Employee Compensation Trends in Firms that Have Adopted Progressive Wage Model

Assoc Prof Jamus Jerome Lim asked the Minister for Manpower (a) whether the Ministry tracks employee compensation patterns for firms that have adopted the Progressive Wage Model (PWM); and (b) in particular, whether the Ministry has detected any systematic efforts to reduce total compensation disbursed by the company to the employee, in response to instituting the PWM.

Employers are required to pay eligible workers the applicable Progressive Wage based on each worker's job scope. The Ministry of Manpower (MOM) enforces compliance with Progressive Wage requirements through inspections and investigations of complaints. Employers may face suspension of work pass privileges if they are found to be non-compliant with Progressive Wage requirements. Enforcement is complemented by education, so that employers are aware of the requirements.

Employers can decide on workers' overall compensation structure, provided Progressive Wage requirements are adhered to. Since the Progressive Wage approach was expanded in 2022, MOM has not found any substantiated case of companies reducing total compensation to employees in response to Progressive Wage requirements. In a tight labour market, it is not in employers' interests to do so. Those who do so will likely not be able to attract and retain their workers.

Furthermore, Progressive Wages increase annually, according to a schedule that is negotiated by tripartite consensus, which ensures that workers see meaningful wage increases over time. In the five-year period from 2016 to 2021, the real median gross monthly wages of Cleaners, Security Guards and Landscape Maintenance workers grew by an average cumulative rate of 13%1, faster than the median worker at 10%2.