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Comprehensive Guide To Progressive Wage Model
As a financial SME or young entrepreneur in Singapore, you may have heard of the Progressive Wage Model (PWM) and its impact on the local workforce. In this comprehensive guide, we’ll explore what PWM is, how it works, and its benefits for businesses and employees. We’ll also address concerns about potential loopholes and provide step-by-step instructions for SMEs interested in adopting the PWM.
As of 2021, around 1,900 companies in Singapore have been accredited for uplifting lower-wage workers through the Progressive Wage Model (PWM). In the food services industry, entry-level local workers must be paid at least S$1,750 under the PWM. Recently, the PWM has also been extended to the waste sector, with up to 3,000 local workers set to benefit from the scheme. By adopting the PWM, businesses can not only improve the lives of their workers but also enhance their workforce quality and productivity.
The PWM is a wage system that aims to increase the pay of low-wage workers in a progressive and sustainable manner. It was first introduced in Singapore in 2012, targeting specific sectors such as cleaning, security, and landscaping. The PWM has since expanded to include other sectors such as F&B, retail, and logistics.
Under the PWM, workers are classified into different levels based on their skills and experience. They are then assigned a minimum monthly wage that increases over time as they gain more skills and experience. This provides workers with a clear career progression path and ensures that they are fairly compensated for their efforts.
How Does PWM Work?
The PWM works by setting clear wage standards and career progression pathways for workers in specific sectors. These standards are developed by tripartite committees consisting of representatives from the government, employers, and unions. The committees conduct research on the sector’s wage levels and job requirements, and then recommend minimum wage levels and skills training programs.
For example, in the cleaning sector, the PWM has three different levels: Basic, Skilled, and Specialist. A worker who starts as a Basic cleaner will receive a minimum monthly wage of $1,400. After completing training and gaining experience, they can move up to the Skilled level with a minimum wage of $1,600. Finally, after further training and experience, they can reach the Specialist level with a minimum wage of $1,800.
To ensure compliance with the PWM, companies are required to pay their workers at least the minimum monthly wage for their respective levels. Companies that fail to do so may face penalties and be barred from government contracts. The government also provides funding and support for companies to implement the PWM, such as through grants and training programs.
Here's something noteworthy:
NTUC started PWM in 2012 to help contract workers in low-wage sectors improve their skills, productivity and earnings.
Read also: Minimum Wage VS Progressive Wage Model – Is There a Point in Comparing Them?
What Are The Benefits of PWM?
The PWM has several benefits for businesses and employees. For businesses, the PWM helps to improve the quality of their workforce and increase productivity. By providing workers with clear career progression pathways and skills training, companies can ensure that their workers are motivated and capable of delivering high-quality work.
Additionally, the PWM helps to reduce turnover and recruitment costs. With clear career progression pathways and higher wages, workers are more likely to stay with their employers and contribute to the company’s growth. This reduces the need for constant recruitment and training of new workers, which can be costly and time-consuming.
Will Companies Circumvent The Progressive Wage Model?
One concern about the PWM is that companies may circumvent the system by constantly cycling through employees, firing and re-hiring them to avoid paying the higher wages. However, the government has taken steps to address this issue.
From March 1, 2023, businesses will need to apply for the Progressive Wage Mark accreditation for government contracts. This accreditation requires companies to demonstrate their commitment to the PWM by meeting certain criteria such as providing skills training and paying their workers at least the minimum monthly wage for their respective levels. This will help to ensure that companies cannot simply circumvent the PWM by constantly cycling through employees. We will try to break down PWM into details later in the article.
How Can SMEs Adopt The Progressive Wage Model?
If you’re an SME interested in adopting the PWM, here are the steps you can take:
Identify the sector: First, identify which sector your business operates in and whether the PWM has been implemented in that sector. You can check the website of the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) for more information.
Understand the PWM standards: Once you’ve identified the sector, review the PWM standards for that sector. This will give you an idea of the minimum wage levels and skills training programs required for your workers.
Assess your workforce: Next, assess your current workforce to determine which level each worker is at and whether they meet the minimum wage requirements for their respective levels.
Develop a skills training plan: Based on your assessment, develop a skills training plan for your workers. This can include on-the-job training, external training programs, or a combination of both.
Review your budget: Review your budget to ensure that you can afford to pay your workers at least the minimum monthly wage for their respective levels. You may also want to consider applying for government funding or grants to support your PWM implementation.
Implement the PWM: Finally, implement the PWM in your business by paying your workers at least the minimum monthly wage for their respective levels, providing skills training, and monitoring their progress. You may also want to consider applying for the Progressive Wage Mark accreditation to demonstrate your commitment to the PWM.
Understanding Progressive Wage Mark
PW Mark Tiers
There are two accreditation levels, PW Mark and PW Mark Plus, which are valid for one year and are subject to automatic renewal if firms maintain eligibility criteria.
PWM Eligibility Criteria
Your company qualifies for PW Mark if it meets certain criteria.
- It is recommended to employ at least one employee who is covered by the Progressive Wage Model (PWM).
- You must ensure compliance across the respective PWMs and pay all other local workers at least the Local Qualifying Salary (LQS).
Effective March 2023, additional occupational PWs, such as drivers and administrators, will be deemed eligible. You can read more here.
Employers will have the period between March 2023 and August 2023 to adapt and adhere to the wage requirements set to take effect from 1 March 2023 so make sure you're following the PWM requirements for your local employees and the LQS requirements for everyone else. To fully understand on how you can comply, check here.
PWM Plus Eligibility Criteria
Companies meeting PW Mark requirements and adopting TS-LWW will receive PW Mark Plus, a higher tier than PW Mark.
You can revolutionize your workplace with TS-LWW, a game-changing set of progressive practices that prioritize the well-being and career development of your lower-wage workers. From ensuring workplace safety and health, to providing ample rest areas and career training opportunities, TS-LWW will have you covered.
Learn about TS-LWW on TAFEP's website.
How To Apply To Be Accredited?
As employers, your business can apply for PW Mark and PW Mark Plus accreditation via the GoBusiness Portal at www.gobusiness.gov.sg.
The PW Mark Application Guide can assist you in navigating through the application process.
Additionally, Workfare Skills Support scheme covers training costs for Singaporean employees.
Visit the Business Grants Portal if you want to:
- Apply for support for job redesign
- Raise productivity and build capabilities for sustainable growth
As the government will co-fund eligible wage increases for lower-wage workers through the Progressive Wage Credit Scheme from 2022 to 2026, employers are advised to take advantage of this support to enhance firm-level productivity improvements.
In an effort to uplift local employees in Singapore, the Progressive Wage Model (PWM) will be expanding to new sectors. Starting from 1 September 2022, the retail sector will be included, followed by the food services sector from 1 March 2023, and the waste management sector from 1 July 2023. Businesses in these sectors can read the press releases on PWM recommendations for waste management workers, retail workers, and food services workers to ensure compliance.
Furthermore, from 1 March 2023, the Occupational PWs such as administrators and drivers will be covered under the Occupational PWs, providing opportunities for these workers to earn higher wages and improve their standard of living.
In conclusion, the Progressive Wage Model is a wage system that aims to increase the pay of low-wage workers in a progressive and sustainable manner. It provides workers with clear career progression pathways and skills training programs, while also helping businesses to improve their workforce quality and productivity. Despite concerns about potential loopholes, the government has taken steps to address them by requiring businesses to apply for the Progressive Wage Mark accreditation for government contracts. If you’re an SME interested in adopting the PWM, follow the steps outlined above to implement the system in your business and reap its benefits.
Frequently Asked Questions
What are the implications for me as an individual?
To increase your income, it is recommended to continually improve your skills and productivity. Attending relevant training courses can help you advance in your career and earn higher wages. You can speak with your employer to discuss your training options.
Read also: New Update: What You Need to Know About the Senior Worker Support Package 2023: Up to S$125,000 Grants for Companies
Read also: How SMEs & Job Seekers Can Benefit From the Career Trial Programme 2023 [Updated]
Read also: Reduced Grant Funding Support For Productivity Solutions Grant (PSG) and Enterprise Development Grant (EDG), What It Meant For SMEs In Singapore?
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