Progressive Wages and the Revaluing of "Low-wage Work"

ADJOURNMENT MOTION

Mr Speaker: Leader.

The Leader of the House (Ms Indranee Rajah): Mr Speaker, Sir, I beg to move, "That Parliament do now adjourn."

Question proposed.

Progressive Wages and the Revaluing of "Low-Wage Work"

Mr Speaker: Mr Raj Joshua Thomas.

6.31 pm

Mr Raj Joshua Thomas: Sir, the first Progressive Wage Model (PWM) came into effect in 2014, 10 years ago. This was for the cleaning sector. The PWMs were introduced, championed and coordinated by the Labour Movement, and the nature of them is that they are interventions. They were introduced in sectors that had either seen market failure in terms of wages or that had wage growth that lagged increases in the costs of living.

This is why PWM wage increases are generally higher than National Wage Council recommendations, in order to close the gap of wages in these sectors. PWMs have been implemented in seven sectors and for two occupations. The PWMs have significantly improved the wages of over 150,000 workers or 50% of low-wage workers. Statistics prove that this is so. But, of course, it is always easy to posit academic questions about what these statistics all really mean.

I wish to offer the perspective of an industry representative who has been part of the process of one of the first PWM sectors and has close interactions with industry representatives from several others. I declare my interest, Sir, as President of the Security Association Singapore, which represents security companies. I sit on the Security Tripartite Cluster that formulates the PWM for our sector.

My view is that the PWMs are not just a minimum wage plus scheme. The PWM has revalued the work that is done in these sectors, not only in terms of wages, but also in terms of career progression, in terms of perceptions of the jobs in these sectors and their contribution to our economy. More can be done as the PWMs advance.

Most of these low-wage work are in jobs of the hands. Cleaning, waitering, landscaping, waste management are some of the examples of these jobs. With the emphasis on meritocracy in Singapore's development since Independence, jobs of the hands were increasingly seen as unattractive and were relegated to occupations that people would only go into if they were not academically meritorious. In many cases, these became occupations of last resort.

Because the emphasis has been on studying hard to get a good job, it seemed natural that for jobs that did not require academic qualifications, their wages should be low. In other words, these jobs were valued lowly in terms of how important they were and therefore, how much workers should be remunerated. They were also considered low socio-economic status occupations. Hence, wages in the first three PWM sectors – cleaning, security and landscape – had stagnated at a low level for a long time and required intervention.

The PWMs have already started to challenge how work in these sectors is valued. First, because the PWMs stipulate not just wages, but skills and training, the idea that these are generic jobs that anyone could do has been chipped at. Workers now have to attend courses and pass assessments to be able to qualify for entry into the sector and for promotion to the next rung of the wage ladder. Essentially, there are now some barriers to entry and advancement.

Second, the PWMs are wage ladders, that recognise increases in skills and experience and essentially create a career path. It would fall to reason therefore, that workers in the higher rungs of each PWM are performing work that is more valuable, for example supervisory work or work that requires specific skills.

Third, the PWMs prescribe year-on-year wage increases over several years. This means that there is a compounded increase in value over time.

Value, of course, does not exist in vacuo. Value must be ascribed by someone or recognised by someone. In real terms, value would also suggest that a person is willing to part with something of a certain worth to enjoy the benefits of that item or service. So, in what ways has the value of work been enhanced in the PWM sectors and to what extent?

First, we can look at the value ascribed to these jobs by consumers and society at large. A 2020 Sunday Times survey found that 78% of respondents were willing to pay more for essential workers, such as cleaners and security officers. Even better, they were willing to do so if the extra amount went to the workers themselves. And 55% were willing to pay at least 20% more. This suggests that at least for cleaners and security officers, there is significant value placed on the work that they do, such that consumers are willing to pay more for their services. The survey also made reference to the progressive wages in these sectors, so, there was a nexus between the progressive wages and responses in the survey.

However, consumers have continued to raise concerns about costs. Cheap-sourcing continues to be the primary method of buying for the outsourced PWM services.

Furthermore, while there has been improvement in the treatment of low-wage workers and in their working environments, there are still situations that underscore a continuing discrimination against these workers. I had raised in this House in one of my first speeches the absurd situation of a condominium in the Grange area that disallowed security officers and cleaners from using the condominium toilets. The Management Corporation Strata Title (MCST) had instead installed temporary toilets for them at the basement carpark, which did not even have proper lighting nor running water on the weekends. This was presumably to prevent mixing between residents and workers in the condominium toilets. There is therefore still some socio-economic stigma prevailing in some quarters, as regard this type of work and workers.

Second, statistics show that the PWMs have significantly increased growth in wages in the respective sectors and therefore of the placing of a particular monetary value on work. Cleaners, for example, have enjoyed an over 70% increase over a decade. However, while of course workers will be happy with mandatory wage increases, have these workers re-considered the value of their own work? There are many anecdotal accounts of workers who now put more paid on training and upgrading themselves. A Union of Security Employees study published in 2022 found that over 90% of security officers were prepared to use more technology at work and to undergo training for it. But, these are not clear indications on whether they feel that the value of their work has appreciated.

My own experience has been, at least for the security industry, that workers now value their work better and expect to be compensated better. By way of background, I joined the security industry the year before the PWM for the sector came into effect, some nine years ago. When I first looked at the wages of officers, I was appalled. Basic salaries were at $800 to $1,200. Today, security officers at the basic level must earn a minimum of $2,650, and by 2028, their minimum wage will grow to over $3,500.

With this significant growth in wages and many having progressed above the basic rung, I have also seen over the years, officers understanding their functions better, taking more pride in what they do and asking for better wages and working conditions. There is a greater sense of professionalism and more importantly, of dignity. And Sir, this is not an academic take on the industry, or a survey, this is what I have seen myself. Pride, Sir, in one's work and dignity in your occupation is something that is truly powerful and it is priceless.

Third, we must look at whether employers in these sectors have re-valued the contributions of their workers. There have been positive accounts. In the 2023 Straits Times article, Uniqlo said that "When we have employees who are happy working at Uniqlo (due to the increase in wages), that will translate into excellent customer services. To a certain extent, that will therefore boost sales". In another article, cleaning company LS2 Services said, that it recognised their cleaners as "valuable resources contributing to Singapore's clean and green city". LS2 Services strongly supported the PWM wages.

However, many employers, especially in the outsourced sectors, still see workers as deployable assets rather than as their company's human capital. Buyers of outsourced services still complain that some companies are still just deploying manpower rather than providing a skilled service. They therefore justify a cheap-sourcing approach because services are indistinguishable – but for the price.

Employers for their part also complain that some workers merely attend at the site to "mark attendance" – but the question is what we need to do to get out of this cycle of finger pointing? If a outsourced services company adopts a laissez-faire approach to quality and effectiveness of their manpower, it would invariably lead to a reduction in the perceived value of that occupation. Employers must therefore up their game as well, to offer services that are more cost-effective, more innovative and more productive.

In the round, the PWMs have undoubtedly contributed to the revaluing of low-wage work, but this is just the beginning. The PWMs moving forward can do so much more.

Looking forward and in the past few years, the Prime Minister has consistently called for a broadening of definitions of success, as well as for remuneration to be based on also on skills and not just academic credentials. The Prime Minister's vision is one which I support and share, including the Prime Minister's call to fairly remunerate jobs of the hands, which tend to be low-wage work. The PWMs have, fortuitously, been contributing over the past decade to precisely the Prime Minister 's vision of a labour market where the rewards of work are more fair and equitable.

Looking forward, how can the PWMs continue to contribute to the reshaping of attitudes and perceptions towards low-wage work and consequently, its value?

First, I think we should acknowledge that it is probably not sustainable nor desirable for the PWMs for all sectors to continue indefinitely. As I set out earlier, PWMs were first conceived to address market failures in wage growth or persistently stagnant wages in specific sectors. It would appear then, that once these issues are resolved, the PWMs could lose their purpose. Indeed, in this weekend's Straits Times article, Senior Minister of State Zaqy Mohamad had entertained the possibility of sectors being eased out of the PWM, although there are no plans to do so as yet.

This is a prudent approach. Sectoral PWMs, once they have achieved their objective of correcting wages that were valued wrongly must at some point return the determination of wage increases to the market. This is critical, because otherwise, the PWMs may become a crutch to workers – who will only be able to achieve wage growth due to interventions by the tripartite partners and not through themselves showing the value of their work, nor negotiating for it.

In this regard, it is absolutely critical that while the PWMs are in force, we empower workers in these sectors to realise the value of their work, to realise the value of their skills and training and to organically demand for higher wages as they grow in expertise and seniority. This will position them to be able to continue to grow their value and their wages even if their sector is eased out of the PWM. If we fail to do so, then these vulnerable workers will remain vulnerable forever. We must avoid this as one of the outcomes of the PWMs.

It is also important to note that there are cost consequences of the PWMs beyond just the specific professions covered. Companies in PWM sectors will also have to review the wages of their non-PWM employees and to ensure they are commensurate with the increases of the wages of PWM-covered sectors. Hence, for example, Starbucks, which is required under the F&B PWM to increase the wages of its baristas, also increased the wages of supervisors and managers to ensure parity and fairness across all job levels. Each company, after all, will also have to reconcile the PWM job roles and wages with its own internal pay scale and advancement route for all its different types of staff. While increases in non-PWM job wages are of course a good thing, the question is sustainability and consequent effect on increases in costs and overall inflation in the economy.

I have started to think about what an easing out of the PWMs would entail. My view is that it should not mean that the PWM would be removed or no longer apply. For sectors that are ready, I would suggest that they should instead evolve into a PWM 2.0 to preserve the wage levels already achieved and to provide a base from which the value of these jobs will continue to be enhanced.

How could a PWM 2.0 look like? These are my suggestions.

First, the respective sectoral tripartite clusters would no longer need to prescribe year-on-year wage increases over a period of a few years, which is the current practice. The prevailing wage floors at the point of moving to 2.0 would continue to apply and to be enforced as a form of sectoral minimum wage for each rung. This is important to ensure that wages do not make a u-turn. And a possible U-turn is a particular concern in the outsourced sectors, given that the profit of outsourced services companies is based on the difference between the wage of the outsourced worker and the charge out rate by the company.

Second, the skill ladders should remain and should be periodically reviewed, including whether there is a need for further training or refreshers. This will ensure that skills remain relevant and productivity continues to grow. One example is how the security industry is looking to train our workers to be AI-literate. The AI Literacy Programme designed by Certis and the Singapore University of Technology and Design was launched by Minister of State Gan Siow Huang last week and aims to upskill 5,000 security professionals with AI knowledge by 2027. Skills and courses like these could be incorporated in the periodic review of the skills ladders to ensure continued growth in the value proposition of workers.

Third, and perhaps most importantly, the PWMs would not be inactive, they would merely be dormant. If wages in a PWM 2.0 sector stagnate for some time after they are returned to the market, then the tripartite partners can step in again to prescribe wage increases. The PWMs in PWM 2.0 will be living, breathing creatures, vigilant and ready to take corrective measures if necessary.

Finally, each tripartite cluster should also continue look at matters ancillary or related to the value of work in their sector. This would include factors like working conditions and workplace safety and health. In the security industry, we are trying to reduce working hours in a sustainable manner, while adhering to the prescribed PWM wages. Companies in each sector can also be encouraged to leverage on productivity-building initiatives like the NTUC's company training committees. In this way, we can continue to enhance the value of low-wage work through the operation of PWM 2.0.

Sir, it would be remiss of me not to commemorate the 10th anniversary of the introduction of the PWM this year and its many successes.

The PWMs are a triumph of tripartism. It is unique to Singapore that employers, unions and Government agencies can sit down, negotiate and agree to very wide-ranging increases in wages, year-on-year. As Minister Tan said last month, there are many heated debates between tripartite partners behind closed doors, and the periodic PWM negotiations are probably the most heated of them all. This is because the unions make very robust representations and put up a good fight.

And Sir, I can attest to this, because I am on the opposite side of the table, representing industry, and we come in with equally well-reasoned arguments. The Government bodies then come in with policy input and objectives, and we negotiate hard to come to a consensus. Truly, it is something that you cannot fully understand until you are involved in it. You can be arguing one day, even publicly, and hugging the next. This is because we have a shared objective, to achieve the best for our workers and our businesses. We merely differ on occasion, on how to get there.

Sir, I am humbled and privileged to have had the opportunity to be part of the tripartite process. Our tripartism is precious and we must defend it against unfair criticism and strengthen when needed.

Finally, Sir, I would also like to thank the many people from the unions, trade associations and government bodies who have contributed to the PWMs and to a process that has enhanced the value of work in these sectors over the past decade. I would especially like to thank the team from the NTUC U-Care Centre who are the Secretariat for all the PWM sectoral negotiations. I mention them specifically because theirs is not an easy job. They are the ones caught in the middle of these heated discussions, trying to reconcile positions between the tripartite partners and to actually draft the PWMs and statements of the tripartite clusters. Tripartite partners, including myself, can be very demanding and difficult and sometimes the secretariat itself comes under fire. And yet, they trod on, motivated to see through their mission.

In particular, Sir, I would like to express gratitude to Mr Zainal Sapari and Ms Phyllis Lim. Mr Sapari championed and led the implementation of the earlier PWMs and Ms Lim continues to lead the secretariats. It is without exaggeration to say that these two people are probably the two people, in Singapore who have contributed the most to the success of the PWMs, and through the PWMs, the uplifting of the lives and livelihoods of tens of thousands of low wage workers in Singapore. They are unsung heroes. To Mr Sapari and Ms Lim, thank you.

To conclude, Sir, the PWMs have raised wages and skills in their respective sectors. This has contributed to the enhancement of the value of the work in each sector. As the PWMs mature beyond their 10th year, I am confident that we will continue to position the PWMs to raise wages, increase productivity, to improve the working conditions of our workers and to contribute to their sense of dignity and pride in their work.

And I am hopeful, Sir, that one day, we will be able to call “low-wage work” just “work” or even better, “good work”. Thank you, Mr Speaker, Sir. [Applause.]

Mr Speaker: Senior Minister of State, Mr Zaqy Mohamad.

6.50 pm

The Senior Minister of State for Manpower (Mr Zaqy Mohamad): Mr Speaker, I thank the Member for his support of Singapore’s PWM to improve the livelihoods of our lower-wage workers and hopefully in future, just workers.

I also thank the Member for affirming the importance of tripartism to contributing to the success of PWM. Indeed, our low-wage workers perform essential jobs and should be recognised for their contributions. They form the backbone of our economy and provide many important services that we should not take for granted. And this is why we must ensure that they are paid meaningful wages.

A decade ago, tripartite partners recognised that wages in some jobs were stagnating, as Mr Raj Joshua Thomas earlier on shared, especially in outsourced sectors like cleaning, security and landscape. At the same time, workers found themselves entrenched in the same job with little opportunity for skills upgrading and progression.

In response, NTUC conceptualised the PWM to chart out better wage, skills and career pathways. Tripartite partners implemented the first mandatory PWM in 2014 in the cleaning sector, followed by landscape and security in 2016. Today, we have seen good outcomes. Real cumulative wage growth of locals in these initial PWM sectors grew by 31% from 2014 to 2019, outpacing wage growth of the 20th percentile (P20) worker at 23%. This gave us confidence and we further expanded PWM to the lift and escalator maintenance sector in 2019.

When I chaired the Tripartite Workgroup on Lower-Wage Workers in 2020, I recalled we had several challenges to overcome. First, the lowest paying jobs were in domestic sectors, whether they were in kopitiams, heartland retail, cleaning jobs, security. And this presented the dilemma of how to uplift low-wage workers significantly while convincing consumers and businesses to pay more. The second challenge was raising the coverage of progressive wages from only 10% of low-wage workers in the early days of the first few PWMs and making wage increases meaningful to narrow the gap between the bottom 20% and the median worker.

To address these challenges, then-Prime Minister Lee Hsien Loong in his National Day Rally speech in 2021 announced the Government's acceptance of the Tripartite Work Group's recommendations to expand PWM to more sectors like food and retail and occupations including administrators and drivers. And back then, if you recall, we were in the midst of COVID-19. Despite COVID-19 challenges and business uncertainties, tripartism prevailed and delivered significant boosts in PWM wages.

For example, the basic wage requirement for entry-level cleaners will increase from $1,312 back in 2022 to $2,420 in 2028. The security sector, Mr Raj Joshua Thomas would be very familiar with this, will see even stronger growth, as the Member had highlighted. Today's security PWM wage requirements are minimally at $2,650. This is higher than the P20 salary range today.

By 2028, entry-level security officers will earn at least $3,530. And that is a 56% increase from 2022. These significant wage increases are possible for the security sector, in part because of its high potential for productivity gains. Through deployment of digital technologies, more efficient work processes and robust skills certification framework to guide officers in improving their productivity.

But of course, as the Member also shared, we are still working on how to improve their work environment and reduce reliance on work hours. Beyond PWM, we also require employers to pay all their local employees at least the Local Qualifying Salary (LQS) to qualify for foreign work passes. And we implemented the Progressive Wage Mark Accreditation Scheme to encourage consumers to support employers who are paying progressive wages. So, as a whole, collectively, these measures benefit up to nine in 10 local full-time low-wage workers today, up from where we were – one in 10 prior to 2021.

So, we agree with the Member that if we want wages to continue to increase, both workers and businesses must continue to improve productivity. And this is why the PWM is not just about raising wages, but also raising the value-add of the jobs involved. Tripartite partners regularly review the skills letters while workers are required to go through skills training and encouraged to take on higher value jobs.

Businesses too, have a significant role in transforming business models, improving operations, as well as redesigning jobs. And they can also take reference from the respective industry transformation maps too. So, we recognise that uplifting low-wage workers is a journey. The Government has thus provided employers substantial transitional support through the Progressive Wage Credit Scheme, which partially offsets employers' costs of paying lower-wage workers better wages.

The Government disbursed around $1 billion to 70,000 employers who gave wage increases to more than 345,000 employees in 2022. So, employers must take advantage of this transitional support by accelerating business transformation, such as adopting technology and refining processes to improve productivity. And the security sector has shown that it can be done.

The Member is right that the success of PWM rests in part on public recognition that PWM jobs are important jobs and that society must support fair remuneration of our workers. When I speak to our low-wage workers across sectors, it is clear that they want their work to be recognised by society. They prefer the dignity of earning a fair salary over receiving handouts any day. And this is fundamental to our social compact here in Singapore.

In this regard, tripartite partners agree with the Member that service buyers and consumers also play important roles. Tripartite partners have been promulgating good industry practices among service buyers, such as outcome-based contracting to specify clear deliverables in a contract, rather than the number of workers. This allows service providers to redesign work processes holistically to deliver quality outcomes with lower labour intensity, enabling employers to pay higher wages. And it is also important for consumers to treat fellow Singaporeans with respect and recognising that paying a little more for goods and services goes a long way to rewarding their efforts and to improve the livelihoods of our low-wage workers.

The Member spoke on the future of PWM. I agree that we should regularly take stock and make adjustments. In fact, this is why we had convened the Tripartite Workgroup in 2020, to take stock and to refresh our approach. I thank the Member for his suggestions for PWM 2.0. Currently, there is some flexibility in the PWM for market forces to play a role.

In jobs where the skills levels are higher and wages have risen to an appropriate level, we recognise that their wages could then be decided by market forces. Examples are the retail and food services sectors, where jobs such as retail managers and senior cooks are part of the PWM ladder, but their wages are not mandated by PWM. Of course, we hope to see the wages in more jobs rise sufficiently, such that there is no longer a need to mandate PWM wages which increases.

As PWM sectors negotiate wage requirements over the next few years, we hope that more workers can see significant uplift and over time, more higher-level job roles can have their wages left to market forces. But for now, the majority of our PWM workers still need the support and uplift from our PWM requirements. We will certainly continue to monitor and review PWM together with our tripartite partners.

Mr Speaker, as the Member has affirmed, our progressive wage approach is a triumph of tripartism. It will continue to be a vital pillar of support and uplift for our low-wage workers. For now, having extended the coverage of our wages, we must double down on our efforts to implement our PWMs effectively. Employees must recognise that they have the largest influence on work productivity outcomes in transforming businesses and jobs and supporting the continuous and upskilling of our low-wage workers. But at the same time, workers too need to do their part by embracing change and being open to work with technology. If we get this ecosystem right, we will not just uplift our low-wage workers, but also enable our businesses to thrive and our economy to grow.

And to conclude, I would like to thank our tripartite partners, our employers, our union leaders who have done a lot, and also certainly our members of the public. Beyond just paying more, I think what we are doing is to give them respect and dignity for the work that they do. I think it is key that we value all our low-wage workers for all they do for us and our economy. So, with that, I want to say a big thank you. Certainly, this is a whole-of-society effort to uplift our low-wage workers for a stronger social compact for Singapore.

Question put, and agreed to.

Resolved, "That Parliament do now adjourn."

Mr Speaker: Pursuant to Standing Order 2(3)(a), I wish to inform hon Members that the Sitting tomorrow will commence at 12.00 noon.

Adjourned accordingly at 7.00 pm.