Variations to Existing Waste Management Contracts under Government Entities to Factor in Progressive Wage Model
Ministry of FinanceSpeakers
Summary
This question concerns the adjustment of government waste management contracts to account for cost increases from the Progressive Wage Model (PWM). Mr Gan Thiam Poh asked about the number of contracts expiring after 2024 and recourse for providers who signed agreements before the PWM announcement. Minister for Finance Lawrence Wong noted that six major and over 100 smaller contracts exist, with the Progressive Wage Credit Scheme providing transitional support. He announced that an advisory will be issued allowing agencies to consider contract variations or mutual terminations to facilitate new tenders that incorporate PWM costs. These measures aim to support service providers and ensure the smooth implementation of the new wage model for the waste management sector.
Transcript
12 Mr Gan Thiam Poh asked the Minister for Finance (a) what is the number of existing waste management contracts under Government Procurement Entities (GPEs) that will expire beyond 2024; (b) whether an advisory will be issued to these GPEs to allow a contract variation with their waste management service providers to factor in cost increases due to the Progressive Wage Model (PWM); and (c) if not, what recourse is available to these service providers who have signed their contracts before the announcement of the PWM and unable to continue providing the service.
Mr Lawrence Wong: The National Environment Agency has six existing contracts with Public Waste Collectors which provide services across the whole of Singapore. These contracts will expire after 2024. These contracts make up over 90% of Government’s waste management contracts by value. In addition, there are over 100 smaller contracts for general waste management services by various Government agencies, which will mostly end by 2024.
The Tripartite Cluster for Waste Management, comprising representatives from employers, unions, Government agencies and service buyers, had decided to implement the Progressive Wage Model (PWM) for the waste management sector from 1 July 2023, allowing a lead time of about 1.5 years from its announcement. Contracts made after the announcement will factor in the impact of PWM.
To support employers in uplifting lower-wage workers, the Government has introduced the Progressive Wage Credit Scheme from 2022 to 2026. This transitional support will help to cushion the increase in PWM wages in the waste management sector for existing contracts, while employers work towards factoring wage increases in their new contracts.
MOF will work with MSE to issue an advisory to Government agencies on the appropriate treatment for their existing contracts with waste management service providers. For contracts made before the announcement of the PWM, agencies may consider contract variations with their service providers if there is justification to do so or mutually agree to terminate the contract to pave the way for a new tender to be called. This way, we work together to ensure that the PWM is implemented smoothly for our waste management contracts.