Some business leaders want a minimum wage to go with progressive wage model

Singapore

SOME business leaders have expressed support for a minimum wage component to complement the progressive wage model (PWM) as a means to speed up as well as broaden efforts to raise the income of low wage workers.

Dileep Nair, an independent director of diversified business group Thakral Corporation, said that the progressive wage model does set a minimum wage - but only in the sectors of security, landscape and cleaning since its introduction in 2012.

He noted: "This covers barely 15 per cent of low-wage workers. Extending the PWM to other sectors takes time because of its complex structure and the need for consultation and negotiation. Given the relative simplicity of a minimum wage, twinning it with the PWM is sensible. "

Mr Nair is among a group of C-suite executives who responded to a question in Views from the Top, a weekly feature in The Business Times aimed at collating responses from corporate leaders on topics relevant to their businesses.

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Mario Singh, chief executive officer of brokerage firm Fullerton Markets, shared similar views as he asked: "What about workers in other low-wage sectors like retail or plant and machinery?"

Also, he questioned how much a worker is able to upgrade in terms of skills to keep an area clean or safe. The progressive wage model is based on upgrading of the workers' skills where wages rise along with training and productivity improvements.

Lawrence Loh, director of the Centre for Governance and Sustainability at NUS Business School, acknowledged that the "vertical" approach of the progressive wage model is focused and can go deep in addressing the total set of issues beyond just wages in itself.

He noted, however, it will take a long time to cater to workers in all relevant sectors if the model is applied one sector at a time. The "horizontal" approach of a minimum wage across the board will therefore accelerate the rate of reaching out to all deserving workers.

He stated: "The dual vertical-horizontal mode will be a complete way to holistically address the specific issue of wage level and more broadly worker development in a phased manner."

Ho Kai Weng, CEO of the General Insurance Association of Singapore, pointed out that there are far more jobs (3.6 million) than resident workforce (2.3 million). "Wages at the lower levels can and should adjust upwards, and the costs shared by the employers and customers, as is the case at the median and higher wage levels. A minimum wage will help us get there," he commented.

Zaheer K Merchant, corporate affairs director at QI Group, thinks the progressive wage model does require "help" for real progress and inclusivity. Also, he sees it slightly awry that "we cannot wrap our minds around a minimum wage", given Singapore's per capita gross domestic product of around US$60,000. "If we pride ourselves on impressive statistics while being effectively a First World country, we should at least be able to implement a minimum wage for the lower-income rungs in Singapore society."

The much-debated topic has been in sharp focus once again as the pandemic underscored the importance of the essential roles low-wage workers play. These workers have been hardest hit during the pandemic owing to reduced income and job losses.

Chia Tek Yew, vice-chairman of Singapore at management consulting firm Oliver Wyman, said: "During this pandemic, it's obvious that many of our low-wage employees play a very important role in keeping the country clean, green and safe, and deserve to be paid fairly and properly. It's time to consider implementing a minimum wage to supplement the PWM, with the government providing grants/tax incentives to help businesses transition."

Prime Minister Lee Hsien Loong in his National Day message said that lower wage workers will need more sustained support as the economy becomes increasingly skills-based. A tripartite workgroup is looking into proposals for lower-wage workers, including one that will build on the progressive wage model to boost their incomes and create new opportunities for upskilling and job progression.

There are, however, others who think that the progressive wage model is a targeted approach, and upskilling would offer the low wage workers better job prospects.

Maren Schweizer, CEO of advisory firm Schweizer World Group, said work-based learning programmes have been shown to effectively raise wages in part because employers determine the skills needed. "Economists agree on subsidies during upskilling that directly target the working poor being better than a minimum wage."