SINGAPORE – Firms employing foreign workers will soon be required to pay all their local employees a monthly salary of at least $1,400.
This tightened Local Qualifying Salary (LQS) requirement is among efforts the Government will undertake to support lower-wage workers, Prime Minister Lee Hsien Loong announced in his National Day Rally speech on Sunday (Aug 29).
It is one of three strategies recommended by a tripartite workgroup on lower-wage workers which the Government has accepted.
The other two strategies are extending the progressive wage model to more sectors and cover specific occupations across all sectors, as well as introducing a scheme to recognise and accredit companies that pay workers progressive wages.
At the same time, the Government will be increasing its annual spending on the Workfare Income Supplement to $1.1 billion in two years, PM Lee said.
The scheme, which tops up the incomes of lower-wage employees and self-employed people in cash and Central Provident Fund (CPF) contributions, benefits almost half a million workers currently.
Taken together, these moves mean that almost all lower-wage workers can look forward to higher incomes within the next two years, PM Lee said.
The Government now spends about $850 million a year on Workfare.
The increased spending on Workfare will allow for higher payouts for all recipients and extend the scheme to those aged 30 and above, said PM Lee. Recipients currently have to be 35 years old or older on Dec 31 of the work year to qualify for Workfare.
In his speech, PM Lee noted how lower-wage workers currently receive aid through subsidies in housing, healthcare, education and retirement.
Despite the help, they have less job security and less savings to tide them over hard times, and their situation has been precarious during the pandemic, which is why extra help for lower-income households was included in every Covid-19 Budget package, he said.
“Beyond emergency assistance, lower-wage workers need longer-term support,” he said.
Lower-wage workers refer to the bottom 20 per cent of income earners. The 20th percentile of gross monthly income, including employer CPF contributions, of full-time employed residents in Singapore was around $2,300 in 2020.
The new requirement for companies hiring foreign workers to pay all their local employees at least the LQS of $1,400 each month is a step up from current regulations.
Today, companies have to pay the LQS to some of their local workers, depending on the number of foreigners they hire. It determines the number of local employees who can be used to count towards a firm’s quota for hiring foreigners on work permits and S Passes.
The LQS will also be adjusted from time to time, PM Lee said. It was last raised by $100 to the present $1,400 in July 2020.
The Progressive Wage Model (PWM) will be extended to cover more sectors, starting with retail from next year and food services and waste management to follow, he added. It will also cover specific occupations that cut across sectors, starting with administrative assistants and drivers.
The PWM is a wage ladder that sets out the minimum basic wages an employer must pay, based on the worker’s skills. Cleaners, security guards, landscape workers and those in lift maintenance are currently covered by the model.
“It has raised their skills and productivity, and boosted their incomes and job progression,” said PM Lee.
The extended progressive wages and the tighter LQS will cover about eight in 10 lower-wage workers, he noted.
Besides raising wages, the Government will also introduce a Progressive Wage Mark to accredit companies that are paying all their workers progressive wages.
The mark will tell consumers which companies are paying all their workers decent wages, PM Lee said, adding that the public sector, as a major buyer of goods and services, will take the lead and purchase only from such businesses.
PM Lee stressed that the cost of higher wages for lower-wage workers will have to be shared, not just by workers and employers, but consumers as well.
“Pay a little bit more for some of our favourite things, like bubble tea or bak chor mee (minced meat noodles), with or without hum (cockles), to help the shop cover higher cleaning and waste collection costs,” he said, adding that he is glad that many Singaporeans are willing to support lower-wage workers in this way.
“It will not only enable the workers to keep their jobs at higher pay, it will also show that as a society, we value their work and contributions, and that they are part of us.”