Employee Compensation Trends in Firms that Have Adopted Progressive Wage Model
Ministry of ManpowerSpeakers
Summary
This question concerns tracking employee compensation patterns and whether firms have systematically reduced total compensation in response to the Progressive Wage Model (PWM), as raised by Assoc Prof Jamus Jerome Lim. Minister for Manpower Dr Tan See Leng responded that the Ministry of Manpower enforces PWM compliance through inspections and investigations, with penalties including the suspension of work pass privileges. He noted that no substantiated cases of firms reducing total compensation have been detected since the 2022 PWM expansion, as such practices are counterproductive in a tight labor market. Minister for Manpower Dr Tan See Leng emphasized that real median wages in PWM sectors grew by a cumulative rate of 13% between 2016 and 2021. This growth rate was faster than the 10% growth for the median worker, reflecting the schedule of wage increases negotiated through tripartite consensus.
Transcript
28 Assoc Prof Jamus Jerome Lim asked the Minister for Manpower (a) whether the Ministry tracks employee compensation patterns for firms that have adopted the Progressive Wage Model (PWM); and (b) in particular, whether the Ministry has detected any systematic efforts to reduce total compensation disbursed by the company to the employee, in response to instituting the PWM.
Dr Tan See Leng: Employers are required to pay eligible workers the applicable Progressive Wage based on each worker's job scope. The Ministry of Manpower (MOM) enforces compliance with Progressive Wage requirements through inspections and investigations of complaints. Employers may face suspension of work pass privileges if they are found to be non-compliant with Progressive Wage requirements. Enforcement is complemented by education, so that employers are aware of the requirements.
Employers can decide on workers' overall compensation structure, provided Progressive Wage requirements are adhered to. Since the Progressive Wage approach was expanded in 2022, MOM has not found any substantiated case of companies reducing total compensation to employees in response to Progressive Wage requirements. In a tight labour market, it is not in employers' interests to do so. Those who do so will likely not be able to attract and retain their workers.
Furthermore, Progressive Wages increase annually, according to a schedule that is negotiated by tripartite consensus, which ensures that workers see meaningful wage increases over time. In the five-year period from 2016 to 2021, the real median gross monthly wages of Cleaners, Security Guards and Landscape Maintenance workers grew by an average cumulative rate of 13%1, faster than the median worker at 10%2.