noted that there is currently “some flexibility” in the PWM for market forces to play a role.

“In jobs where the skills levels are higher and wages have risen to an appropriate level, we recognise that their wages should be decided by market forces,” he added.

Mr Zaqy cited examples in the retail and food services sectors, where jobs such as retail managers and senior cooks are part of the PWM job ladder, but their wages are not mandated by the PWM.

“Of course, we hope to see the wages in more jobs rise sufficiently, such that there is no longer a need to mandate PWM wage increases.”