reporter2
30-08-21, 10:48
8 in 10 lower-wage workers to see income boost
The qualifying age for Workfare will be lowered to 30, from 35 today; annual spending on the scheme to go up to S$1.1b in two years' time, says PM Lee
Aug 30, 2021
https://www.businesstimes.com.sg/government-economy/8-in-10-lower-wage-workers-to-see-income-boost
RECOMMENDATIONS by a tripartite workgroup to raise wages for eight in 10 lower-wage workers in the next two years could have a ripple effect in increasing the incomes of the remaining workers, said economists.
"The remainder are more likely to receive increased wages through labour market competition, since they will have the option of working in a covered job," said Walter Theseira, an economist at the Singapore University for Social Sciences (SUSS).
The income growth for lower-wage workers will draw on extensions to three existing schemes - the Progressive Wage Model (PWM), the Local Qualifying Salary (LQS) and the Workfare Income Supplement (WIS), Prime Minister Lee Hsien Loong announced on Sunday at the National Day Rally.
These changes are based on recommendations by the workgroup chaired by Senior Minister of State for Manpower Zaqy Mohamad and which have all been accepted by the government, said Mr Lee.
The PWM - described as a "minimum wage plus" by former Manpower Minister and workgroup adviser Josephine Teo - will be extended to the retail, food services and wage management sectors as well as specific occupations, such as administrative assistants, across all industries.
The qualifying age for WIS, aimed at workers in the bottom 20 per cent, will be lowered to 30, from 35 today, with the government budget for the scheme raised to S$1.1 billion, up from S$850 million currently, in two years' time.
Meanwhile, firms that hire foreigners will soon be required to pay all their local employees at least a LQS of S$1,400, rather than just a portion of them depending on the number of foreigners they hire.
DBS senior economist Irvin Seah said the extension of the LQS has an added effect of advocating hiring Singaporeans first.
"Typically, the foreign workers would be willing to accept a lower pay and because of that, you do not want the fact that the company can hire foreign workers to use that to depress the wages of Singaporeans," said Mr Seah, adding that the change would help to counter any substitution effect.
Asked if the LQS could be extended to all firms, Assoc Prof Theseira said imposing a "minimum wage" across the board would lead to inefficiencies and unemployment, as there may be jobs that pay less than S$1,400 but may be willingly accepted by workers if they are, for example, near their home or flexible.
He added that companies with foreign workers are likely those able to absorb the wage floor, unlike small, family-run businesses or hawker stalls.
"I suppose it's also the case that, if a business cannot survive because they cannot afford to pay the market wage for a worker, that's very different from a business closing down because the government required them to pay S$1,400," he said.
Kurt Wee, president of the Association of Small and Medium Enterprises, said most companies should already be paying their local staff at least S$1,400, as it is difficult to hire locals at that wage these days.
"If there are any companies that are not paying their workforce at this wage level, they probably also need to go through some form of pivoting or transformation to improve their business so that they can improve their job conditions," said Mr Wee.
But with the Covid-19 pandemic still posing a downside risk to the Singapore economy, Mr Seah said companies still struggling from the crisis may find it hard to adjust.
Even so, "there is no best time or bad time to introduce such changes", he said, adding that these are longer-term strategies meant to address structural issues.
R Dhinakaran, president of the Singapore Retailers Association said that while the retail business recovery is expected to be slow in the next two to three years, the association and its members acknowledge that the PWM for the retail sector is "a step in the right direction".
"We hope that by improving the wages and career prospects of these important retail roles through the PWM, we can attract more locals into the retail sector that has long faced much difficulties in hiring and reduce turnover," he said.
In a Facebook post, National Trades Union Congress secretary-general Ng Chee Meng said he hopes these policy changes will ensure a "longer-term view" is taken when it comes to support for lower-wage workers, so that their salaries will not stagnate.
DBS's Mr Seah said taken together, the three policy changes should provide a more comprehensive impact than merely "tweaking some of the nuts and bolts" of the PWM
"Too much discussion had just been merely focused on the PWM, but the PWM is not just a standalone policy. It requires the complementary effect of the policies," he said.
The qualifying age for Workfare will be lowered to 30, from 35 today; annual spending on the scheme to go up to S$1.1b in two years' time, says PM Lee
Aug 30, 2021
https://www.businesstimes.com.sg/government-economy/8-in-10-lower-wage-workers-to-see-income-boost
RECOMMENDATIONS by a tripartite workgroup to raise wages for eight in 10 lower-wage workers in the next two years could have a ripple effect in increasing the incomes of the remaining workers, said economists.
"The remainder are more likely to receive increased wages through labour market competition, since they will have the option of working in a covered job," said Walter Theseira, an economist at the Singapore University for Social Sciences (SUSS).
The income growth for lower-wage workers will draw on extensions to three existing schemes - the Progressive Wage Model (PWM), the Local Qualifying Salary (LQS) and the Workfare Income Supplement (WIS), Prime Minister Lee Hsien Loong announced on Sunday at the National Day Rally.
These changes are based on recommendations by the workgroup chaired by Senior Minister of State for Manpower Zaqy Mohamad and which have all been accepted by the government, said Mr Lee.
The PWM - described as a "minimum wage plus" by former Manpower Minister and workgroup adviser Josephine Teo - will be extended to the retail, food services and wage management sectors as well as specific occupations, such as administrative assistants, across all industries.
The qualifying age for WIS, aimed at workers in the bottom 20 per cent, will be lowered to 30, from 35 today, with the government budget for the scheme raised to S$1.1 billion, up from S$850 million currently, in two years' time.
Meanwhile, firms that hire foreigners will soon be required to pay all their local employees at least a LQS of S$1,400, rather than just a portion of them depending on the number of foreigners they hire.
DBS senior economist Irvin Seah said the extension of the LQS has an added effect of advocating hiring Singaporeans first.
"Typically, the foreign workers would be willing to accept a lower pay and because of that, you do not want the fact that the company can hire foreign workers to use that to depress the wages of Singaporeans," said Mr Seah, adding that the change would help to counter any substitution effect.
Asked if the LQS could be extended to all firms, Assoc Prof Theseira said imposing a "minimum wage" across the board would lead to inefficiencies and unemployment, as there may be jobs that pay less than S$1,400 but may be willingly accepted by workers if they are, for example, near their home or flexible.
He added that companies with foreign workers are likely those able to absorb the wage floor, unlike small, family-run businesses or hawker stalls.
"I suppose it's also the case that, if a business cannot survive because they cannot afford to pay the market wage for a worker, that's very different from a business closing down because the government required them to pay S$1,400," he said.
Kurt Wee, president of the Association of Small and Medium Enterprises, said most companies should already be paying their local staff at least S$1,400, as it is difficult to hire locals at that wage these days.
"If there are any companies that are not paying their workforce at this wage level, they probably also need to go through some form of pivoting or transformation to improve their business so that they can improve their job conditions," said Mr Wee.
But with the Covid-19 pandemic still posing a downside risk to the Singapore economy, Mr Seah said companies still struggling from the crisis may find it hard to adjust.
Even so, "there is no best time or bad time to introduce such changes", he said, adding that these are longer-term strategies meant to address structural issues.
R Dhinakaran, president of the Singapore Retailers Association said that while the retail business recovery is expected to be slow in the next two to three years, the association and its members acknowledge that the PWM for the retail sector is "a step in the right direction".
"We hope that by improving the wages and career prospects of these important retail roles through the PWM, we can attract more locals into the retail sector that has long faced much difficulties in hiring and reduce turnover," he said.
In a Facebook post, National Trades Union Congress secretary-general Ng Chee Meng said he hopes these policy changes will ensure a "longer-term view" is taken when it comes to support for lower-wage workers, so that their salaries will not stagnate.
DBS's Mr Seah said taken together, the three policy changes should provide a more comprehensive impact than merely "tweaking some of the nuts and bolts" of the PWM
"Too much discussion had just been merely focused on the PWM, but the PWM is not just a standalone policy. It requires the complementary effect of the policies," he said.