Guidelines to Protect Lower Wage Workers from Wage Reductions

Miss Penny Low asked the Acting Minister for Manpower what guidelines are in place to ensure that lower wage workers like cleaners are protected from wage reductions whenever their original company's contract expires and a new company takes over the contract, staff and machinery with a lower bid for the new contract.

Mr Tan Chuan-Jin: The Government shares Miss Penny Low's concern for cleaners. Cleaners are a group of workers which the Government is giving special attention to. While most low-wage workers have enjoyed income growth, cleaners have seen their wages fall over the last 10 years.

One reason for this is that the cleaning sector is often subject to the problem of cheap sourcing, where service buyers award contracts mainly based on price. As a result, cleaning companies bid aggressively low to win contracts and cut costs by reducing benefits and depressing wages. When this takes place, cleaners bear the brunt in terms of lower wages, poor employment conditions and few opportunities to up-skill themselves.

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The Ministry of Manpower and its tripartite partners have promoted best sourcing to tackle cheap sourcing. The Tripartite Advisory on Best Sourcing Practices was released in 2008 and updated in January 2012. A complementary step-by-step guidebook was also released to provide buyers with practical information to implement best sourcing. NTUC administers the Best Sourcing Initiative (BSI) scheme which provides one-time funding equivalent of up to 5% of the outsourced contract value, capped at $150,000, to support companies in adopting best sourcing. This was recently raised from $75,000.

As a buyer of services, such as cleaning, the Government has announced its commitment to best sourcing. Starting from early next year, all new Government cleaning contracts will only be awarded to accredited cleaning companies. This also applies to contracts that come up for renewal.

In addition, the Government has announced it will be strengthening NEA's Clean Mark accreditation scheme, which recognises higher-quality service providers in the cleaning industry. While NEA will launch the full set of enhanced criteria later, a few new employment-related criteria are ready. These include requiring cleaning companies to (i) pay their cleaners' salaries through GIRO to facilitate prompt and regular salary payments, (ii) attain at least bizSAFE 17 Level 1 status to demonstrate the capability to manage safety and health risks, and (iii) not have defaulted on Labour Court orders 18 .

With the strengthening of the accreditation scheme, cleaners will need to be better trained, meet higher standards and become more productive. Because of cheap sourcing, however, the market on its own may not translate these requirements into higher wages for cleaners.

For this reason, the Government had earlier also announced that it will introduce a new requirement into the accreditation scheme for cleaners to receive appropriate wages commensurate with the training and higher standards, skills and productivity expected in the cleaning industry. This new requirement would ensure that local cleaners are fairly remunerated, as well as encourage the cleaning industry to focus on raising productivity rather than reducing wage costs. More details will be announced later.