Efforts to increase wages in S'pore aimed at bridging gap between bottom 20% and median-income earners

SINGAPORE – Singapore’s efforts to grow the wages of the bottom 20 per cent of income earners over the years had had some success, but the gulf between their wages and those of median income earners is still too wide, said a national workgroup to uplift low-wage workers.

The ratio of the income at the 20th percentile to median full-timers in Singapore is 0.54, the Tripartite Workgroup on Lower-wage Workers noted in its report released on Monday (Aug 30).

This compares to 0.77 for Finland, 0.69 for South Korea, and 0.62 for the United States, among other developed countries ahead of Singapore.

“This means that there remains significant ground for our lower-income workers’ wages to catch up with the median worker’s,” said the workgroup.

Its report provided a detailed snapshot of the group of workers in Singapore who are earning at or below the 20th percentile of income earners with a gross monthly salary of $2,033.

The reason for the gulf was due to the robust growth in median wages, the workgroup explained.

While Singapore has made progress in raising the pay of lower-wage workers, the ratio only improved slightly from 2009 to 2019, as real full-time median wages also grew robustly at about 3 per cent a year in the period, it added. The report observed that this was remarkable for a developed economy.

The 18 recommendations in the report, ranging from expanding the progressive wage model that ties wage increases to a skills ladder to regular reviews of the Workfare income supplement, are aimed at bridging the gap.

“In the next bound, we want to redouble our efforts to uplift wages at the bottom and help lower-wage workers gain ground with other workers, enabling them to progress with the rest of our society,” said the report.

Senior Minister of State for Manpower Zaqy Mohamad, who chaired the workgroup, said at a press conference: “We’ve seen… how the median wages have progressed, and what we don’t want to see is a segregation over time in terms of wages, where you have the lower incomes left behind.”

Among the full-time lower-wage workers, 73 per cent are employees, while the remaining 27 per cent are those who are self-employed, including private-hire car drivers, taxi drivers, insurance agents, delivery riders, tutors and hawkers.

The workgroup’s recommendations focus on the 73 per cent who are employees, who number about 283,000. The majority are in domestically-oriented industries.

Among these industries, the administrative and support services sector has the largest concentration of lower-wage workers here, followed by food services, and retail trade.

Also, nearly half of the lower-wage workers are aged 55 and over, of which a large majority do not have post-secondary education.

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“How we uplift their wages is crucial, as doing so too quickly will leave workers who are less-skilled and with lower qualifications more vulnerable to dis-employment effects,” said the report. “At the same time, lower-wage workers who are younger have much more scope to upskill, raise their productivity and take on better jobs.”

It cited the security sector as one where technology and changed practices have improved productivity, work conditions and wages.

Minister for Communications and Information Josephine Teo, who is advisor to the workgroup, said the Covid-19 pandemic had highlighted the challenges faced by lower-wage workers.

“We saw that many of our lower-wage workers were on the front line. They were severely impacted. They were helping to keep us all safe and healthy, but their own jobs and stability, their own prospects were not so clear. They were very much precarious workers. And we were very concerned about them,” she said.

When the measures to boost wages for lower-wage workers kick in, they are expected to lead to higher prices for goods and services, the workgroup noted.

But it added that surveys by the Government in the past year showed that people were willing to pay more if they knew that the increase in costs would go towards supporting pay increases for lower-wage workers.

Mr Zaqy said: “Our society has to appreciate the status of all trades. You have to be prepared to pay more for goods and services. This means that our low-wage workers can take home better pay, and provide for their families so that they can all enjoy a higher standard of living.”

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