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Bringing more lower-wage workers into Singapore’s growth story
The PAP Government, true to its mission of ensuring the benefits of progress are spread widely to all, will uplift our lower-wage workers with enhanced Progressive Wage coverage as part of our multi-layered support for them
When the Covid-19 pandemic struck Singapore in early 2020, thousands of lowerwage workers were on the frontline to keep essential services going and the economy humming as best as possible.
As a result, Singaporeans saw the importance of jobs like cleaning, food delivery and security, and there was fresh respect and appreciation for these workers, said PAP Secretary-General and Prime Minister Lee Hsien Loong at the National Day Rally at Mediacorp on August 29, 2021.
He outlined how the PAP Government has ensured the lower-wage workers and their families receive “significant support” for their basic needs.
For housing, they receive HDB subsidies and get access to rental flats. In healthcare, there are hospital subsidies, the CHAS (Community Health Assist Scheme) scheme and the MediFund endowment fund. They receive regular top-ups to their Central Provident Fund (CPF) accounts and Silver Support for their retirement while for education, the Government has in place a major effort to help their children do well in school and beyond.
But despite all these, Mr Lee noted how lower-wage workers are more stressed than others during the pandemic. Their jobs are less secure, they are more likely to be retrenched, and have less savings to fall back on to tide them through tough times. “That is why, in every Covid-19 Budget Package, we included extra help for lower income households,” pointed out the PM.
“The Government has helped them upgrade their skills, use machines and technology, and become more productive,” he said, adding that there are also specific policies in place to raise their incomes.
Beyond such emergency help, he stressed that lower-wage workers need longer term support too.
— PM Lee Hsien Loong
Higher Workfare payouts
One key policy that has served Singapore’s lower-income groups well over the years is the Workfare Income Supplement (Workfare) scheme. It is effectively a negative income tax where, instead of taxing the incomes of lowerwage workers, the Government goes on to top up their salaries in cash and CPF contributions.
Nearly 500,000 workers benefit from Workfare and this costs the Government $850 million a year. It plans to increase this annual expenditure to $1.1 billion by 2023, which will enable more payouts for all recipients. Younger lower-wage workers will also benefit from the lowering of Workfare eligibility to age 30, from the current 35 years old.
With progressive wages, every cleaner earns at least $1,200 a month. The salary is set to go up to a minimum of $1,500 in 2023, and $1,900 in 2025. Over time, the cleaners will also have picked up new skills and become more productive, said Mr Lee, noting that this trend is similar for security guards, landscaping and lift maintenance workers.
-The Progressive Wage Model (PWM) is another policy that has benefitted lower-wage workers. It covers cleaners, security guards, landscaping and lift maintenance workers who have seen their skills and productivity raised, and incomes and job progression boosted.
The PM said the Government has accepted the three strategies recommended by a tripartite workgroup to uplift lower-wage workers. One strategy is to extend progressive wages to workers from more sectors, starting with retail in 2022, followed by food services and waste management. Administrative assistants and drivers across all sectors will also be covered.
— PM Lee Hsien Loong
Providing lower-wage workers with secure futures
The committee’s second strategy is to require companies hiring foreign workers to pay all their local staff at least a monthly Local Qualifying Salary of $1,400, which will be adjusted from time to time. And third, a Progressive Wage Mark will be introduced to accredit firms that pay all their workers progressive wages. Mr Lee said the public sector will take the lead and purchase only from businesses that have this accreditation.
This is the ambitious roadmap drawn up by the Tripartite Workgroup on Lower-Wage Workers. The recommendations will uplift the wages and well-being of some 234,000 (82%) lower-wage workers. In fact, up to 94% stand to benefit, with the launch of the Progressive Wage Mark.
As these measures take effect, he said consumers should expect to share the cost of these higher salaries for lower-wage workers as businesses inevitably have to pass on some of these added expenses to customers. The Government will help companies with transitional support.
A specific group of lower-wage workers was singled out for his concern: delivery workers who work with popular online platforms such as Deliveroo, Food Panda and Grab. These workers have no employment contracts and lack basic job protection such as workplace injury compensation, union representation and employer CPF contributions, he noted.
“More people are taking up this type of work, so this problem is growing. The Ministry of Manpower is studying it and will be doing consultations. We must address the issues to give these workers more secure futures,” he said.
Concluding, the PM said Covid-19 will not be our last crisis but he is confident that Singapore will prevail. “We have done it before. We will do it again.”
