Impact of Progressive Wage Model on Wage Levels, and Business Costs and Competitiveness

Mr Sharael Taha asked the Minister for Manpower (a) how the Progressive Wage Model (PWM) has affected wage levels in adjacent or non-PWM sectors; and (b) what assessment has been made of its impact on business costs and competitiveness in the most affected industries.

Dr Tan See Leng: Most lower-wage workers who are not covered by the Progressive Wage Model nevertheless benefit from the Local Qualifying Salary and the Progressive Wage Mark accreditation scheme, which have contributed to increases in their real wages. This is in line with our policy objective to reduce income inequality between lower-wage workers and the median. From 2021 to 2025, real gross monthly income at the 20th percentile rose cumulatively by 10.1%, outpacing the 7.4% increase at the median.

We recognise that businesses are concerned about increases to costs. In a typical business organisation, lower-wage workers account for a relatively modest share of businesses' overall manpower costs, which, in turn, is a sub-set of overall business costs, including rent and utilities. Lower-wage workers constitute about one-fifth of our resident workforce, and their wages are also relatively lower to begin with.

To help employers invest in upskilling, transformation and productivity increases for their lower-wage workers so that wage increases are sustainable, the Government introduced the Progressive Wage Credit Scheme (PWCS) in 2022 to co-fund wage increases given by employers to lower-wage workers. Employers can also tap on the Workfare Skills Support (Basic) scheme, which provides absentee payroll for employers who send eligible lower-wage workers for training.