Uplifting lower-wage workers through Progressive Wage Model, Workfare & mindset changes — DPM Wong explains


Improving the well-being of Singapore’s lower-wage workers is an important priority for the Government. This is why it is putting in more resources for Workfare and the Progressive Wage Model (PWM).

“The Government is co-funding quite a bit of the wage increases, in order to ease the transition,” said DPM Lawrence Wong at the Alliance for Action for Lower-wage Workers’s 3rd Workshop this previous Saturday (Sep 24).

Source: DPM Wong Facebook

DPM Wong referred to the Budget 2022 announcements about helping employers introduce progressive wages for their lower-wage workers.  

In the Budget, the PWM will be extended to cover sectors like food services and retail, as well as occupations like cleaners, administrators and drivers.

And companies employing foreign workers must pay local employees at least the Local Qualifying Salary (S$1,400 per month as of March 2022).

This while co-funding wage increases of lower-wage workers between 2022 and 2026 under the Progressive Wage Credit Scheme (PWCS).  

As revised in June 2022, the PWCS will co-fund 75 per cent of these wage increases for 2022, 50 per cent for 2023, 30 per cent for 2024 and 2025, and 15 per cent for 2026.

More boosted with Workfare  

Source: DPM Wong Facebook

The PAP Government is also enhancing the Workfare Income Supplement Scheme for lower-wage workers.

Workfare, in a nutshell, is effectively a negative income tax, which means the Government doesn’t tax the incomes of lower-wage workers but instead tops up their salaries in cash and CPF contributions.

The new higher qualifying income cap of S$2,500 per month will let more workers benefit. So too will Workfare’s extension to workers aged 30 to 34.

Further, the higher maximum annual payout is being doubled from S$2,100 to S$4,200.

“With progressive wages and Workfare combined together, we want to see lower-wage workers in Singapore have higher starting salaries,” said DPM Wong.

“But we also want to see them have continued career progression throughout their working lives. This means not just good starting salaries, but having the new wage increases tied to a skills ladder,” he added.

To do this, the Government supports the continuous training of lower-wage workers too so that they will have better careers.

Changing mindsets and Forward Singapore

Mindsets need changing too, said DPM Wong, since the Singapore way involves partnership — the Government with employers, together with union leaders and workers.  

“Together we discuss, we understand each other’s positions, we examine trade-offs and then we try our best to move forward in partnership together,” he elaborated.

“I think it is an approach that leads to more enduring solutions — solutions that work, not because of political headlines, but solutions that make an impact on the ground.”

DPM Wong then moved on to the fallacy of minimum wage.

“Sometimes people say, well if that is what you want to achieve, just raise the salaries and job is done; put in place minimum salaries and everything is over, mission accomplished. If only it was so easy,” he said.

He noted that some of the countries with the highest minimum wages have high wage disparity and high unemployment rates. He also noted that pushing up the minimum wage could have unintended consequences — companies might hire less workers, more unemployment and youth from better-off families taking these minimum-wage jobs.

“So while we all share the common objectives and would like to see the well-being of lower-wage workers in Singapore improve, we do have to think through and work together with different stakeholders on what are the best solutions to take this forward,” he explained.

Currently, while Workfare and the Progressive Wage Model do their part, community mindsets need shifting.

“We need to get employers to change their mindsets as well, from understanding the importance of the contribution of every worker to looking at wage dispersion within the organisation, but importantly, just valuing the contributions of every worker within the organisation,” said the DPM.

In other words, people need to value other people; to recognise and appreciate the contributions, the dignity and the value of every worker regardless of their salaries.

“If you have new ideas and new suggestions for us on what more we can do on the policy front, please give us your feedback so that we can think about what further changes we can make together,” said DPM Wong.

The DPM’s call to action comes as part of Forward Singapore, an all-of-nation exercise for all of us to come together, examine our values and aspirations, build consensus, and so refresh our social compact for Singapore’s shared future.

“As the Government, employers, union leaders and workers — all of us — working together, we must see what more we can do to truly advance the well-being of lower-wage workers in Singapore and become a more cohesive and inclusive society.”