The Tripartite Workgroup on Lower-Wage Workers (TWG-LWW) has revealed 18 recommendations to help lower-wage workers get better pay and secure better work prospects.
One of the recommendations included amendments to a pre-existing Ministry of Manpower (MOM) employment criterion – also known as the Local Qualifying Salary (LQS).
So just what is the LQS, and is it essentially a minimum wage?
What is the Local Qualifying Salary?
It is worth noting that the LQS’ original purpose was not to help uplift lower-wage employees.
Previously known as the Full-Time Equivalent Salary, the LQS was, and still is, used to calculate an employer’s Work Permit and S Pass quota entitlement.
For example, a services firm with 20 local and five foreign workers must pay at least 10 locals a minimum of $1,400 monthly.
In other words, the LQS is all about ensuring that companies have local hires under their payroll before considering foreign manpower options.
The recommendation by the TWG-LWW is to have firms employing foreign workers pay at least the LQS of $1,400 to all local workers from 1 September 2022.
This effectively places a wage floor for all local hires, uplifting them in terms of wages if their current salary is not above $1,400.
Is it a Minimum Wage?
Well, not really. A minimum wage is the lowest salary that employers can legally pay their employees.
With that said, the LQS has a couple of traits that does not fit a minimum wage bill.
LQS Does Not Apply When All Employees are Local
The $1,400 LQS wage floor for local workers is only applicable to companies that hire foreign workers to complement their local workforce.
If a company does not need to hire foreign workers, it has a choice to not meet this wage floor.
There is Flexibility for Employers
Employers will still get the flexibility to hire part-timers who will account for the total foreign manpower they can hire.
If a company hires two part-timers minimally at $9 per hour, they will still account for one foreign manpower headcount.
PWM Will Still Pay Higher
The LQS extension will mainly affect lower-wage workers in sectors not covered by the Progressive Wage Model (PWM).
There are already several sectors where the PWM has been made mandatory, such as the cleaning, security and landscape sectors. The PWM will be made a mandatory registration requirement with the Building and Construction Authority (BCA) for all lift and escalator maintenance companies, starting next year.
By 2022, workers in these PWM sectors would be getting paid higher than the LQS.
Minimum Wage is Not Part of Singapore’s National Policy
To date, the Singapore Government does not prescribe a minimum wage policy for all workers, both foreign and local, as a matter of national policy.
It believes that “Employers should pay their employees (whether local or foreign), based on their skills, capabilities and competencies”, and that “a competitive pay structure can help a company motivate their staff, and retain valuable employees”.
Is LQS Alone Enough to Uplift Lower-Wage Workers?
If we are talking about treating the LQS like a minimum wage – then no, it is not enough.
Extending the $1,400 LQS will cover lower-wage workers who are currently not under a Progressive Wage Model (PWM).
Yes, the LQS gives these uncovered workers a boost like a minimum wage. But it is not sustainable in the long run.
Not tying pay increase to productivity would lead to job losses as companies cannot justify the increase in cost.
The simplest analogy I can think of is, would you rather pay, say, $800 for a domestic helper who can only clean, or $800 for a helper who can clean and cook – assuming that they both are just as good when it comes to cleaning?
With that said, dignity and respect to lower-wage workers go beyond “not looking down on them”. We need to believe that they can do more than earn the minimum.