• Sun. Apr 14th, 2024

Singapore’s Minimum Wage vs. Progressive Wage Model.

Samuel Hall

BySamuel Hall

May 7, 2022
Singapore's Minimum Wage

Singapore’s minimum salary has been the subject of heated controversy in Parliament in the year (or lack thereof). The minimal salary is the lowest incentive businesses are legally allowed to pay their employees.

Here’s a refresher for those curious about Singapore’s basic wage or just like to know what all those heated Facebook comments seem to be about.

Singapore's Minimum Wage
Singapore’s Minimum Wage

PWM stands for Progressive Wage Mechanism.

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The PWM covers only cleaning, security, and landscaping employees in industry sectors.

Workers’ earnings are determined by their ability levels. The concept is that a person begins at the basic income offered to entry-level employees, a sort of minimum salary,’ whatever you want to.

Wages will climb in line with the framework’s salary scale as a man receives training and gains experience.

The PWM works in concert with the Workfare Payment Replacement Program, which helps low-wage employees supplement their income and CPF savings. The Workfare Technical Support Plan also pays for training for those who earn less than a specific amount.

Is there a minimum wage in Singapore?

In Singapore, there’s no such thing as a minimum salary. This implies that most firms can potentially pay their employees as much as possible. As a result, companies could substantially undercut employees in economic downturns, such as the moment when people are more vulnerable.

The government promotes a Progress Wage System (PWM) concept to substitute for the Minimum Salary.

The majority of developed nations have a min wage. However, Denmark, Liechtenstein, Sweden, Switzerland, Iceland, Norway, and Austria do not.

Most industrialized nations that may not have a minimum wage compensate by having strong labor unions that could still negotiate for better salaries and labor laws protecting employees.

The justification for a minimum wage: it’s easier to understand and applies to a larger range of people.

The PWM’s major fault is that it has a relatively narrow scope. As a result, it excludes workers from businesses other than cleaning, safety, gardening, and non-Singaporean and non-PR staff.

Furthermore, it only applies to employees who work for cleaning, security, or gardening firms. The PWM does not help in-house cleaning, security officers, or landscape upkeep workers.

An all-inclusive minimum wage will help more individuals who might otherwise be left behind.

However, the government would also have to decide if the minimum salary must be applied to all workers in Singapore or merely citizens and permanent residents. And, if it’s solely for locals, will companies prefer foreign labor since they’re cheaper?

Business-friendliness is the rationale for the Progressive Wage Mechanism.

One of the primary justifications for the government’s aversion to implementing a minimum wage is that it would dramatically increase the cost of conducting business, perhaps causing businesses to fail and their livelihoods to be sacrificed. In addition, it would reduce Singapore’s appeal as a business destination.

Furthermore, the impacts would’ve been given more importance during a global recession, such as the one currently underway, when businesses are closing swiftly, and individuals are abandoning their jobs.

A counter-argument would be that businesses that rely on low-wage labor to stay afloat aren’t competitive and shouldn’t operate in the market economy. As a result, businesses are discouraged from innovating to be relevant because they can decrease costs.

What Does It Mean To Take A Practical Approach In This Situation?

Finally, by pushing the debate regarding minimum wages and the Progress Wage System away from theoretical considerations, the practicality of either strategy in achieving its low-level goals becomes more important.

Maybe this shouldn’t be an either/or situation. Perhaps a mix of the two will be beneficial at variable degrees throughout different industries. But this would prioritize the simple goal of protecting the fortunes of the most vulnerable citizens over the more political questions of “who has the proper insight.”

Samuel Hall

Samuel Hall

Samuel Hall, a renowned name in the world of finance and wealth management, has devoted more than two decades to understanding the intricacies of the financial realm. As the chief contributor to WealthServing, Samuel has enlightened thousands with his insights on wealth accumulation, risk management, and smart investment strategies.