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Josephine Teo: My progressive wage model is superior to minimum wage scheme

At a recent IPS conference, Manpower Minister Josephine Teo talked about the superiority of the Progressive Wage Model (PWM) conceived by her government in uplifting the low wage workers in Singapore.

"The recent debate on wage inequality points to a deeper sense of social fairness that wants to see everyone progress together. More than handouts, we want a 'hand-up'," she said. "This is why we introduced the Progressive Wage Model."

She said that PWM helps low wage workers to "acquire skills, to be assigned work that makes use of those skills, and be paid more for enlarged responsibilities or improved productivity".

She gave an example in the landscape maintenance sector. An entry-level landscape worker can receive a basic monthly wage of at least $1,300 under PWM.

"But this is only a starting point. As a landscape technician with the necessary training and skills to operate motorised machinery, the worker can earn at least $1,500, and more than $2,100 when he advances to the role of supervisor," she explained.

And this is supposed to be different from minimum wage according to the Minister. She said, "First, it is a ladder, not a floor, and every worker has the chance to earn more through better skills, a larger job or higher productivity."

"Second, it takes into account sectoral differences and is not one-size-fits-all. Third, and perhaps most important of all, PWM offers a way of uplifting pay which both employers and employees can accept."

PWM nothing more than establishing multiple minimum wages for various sectors

Ms Teo is correct to say that PWM is not a "one-size-fits-all".

In actual fact, it is nothing more than establishing minimum or "floor" wages for the various industry sectors. At present, only 3 sectors have been identified: security, cleaning and landscaping.

Minimum wages in these 3 sectors are enforced through licensing. That is to say, companies in these 3 sectors can get their licence to operate only if they pay a minimum wage in their respective sector:

Cleaning

1. Office and Commercial - $1,060
2. F&B - $1,060
3. Conservancy - $1,260

Landscaping- $1,300

Security- $1,100

Ms Teo shared that there are some 70,000 workers in these 3 sectors alone.

She said, "Workers in these sectors have seen higher real wage growth than those at the median. Between 2011 and 2016, the real median gross wages of full-time resident cleaners, security guards and landscape maintenance workers increased by 5.7 per cent, 6.4 per cent and 3 per cent per year respectively, exceeding resident median income growth of 2.3 per cent per year."

But of course, she didn't reveal that the wages for workers in these 3 sectors were pathetic to begin with, thanks to her government's open-door policy allowing waves of foreign workers to flood Singapore depressing their wages.

As far back as 2012, ex-GIC Chief Economist Yeoh Lam Keong already observed that mass immigration of foreign unskilled workers has depressed the wages of working-class Singaporeans. Local firms obviously prefer to hire foreign workers who are willing to accept lower pay, depressing the salaries of our locals.

As for PWM being a ladder to help, say, cleaners to "move up" in their "career" to become machine Operators, "multi-skilled" cleaners or supervisors, that would depend on the employers, wouldn't it?

For example, what is to prevent a cleaning company director "parachuting" his brother into his company to become the supervisor instead of promoting an existing cleaner?

Making profits would always be the number one concern of any business and if an employer can get away with paying the lowest possible costs so as to maximize profits, he would naturally do so, regardless of whatever "models" the government is implementing.