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Uplifting lower-wage workers not as easy as just setting minimum salaries: DPM Wong


SINGAPORE: Uplifting lower-wage workers is not as easy as just setting minimum salaries and Singapore must be careful about “unintended consequences” when working through solutions, said Deputy Prime Minister Lawrence Wong on Saturday (Sep 24).

Speaking at a workshop for the Alliance for Action for Lower-Wage Workers, Mr Wong said that advancing the well-being of lower-wage workers is an important priority for the Government, and that is why it is putting in a lot more resources to uplift lower-wage workers.

But while Singapore wants to see lower-wage workers get higher starting salaries, it is also important that these workers see continued career progression throughout their working lives.

“This means not just good starting salaries but having the new wage increases tied to a skills ladder,” said Mr Wong, who is also Finance Minister.

“Ultimately, what we want to achieve is a compression of wages in our workplace, not increasing wage gaps but wage compression taking place largely by uplifting of lower-wage workers in Singapore,” he added.

He added that pursuing the objective is not as straightforward as it sounds, and that it is not just about putting minimum salaries in place.

Saying that there is "no silver bullet" in solving the problem, he cited examples of some countries with the highest minimum wages which also have high wage disparity and high unemployment rates.

“At the stroke of a pen, you can decide that this is the new minimum wage. But what are the consequences of that? Will companies end up hiring less workers? Will you have more unemployment?" he said.

“Or perhaps, in some cases, what other countries have seen is that a number of the beneficiaries of a higher minimum wage are not low-income families but young people from rich families who go out and work at minimum wage levels.

“So these are all unintended consequences that can easily happen if you're not careful in thinking about the right solutions."

Singapore has to think through and work together with different stakeholders on the best solutions to improve the well-being of lower-wage workers, he added.

The Deputy Prime Minister said that the Government works together with employers, union leaders and workers instead of doing things through a top-down approach.

“It takes longer for such an approach to work. It is because you have to build consensus and you have to bring people along with you, so it takes longer,” he added.

“But I think it is an approach that leads to more enduring solutions - solutions that work, not because of political headlines, but solutions that make an impact on the ground.”



In his speech, Mr Wong noted that while wages are important, there are also other areas where the well-being of lower-wage workers can be improved.

These include opportunities for them at the workplace, skills training and upgrading, rest areas and workplace conditions.

Often, buy-in from employers is very important, Mr Wong added.

“They play a critical role and we need to get employers to change their mindsets as well, from understanding the importance of the contribution of every worker to looking at wage dispersion within the organisation, but importantly, just valuing the contributions of every worker within the organisation,” he said.

He said that no organisation has a flat salary structure across the board and that there will always be a range. The question, he added, is how to keep the range compact and make sure every worker is valued.

“It is one thing to narrow the wage gap, but how do you narrow the status gap? That is a very hard thing to do.

"It has to do with mindsets. How do you get people to recognise and appreciate the contributions, the dignity and the value of every worker regardless of their salaries?"

Wrapping up his speech, Mr Wong urged the Alliance for Action for lower-wage workers to participate in the Forward Singapore exercise and provide their feedback on what more Singapore can do on the policy front.

In his Budget 2022 speech earlier this year, Mr Wong announced that the Government will spend S$9 billion over five years to uplift and support lower-wage workers.

He had also reiterated that the Progressive Wage Model will be extended to various sectors such as retail, food services and waste management in the coming years, as previously announced by Prime Minister Lee Hsien Loong at last year’s National Day Rally.

Under the expansion, retail staff will receive wage increases over three years starting from this month.

Separately, about 159,000 lower-wage workers in sectors not covered by the Progressive Wage Model will earn at least S$1,400 under a new local qualifying salary requirement which also kicked in on Sep 1.

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