The Progressive Wage Model is a wage structure advocated by the Labour movement of Singapore, which is led by the National Trades Union Congress (NTUC), the sole national trade union centre in Singapore. The objective of introducing the Progressive Wage Model is to increase the salaries of workers through the enhancement of skills and improving productivity. Progressive Wage is enforced via business licensing (as opposed to legislation). This model was designed to enable rank and file workers to climb the wage ladder, and provides for a minimum wage. This would then lead to higher wages for the worker and improved overall productivity which helps sustain economic growth.
While the Progressive Wage Model concept was only introduced by the Labour Movement in June 2012, this remuneration model is actually an amalgamation of various existing programmes and initiatives over the years by the Labour Movement to help workers in Singapore upgrade and up-skill themselves to be able to earn higher wages. These programmes and initiatives include the Skills Redevelopment Programme, the Job Redevelopment Programme, the Best Sourcing Initiatives, and the Inclusive Growth Programme, among others. All of these already help workers in Singapore improve themselves to be able to take on better-paying jobs. However, the Progressive Wage Model takes things a step further by ensuring employers’ commitment to their employees’ career growth, better wages and increased productivity.
Principles of Progressive Wage
The Progressive Wage Model is based on the key objectives of helping Singaporean workers climb the four ladders of skills upgrading, productivity improvement, career advancement and wage progression. Thus far, seven unionised clusters in Singapore have implemented or are planning to implement a Progressive Wage Model to help workers . The Tripartite Cluster for Cleaners, a working committee formed representatives of the tripartite partners, is pushing for the Progressive Wage Model to help about 10,000 cleaners across various industries. These workers are set to earn a higher entry-level basic wage of between S$1,000 and S$1,200. About half of all cleaners employed under government contracts, or over 3,500 cleaners, currently earn basic wages of at least $1,000 per month. The median wage of cleaners in the civil service was between S$675 and S$950 prior to the introduction of the Progressive Wage Model.
Minister of State Josephine Teo was reported as saying that the government plans to engage only cleaning companies accredited under the National Environment Agency’s Enhanced Clean Mark Accreditation Scheme for all contracts called from 1 April 2013.
According to NTUC Secretary General Lim Swee Say, the reason why Singapore can adopt this method of wage improvements through re-skilling and upgrading of workers is based on these factors: the availability of workfare supplements to help the worker while he or she undergoes training to reach the next step of the wage ladder; the establishment of a comprehensive employee training framework in the country; and the government’s financial capacity to pay for such training programmes.
Progressive Wage Model and the Minimum Wage Model
The Progressive Wage Model is an enhancement to a basic Minimum Wage model to help increase the salaries of workers in Singapore. NTUC Secretary General Lim Swee Say was reported as saying that he believed that the shortcomings of a minimum wage system outweigh the benefits. He noted that if the minimum wage was set too low, it would not help workers. On the other hand, if the minimum wage was set too high, that could result in higher unemployment as employers may not be able to afford to pay their workers . He felt the Progressive Wage Model would be a more sustainable approach to helping workers earn better wages.
Labour MP Patrick Tay Teck Guan delivered a speech at the Singapore Budget Debate in parliament in 2013 highlighting how the Progressive Wage Model does not only apply to low wage workers but also to Professional, Managers, and Executives (PMEs). He gave the example of how Singapore Power, a unionized company of The Union of Power and Gas Employees, has implemented a structured path for Technicians to progress to Senior Technician, and thereafter to Technical Officer, Senior Technical Officer and to an Engineer which earns as much as S$7,000 per month .
Singapore’s union clusters representing various sectors are working alongside their respective tripartite partners, which include industry players and government officials, to design Progressive Wage Models tailored to meet the needs of each sub-sector. These clusters have set individual targets for progressive wage increases to help especially low-income earners, women and mature workers, the most vulnerable groups of the workforce.
NTUC estimates that the Progressive Wage Model can help about 100,000 workers in the next two to three years from end-2012.
Criticisms of Progressive Wage
According to Singapore’s Ministry of Manpower, Singapore does not have minimum wage and “salary is subject to negotiation and mutual agreement between an employer and an employee or the trade union representing the employees” . Singapore is part of the fewer than 10 percent of countries globally that do not have a legislated minimum wage policy. There has not been any outright opposition to the Progressive Wage Model that was introduced in 2012, but several Singaporean politicians and the public have made calls for Singapore to legislate minimum wage to protect low-wage workers. During the Singapore Budget 2013 debate in parliament, Members-of-Parliament such as Inderjit Singh of Ang Mo Kio GRC and Nominated MP Laurence Lien expressed concerns that wages at the bottom of the economic ladder are not increasing quickly enough to help workers cope with a rising cost of living . In an article in The Straits Times in September 2011, Tommy Koh, Ambassador-at-Large for the Singapore government, echoed a recent comment by a journalist from the same paper that “Singapore is a First World country with a Third World wage structure”. Koh believed that a minimum wage model would help low-income workers and promote inclusive growth in Singapore society.