Budget debate: Safeguards for progressive wage model must be in place to stop vendors from profiteering: MPs

More is being done to help low-wage workers through the progressive wage model. PHOTO: ST FILE

SINGAPORE - More is being done to help low-wage workers through the progressive wage model (PWM), but safeguards must be in place to avoid passing costs to others and stop unscrupulous vendors from profiteering under the guise of rising wages.

Mr Edward Chia (Holland-Bukit Timah GRC) and Workers' Party chief Pritam Singh (Aljunied GRC) raised these issues at the start of the debate on the Ministry of Manpower's (MOM) budget on Tuesday (March 2).

Their remarks come as the National Trades Union Congress (NTUC) said last Wednesday that it hopes to implement the PWM for the food services and retail sectors in the next two to three years, as well as the strata management, pest management and solar technology sectors in the near future.

Introduced in 2012, the PWM is a wage ladder that sets out the minimum monthly salary for local low-wage workers, based on their skills and training. It has helped to lift the wages of workers in the cleaning, security and landscaping sectors. It will be mandatory in the lift and escalator maintenance sector next year, while a PWM for the waste management sector is in the works.

Mr Chia, offering an example of how manpower costs for a hawker could trickle down to consumers, said that cost increases in a sector may also indirectly affect another.

"For instance, the introduction of cleaning PWM could have increased the cost of dishwashing and cleaning thereby increasing their operating structure. Hence, a targeted approach for smaller enterprises is necessary to keep their businesses sustainable for themselves and workers and cost affordable for consumers," he said.

The PWM is currently implemented by sectors, Mr Chia noted, adding that with this "vertical approach", hawkers cannot offer the same salaries and benefits as other food operators like restaurants.

"We also need a horizontal approach to include smaller enterprises. Smaller businesses do not have economies of scale and do need a runway to prepare and scale up to pay their workers and concurrently remain viable."

Mr Singh highlighted the issue of unscrupulous vendors who might try to make an excessive profit under the guise of rising wages for workers, particularly in some industries like the lift and escalator sector which is dominated by a number of major players.

"The argument from some when a minimum wage like the PWM is applied, is that costs will rise and the burden will have to be borne by consumers. But it would appear that some vendors could take advantage of the PWM to profiteer under the pretext of increased costs," he said.

The Leader of the Opposition noted that in discussions with lift companies as an MP overseeing Aljunied-Hougang Town Council, the starting position for some vendors has been to "throw a steep increase in maintenance fees". One major firm started with a more than 40 per cent jump in lift maintenance fees.

"When this company was questioned what percentage of the increase would go to its workers, considering it maintained thousands of lifts across various town councils and should benefit from significant economies of scale to accommodate a mandated rise in wages through the PWM, company representatives demurred and argued that a rise in excess of 40 per cent was just an opening position and that this amount was subject to negotiation," he added.

Mr Louis Ng (Nee Soon GRC) welcomed the expansion of the model, but said timing is also important and asked if it is possible to roll the PWM out within a shorter time.

On its expansion to the pest and strata management sectors, Mr Fahmi Aliman (Marine Parade GRC) asked about MOM's plans to help their workers benefit from a clear career progression pathway.

Mr Gerald Giam (Aljunied GRC) wanted to know whether MOM has plans to roll out the model to other sectors, including manufacturing, transportation and storage, public administration and education, and health and social services, as well as the broad timeline for the plans.

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