SINGAPORE — The fight to raise salaries in two sectors plagued by stagnant wages achieved a breakthrough yesterday, with the Government announcing the implementation of the progressive wage model as a mandatory licensing condition for all companies providing cleaning and security services.

Starting in September — after legislative changes are introduced later this month and passed by Parliament — cleaning companies must pay an entry-level salary of S$1,000 each month, up from the current median gross monthly wage of about S$850, and subsequently give increments in tandem with skills upgrading.

The impasse on this matter in the security sector drags on, but once the tripartite partners reach a consensus on the details of the progressive wage model to be implemented, it will be tagged on as an additional requirement in its existing licensing framework overseen by the police. Both sellers and buyers of the two services who do not comply will face penalties.

Deputy Prime Minister Tharman Shanmugaratnam, who announced the change at the Employment and Employability Institute’s (e2i) Best Sourcing Symposium yesterday, explained that the Government took this measure to ensure that responsible outsourcing becomes the norm in these industries, as cheap sourcing practices have “held down wages … led to high attrition and churning of employees, making skills acquisition difficult”.

While it has taken the lead in adopting best-sourcing practices, the Government cannot transform industry practices on its own, as its procurement of cleaning services only covers about 11 per cent of cleaners and has a similar proportion of security service contracts, he added. There are currently about 55,000 cleaners in the resident workforce.

Giving his assessment on the median gross monthly wage of about S$850 for cleaners, Mr Tharman said: “Not only is that low pay, but most cleaners have also not enjoyed the real wage growth seen among workers nationally, including other lower-income Singaporeans, in the last five years.”

Mr Tharman, who is also Finance Minister, pointed out that by raising productivity and service quality, the progressive wage model is a win-win outcome for all and does not only benefit cleaners. The model sets a wage ladder where workers in low-wage jobs can earn higher pay through training and productivity gains.

“The cleaning companies can better retain manpower and, in so doing, build up a more skilled workforce. Service buyers and consumers may pay a little more for cleaning services, but can also enjoy enhanced service quality and higher standards,” he said.

Cleaning companies TODAY spoke to were supportive of the Government’s move to mandate the progressive wage model as a licensing condition. “Most of the cleaning companies are not concerned because, at the end of the day, it’s a cost that is passed on. But I think the market itself — we have a tight labour market — if you do not even pay (by) the progressive wage model, you cannot get workers,” said Ramky Cleantech Services Director Milton Ng.

The company has about 2,000 cleaners, with close to 90 per cent on the progressive wage model.

Clean Solutions Sales Director Sunny Khoo added: “Most clients have accepted the fact that cleaning costs are up.” The company has about 2,000 cleaners with approximately 80 per cent on the progressive wage model.

On concerns from some employers that there would be less flexibility for companies to set wages with the move, labour chief Lim Swee Say said they should instead turn it into a business opportunity.

“With this more decent starting pay, they will be able to attract and retain their better workers better. So what they really have to think about is not so much that the wage cost will now go up but, rather, they should apply their mind to how (they) can improve the skill standard, the productivity standard,” added Mr Lim, who is Secretary-General of the National Trades Union Congress (NTUC).

Mr Tharman said once the minimum entry-level wage is mandated as a licensing requirement for cleaning businesses under the progressive wage model, the Government will take non-compliance seriously, with penalties to be imposed.

Companies may have their licences suspended or revoked, while service buyers procuring from non-licensed cleaning companies will also face penalties under the law.

Similar to the cleaning industry, once tripartite partners agree on the wage model for the security industry, it will be incorporated into the existing licensing framework for security companies administered by the police and made mandatory, Mr Tharman said. There are currently about 70,000 officers in the security industry.

Two industry groups in the security sector had baulked last year at a proposal by unions for S$1,000 in basic pay for guards — S$200 more than the median. Asked about this yesterday, Mr Lim remained optimistic after the NTUC engaged industry groups to provide a better understanding of the model. “I am hopeful and confident that the progress on the tripartite efforts for the security sector, the pace will now be even faster and I look forward to having some breakthrough agreement some time this year,” he said.

To help firms defray costs incurred in the adoption of the progressive wage model, or proposed working models being finalised by Tripartite Cluster Committees, in the cleaning, security and landscaping sectors, a S$5 million Progressive Wage Incentive scheme was started by the labour movement this month.

The scheme will subsidise up to 10 per cent of contract values, with funding capped at S$150,000 for each project, and aims to benefit about 1,500 low-wage local workers in the three sectors over the next one-and-a-half years.