Impact of Progressive Wage Model on Wage Levels, and Business Costs and Competitiveness
Ministry of ManpowerSpeakers
Summary
This question concerns the impact of the Progressive Wage Model (PWM) on non-PWM sectors and business costs as raised by Mr Sharael Taha. Minister for Manpower Dr Tan See Leng explained that the Local Qualifying Salary and Progressive Wage Mark helped real wages at the 20th percentile grow faster than the median. He noted that lower-wage workers account for a modest share of business costs and highlighted the Progressive Wage Credit Scheme’s role in co-funding wage increases. Additionally, the Workfare Skills Support (Basic) scheme provides absentee payroll to support employer-led training and productivity. These measures aim to reduce income inequality sustainably through upskilling and government co-funding for the lower-wage workforce.
Transcript
29 Mr Sharael Taha asked the Minister for Manpower (a) how the Progressive Wage Model (PWM) has affected wage levels in adjacent or non-PWM sectors; and (b) what assessment has been made of its impact on business costs and competitiveness in the most affected industries.
Dr Tan See Leng: Most lower-wage workers who are not covered by the Progressive Wage Model nevertheless benefit from the Local Qualifying Salary and the Progressive Wage Mark accreditation scheme, which have contributed to increases in their real wages. This is in line with our policy objective to reduce income inequality between lower-wage workers and the median. From 2021 to 2025, real gross monthly income at the 20th percentile rose cumulatively by 10.1%, outpacing the 7.4% increase at the median.
We recognise that businesses are concerned about increases to costs. In a typical business organisation, lower-wage workers account for a relatively modest share of businesses' overall manpower costs, which, in turn, is a sub-set of overall business costs, including rent and utilities. Lower-wage workers constitute about one-fifth of our resident workforce, and their wages are also relatively lower to begin with.
To help employers invest in upskilling, transformation and productivity increases for their lower-wage workers so that wage increases are sustainable, the Government introduced the Progressive Wage Credit Scheme (PWCS) in 2022 to co-fund wage increases given by employers to lower-wage workers. Employers can also tap on the Workfare Skills Support (Basic) scheme, which provides absentee payroll for employers who send eligible lower-wage workers for training.