Progressive Wage Credit Scheme
An important policy intent behind the Progressive Wage Credit Scheme (PWCS), introduced in 2022, was to serve as transitional support to help businesses defray the costs of raising the incomes of lower-wage workers. In its initial two years, it was reported that the PWCS helped over 90,000 employers and supported wage increases for more than 500,000 lower-wage workers, with payouts totalling approximately S$2.7 billion by early 2025.
Critically and for the purposes of my cut, the scheme was not conceived merely as wage support. The Ministry of Manpower expected employers to use the transitional period to upskill their employees, transform their businesses, and improve productivity, so that wage increases for workers would be sustainable over the long term. The PWCS scheme has since been extended through 2028 by this year’s budget.
Given this, what has been the report card on qualifying employers insofar as their upskilling initiatives, business transformation, and productivity improvements are concerned? Has MOM followed up with employers to assess whether the PWCS has meaningfully shifted the needle on these three areas that were tied to the PWCS?
It cannot be the case that there is no report back to Parliament on the outcomes these subsidies have achieved. A policy review could also reveal important gaps to assist future policymaking with regard to manpower levies and quotas and whether they should be adjusted — for instance, identifying sectors where upskilling or business transformation has reached a practical limit given current technology. Conservancy cleaning in the HDB setting is a case in point. Productivity improvements in this sector are marginal, and robotics has not yet advanced to the point where machines can sweep common corridors across different floors and independently negotiate staircases at an economically viable price point.
With assistance through the Progressive Wage Credit Scheme running into billions of dollars, Parliament must be expected to track the policy impact of this initiative, and to determine whether a further extension is warranted - and if so, whether expected business outcomes should be imposed to ensure that taxpayer subsidies deliver for both for businesses and workers. In the alternative, if the intention is simply to support businesses without strings attached so as to force wages up at the lower end, then that should be communicated as such rather than to seek outcomes which for some employers, may not be realistic.
