Impact of Revising Wages for Cleaning Sector on Cleaners and Workers in Other Sectors

Ms Yeo Wan Ling asked the Minister for Manpower (a) what skillsets has the Ministry planned for workers in the cleaning sector to possess to remain relevant in the move towards cleaning automation; and (b) what is the Ministry’s plan to ensure that the cleaning industry will continue to provide viable livelihoods in the long term.

Ms Yeo Wan Ling asked the Minister for Manpower (a) why is the wage ladder under the Progressive Wage Model (PWM) for the cleaning sector determined only in 2021 when the announcement for a six-year wage increment under the PWM for that sector was made in 2016; (b) what are the considerations for the six-year roll-out period; and (c) whether the cleaning industry has been consulted on wage quantum and rate of increments.

Mr Yip Hon Weng asked the Minister for Manpower with the adjustments to cleaners’ wages under the Progressive Wage Model (PWM) (a) what will be the overall increase in costs to the industry in a year given the additional manpower required due to the COVID-19 pandemic; (b) how will businesses and the community be impacted by such additional costs; and (c) how is the Ministry engaging the industry to increase mechanisation to raise productivity and cut manpower needs.

Mr Yip Hon Weng asked the Minister for Manpower (a) what are the roll-out plans for the Progressive Wage Model (PWM) for the retail and food services sector; (b) what is the plan to implement PWM for other vocational roles that are not currently covered under the PWM; and (c) how will PWM contribute to shifting away from reliance on foreign manpower.

Mr Gan Thiam Poh asked the Minister for Manpower (a) how is the wage ladder under the latest Progressive Wage Model (PWM) for the cleaning sector decided upon; and (b) whether the Government will provide support to cleaning companies with existing contracts that are tendered based on the previous PWM wage recommendation.

Miss Cheng Li Hui asked the Minister for Manpower in the past decade, how does growth in the wages of the bottom 20% of workers compare with (i) median wage growth in Singapore and (ii) income growth of bottom 20% of workers in OECD countries.

Miss Cheng Li Hui asked the Minister for Manpower (a) how has the COVID-19 pandemic affected lower wage workers; and (b) whether the pandemic has delayed implementation timelines for expansion of the Progressive Wage Model to other sectors and other efforts to uplift lower wage workers.

Mr Edward Chia Bing Hui asked the Minister for Manpower whether the Workfare Income Supplement (WIS) will be adjusted such that enhancements to wages under the Progressive Wage Model are not entirely offset by lower WIS payouts.

Mr Edward Chia Bing Hui asked the Minister for Manpower (a) whether the Tripartite Cluster for Cleaners (TCC) discussed ways to ensure that the higher cost arising from enhanced wages under the Progressive Wage Model (PWM) for the cleaning sector will be fairly borne by cleaning companies, service buyers and the public, (b) what are some of the feedback the TCC received from cleaning companies and their service buyers; and (c) what lessons can be drawn from this as the PWM is expanded to other sectors.

Miss Rachel Ong asked the Minister for Manpower given plans to adopt a vocational approach for the Progressive Wage Model (PWM), how will progressive wages be extended to workers who are employed by companies in sectors not currently covered by the PWMs and whose majority of rank and file workers will not be on PWM, without disrupting the pay and cost structure in such companies.

Mr Don Wee asked the Minister for Manpower how will the cleaning industry be impacted by the recent announcement on the Progressive Wage Model for cleaners.

Ms Hany Soh asked the Minister for Manpower (a) what has been the average wage increase of cleaners under the Progressive Wage Model (PWM) over the years; (b) whether the PWM has improved the quality of cleaning; (c) whether the PWM has caused a reduction in the number of cleaners employed, especially for those smaller scale F&B outlets; and (d) whether the PWM has a knock-on effect on food prices.

Mr Liang Eng Hwa asked the Minister for Manpower whether the income qualifying criteria for Workfare Income Supplement (WIS) will be adjusted in line with the new Progressive Wage Model (PWM).

Mr Sharael Taha asked the Minister for Manpower how will Workfare Income Supplement (WIS) complement the Progressive Wage Model (PWM) so that an increase in wages of workers through PWM is not offset by a reduction in WIS payouts.

Mr Gerald Giam Yean Song asked the Minister for Manpower (a) whether the Government intends to increase labour productivity of the cleaning sector in tandem with the projected doubling of the wage floor from the current $1,236 to $2,420 by 2028 under the latest updates to the Progressive Wage Model (PWM) for this sector; (b) if so, how will this doubling of productivity be brought about; and (c) whether workers in this sector will face higher unemployment if this productivity increase cannot be achieved.

Mr Sharael Taha asked the Minister for Manpower under the Progressive Wage Model (PWM) for workers with wages at the bottom 20% of the workforce (a) what is the number and percentage of workers from the cleaning, security, landscape and lift and escalator industries who can benefit; (b) what is the additional number and percentage of workers who will benefit from the expansion of PWM into the food, retail and waste management industries; and (c) what lessons can be drawn from the implementation of the PWM to expedite its expansion.

Mr Speaker, many Members have filed questions related to our low-wage workers. I thank Members for sharing their keen interest in uplifting them.

Our fundamental objective is to make sure that as a society, we take care of every worker. We cannot progress as a society and achieve economic progress with a strong social compact if there is a group of workers who are left behind. We must ensure that every worker who is prepared to work hard will be able to earn fair wages and prosper along with the rest of Singapore.

Uplifting our low-wage workers has been a priority for the Government. Introduced in 2007, Workfare is the foundation of the Government's support for low-wage workers. It supplements the incomes of our low-wage workers in cash and helps them save for retirement. This encourages them to work regularly, rather than rely on welfare measures. Studies have shown that Workfare has led to an increase in employment rates, with the highest increases among our older workers.

Close to a million low-wage workers have since benefited from nearly $7.8 billion in Workfare payouts.

Workfare also supports our lower wage workers to upskill themselves, increase their productivity, find better jobs and earn higher wages. Another $600 million has been paid out to employers and workers through the Workfare Skills Support Scheme, to enhance their skills and employability.

On top of Workfare, the Progressive Wage Model (PWM) provides job and training progression pathways for our lower wage workers, to grow their wages as they improve their skills and productivity.

Our policies to support our low-wage workers have made a difference in uplifting them, helping them to enjoy good wage growth over the last decade. To Miss Cheng Li Hui's question, from 2009 to 2019, the real wages at the 20th percentile of our resident workforce grew 39% cumulatively, faster than the median worker at 33%. This has allowed our low-wage workers to gain ground and progress faster than the median. That means the low-wage workers are earning closer to the median wage.

While we see robust real income growth for them, this is not the case for most OECD countries. For example, over the same 10-year period, workers at the 20th percentile in the United Kingdom saw no real wage growth, while those in Japan and United States saw only cumulative real wage growth of 3% and 6% respectively, despite having minimum wage. Nonetheless, we should not take our progress for granted. It is not inevitable that this will always be so.

While COVID-19 has resulted in a fall in the earnings of low-wage workers to $2,340 a month, Government schemes such as the Workfare Income Supplement (WIS) and the one-off Workfare Special Payment (WSP) in 2020 helped to mitigate this impact. After taking this into account, the incomes of the first 20% of income earners in 2020 were actually similar to wages in 2019.

As we helped our low-wage workers cope with COVID-19, it was also timely that we look to strengthen their prospects and progression for the long term. This is why we formed the Tripartite Workgroup on Lower-Wage Workers last year. The Workgroup will be releasing its recommendations in the coming months.

The Government's aspiration remains to cover all sectors with Progressive Wages. Currently, Progressive Wages benefit 85,000 workers. The Workgroup has already announced that it will introduce PWMs in three new sectors: food services, retail and waste management. It will also bring in-house cleaning, security and landscaping workers into the Progressive Wage system. These moves will significantly expand coverage to up to 218,000 workers. The Workgroup is also looking at introducing Progressive Wages to other low-wage occupations that straddle multiple sectors, as raised by Miss Rachel Ong.

Agreeing which sector should start the PWM is just the first step. The hard work of making sure that it achieves its objective of progress for low-wage workers and sustaining high employment is in the details. These are carefully negotiated by the tripartite partners.

When it was first introduced in 2012, the mindsets of employers and service buyers were different. Much effort went into getting their support and their buy-in. There were concerns whether wage increases were sustainable, whether they would lead to higher costs for essential services in our daily lives. But today, all our PWM stakeholders buy into the same vision and work together to support our low-wage workers.

Employers now better understand the benefits of PWM to them and to their workers. This win-win outcome is why the cleaning sector has been able to agree to a much more ambitious rate of growth in its most recently concluded run of review.

To Ms Hany Soh's question, cleaners' wages have risen by 26% cumulatively from 2014 to 2019 and we have seen local employment rise by 3%. Overall, while businesses have had to adjust to the wage increases, they have had been able to do so without adverse effect.

Mr Desmond Choo asked how they will impact wages of other low-wage workers. For related jobs, there could potentially be some positive spillover effects. Nonetheless, if we want to achieve more broad-based progress for more low-wage workers, more of them would have to be brought in directly into our Progressive Wage system. Hence, the Tripartite Workgroup's discussion to include more sectors.

Some Members, including Mr Gan Thiam Poh, wanted more information of how future wage increases for the cleaning sector were determined.

Mr Speaker, the essence of the Progressive Wage Model is tripartite negotiation and consensus. Hence, the representatives from the cleaning sector are part of the Tripartite Cluster for Cleaners (TCC), which negotiated the wage increases. The TCC, which oversees the cleaning PWM, consists of representatives from the unions, employers, service buyers, as well as the Government. The TCC consulted widely with the industry and had numerous vigorous discussions amongst its members to find common ground that benefits all stakeholders. The TCC was clear in its collective desire to raise the wages of our cleaners in a sustained manner and revalue the work of our cleaners who have been integral in our fight against COVID-19.

This is the uniqueness of Singapore's approach because PWM progression is brought about with tripartite consensus. Mr Edward Chia and Mr Sharael Taha asked about the lessons drawn from our experience with the cleaning PWM. A key takeaway is that the negotiated approach of the PWM helps address concerns and allows the sector to raise wages at a pace that is suitable for them.

The robust wage increases for the cleaning PWM are fruits of almost a decade of close tripartite collaboration and consistent efforts of the TCC.

The TCC has learned over time to harness the PWM design to benefit their workers and the sector. Cleaning companies recognise that Singapore's resident workforce is ageing. And that in addition to better wages, they needed to re-design the jobs to better retain and attract workers to the sector. Their support also assures us that the wage increases are sustainable. Through negotiation, the PWM allows stakeholders to take sector-specific circumstances into account.

One example is the six-year wage schedule as highlighted by Ms Yeo Wan Ling. The TCC did so to provide employees and service providers with clarity for long-term planning. Cleaning firms can price in the wage increases in their multi-year contracts with service buyers. There is also a midpoint review so that the TCC can ensure that the wage increases remain sustainable.

This pandemic has showed us how the PWM approach is superior to a blunt minimum wage. The sectoral approach has enabled us to advance PWM for cleaners as well as other sectors that are able to adjust to PWM progression in the short term. A blunt minimum wage may not have been able to achieve consensus or as ambitious a wage growth. Sectors such as tourism, aviation, hospitality and others that were severely impacted by COVID-19 would not have been able to agree to such a move. So, our targeted approach enabled the tripartite movement to advance PWM at a pace depending on how different sectors perform in the market.

The tripartite clusters for the new sectors such as food services and retail will similarly take into account market conditions and what each sector can manage as they recover from the economic impact of the COVID-19 pandemic. Mr Yip Hon Weng would be happy to know that these sectors are making good headway in developing their PWMs. Notwithstanding the challenging economic conditions, they are committed to submitting their recommendations before the end of the year.

The cleaning PWM is also not pursuing wage increases without considering skills, productivity and industry transformation. To Ms Yeo's question on re-skilling, the TCC has upgraded the training requirements for cleaners. This ensures that our workers continue to be upskilled and helps reduce the sector's reliance on low value-added manpower, including foreign manpower as raised by Mr Yip.

Members have raised questions on how businesses and consumers will handle the additional costs and also how productivity in the sector can be increased.

Indeed, if we as a society would like to see low-wage workers make good progress sustainably, all of us have a role to play in this. Employers have to drive productivity improvements in their firms through better technology and processes as raised by Mr Don Wee. They may also have to explore new business models or services to value-add to their customers. Service buyers have to embrace outcome-based contracting and contract durations that encourage investments in new technology. These are indeed directions that the industry has articulated in the Industry Transformation Map for the environmental services sector. Consumers will also contribute by sharing the cost of wage increases and have to pay slightly more for services and products as the sector implements the PWM.

Mr Gerald Giam asked about how the Government will increase productivity in the cleaning sector. The Government cannot legislate productivity. Productivity growth is a result of workers and firms working together to grow the business and then fairly redistribute the fruits of growth. This is why the tripartite movement believe that the Progressive Wage Model is better than a blunt minimum wage. Each PWM implemented is agreed by a tripartite process, which gives greater confidence that such wage increases can be supported by the market, by the society and will not put employment at risk.

Finally, Members including Mr Liang Eng Hwa have asked whether Government support for firms and workers will be provided. This is something that the Tripartite Workgroup is looking at as part of its deliberations. The Ministry of Manpower has been reviewing and enhancing Workfare with significant improvements made recently in 2017 and 2020. At each review, the wage growth of our low-wage workers has been taken into consideration and qualifying criteria adjusted accordingly. The Government will continue to review Workfare regularly to ensure that low-wage workers remain adequately supported.

The Government and tripartite partners are working closely together to make progressive wages a reality for all sectors of our economy sooner rather than later. I urge this House and all Singaporeans to support our low-wage workers.

Mr Speaker, Sir, I would like to thank the Senior Minister of State for his very comprehensive reply. Just one supplementary question.

It is without a doubt that we must uplift our lower wage workers. At the same time, I am concerned about the impact on our smaller businesses. What can be done to assist our smaller businesses in business transformation to cope as an employer and as a service buyer?

Mr Speaker, I thank the Member for his question. In fact, this is a very important aspect of our PWM negotiations because one of the key considerations we also had was both the survivability of our companies, as well as, at the same time, the employment outcomes of our workers. On the one hand, you want wages to go up but you do not want workers to lose their jobs either if the company closes down or the company says, "I cannot afford this", and they have to let go of workers. So, two things.

One, over time, this is why we find it very important, and I support the NTUC's work in this too, with the Company Training Committees, because these are important aspects which we want to help companies to look at – job re-design, productivity enhancements – and how they can leverage Government schemes with Enterprise Singapore providing the Productivity Solutions Grant and other development grants that they can use. These are areas in which the Government intends to provide support. We also understand that in the current market, some sectors are a bit challenged and, therefore, these may require further support. This is where the Tripartite Workgroup will study and roll out the recommendations soon to see how can we can layer on added support to help companies transition into some of these new PWM wage structures as well as for new sectors coming into PWM.

Mr Speaker, I would like to thank the Senior Minister of State for his very comprehensive reply. The Labour Movement would like to extend our support for the PWM. Of course, central to the Labour Movement has always been the issue of unemployment as we raise wages. So, I would like to ask the Senior Minister of State, what are the safeguards that we can put in place to make sure that as we journey to the next milestone for PWM, we do not create undue unemployment?

The next question would be —

Mr Speaker, I thank Mr Choo for his question. In fact, that is the uniqueness of Singapore's system in that our safeguard is the tripartite consensus, with the employers on board, the employees agreeing, knowing what the projections look like and what they can agree to, and what they see as the market conditions coming forward. I think that is one way in which we ensure that our workers are not left behind or disemployed, fully understanding the risk that for many of our low-wage workers, the profile of this group is really the older groups, the less skilled. We know that these are also the ones who are most at risk with disemployment effects.

On one hand, I think this is where tripartite consensus will have to move ahead as we embark on putting more sectors on board. And that is why we have been talking to companies, employers to see how this would impact them, and how their views are in the way forward and the years ahead, whether they can absorb some of these wage increases and how much we can pass on to consumers.

I also want to say that consumers, too, have their part to play, in terms of supporting these initiatives and efforts, to pay more for services and products to support our low-wage workers.

Sir, has productivity in the cleaning sector increased at the same rate as wage increases since the PWM for this sector has started and how is this measured?

I do not have the figures for productivity with me. But I think it is important to also look at productivity from the fact that we did not see disemployment in the years where PWM has been implemented. I think it is key. We have also seen how companies have transformed to put in place more mechanisation, different ways of cleaning, more clean technology being put in place, and more being explored. I know NTUC and the cleaning sector are also working to see how they can improve not just the conditions of work, but also the methods in which we re-design our cleaning sector.

I think most importantly is this, that productivity level is not just viewed from the workers' angle. At the end of the day, there is only so much floor you can clean and so many roads you can sweep. But I think, ultimately, for many companies involved, not just the cleaning sector, but others, that you have to look at productivity at both the employee level and the enterprise level. That is why the whole enterprise transformation, job re-design becomes an important factor in this because then you can see the multiples in terms of productivity increases over time.

The security sector has done very well with this: moving into technology, sensors, CCTVs and so forth. And that is where we want to move many more of our sectors into, so that we can target better wage increases. It becomes more sustainable because productivity as a whole, for the whole sector, improves over time.

In the planning for the roll-out of the Progressive Wage Model (PWM), does the Ministry take into account job types that may become obsolete or face disruptions in the next five to 10 years? And in such circumstances, what measures would the Ministry take to ensure that the livelihoods of our workers, particularly those in the lower paying tiers, are not affected?

I thank the Member for her question. Indeed, this is why close conversations that we have with employers are important, to look at where the blind spots are.

As a whole, as I have shared, many of the employers are very supportive of our PWM moves. I think they are also in line with us in our ambition to expand progressive wages and, at the same time, to try to grow this closer to median or to increase wages past the median. This is something that we want to work on with the employers.

But, at the same time as well, it is inevitable that even without PWM, you might find, because of industry transformation, certain jobs going obsolete. That is where the whole training and skills element becomes very important. We have to work with the unions, the trade associations and all our stakeholders to see how we can better improve the job scope as well as the job re-design to help workers transition.

More importantly, as wages go up, workers must also do their part to train, upskill, become relevant and address some of these new opportunities that come by.

Yes, with or without PWM, there may be transformations within each sector. We have got to look at it quite closely. Ultimately, we will do our best to be the catch-all too. If there are any displaced, to try to match them and move them into sectors that will absorb them. Overall, for as long as we keep our labour policies tight or keep our economy growing, we can then continue to create more jobs and more opportunities for everyone.