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Minimum Wage in Singapore

Singapore does not have a universal minimum wage policy as of 2024, but there are minimum wage requirements for specific sectors.

Minimum wage is a topic of interest in many countries, including Singapore. Singapore does not have a standard minimum wage law applicable to all workers; instead, it follows a unique approach to ensuring fair wages for employees. The Progressive Wage Model (PWM) is a key component of the country’s wage policy, focusing on wage increments and upgrading skills for workers in specified sectors.

The PWM has been implemented in various industries across Singapore, impacting the earnings and growth opportunities of numerous workers. Foreign workers are also subject to specific measures, with the Ministry of Manpower establishing minimum salary requirements for various employment passes. The Local Qualifying Salary (LQS) sets a base pay for local employees, which also affects the number of foreign workers a company is allowed to hire.

Comparisons between Singapore’s approach to minimum wage and that of other countries are inevitable. Despite the differences in implementation, Singapore’s unique strategy aims to achieve similar goals of addressing income inequality, supporting low-wage workers, and ensuring competitiveness in the global market while balancing employer and employee interests.

Key Takeaways

  • Singapore uses the Progressive Wage Model instead of a fixed minimum wage.
  • Both local and foreign workers are affected by different wage guidelines.
  • The country’s wage policy aims to balance income disparity and economic competitiveness.

Historical Overview

In Singapore, the concept of a minimum wage has evolved over the years. Instead of implementing a blanket minimum wage for all employees, the government has adopted a sector-specific approach known as the Progressive Wage Model (PWM). This model seeks to strike a balance between promoting inclusive growth and maintaining the competitiveness of the Singaporean labor market.

The PWM was introduced in 2012 by the Singaporean government and its tripartite partners, which include the Ministry of Manpower (MOM), the National Trades Union Congress (NTUC), and the Singapore National Employers Federation (SNEF). The PWM seeks to raise the wages of low-wage workers in a sustainable manner by linking wage growth with skills upgrading and productivity improvements. This enables employees to earn higher wages while supporting employers’ needs for a skilled and productive workforce.

Initially, the PWM was implemented in the cleaning, security, and landscape sectors. Since then, it has been expanded to other industries, such as the lift and escalator maintenance sector, the waste management sector, and the retail industry. Over the years, the PWM has led to significant wage increases for employees in the targeted sectors. For example, between 2012 and 2020, the median basic wage of full-time resident cleaners increased by 48%, while that of security officers rose by 42%.

The PWM also provides guidelines on wage distribution according to different skill levels and job responsibilities within a sector. This helps to ensure that employees with higher skills and more responsibilities are compensated accordingly, which in turn encourages skills upgrading and career progression.

Singapore’s approach to minimum wage policies through the Progressive Wage Model has contributed to wage growth for low-income workers while maintaining labor market flexibility. Through continuous review and expansion of the PWM to various industries, the government aims to ensure that the wages of Singapore’s workforce grow in tandem with productivity improvements and skill enhancements.

Minimum Wage Laws in Singapore

Singapore has a unique approach to minimum wage laws through its adoption of the Progressive Wage Model (PWM). Instead of a traditional legislated minimum wage, the PWM is a sector-specific wage structure that seeks to gradually increase wages while also improving employee skills and career advancement opportunities. Under this model, companies are required to pay their workers based on wage levels tied to skillsets and job roles, thus incentivizing skill development and productivity source.

The PWM is currently implemented in sectors such as cleaning, security, and landscape. The Ministry of Manpower, in collaboration with the National Wages Council, regularly reviews and updates the wage guidelines for these industries source. These guidelines take into consideration the economic performance, outlook, and needs of the specific sectors in setting wage recommendations.

Employers in Singapore are obligated to follow the PWM guidelines to ensure that employees receive fair wages in line with industry standards. The guidelines also promote stability in the labour market by addressing income inequality issues and encouraging an inclusive growth strategy that benefits both employers and employees source.

While the PWM continues to be the primary mechanism for regulating wages in Singapore, it is essential for employers to be aware of and adhere to any additional legislation, rules, or market practices relevant to their industry. This ensures a balance between fostering a competitive labour market and providing a sustainable and equitable income for employees in various sectors.

Role of Progressive Wage Model

The Progressive Wage Model (PWM) is a crucial component of Singapore’s approach to ensuring fair wages for low-wage workers. It is specifically targeted at employees in certain sectors, such as retail, food service, and waste management. Unlike a traditional minimum wage system, the PWM ensures that wages are determined by the skill levels of employees, encouraging workers to continually enhance their capabilities.

An essential feature of the PWM is that it sets a base salary for entry-level workers, functioning as a kind of minimum wage. This ensures that even those starting in the workforce are guaranteed a reasonable income. As workers gain experience, undergo training, and develop higher-value skills, their wages continue to increase. This progression is intended to motivate employees to consistently improve and advance their careers over time.

Singapore PWM

Singapore’s Progressive Wage Model is designed to enhance the productivity and livelihoods of workers in the specified industries. By structuring wages according to skill levels, employees have a clear pathway for growth and are incentivized to learn and take on more complex tasks. As their skills improve, so does their earning potential, allowing for an environment where wage growth and productivity go hand-in-hand.

Furthermore, PWM has a positive impact on Singapore’s economy by reducing wage disparity and preventing low-wage job exploitation. Since the model applies to Singaporeans and PRs, it ensures that the country’s local workforce remains competitive and fairly compensated for their work. It also serves as a tool to attract and retain workers in industries that typically experience higher levels of wage inequality.

The Progressive Wage Model plays a pivotal role in protecting the interests of low-wage workers in Singapore by offering a dynamic and forward-looking approach to wage setting. By focusing on skill development, productivity, and inclusive growth, the PWM contributes to building a sustainable and competitive workforce within the nation.

Impact on Different Economic Sectors

As Singapore implements its minimum wage policies, the impact on different economic sectors varies. Currently, only select sectors such as cleaning, security, and landscaping are covered under the nation’s Progressive Wage Model. The stakeholders, which include employers, unions, and the government, collectively decide on factors such as wage rates, increment schemes, and requisite training for workers to be eligible for a wage increase.

The introduction of a minimum wage policy in these sectors has led to a shift in market demand. As wages rise, employers may opt to invest in automation to reduce labor costs. This trend is prevalent in sectors such as cleaning, where companies lean towards automated equipment to maintain productivity levels while adhering to the minimum wage requirements.

Singapore 10 years of PWM

Another consequence of the minimum wage policy is its effect on income distribution. With the implementation of a minimum wage policy, low-skilled workers in the targeted sectors experience an increase in wages. This increase fosters a more equitable income distribution, particularly amongst the elderly and those with little formal education who often find employment in these sectors.

However, the limited scope of the minimum wage policy in Singapore creates disparities among different economic sectors. Industries not regulated by the policy, such as the burgeoning gig economy, may not observe the same improvements in income distribution or market demand. Workers in these sectors may continue to face low wages and income disparities.

To ensure a more inclusive growth, policymakers and stakeholders must consider expanding the reach of minimum wage policies. Such a move could not only balance income distribution but also encourage industries to explore more efficient methods of operation, ultimately contributing to a more sustainable and economically viable market in Singapore.

Minimum Wages for Foreign Workers

In Singapore, there is no prescribed minimum wage for all workers, including foreign domestic workers (FDWs). However, foreign employees holding certain types of passes are required to meet minimum salary thresholds. For instance, mid-level skilled foreign workers holding an S Pass must receive a minimum monthly salary of SGD 3,000. Those employed in the financial sector are subject to a higher minimum salary of SGD 3,500 per month.

Employers of foreign workers are also required to comply with certain regulations, including a quota system that limits the number of foreign workers employed in various sectors. Additionally, employers have to pay levies for the foreign workers they hire, which vary depending on the worker’s pass type, the sector they are employed in, and the employer’s quota usage.

As for the Employment Pass (EP) holders, which are typically for foreign professionals, managers, and executives, their minimum monthly salary is currently set at SGD 5,000 or SGD 5,500 for those in the finance sector.

Over time, Singapore has been increasing the qualifying salaries for foreign workers, which can be observed through the rising minimum salaries for both EP and S Pass permits. This change aims to ensure that foreign employees are suitably compensated and that local workers are not disadvantaged by the influx of foreign labor.

Overall, while there is no universal minimum wage policy in Singapore, specific requirements are in place to regulate the salaries and working conditions of some foreign employees. It is essential for both employers and foreign workers to be aware of these regulations to ensure compliance within the Singaporean labor market.

Local Qualifying Salary

The Local Qualifying Salary (LQS) is an important concept in Singapore’s wage policies, especially for lower-wage workers. Introduced by the Ministry of Manpower (MOM), the LQS sets a baseline for the earnings of local employees, which mainly benefits Singaporeans. The LQS predominantly influences the calculation of Work Permit and S Pass quota entitlements for employers.

As of September 1, 2021, the LQS has been set at S$1,400 per month. Employers will have to take this amount into account when determining the number of local employees that can be used for calculating their Work Permit and S Pass quotas. Specifically, a local employee who earns the LQS of at least S$1,400 per month will be considered as one full local employee, while an employee who earns half the LQS (at least S$700 to below S$1,400 per month) will be counted as 0.5 local employee.

Singapore LQS

It is crucial to note that certain employees are excluded from the local employee quota calculations. For example, business owners of sole proprietorships or partnerships, as well as employees who receive CPF contributions from three or more employers, are not counted as local employees when determining the quota.

The implementation of the LQS has a significant impact on lower-wage workers in Singapore. Around 159,000 workers will benefit from the new LQS requirement, as they will now earn a minimum of S$1,400 per month. This policy aims to ensure adequate income for these workers, helping to close the income gap and address issues related to social inequality.

The Local Qualifying Salary (LQS) is a vital aspect of Singapore’s wage policies aimed at supporting lower-wage earners. By establishing a baseline wage level for local employees, the LQS enables a fairer distribution of income and enhances the overall livelihoods of Singaporeans in the workforce.

Impact on Low-Wage Workers

In Singapore, the government has resisted implementing a universal minimum wage, opting instead for a sector-specific approach called the Progressive Wage Model (PWM). This model aims to benefit low-wage workers by linking their wages to skills, productivity, and career progression.

The PWM has been successful in raising the income of workers in certain sectors. For example, Singaporeans and PRs working in waste collection can expect their monthly gross wages to increase from at least S$2,210 in July 2023 to S$3,260 by 2028, and those in materials recovery could earn a minimum monthly gross wage of S$3,160 by 2028, up from the current levels.

Singapore PWM system

One positive aspect of this model is that it addresses the issue of wage stagnation and enhances social inclusion for workers in these targeted sectors. By providing clear pathways for skills development and career growth, the PWM ensures that workers are adequately renumerated and do not suffer from long-term consequences of low-income status.

However, the absence of a universal minimum wage raises concerns about the sufficiency of incomes for low-wage workers in other sectors. A report by the Lee Kuan Yew School of Public Policy suggested that a “reasonable starting point” for a living wage in Singapore would be S$2,906 a month. This may leave some low-income households unable to meet their basic needs without additional financial assistance.

To mitigate these concerns, the Singapore government provides a range of welfare measures and financial aid schemes targeted at low-wage workers and their families. These measures aim to ensure that citizens have access to essential services such as housing, healthcare, and education, regardless of their income levels. Additionally, these social safety nets also contribute to fostering social inclusion among the population.

While the Progressive Wage Model has demonstrated progress in raising incomes for low-wage workers in targeted sectors, it is essential to continue monitoring the impact on those not covered by these sector-specific plans. Ensuring that all low-wage workers can meet their basic needs and are on a path toward economic stability and social inclusion remains a priority for the Singapore government.

Living Wage vs Minimum Wage

In Singapore, the concept of a living wage and a minimum wage often sparks discussion on how to address income inequality. The living wage refers to the amount of income that allows workers to maintain a decent standard of living based on the contemporary social norms in their society. On the other hand, the minimum wage is the lowest pay set by the government that an employer can legally offer to their employees.

The Singapore government has implemented the Progressive Wage Model as an alternative to a traditional minimum wage system. This model sets minimum wages for specific sectors and ties salary progression to skill upgrading. The goal is to increase the wages of low-income workers and reduce income inequality, while also encouraging workers and businesses to innovate and improve productivity.

In contrast, a living wage would be a broader measure that takes into account various factors beyond the scope of the Progressive Wage Model. The Minimum Income Standard estimates that the living wage in Singapore, averaged between different household types and age groups is approximately S$2,990 per month.

Comparing the two approaches, a living wage could potentially address income inequality more comprehensively by focusing on the workers’ ability to cover their basic needs and maintain a decent standard of living. However, critics of the living wage argue that setting such a high wage floor may lead to higher unemployment levels and reduced business competitiveness.

In conclusion, both the living wage and minimum wage have their merits and drawbacks in addressing income inequality in Singapore. Understanding the differences between these two concepts can help inform more effective policy decisions and contribute to a more equitable society.

Comparison with Other Countries

When examining minimum wage structures around the world, it’s important to compare Singapore with other countries like the United States, Canada, Japan, and Taiwan. Each of these nations has its unique approach to regulating their minimum wage policies, resulting in distinct implications for their overall labor market structure.

While Singapore does not have a mandatory minimum wage, other countries like the United States and Canada enforce minimum wage laws. In the United States, the federal minimum wage is set at $7.25 per hour. However, individual states can set their minimum wage rates higher than the federal level, resulting in varying rates across the country. Similarly, Canada employs a provincial minimum wage system, with each of its provinces determining their minimum hourly wages.

In contrast, Japan and Taiwan have national minimum wage laws, which are standardized across their jurisdictions. Japan holds multiple minimum wage rates based on their different regions, adjusted according to the region’s specific needs. Taiwan, on the other hand, follows a single national minimum wage rate.

It is essential to acknowledge that minimum wages across the ASEAN countries are gradually increasing in response to the rise in the cost of living. However, Singapore still maintains its practice of not imposing a mandatory minimum wage. Instead, the country’s wage structure relies on collective bargaining agreements and negotiations.

Regarding the minimum wages in the APAC region, Singapore’s approach is distinguished as it focuses on ensuring fair and flexible compensation rather than implementing a legislated minimum wage. This unique wage model allows Singapore to remain competitive in the global market while continuing to prioritize workers’ welfare.

Comparing Singapore’s wage structure with countries like the United States, Canada, Japan, and Taiwan reveals various approaches to minimum wage policies. While some nations enforce mandatory minimum wages, Singapore trusts collective bargaining and negotiation to determine fair wages for employees. This distinction highlights the diversity in labor market regulations and emphasizes the importance of considering multiple factors when examining the minimum wage landscape worldwide.

Role of Employers and Employees

In Singapore, the approach to minimum wage is built around the Progressive Wage Model. This model is a framework that creates a reliable wage progression pathway for low-wage employees while focusing on productivity and skills improvement. Employers and employees play a significant role in the success of this model.

Employers are expected to adjust to the minimum wage levels set by the government. For instance, from 1 July 2022 to 30 June 2023, the minimum basic salary for general cleaners increased to $1,312 and $1,530 based on their roles. Employers should provide wage increments as employees undergo training and assume responsibilities requiring higher-value skills.

Another key role for employers is reviewing and initiating efforts to minimize the disparity in wages between highly paid and low-wage employees, as a strong minimum wage system can empower the workforce. By following the legally established minimum wage guidelines, employers contribute to overall employment stabilization and prevent instances of employee exploitation through below-market rates.

On the other hand, employees must actively participate in skill development and upgrade their competencies as they advance in their careers. As the Progressive Wage Model links wage increases with skills improvements, it is essential for employees to stay committed to personal and professional growth.

The success of Singapore’s Progressive Wage Model depends on the active involvement and collaboration of both employers and employees. While employers must adhere to established wage guidelines and support skill development in the workforce, employees should embrace the opportunities for upskilling and be proactive in their career progression.

Influence on Singapore’s Economy and Competitiveness

Singapore’s approach to minimum wage has been unique compared to other countries, focusing on innovative labor market policies that have a direct impact on its economy and competitiveness. The nation has opted for a Progressive Wage Model instead of a standard minimum wage policy, in an attempt to address stagnation of low-wage workers’ incomes.

The implementation of the Progressive Wage Model promotes productivity growth and facilitates skills upgrading for low-wage workers. One of the key effects of this model is the increased competitiveness of the local workforce. In turn, this helps Singapore maintain its position as a global economic powerhouse.

Concerning core inflation, the unique wage model adopted by Singapore helps sustain manageable inflation levels for the entire economy. By fostering gradual wage growth for low-income workers, this system may decrease the chances of sudden wage inflation or any negative impacts on the local purchasing power.

Singapore Inflation rate
Singapore Inflation Rate, Statista

A well-structured minimum wage policy is vital for narrowing the income gap and fostering inclusive growth. However, it is essential to strike a balance between maintaining competitiveness and ensuring a decent standard of living for the lowest strata. Singapore’s innovative approach to minimum wage, via the Progressive Wage Model, aims to achieve this delicate balance in the long term and maintain a competitive edge in the global market.

Impact of Training and Skills Development

In Singapore, the emphasis on training and skills development has resulted in a more productive and skilled workforce. The Progressive Wage Model (PWM) is a key component of the nation’s strategy to enhance employees’ skills and increase productivity. The PWM mandates that the minimum wage be raised as employees upgrade their skills and become more productive, enabling low-wage workers to enjoy a decent living wage and salary growth. The Singapore Legal Advice website provides insights into how this model operates.

Training programs and initiatives, such as SkillsFuture, aim to equip workers with the necessary competencies to thrive in their industries. By promoting continuous learning and upskilling, these programs create a more robust labor force that is capable of adapting to the dynamic needs of the economy. As a result, Singapore’s workforce is better positioned to tackle emerging challenges and seize new opportunities.

Additionally, the government’s support for workers’ career resilience and the co-funding of pay increases demonstrates its commitment to raising wage levels and encouraging skills improvements. For instance, the MyCareersFuture website explains that in 2023, the government will continue co-funding up to 75% of pay increases for workers earning a gross wage up to $2,500 a month.

Finally, the development of industry-specific skills frameworks ensures that employees acquire relevant and in-demand skills tailored to the needs of their sectors. This promotes the transferability and versatility of skillsets, allowing workers to explore new career paths and opportunities within their industries.

The focus on training and skills development has significant impacts on Singapore’s minimum wage and workforce productivity. By fostering a culture of continuous learning and nurturing workers’ competencies, the nation is well-positioned to maintain a thriving and competitive economy.

The Future of Minimum Wage

Singapore has maintained its stance against implementing a universal minimum wage, aiming to preserve the nation’s economic competitiveness, promote job creation, and protect businesses from increased labor costs in 2023. However, Singapore’s government has shown a commitment to ensuring fair wages for workers, with Prime Minister Lee Hsien Loong emphasizing the importance of an inclusive society.

In place of a national minimum wage, the country has adopted the Progressive Wage Model (PWM) to provide wage enhancements, which is sector-specific and focused on low-wage workers. The PWM ensures that workers in Singapore receive a base wage, together with opportunities for training and career progress. This approach benefits both businesses and workers, as it encourages economic growth alongside social equity.

Public policy in Singapore concentrates on fostering a sustainable wage model that promotes inclusivity while maintaining the nation’s global competitiveness. The PWM is dynamically adjusted to match current economic needs and trends, addressing the concerns raised by proponents of a minimum wage. This flexibility keeps Singapore’s labor market adaptable to external factors without compromising its workforce’s well-being.

Additionally, Singapore’s policymakers will continue to explore various options, such as the National Wages Council (NWC) guidelines, to advocate for fairer wages and better workplace conditions as seen in the NWC 2022/2023 guidelines. These guidelines aim to guide employer recommendations on wage adjustments, accounting for factors like company performance and prevailing economic conditions.

While a traditional national minimum wage has not been implemented in Singapore, the government’s focus on the PWM and NWC guidelines demonstrates their dedication to a more equitable labor market and the greater good of the nation’s inclusive society. Policymakers will likely continue this path, pursuing innovative solutions to ensure that Singapore remains an attractive destination for businesses and a fair society for its diverse workforce.

If you are a global company considering Singapore expansion or hiring employees, it is worth considering advice from a Singapore PEO or Employer of Record to ensure full compliance with minimum wage laws.  

Frequently Asked Questions

The Progressive Wage Model (PWM) in Singapore is an alternative to the traditional minimum wage system. It aims to raise the income of low-wage workers by linking their pay to their skills and productivity levels. By offering incentives for skill development and career progression, the PWM ensures a fair wage for workers while boosting their employability. For more details on the PWM, refer to this source.

While Singapore does not have a specific minimum wage for most sectors, it does mandate a standard salary for foreign domestic workers (FDWs). This salary tends to be competitive compared to other countries in the region. However, it might be lower when compared to countries such as Canada and the United States that implement national minimum wage laws. More information on wages in Singapore can be found here.

Singapore's approach to minimum wage is influenced by several factors, including market demand, the supply of labor, and the need to maintain economic competitiveness. Instead of implementing a stringent minimum wage law, the country focuses on progressive wage models, collective bargaining agreements, and skills training to improve wage levels and working conditions. For more on this approach, refer to this source.

A living wage is the income required to meet an individual's basic needs and maintain a decent standard of living. It is typically higher than the minimum wage, which is the lowest amount an employer can legally pay their workers. In Singapore, there is no official living wage or minimum wage for most sectors. Instead, wages are determined by market conditions and collective bargaining between employers and employees. More info on the living wage in Singapore can be found here.

Wages in Singapore can vary significantly depending on the industry, job qualifications, and experience. In the retail sector, common wages range from S$1,200 to S$2,000 for entry-level positions, while more experienced staff may earn higher salaries. In the cleaning industry, wages often start around S$1,000 for entry-level workers. Note that these wage ranges must be agreed upon through negotiation and collective bargaining between the parties involved. Refer to this source for more details about wages in different industries in Singapore.

Unlike Singapore, Canada has a federally mandated minimum wage, which is supplemented by province-specific minimum wage laws. On average, the minimum wage in Canada is significantly higher than in Singapore. However, it is essential to consider that living costs and socioeconomic factors differ between the two countries. In Singapore, the PWM aims to address wage disparities for low-wage workers, rather than implementing a strict minimum wage as seen in Canada. To learn more about Singapore's labor laws and their approach to wages, consult this source.

Travis is a global business development advisor. He has spent the last 14 years supporting business establishment and development in North America, Southeast Asia, and throughout the world. With multiple degrees from the University of Oregon, Travis currently splits his time between the US, and Bali, Indonesia. At RemotePad, Travis writes about remote work, hiring internationally and PEO/EOR business models.

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