RemotePad Logo
  • Guides

What is an Employer of Record

How to hire globally with an EOR

What is a Global PEO

An alternative to EOR

What is a PEO

Hire locally with a PEO

Our Methodology

Why you can trust our guides

Hire Globally

Find international talents

Outsource Recruitment

How to outsource recruitment

Work Visas

How to get a work visa

Digital Nomad Visas

Get a digital nomad visa

  • Best Providers

Best Employer of Record (EOR)

Hire globally with the best EOR companies

Best Contractor Management

Hire and pay contractors and freelancers

Best Global PEO

Discover the best international co-employers

Best PEO Companies

Save on payroll and HR costs

Best Background Check Companies

Screen employees before hire

Best Global Payroll Providers

Outsource international payroll

Best Relocation Services

Relocate employees internationally

Best International Recruitment Agency

Find global talent

International Company Registration

Get help to incorporate overseas

All Reviews

Compare all providers

  • Best EOR

1. Horizons

Best Global EOR

2. Remote

Best EOR for Compliance

3. Deel

Best EOR Platform

4. Papaya Global

Best EOR for Payments

All EOR Reviews

Compare all providers

Where do you need a service provider?

All Countries

Explore our detailed guides for professional advice on international growth, recruitment, compensations strategies, and a curated list of top service providers.

Country Guides
Request proposal - it's free
4dc2d1f2 3c2c 42b8 ab74 5adece72ccc6
  • By Travis Kliever
  • Updated March 5, 2024
Picture of Travis Kliever
Travis Kliever
Linkedin
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.
RemotePad editorial guidelines

Minimum Wage in Singapore

In this article

 show

Spending too much on recruitment, payroll or global HR?

We help you find the Best Providers at the lowest cost.

Get Started

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

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.

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.

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 sustainably raise the wages of low-wage workers 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 expanded to other industries, such as lift and escalator maintenance, waste management, and retail. 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 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, encouraging 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 by adopting 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 improving employee skills and career advancement opportunities. Under this model, companies must pay their workers based on wage levels tied to skillsets and job roles, thus incentivizing skill development and productivity.

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

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

While the PWM remains the primary mechanism for regulating wages in Singapore, employers must 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 labor 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 specifically targets 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 enhance their capabilities continually.

An essential feature of the PWM is that it sets a base salary for entry-level workers, functioning as a 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.

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 positively impacts Singapore’s economy by reducing wage disparity and preventing low-wage job exploitation. Since the model applies to Singaporeans and PRs, 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. 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.

Introducing a minimum wage policy in these sectors has led to a shift in market demand. As wages rise, employers may invest in automation to reduce labor costs. This trend is prevalent in industries 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 income distribution or market demand improvements. 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 balance income distribution and 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

Singapore has no prescribed minimum wage for all workers, including foreign domestic workers (FDWs). However, foreign employees holding certain types of passes must 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 monthly.

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 the influx of foreign labor does not disadvantage local workers.

Overall, while there is no universal minimum wage policy in Singapore, specific requirements are in place to regulate some foreign employees’ salaries and working conditions. Both employers and foreign workers must 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 employers’ Work Permits and S Pass quota entitlements.

As of September 1, 2021, the LQS has been set at S$1,400 monthly. Employers will have to consider this amount 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 an 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 and 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 to support lower-wage earners. By establishing a baseline wage level for local employees, the LQS enables a fairer income distribution and enhances the overall livelihoods of Singaporeans in the workforce.

Impact on Low-Wage Workers

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

The PWM has successfully raised 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 remunerated 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 citizens can access essential services such as housing, healthcare, and education, regardless of their income levels. 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, monitoring the impact on those not covered by these sector-specific plans is essential. 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 living and minimum wage often sparks discussion on how to address income inequality. The living wage refers to the 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 considers various factors beyond the scope of the Progressive Wage Model. The Minimum Income Standard estimates that the average living wage in Singapore, between different household types and age groups, is approximately S$2,990 per month.

Comparing the two approaches, a living wage could 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 and minimum wage have 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 worldwide, comparing Singapore with other countries like the United States, Canada, Japan, and Taiwan is important. 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

Singapore’s 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, general cleaners’ minimum salary 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 wage disparity 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. Employees must stay committed to personal and professional growth as the Progressive Wage Model links wage increases with skills improvements.

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 directly impact its economy and competitiveness. The nation has opted for a Progressive Wage Model instead of a standard minimum wage policy to address the stagnation of low-wage workers’ incomes.

Implementing 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. 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 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 balance 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 raising the minimum wage 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 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 2024 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, developing 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 significantly impacts 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 2024. 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 are sector-specific and focused on low-wage workers. The PWM ensures that workers in Singapore receive a base wage and opportunities for training and career progress. This approach benefits businesses and workers, encouraging economic growth and 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 minimum wage proponents. 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 guide employer recommendations on wage adjustments, accounting for 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 pursuing innovative solutions to ensure Singapore remains an attractive destination for businesses and a fair society for its diverse workforce.

Suppose you are a global company considering Singapore expansion or hiring employees. In that case, 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.
cropped Travis Kliever 1
Article By

Travis Kliever

Linkedin
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.

Search

Search