Singapore Intends to Expand Progressive Wage Model for Retail Sector

February 26, 20211:16 pm733 views
Singapore Intends to Expand Progressive Wage Model for Retail Sector
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Singaporean workers in the retail sector can expect to receive salary raise, if the progressive wage model is approved by the government. First started in 2015, the progressive wage model is a policy designed to raise the salaries of low-wage workers by upgrading their skills and increasing productivity. If included, the retail sector will be the sixth adopting this wage model.

Speaking in a press briefing on Tuesday (Feb 23), Senior Minister of State for Manpower Zaqy Mohamad said that the model will cover workers such as cashiers and salespeople in the likes of supermarkets, convenience stores, and fashion retail shops. At the moment, about 45 percent of full-time resident employees in retail earn at or less than the 20th wage percentile of the local workforce, which was nominally at S$2,340 including employers’ Central Provident Fund contributions as of June 2020, Channel News Asia reports.

Mr Zaqy said that no studies have been done yet in the implementation of this initiative. The high proportion of low-wage retail employees is the main reason why the Government is considering the sector for the progressive wage model, he added. 

According to him, there are at least two unique challenges this sector faces. Firstly, unlike other sectors covered by the progressive wage model, the retail sector is not licensed, and new regulations may have to be put in place. Secondly, policymakers will need to examine how e-commerce players can be included in the scheme. 

See also: 2021 Salary Projection: 1 in 4 Firms in Singapore Plan to Implement Salary Freezes, Salary Increment Projected to Soften

The sector is also a very diverse one that ranges from high-end luxury boutiques to minimarts in the heartlands, with each business having its own remuneration and employment structure. For example, a mom and pop store might be a family business  – whether the wage ladder applies to such businesses is something to discuss, Mr Zaqy said. 

Operating costs for retail employers may rise by around five percent if the progressive wage model is incorporated, Mr Zaqy said, citing simulations his team had done. This could raise prices of goods and services. 

“It’s not so straightforward,” he said. “Some will say, ‘no problem, I’m prepared to pay’. But others, for example, those in your heartland wet markets, you (may not) want to increase costs when many of the lower-wage earners are also consumers there too.”

Read also: Over $1 Bil Wage Incentives Distributed to 95,000 Employers