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Mr Speaker, Sir, during the Debate on the President’s Address recently, I spoke as Deputy Secretary-General of NTUC and urged the Tripartite Partners to come together to conduct an in-depth study on the implementation of the Progressive Wage Model, or PWM, across more sectors, so that we can move faster in this aspect when the economy recovers post COVID-19.
Various Labour MPs, from former Sec-Gen Lim Swee Say to former parliamentary colleague Zainal Sapari, have in their parliamentary speeches over the years also pushed for a faster and wider implementation of the PWM. Hence, NTUC welcomes the announcement to form a Tripartite Workgroup for Lower-Wage Workers to take concrete actions on this very important agenda.
Uplifting LWWs is a Core Mission
Uplifting lower income Singaporeans have been a core mission of the PAP government right from the outset. The PAP was born from the Unions in the 1950s. Taking care of our workers has been a critical part of our DNA as a party. We have achieved what few have done in six decades, but the task is never finished. It is something that we must, and will, keep working on.
Under the PAP government and with support from the Labour Movement, the lives of millions of Singaporeans have been greatly improved. More than 90% of Singaporeans own their homes. Our children get much better education. We invested in upgrading the skills of our people so they can stay employed and improve in their careers even as our economy transforms through the decades.
We have made significant progress in the past 10 years. The wages of workers at the lowest 20th percentile have increased by 24% in real terms in the last five years, and by 39% over the last ten years. This was a big lift, and faster than for those higher up on the wage ladder.
It has also helped moderate income inequality in Singapore, which is now at its narrowest in almost 20 years. The Gini coefficient, calculated using the widely-used OECD methodology, fell to 0.35 in 2019 after accounting for government transfers like the Workfare Income Supplement.
All this did not happen just by itself. It’s not by chance. It was brought about by sound economic policies, and tripartite partners working actively to intervene to support workers. We implemented the “Triple Uplift” formula comprising the PWM + Workfare Income Supplement (WIS) + National Wage Council (NWC) recommendations.
The PWM has lifted the wages of close to 80,000 cleaners, security officers and landscape workers. Their wages have increased by 30% in real terms in recent years without the loss of jobs. The PWM also enables them to climb a skills-ladder, improving their future employability and their wage progression at the same time. This has been a significant achievement, because the workers in these sectors tend to be older or with limited education, and therefore are at highest risk of dis-employment. It required very involved negotiations, and firms had to undertake many changes in many of their practices to do so.
Workfare is another significant intervention. It acts like a form of negative income tax: the Government tops up the income of workers earning less than $2300 per month.
There are many other efforts, all part of the ongoing task of uplifting our workers. Skills upgrading and job placement efforts by the NTUC’s Employment and Employability Institute (E2i), working with government agencies, help many workers access better jobs, better pay, better job prospects. Bus drivers’ salaries jumped by more than 20% since 2015 with the new bus financing framework supported by the Labour Movement and the National Transport Workers’ Union (NTWU). In the last five years or so, we have pushed hard on the ITM efforts as well. This brought together tripartite partners, integrating skills upgrading together with business transformation, productivity enhancement and innovation to catalyse change as a whole ecosystem, to also create better jobs and better job prospects for our workers.
Raising the incomes of our less skilled and lower wage workers is therefore a holistic and continuous effort. Through Workfare, the PWM and our efforts involving various stakeholders to boost skills and productivity in every sector, we are demonstrating exactly what President Halimah spoke about on Social Solidarity. Our LWW get an uplift in incomes through Workfare supported by taxes, through the PWM, and by productivity improvements. The upshot is that we achieve higher incomes for LWWs without putting their employment at risk, and minimising cost increases for consumers.
How about the coverage of PWM? The Government has committed to working with its tripartite partners to extend the PWM to all sectors, in a manner that is appropriate to each and every sector’s unique conditions. I should point out also that the PWM in the existing sectors have also helped lift wages in the other non-PWM sectors as well.
If we look at the occupations that are traditionally deemed as comprising workers of lower income – clerical support, service staff, tradesmen, operators, cleaners, labourers, there are perhaps about slightly over 850,000 workers doing these jobs in Singapore. The vast majority of them actually earn above $1,300 a month. According to MOM, the residual number of LWW who earned below $1,300 is about 100,000 workers. About a quarter of them actually are self-employed so they wouldn’t have benefitted from any minimum wage to begin with. With Workfare and employer CPF contributions included, only about 56, 000 across a variety of job roles earn less than $1300. Of these, only about 32,000 are full-time employees. So what the WP wants to achieve with the proposed MW of $1300 a month we have already achieved through PWM and many other policy measures such as Workfare. And with the latest Tripartite move, we will further reduce this number. We have in fact made tremendous strides over the decades, but as I said, it is still unfinished business.
The Workers Party have called for a MW of $1300 a month to be applied across all sectors, as a quick way to cover everyone else. As I’ve just highlighted, this is a very small number of, 32,000 to 50 over thousand, about 1.7% of our local workforce.
Let me state that we are not ideologically against a MW. In fact, the first rung of the wage ladder in the PWM is a form of sectoral MW. SM Tharman has also called the PWM a “Minimum Wage Plus” – Minimum Wage plus a ladder for wages to increase through upskilling.
So the idea of having some form of a Minimum Wage is not new and we share the same objective to uplift the incomes of low wage workers. Where we differ though, is the approach to getting there.
All programmes and policies have pros and cons and so too, a single, blanket minimum wage. Its appeal is that it is seemingly a quick way to raise the wages of workers who have yet to benefit from PWM and maybe many other initiatives. But there are actually risks to jumping on to this single, blanket minimum wage.
First, there is the question of its effectiveness in helping our lowest skilled and most vulnerable workers, and not inadvertently putting them at a disadvantage.
It is difficult to find the right, single MW for all sectors. If it is set too low, then the benefit to workers in many sectors will be limited and it defeats the purpose of having a minimum wage in the first place. For example, the starting salary for a cleaner in Town Councils today under the mandatory PWM is already $1442.
With overtime pay, WIS, AWS or Bonuses, this would be much higher than the $1300 a month that the WP proposes as a MW. Indeed, because of the mandatory PWM, the WP Town Council cleaners are being paid based on the PWM and not based on their proposed MW!
But if the minimum wage is set too high, then businesses especially the SMEs, cannot afford to pay. They will have to pass the costs on to consumers if they are able to, or cut back on employment of workers of lower educational standards or skills, or even go out of business. In an ideal world, a high minimum wage will force industries to invest more in technology, invest in items that can raise productivity, and favour the most efficient firms, without lowering overall employment. But in practice, there will be winners and losers, and it is our SMEs who are the most vulnerable, and our most vulnerable workers who are also at risk of losing out.
We all want to help LWWs to earn more. But in practice, it is difficult to arbitrarily prescribe a single higher salary for all sectors and all industries. There must be a basis for setting the MW that reflects the realities of each sector, including the profile of LWW in the particular sector, so that it is sustainable, benefits them, and avoids any unintended costs. Veteran union leaders with long experience on the ground, understand the importance of working this out and arriving at a tripartite consensus, so that “low wage” does not inadvertently become “no wage”. If I may share what my good brother in the union, Brother Toh Hock Poh, will always say when it comes to complex issues, 这么简单我们早就做了，好要等到你来说(in Hokkien)！Sir if you don’t mind I have to do this to justify the charisma of Brother Hock Poh, and show his charisma. What it means is that if it was so simple, we would have done it long ago. So a single MW is no panacea.
The second risk with a single blanket minimum wage is the inevitable politicisation of wage setting. What do I mean? Today, let’s say we can all agree to $1300 MW proposed by the WP, a “moral imperative” as Mr Singh puts it in his recent Facebook post. But what next, what happens next? How will this number change from this year to the next, and on what basis?
In a political contest, a political party will surely come along and say $1500 will reflect higher “moral imperatives”. Yet another will come along and say $1300 is good, $1500 is better, but $1700 must surely be more “divine” moral imperative. It can become a political auction.
When this process, this political auction gathers momentum, and becomes detached from market realities, the minimum wage escalates beyond what employers are able to pay, and the jobs of our more vulnerable sisters and brothers in this sector will be threatened with the risk of unemployment.
So, I am not so much concerned by what Mr Singh and the WP is proposing for now, but what it portends for the future --- the possibility of a political auction that will price our lower-skilled workers, our brothers and sisters, and disadvantage our smaller businesses, our SMEs. This is not an academic issue, and we are seeing this kind of political processes, this political auction in other countries. What is a better way? Well in the NTUC we believe the PWM is one way of doing so.
Under PWM, we can engage the different stakeholders of each industry, work out how to address their concerns and their challenges, and arrive at a consensus with a basis that they can all actively support. And with this sectoral, tripartite consensus-building approach, it is much less likely for a political auction to happen.
We can and we should do more to help the lowest paid in our society. But we must go about it in a way that ensures the upside while minimising the downsides. The cure, surely, should not be worse than the problem it tries to solve.
A third complication, and this is a major one, is the question of migrant workers. In most developed countries, the legal MW applies to all workers, including migrant workers.
If a minimum wage is driven simply by a ‘moral imperative’, then the natural question to ask is whether it should include non-Singaporeans such as migrant workers, including our foreign domestic workers. I do see an online petition going on now, in the honour of Mr Singh’s name, with all the text he put into his Facebook, on a page calling for people to petition to support MW for foreign domestic workers as well. So perhaps Mr Singh should also take this chance to explain to Singaporeans what the position of the WP is when you advocate for MW.
Now if businesses cannot bear the resulting cost, is there also a “moral imperative” to help our SMEs? This is a particularly pertinent consideration at this time, when we are in a deep COVID-19 crisis, and many companies and especially our SMEs, such as those in the construction sector, are suffering and not quite out of the woods. What is Mr Singh’s views on this? I do note that in his Facebook post, the very first line and I quote “the universal MW for the Singaporean worker is not just a moral imperative. It is an act of national solidarity, one that is even more relevant in today’s economic environment” . I’ve been listening to some of the speeches of many of the WP members of the house yesterday and today, and I must thank them for sharing the government’s views on improving career coaching, reforming education, supporting our workers, helping our SMEs. And member Jamus Lim’s earlier speech talks about supporting SMEs which I’m sure will be welcome. But, if we juxtapose this together with his speech in the last Sitting about raising minimum wages, how does it square away? Are we supporting SMEs or are we adding more oil to the fire, so to speak. Perhaps it will be better to explain in Chinese, we call it 雪上加霜. When the companies are in a deep economic freeze now, or economic recession, is what is being proposed by the WP, raising wages through a MW legislation, going to add more frost to the snow in companies in deep economic winter right now?
Expanding Progressive Wage Model
Mr Speaker Sir, I seek the support of this House for us to continue to push for PWM. NTUC will continue our conversations with the Tripartite Partners via the newly convened Tripartite Workgroup on expanding PWM, to ensure that we take into account the concerns of all stakeholders for a sustainable implementation of the PWMs, even as we work collectively to help ourselves to get out of this economic recession.
In the interim, the PWM Mark that was recently introduced by Minister Josephine Teo in Parliament, has a potential means of recognising firms that voluntarily pay progressive wages. It’s something that we welcome. We welcome such ideas as it would enable consumers to choose whether to support progressive-minded firms.
While introducing a PWM Mark is a good first step, voluntary schemes on their own may not be attractive enough for companies to come onboard. Government must be prepared to use regulatory levers to help incentivise firms to adopt the PWM Mark, such as requiring companies that access Government schemes or bid for Government projects to come onboard this voluntary mark. That way, we can also raise the awareness of consumers and service buyers to price contracts fairly and build trust towards eventual mandatory PWM for other sectors.
Beyond the Lift and Escalator PWM becoming mandatory in 2022, NTUC had also submitted a proposal to the Government to form a Tripartite Cluster for the Waste Management Industry to introduce a PWM focusing on the waste collection sub-sectors. We look forward to the Government’s strong support and will work closely with our Tripartite Partners to bring about better wages, better welfare and better work prospects for low-wage workers in this sector.
In expanding PWM, we should also consider studying other approaches to complement the existing PWM efforts, such as setting a sectoral wage benchmark as a first step for companies in sectors where there are currently no regulatory levers to mandate a PWM. The benchmarks would be a good way, a good starting point, a first step towards empowering workers with greater awareness of wages in their occupations and sectors. This can be done through leveraging various data sources that we currently have, such as the Occupational Wage Survey data.
In sectors with a more variegated employment landscape such as Food Services and Retail, sectoral wage benchmarks may help catalyse more companies to embark on uplifting the livelihoods of our low wage workers. This, of course, in time to come can evolve into a PWM.
The Tripartite Workgroup could also study lower wage occupations that cut across multiple sectors to see how best to help improve their wage prospects. Some job roles, clerical job roles for example, does not neatly fall into one particular sector and is a horizontal across many sectors. Having employers, Government and union at the same table would enable us to have frank and deep discussions on policy innovations to move the way forward.
Conclusion
Mr Speaker, Sir, there is much work to be done to uplift more lower wage workers, many of whom provide essential services for all of us. We should recognise what the Government and the Tripartite partners have achieved in providing a genuine uplift for the workforce, especially our LWW, and be willing to adopt new approaches. Indeed, the PWM and Workfare Income Supplement have been major new approaches in recent years, and we remain of course open to new ideas.
Achieving social equality and enabling lower income families to improve their lives is never a simple task. There is no silver bullet. It is also continuous hard work. NTUC and the Tripartite Partners will focus on this real hard work of uplifting wages of LWW and seek public support for our workers while hoping to avoid all the possible downsides.
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