Boosting quality and reducing inequality

FOR some time now the labour movement in Singapore has been promoting, in lieu of a minimum wage system, a "progressive wage model" aimed at improving the lot of low-wage earners. The government has now taken the efforts a big step further in legislating the scheme, at least in two sectors. Businesses in the cleaning and security services will soon have to adopt a tiered wage system, with cleaners' entry salary set at $1,000.

It's a laudable if bold move on the part of the government to, in effect, enforce a minimum wage level for the cleaning sector, which has among the lowest-paid workers in Singapore. But Deputy Prime Minister Tharman Shanmugaratnam, announcing the plans on Wednesday, took pains to emphasise that the "targeted approach" for the two sectors does not amount to any "national minimum wage", which Singapore is not in favour of. Nor is the government "setting wages by political decree", he said, pointing out that the wages are negotiated between the government, unions and employers.

Indeed, more than merely stipulating a minimum salary, the tiered wage model sets out clear rungs for workers to progressively climb the wage ladder as they become more skilled and productive. Linking pay to skills and productivity is essential, particularly as adopting a progressive wage model will become a licensing prerequisite for cleaning firms (and later, security agencies). To be sure, the National Trades Union Congress believes every sector should adopt a progressive wage model - and, indeed, the principle of being paid according to one's level of skill and productivity is sound. But while employers have always been urged to adopt the national wage recommendations, they haven't been mandatory - until now. It is a bold gamble but there is good reason to wield the legislative stick on the cleaning and security sectors, where wages have been persistently low, in the bottom decile. Most of the 70,000 cleaners - including some 55,000 locals - are older workers with little or no education and limited job options. The new licensing rules will hopefully force cleaning and security firms to focus on worker training and operations upgrading, and lead the sectors away from rampant cheap-sourcing. Service buyers may face higher contract costs, but they can also expect better and more reliable service. They should, and should take the cue from the government, which has started awarding cleaning and security services contracts to firms based on quality and performance standards, rather than pricing.