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NDR 2021: Firms that hire foreign workers must pay monthly salary of at least S$1,400 to all Singapore employees

SINGAPORE — Companies that hire foreign workers will be required to pay all their Singapore employees at least a “local qualifying salary”, which is set at S$1,400 a month, Prime Minister Lee Hsien Loong said.

NDR 2021: Firms that hire foreign workers must pay monthly salary of at least S$1,400 to all Singapore employees

The Government has accepted three proposals by a tripartite workgroup, which looked into raising the salaries and well-being of low-income workers.

  • The Government will require firms that hire foreign workers to pay all their Singapore employees at least S$1,400 a month
  • The Progressive Wage Model will be extended to more workers and sectors 
  • Companies that pay progressive wages will be accredited
  • Consumers will have to share the higher costs to support workers getting better pay, PM Lee said
  • The Government will be looking at the problem of delivery workers who lack basic job protection

 

SINGAPORE —  Companies that hire foreign workers will be required to pay all their Singapore employees at least a “local qualifying salary”, which is set at S$1,400 a month, Prime Minister Lee Hsien Loong said. 

This is to help lift the livelihoods of lower-wage workers over the long term, Mr Lee said during the National Day Rally on Sunday (Aug 29).

Among this group of workers, Mr Lee also said that he is especially concerned about delivery workers, due to the stress and insecurities that they face and their lack of basic job protection. The Ministry of Manpower (MOM) will thus be looking into this problem.

For lower-wage workers in general, the situation has been “precarious” during the Covid-19 pandemic, he noted.

Their jobs are less secure and they are more likely to lose their jobs. They also have less savings to tide over hard times, he added.

“That is why in every Covid-19 Budget package, we included extra help to lower-income households.”

However, Mr Lee said that beyond emergency assistance, the lower-wage workers also need longer-term support. 

For instance, the Workfare Income Supplement Scheme helps to top up the salaries of lower-wage workers in cash and Central Provident Fund (CPF) contributions. 

Mr Lee said that the scheme benefits almost half a million workers and costs the Government S$850 million a year. 

In two years’ time, this will be increased to S$1.1 billion a year, which will allow the authorities to raise the payouts for all Workfare recipients, and also reduce the eligible age to access the scheme from 35 to 30. 

Mr Fahmi Aliman, a director at the National Trades Union Congress (NTUC) who pushed for the move, said that reducing the eligible age would come in handy, particularly for low-wage workers who are starting a family at age 30.

In addition, there were three recommendations put forth by the tripartite workgroup comprising unions, employers and the Government to look into raising the salaries and well-being of low-income workers, which is chaired by Mr Zaqy Mohamed, Senior Minister of State for Manpower. 

One recommendation it made, which has been accepted by the Government, is for the local qualifying salary to be extended to all Singapore employees of firms that hire foreign workers. 

The local qualifying salary was introduced to ensure that Singapore workers are paid meaningful wages in counting towards the foreign worker quota.

It determines the quota that a Singapore employer gets when the company applies for work permits and S Passes for foreign workers. Only when a Singapore employee meets the present qualifying salary of S$1,400 can he or she be counted towards the quota of resident workers, which would in turn qualify the company to hire more foreign workers. 

Right now, companies have to pay the qualifying salary to some Singapore employees, depending on how many foreigners they hire. 

“We will tighten this to require these companies to pay all their local employees this local qualifying salary if they wish to hire any foreign workers,” Mr Lee said at the rally.

“And this local qualifying salary will also be adjusted from time to time.”

In response, NTUC’s assistant secretary-general Melvin Yong said that the move was significant because it would allow workers’ wages to rise quickly. 

“However, the local qualifying salary is not set as high as the basic wage rungs of the Progressive Wage Models, because it is not tied to productivity and skills,” he said.  

“It is also why we want to expand the Progressive Wage Model to more sectors, as we believe the Progressive Wage Model can lead to higher wages and better outcomes than a minimum wage or the local qualifying salary alone.”

The Progressive Wage Model helps to increase workers’ pay when they upskill and improve their productivity. Right now, it covers the cleaning, security, landscaping and lift maintenance sectors.

PROGRESSIVE WAGE MODEL TO COVER MORE WORKERS

Two other strategies proposed by the workgroup to boost the wages of lower-income workers were also accepted by the Government.

One is for the Progressive Wage Model to be extended to cover “many more” workers, Mr Lee said.

Mr Lee noted that with progressive wages, every cleaner earns at least S$1,200. This will go up to S$1,500 in two years' time, and in another two years, this will increase to S$1,900.

Starting next year, the wage model will also apply to the retail sector, with food services and waste management to follow later. 

“We will also cover specific occupations, across all sectors simultaneously, starting with administrative assistants and drivers,” he said. 

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ACCREDITING COMPANIES THAT SUPPORT WAGE MODEL

For the workgroup’s third recommendation that will be executed in due time, companies that pay all their workers progressive wages will be accredited with a “Progressive Wage Mark”.

This accreditation, which was earlier announced in September last year, will “tell consumers which companies are paying their workers decent wages”, Mr Lee said.

The public sector, being a major buyer of goods and services, will take the lead in supporting this scheme, by buying only from businesses with the mark, Mr Lee added. 

“We don’t have an official logo yet, but I asked Nanyang Polytechnic students to design something for the workgroup to consider.”

No dates were given yet for when these changes will take effect.  

WHAT CONSUMERS CAN DO

When these three strategies come into play, Mr Lee said that almost all lower-wage workers can look forward to getting better pay within the next two years. 

However, the cost of higher wages for these workers will have to be shared. 

Workers have to reskill and be more productive, while employers have to absorb part of the higher wage costs. 

The Government will support businesses to make this transition, but they will still have to pass on some of the costs to their customers, he said.

“So all of us, as consumers, must also chip in,” Mr Lee said.

“Pay a little bit more for some of our favourite things, like bubble tea or bak chor mee... to help the shop cover higher cleaning and waste collection costs.” 

CONCERN OVER DELIVERY RIDERS

Singling out a group of workers for whom he is “especially concerned”, Mr Lee said that delivery workers who work with online platforms such as Foodpanda, Grab and Deliveroo have no employment contracts with these online service providers. 

Prime Minister Lee Hsien Loong noted that delivery workers are typically under constant stress when doing their jobs, for reasons beyond their control. Photo: Ili Nadhirah Mansor/TODAY

The online platforms set the price of their product, determine which jobs are assigned to which workers and manage how the workers perform, including imposing penalties and suspensions, Mr Lee noted.

What the delivery workers lack is basic job protection that most employees have, such as workplace injury compensation, union representation and employers’ contribution to the workers’ CPF, he added.

He also noted that these workers are “under constant stress for reasons beyond their control: Bad weather, scary dogs, motorcycle breakdowns… (they try) their best to hit their daily targets, and not always succeeding”.

“More people are taking up this type of work, so this problem is growing,” he said.

Delivery workers and some other lower-wage workers in jobs with similar “employee-like relationships” with such platforms will find it harder to afford housing, healthcare and, eventually, retirement. 

“We must address the issues to give these workers more secure futures,” Mr Lee said.

COMMITTEE TO BEGIN WORK SOON

Manpower Minister Tan See Leng said in a Facebook post after Mr Lee’s speech that an advisory committee will be set up to “look into strengthening protections and ensuring a more balanced relationship between (online) platforms and platform workers”. 

It will be chaired by Ms Goh Swee Chen, chairman of the National Arts Council.

“The committee will begin their work soon and consult widely,” Mr Tan said. 

Responding to Mr Lee’s speech, Mr Ng Chee Meng, NTUC's secretary-general, said in a Facebook post that the labour movement has been “actively championing the needs of our (self-employed) platform workers on the ground”. 

“We urge platform operators to work together with us to improve work terms and conditions, work safety as well as medical and injury coverage for these employee-like gig workers,” Mr Ng said.  

He added that NTUC will also work with employers and the Government to explore how to better support these workers. ADDITIONAL REPORTING BY DARYL CHOO

Related topics

National Day Rally low-income workers foreign workers employers Progressive Wage Model delivery riders

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