Higher bus driver pay will not lead to increased fares; experts say move should ‘help at the margins’

SINGAPORE – Commuters will not bear the cost of the wage increases for public bus drivers that take effect from January 2027, as driver salaries are not a factor in calculating changes to public transport fares.

The Land Transport Authority (LTA) said in response to queries that any increases to fares are decided by the Public Transport Council, which uses a fare adjustment formula that accounts for several factors.

While the formula accounts for wage costs, this metric reflects national average wage changes across the broader economy, rather than the specific salaries of public transport workers. Other components include the core inflation rate.

“This set of salary adjustments for bus captains is not part of the fare adjustment formula,” said LTA.

On June 3, the authority announced that the Government will fund a $450 monthly salary increase for new Singaporean and permanent resident bus drivers, along with an additional $2,000 in sign-on bonuses.

The move is aimed at attracting more locals to the profession, as the workforce ages and operators face challenges in hiring and retaining bus drivers.

This will push the average monthly pay of a new bus driver from about $3,600 currently to more than $4,000, after including overtime pay and allowances.

Existing bus drivers will also get a one-time pay increase, ranging from $150 to $250, which will be funded by their respective employers among the four public bus operators.

The Government’s injection of funds will continue until each bus package is re-tendered or renewed, said LTA. The operators are expected to factor in the higher starting pay as part of future bids.

LTA said the cost of the initiative will depend on how many new local bus drivers join the operators. Government subsidies for the public bus sector currently amount to more than $1 billion.

There are 14 bus packages covering different routes across the island, and the operators bid for the right to run the services within them. This system has been in place since 2016, when the bus contracting model was implemented.

Contracts for a bus package last five years, with LTA having the option to extend them by two to five years at the end of the term.

Based on publicly available information, the Bulim and Sembawang-Yishun bus packages are up for bidding in 2028.

The Straits Times has asked LTA if the higher salaries were accounted for during the bidding for the Serangoon-Eunos bus package, which closed on April 17. The winner of the tender is expected to be announced in the third quarter of the year.

The most recent tender for the Tampines bus package was awarded to Go-Ahead Singapore for $646 million. The operator will begin running 27 bus routes under the package from July 5 for a period of five years.

LTA will pay Go-Ahead Singapore over the duration of the contract, although the figure may be adjusted for factors such as inflation, a change in wage levels, fuel costs and changes to services.

As bus operators are constrained by the terms of their contract, the Government has stepped in to “expedite the salary increments” for drivers, said National University of Singapore senior lecturer Timothy Wong.

He added that because revenue is fixed during the contract period, operators would want to keep costs low rather than increase them by raising wages.

Although the starting salary increase is “the most straightforward way to attract more locals to the industry”, it is not a silver bullet, said Wong, who teaches economics and sits on the Public Transport Council.

Assistant Professor Chua Yeow Hwee from Nanyang Technological University said that other factors also play a part in influencing a person’s decision to become a bus driver.

The deputy director of the university’s Economic Growth Centre said: “Workers also care about hours, shift schedules, job stability, career progression and workplace conditions.

“The headline figure of more than $4,000 is meaningful, but it includes overtime, allowances and bonuses. Prospective workers will also consider the basic wage and the demands of the job.”

While Chua expects the improved starting salaries to “help at the margins”, he said it will likely take more measures to improve retention.

“These include more predictable schedules, clearer progression, better rest arrangements, and stronger recognition of bus driving as skilled, essential work,” he noted.