PWM vs MW : Name your salary

Some years ago, I had the benefit of former Manpower Minister Lim Swee Say’s folksy wisdom. He was explaining to me how the Progressive Wage Model works. He persuaded me about advantages of such a system as compared to having minimum wage. You can read the interview here. https://berthahenson.com/2014/08/31/chatting-with-lim-swee-say-part-2/

Of course, that was at the start of PWM which was being introduced for  cleaners. One reason they are paid so poorly was because their clients don’t pay them enough, he said. It made sense to me. Why should a management committee of a condominium pay for a more expensive cleaning contractor when a cheaper one is available? After all, both do cleaning jobs. (Not clean? Complain and threaten not to renew contract!). Likewise for security guards. Why pay more if the job is essentially the same year after year? Nobody really thinks about the person in the uniform whom you see day-in and day-out. He’s like a piece of furniture. 

The PWM model looks complicated because it is complicated. It means a baseline has to be established on the minimum level of work that should be paid for. You can call it the minimum wage for that sector. Then there must be a process for them to move up from there – and this should depend not just on seniority but also how much more the person can do, such as, say, with machines or how many training certificates he’s picked up to show that he has aptitude. If a cleaner learns to operate a machine that enables him to clean five blocks of housing instead of three in the past, he should be paid more. Correct? 

But this means you must get all the companies to agree to these points on the ladder and you can bet that many will cow peh cow bu. Because there will be those which are too small to refine their services and will find themselves unable to stick to the PWM plan, which includes making sure that staff get training and certification at different levels. (I am not sure if this on the workers’ own dime or the company’s) Security companies, for example, had resisted this move initially as too onerous to implement. 

Now, how to compel this? Laws have to be passed with a licensing and regulatory regime. This was done for both cleaning and security agencies. 

But you’ve also got to be fair to the companies and give them time to up their game before throwing the book at them. That’s because if cleaning companies can’t make the mark when the deadline comes around, there goes their licence… 

It also means some kind of enforcement regime to ensure that those who have licences will comply and not anyhow pay any wage they want because desperate people will agree to even exploitative terms. 

Beyond the initial burst of publicity, there hasn’t been much light shed on the difficulties of implementation, except that everybody knows it’s taking too long. Eight years later and only three sectors, including landscaping, have been ring fenced by PMW. I wonder, for example, how many cleaning and security companies have folded since PWM and how many people have been thrown out of employment. Did they get jobs? There’s not been much reporting on the fall-out, just the accolades.  

It’s the same argument against minimum wage isn’t it? If you set a minimum wage that employers die, die must follow, it’s likely that some can’t afford to do so and will have to close shop entirely. There will be more unemployed people. On the other hand, those who earn more than minimum wage might just have employers revising their salary schemes downwards – although, seriously, I can’t believe that there is no legal or union protection against such action. 

The current argument about the pros and cons of a universal minimum wage therefore resolves on the magnitude of job losses, depending on which academic journal, surveys and country reports you read. 

Magicking a minimum wage across sectors, however, looks far simpler than carrying out the PWM.  We can’t deny that people should have the dignity of holding down a job that can keep body and soul together. So it is a popular move. In fact, it has moral worth. (Please nod in agreement)

But recall that someone has to pay for others to hit the minimum wage mark. That must be us, you and I. Just like the PWM for cleaning, security and landscaping service, it’s the people in condos, offices and so forth who have to pay the companies who bid for the contracts. There should be bigger $ numbers on tender bids, because contractors cannot keep undercutting each other to stay afloat or maintain their licence. 

That’s how it should work in theory. But I don’t know if bids have actually gone up over time even as low wage workers get paid more. It must have although it would be nice to see some past and present tender bids for cleaning and security services as well.

The point is, if we think an action is morally worthwhile, we must be prepared to pay the price.

Remember also that employers can hire – and fire. I asked Mr Lim about what would happen if an employer decides to fire a cleaner who deserves more pay because of more certification.  He said there were safeguards and that a cleaner who moves to another cleaning company would take with him his new “credentials’’ to ask for more pay. 

Again, I don’t know if this is happening. A recent CNA report said that a 2018 study published in The Economic and Labour Relations Review showed  that “re-sets’’ in the cleaning industry were done regularly. It needn’t be about re-setting wages, but giving shorter contracts or changing terms on leave days. This means that the PWM, for some workers, is a minimum wage only and not a salary progression ladder.

In fact, the phenomenon will not be dissimilar to the minimum wage conundrum: it encourages employers to keep as many workers at minimum wage levels, replenishing staff with new blood whenever some workers get too senior to pay. If this is the case, then the whole premise of PWM – tying wages with productivity and job scope – comes to naught.

What are the numbers? 

Through PWM, the wages of the lowest 20th percentile have registered an annual growth rate of 4.4 per cent from 2014 to 2019, as compared to 2.3 per cent in the five years before, said NTUC’s Koh Poh Koon.

For workers covered under the PWM, the scheme has raised their wages by around 30 per cent between 2013 and 2018, he said. But they represent only about 15 per cent of all the workers in the lowest 20th percentile of salary ranges. 

What is 15 per cent? Add 40,000 in cleaning, 36,000 in security and 3,000 in the landscape industry and you get 79,000. That means another 525,000 or so among the 20th percentile who are not covered. 

Why is the spread of PMW so slow? 

“For PWM to have traction, it takes time to build a strong working relationship with industry associations and relevant government agencies, which is needed to overcome possible impediments or challenges in implementing a PWM,” said Dr Koh. 

Making the PWM mandatory may also require sector agencies to identify “appropriate regulatory levers” to ensure the model’s scalability across the industry, and these take time to be developed and applied. Businesses, he said, also need time to adjust human resource practices and for existing contracts of outsourced services to be completed so that new contracts take on the new manpower costs. 

So it is a cumbersome process. Nor can it be left static. Regulations and guidelines will have to change with the circumstances and be updated regularly. Is the wait for the extension of the PMW to other sectors worthwhile? Are there still kinks that have yet to be ironed out in the first three sectors so that we can be assured of its superiority to minimum wage? 

The other question is whether the PWM can really cover all low-wage workers. Are they all slotted so neatly into sectors that can be governed by tripartite arrangements? 

In my view, we’ve been arguing about the PWM and minimum wage in conceptual terms. I believe that we can accept that, morally, a rich country like Singapore should have the capacity to raise the earnings of the poorest. What then is the practical approach and will it be sustainable? Should we restructure the labour market, do so by fiat or even re-define take-home pay as income earned as well as grants like Workfare Income Supplement?

The solution might  also well be a combination of sectoral  PWM, and MW for the rest.  The next lot to come under PWM are the lift and escalator maintenance sector. I gather food and beverage will come later. But I find it hard to imagine PWM being put in place for the petrol station attendant, the kopi tiam uncle and the guy employed in a small minimart. 

In theory, the PWM is superior because it isn’t an “artificial’’ inflation of wages but tied to productivity measures.  But the question is whether the wait is worthwhile or a more immediate/temporary patch is needed for low-wage workers.

 If the G can identify the workers (maybe that 32,000 who take home less than $1,300 a month) who fall through the PWM net, for example, the taxpayer might be willing to ensure that they take home more. It could be via tweaking the Workfare Income Supplement or other welfare levers. See it as a moral imperative or adjusting the value of labour, with the taxpaying public willing to bear the cost. In fact, revise the term minimum wage to living wage.  

Instead of talking about solutions, however, we’re being distracted by  the spectacle of unionists “insulted’’ by comments Workers’ Party MP Prof Jamus Lim made.  Rather than a peevish response, they would gain some kudos  if they explained why the PWM is taking so long to be extended and have a response on whether the model could cover those who fall through the sectoral cracks. 

If not for opposition’s consistent nagging, I doubt the committee reviewing the speed of the PWM would have been set up. So let’s hope it has some answers. In the mean-time, can unionists please refrain from distracting people from the issue at hand. 

Just as nobody has a monopoly on compassion, nobody has a monopoly on wisdom too – whether folksy or not.