Measure of Willingness to Pay Higher Prices for Services by Progressive Wage Model Sectors

Mr Raj Joshua Thomas asked the Minister for Manpower (a) whether the Ministry will study whether service buyers are prepared to pay higher prices for services from the Progressive Wage Model sectors arising from mandatory wage increases amidst an uncertain economic climate; and (b) what is the impact on SME service providers that may be unable to pass on the increased costs due to the mandatory wage increases to service buyers.

As the Member is aware, wage increases in the mandatory Progressive Wage Model (PWM) sectors are deliberated by the respective sector’s tripartite cluster committee. These comprise representatives from employer associations, unions, service buyers and the Government.

We expect that discussions in the tripartite cluster committees will reflect the views of firms and buyers on the economic conditions and whether the proposed increases are manageable. When it comes to lower wage workers, we should not be so quick to cite economic conditions as a reason to postpone wage increases. Instead, precisely because of the economic impact of the COVID-19 pandemic, we must make every effort to keep up and ensure lower-wage workers emerge stronger from this crisis. The National Wages Council (NWC) also recognises this. Despite the downturn in 2020, it called for the continuation of agreed PWM wage increments. The NWC also called on employers implementing wage freeze to instead consider wage increases for lower wage workers and those implementing wage reductions to instead freeze wages of lower wage workers.

In the security, cleaning and landscape sectors, where PWM has been implemented for several years, we have seen contract values increase, reflecting the higher wage cost. This shows that firms in the PWM sectors are able to pass on the wage cost increases to service buyers. In addition, rogue firms that do not comply with PWM wage requirements risk losing their licence status.