Effectiveness of Progressive Wage Model Versus Minimum Wage Model for Needs of Low-wage Workers

Ms Foo Mee Har asked the Minister for Manpower (a) how has the Progressive Wage Model (PWM) resulted in more desirable outcomes than the Minimum Wage Model; and (b) what changes are being considered for PWM to address the needs of low-wage workers.

The Progressive Wage Model (PWM) provides a clear progression ladder for workers to earn higher and sustainable wages as they become more skilled, more productive and take on higher job responsibilities. Each PWM is developed through extensive tripartite consultations, taking into consideration sector-specific issues, such as past and prevailing wages, working conditions and the required skills for the relevant jobs.

Over 70,000 resident workers in over 1,600 companies have benefited since PWM was implemented in the cleaning, security and landscaping sectors. Workers in these sectors have seen higher real wage growth than at the median. Between 2011 and 2016, the real median gross wages of full-time resident cleaners, security guards and landscape maintenance employees increased by 5.7%, 6.4% and 3% per year respectively. This was higher than resident median income growth of 2.3% per year.

It is important to recognise that PWM is implemented in the context of a much wider programme of wage support through the Workfare Income Supplement scheme. Workfare reflects our approach of going beyond the debate on minimum wages – one that economists still cannot agree on after decades – to find a way forward that works for Singapore.

Workfare payouts are targeted at those with poor household support, with more going to older workers. It can comprise up to an extra 30% of the worker's monthly income, topping up salaries of low-wage workers and helping them save for retirement. Over the past decade, about 830,000 Singaporeans have benefited from the $5.5 billion disbursed.

Together with Workfare, as well as other initiatives like Silver Support Scheme and Goods and Services Tax (GST) vouchers, PWM has helped uplifted wages and incomes of lower-wage workers while keeping employment levels high and unemployment levels low.

The tripartite partners will continue to review the PWMs in each sector periodically to ensure that they remain relevant in uplifting workers and are aligned with the sectors' industry transformation goals. For example, over the last two years, the tripartite partners in the cleaning and security sectors announced PWM enhancements and are reviewing the PWM for the landscape maintenance employees. The tripartite partners also announced a PWM for lift and escalator maintenance to attract and retain more skilled workers into the sector to build a strong local core workforce in the lift industry.