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SINGAPORE: Singapore is considering a progressive wage model for the retail sector, the Minister of State for Manpower, Zaqy Mohamad, announced on Tuesday (February 23).
The progressive wage model is a policy designed to increase the wages of low-wage workers by improving their skills and increasing their productivity. The scheme began in 2015. If included, the retail sector would be the sixth in the progressive salary model.
It will cover workers such as cashiers and salespeople in supermarkets, convenience stores and fashion retail stores, Zaqy said during a press conference after speaking with workers at a retail store at Jewel Changi Airport. He heads the tripartite working group on lower-wage workers started last October.
Right now, about 45 percent of full-time resident employees in retail earn at or below the 20th percentile of the local workforce salary, which was nominally S $ 2,340, including contributions from the Central Provident Fund. of employers as of June 2020.
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Based on gross earnings, the retail sector’s 20th percentile of salary is about S $ 2,000 right now, Zaqy said, noting that lawmakers are currently speaking with industry stakeholders. No studies have been carried out yet, he added, and the working group will give more details in the second half of this year.
The high proportion of low-wage retail employees is the main reason the government is considering the sector for the progressive wage model, he said.
Mr. Zaqy highlighted two unique challenges facing this sector. First, unlike other sectors covered by the progressive salary model, the retail sector is not licensed and new regulations may need to be established. Second, policymakers will need to examine how e-commerce actors can be included in the framework.
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“Certainly there will have to be some levers involved,” Zaqy said.
The sector is also highly diverse, ranging from high-end luxury boutiques to mini-markets in the heartland, with each business having its own pay and employment structure. For example, a family store could be a family business – whether the pay scale applies to such businesses is something to discuss, Zaqy said.
Wage costs for retail employers can rise by about 5 percent if the wage model is incorporated, Zaqy said, citing simulations his team had done. This could raise the prices of goods and services.
“It’s not that simple,” he said. “Some will say, ‘no problem, I’m willing to pay.’ But others, for example those in the wet markets of the heart, may not want to increase costs when many of those who earn lower wages are also consumers there too. “
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In addition to improving wages and career prospects for retail workers, the government hopes that the progressive wage model will attract more locals to a sector that has faced difficulties in hiring, he added.
Earlier this month, Zaqy said the government is also considering extending the model to the food service sector.
The progressive wage model has been enforced in cleaning, security, and landscaping, affecting some 80,000 workers. The model will enter into force in the elevator and escalator maintenance sector next year, and will be applied next year to the waste management sector.
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Deputy Prime Minister Heng Swee Keat said during his budget speech that he hopes the progressive wage model will eventually expand to all sectors.
