Singapore could extend progressive salary model to retail sector

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SINGAPORE: Singapore is considering a graduated pay model for the retail sector, Minister of State for Manpower Zaqy Mohamad said on Tuesday (February 23rd).

The Progressive Wage Model is a policy designed to increase the wages of low-wage workers by upgrading their skills and increasing their productivity. The plan started in 2015. If included, the retail sector would be 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 at a press briefing after speaking with workers at a retail store at Jewel Changi Airport. He heads the tripartite working group on low-wage workers launched last October.

Currently, around 45% of full-time resident retail workers earn at least the 20th percentile of local labor wages, which was nominally S $ 2,340, including employer contributions. at the Caisse centrale de Prévoyance in June 2020.

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Based on gross earnings, the 20th percentile of local workforce wages is currently around S $ 2,000 per month, Zaqy said, noting that policymakers are currently talking to industry stakeholders about retail. No study has yet been carried out, he added, and more details will be given by the working group in the second half of this year.

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The high proportion of low-wage retail employees is the main reason the government is considering the sector for the graduated wage model, he said.

Mr. Zaqy highlighted two unique challenges facing this sector. First, unlike other sectors covered by the progressive pay model, the retail sector is not licensed and new regulations may need to be put in place. Second, policy makers will need to consider how e-commerce players can be included in the system.

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“Certain levers will certainly have to be involved,” Zaqy said.

The industry is also very diverse, ranging from upscale luxury boutiques to convenience stores in the heart of the country, with each company having its own pay and employment structure. For example, a mom and pop store could be a family business – there is a need to discuss whether the pay scale applies to these businesses, Zaqy said.

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Running costs for retail employers can increase by around 5% if the salary model is integrated, Zaqy said, citing simulations done by his team. This could increase the prices of goods and services.

“It’s not that simple,” he says. “Some will say ‘no problem, I’m willing to pay.’ But others, for example, those in your heart-dampened markets, you (maybe not) want to increase costs when many low-paid workers are also consumers. here too. “

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In addition to improving wages and career prospects for workers in the retail trade, the government hopes the progressive wage model will attract more locals to a sector that has encountered recruitment difficulties, he added.

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Earlier this month, Zaqy said the government is also considering expanding the model to the food service industry.

The graduated wage model has been applied in the areas of cleaning, security and landscaping, reaching around 80,000 workers. The model will come into effect in the elevator and escalator maintenance industry next year and will be applied to the waste management industry next time.

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Deputy Prime Minister Heng Swee Keat said during his budget speech that he hoped the progressive salary model would eventually be extended to all sectors.

Editor’s Note: A previous version of this article indicated that the 20th percentile of retail wages was around S $ 2,000. In fact, this figure refers to the local workforce. A reference to “salary” costs which could increase by 5% was changed to “operating” costs following a clarification of the MOM.

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