The government is reportedly studying the possible implementation of progressive wages in the food service sector. This is a move to try and raise the income of low-wage workers in the sector.
Senior Minister of State for Manpower Zaqy Mohamad said yesterday (4 February 2021) that the impact of such a move could fall onto consumers, who would have to pay more when eating out so that low-wage workers in the food service sector, including cooks, waiters, and kitchen assistants, could see higher wages.
Don’t cry about your precious char siew rice becoming more expensive just yet. On the bright side, maybe this could inspire you to start dieting.
Mr Zaqy made this statement to the media after his visit to Jumbo Seafood restaurant, located in Upper Circular Road in Boat Quay. He made the trip to seek a better understanding of the obstacles in uplifting low-wage workers in the food service sector.
The Tripartite Workgroup on Lower-Wage Workers, which is chaired by Mr Zaqy, is examining for a way to improve the well-being of these workers. Ever since its formation in October 2020, it has been analysing different sectors in which the PWM could possibly be implemented.
The tripartite group comprises industry leaders from the Singapore National Employers Federation, union leaders, and senior civil servants.
A suggestion that was made was the implementation of the progressive wage model (PWM) in the food service sector. This would allow wages to rise along with skills training and improvements in productivity.
Yet, higher wages would lead to higher costs, which could flow down to consumers, who would have to bear the burden of the increase. Mr Zaqy emphasised the importance of “calibrat[ing]” efforts to ensure that consumers do not have to bear too heavy a burden, while ensuring that lower-wage workers will benefit.
Additionally, the group is also investigating the possibility of widespread implementation across the food service sector, which contains a diversity of food places like fine-dining restaurants, fast-food joints, coffee shops, and caterers.
Mr Zaqy noted that an important consideration for the group was that different firms may be at different stages of recovery amidst the pandemic, and they have concerns about business costs. He then stated the need for the group to “be careful.”
What is the Progressive Wage Model?
In case you’ve been staring at the previous section in confusion, scratching your head in confusion as you try to understand what’s going on, this section is for you.
It’s going to be a wall of text, so if you prefer to learn about this with a video instead, here’s one we’ve done (and please subscribe to our YouTube channel for more informative videos!):
The progressive wage model (PWM) is a system developed by tripartite committees, which are formed by unions, employers, and the government. The aim of PWM is to “uplift low-wage workers in the cleaning, security, and landscape sectors.” It does so by helping to increase the wages of such workers through “upgrading skills and improving productivity.”
These three sectors have experienced stagnation in wages due to widespread cheap sourcing. Low wages subsequently led to high turnover rates and labour shortages.
The PWM then helps workers by “mapping out a clear career pathway for their wages to rise along with training and improvements in productivity and standards.” At the same time, higher productivity will help employers by raising profits. Consumers of these services will also enjoy higher service standards and quality.
Currently, the PWM covers Singapore citizens and Singapore permanent residents (PRs) in the cleaning and security sectors, plus landscape companies on NParks’ Landscape Company Register. Employers are encouraged to use the PWM for their foreign cleaners, security officers, and landscape maintenance employees.
So, does the PWM work?
Theoretically, yes. The PWM has a minimum wage component, which is the minimum salary that employers have to pay if employees are in roles that require additional skills.
Under the PWM, employees can earn higher wages by seeking out training opportunities—in other words, the more they “upgrade”, the more they earn. Plus, encouraging lowly-paid workers to upgrade their skills and increase their reliance on technology has improved their efficiency.
Additionally, the PWM also acts as a licensing and accreditation tool. Businesses that do not meet these wage requirements will not be licensed to operate.
Have low-wage workers really seen benefits? At a first glance, yes: median wages for full-time resident cleaners, labourers, and related workers rose from $1,000 a month in 2012 to $1,200 a month in 2016. This is a 20 per cent increase as compared to the 16 per cent experienced by workers overall, according to economist Walter Theseira.
Yet, it is not all sunshine and rainbows. Some cleaners have claimed that though the PMW has raised their basic salaries from as low as $600 a month to $1,000, their pay has remained stagnant ever since, even though they toil all day.
On paper, the PWM seems to have had a positive effect on wages: the years of its implementation have coincided with significant wage growth. Yet, experts have cautioned that other factors could have contributed to this growth, like the decrease in the number of foreign workers in the same period, which could have put an upward pressure on wage earnings.
Furthermore, employers bidding to retain a contract with established workers who are due for a pay rise are being undercut by rivals who base their tender price on entry-level pay rates. If newcomers take over the current workers at the site, the new employer can then reset their wages to the minimum.
Other benefits, such as leave, that have been accumulated during the previous contract, can also be reset. This is known as “cheap sourcing”, which the PWM has also failed to solve.
There is also the issue of non-compliance and a lack of results. According to NTUC, 473 companies had adopted the PWM by September 2015, but only 18 per cent followed the National Wages Council’s (NWC) recommendation of giving low-wage workers a pay rise of at least $60 in 2015. Many companies have also bemoaned how higher wages and more training requirements have not led to an accompanying increase in productivity.
Yet, this has not deterred many. Some believe that better and more progressive companies, especially those which were unable to spare workers for training during the upturn, can take advantage of slackening growth to innovate and restructure to capture future growth. Weaker companies would then naturally fall off the scene.
Others believe that there is more that can be done to improve the PWM, like creating tiers within tiers to help weaker workers climb up the wage ladder.
It seems like only time can tell if our extra money for our cai png will benefit our country. In fact, Mr Zainal, formerly the National Trade Union Congress (NTUC) Assistant Secretary-General, has admitted, “The PWM is not a magic wand in terms of pushing wages up. We have to look at other aspects to improve the productivity of workers to make wage increases sustainable.”
To read more about the pros and cons of the PWM, click here.
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