SINGAPORE is reviewing the local qualifying salary (LQS) – the minimum that local workers must be paid by an employer that hires foreign workers – under the series of moves to support lower-wage workers, said Senior Minister of State for Manpower Zaqy Mohamad on Friday (Jan 26), without giving further details.

The Progressive Wage Credit Scheme (PWCS) that co-funds pay rises for lower-wage workers will also be enhanced, with details to come in Budget 2024.

Zaqy made these announcements at a tripartite commemorative event for the 10th anniversary of the Progressive Wage Model (PWM), which raises the pay of lower-wage workers.

The PWCS was introduced in Budget 2022 to co-fund wage increases for eligible resident employees under the PWM.

In 2022, about S$1 billion in PWCS funding was disbursed to 70,000 employers, which raised the wages of more than 345,000 employees. The median monthly wage increase supported by PWCS was about S$300.

In 2023, the government’s co-funding share for PWCS was raised to a maximum of 75 per cent. Said Zaqy: “We are reviewing the PWCS to further enhance support, and will be announcing details at Budget (2024).”

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The government continues to review ways to give more support to workers, he added.

“One of the policies we are reviewing is the LQS, to ensure that wages for our lower-wage workers continue to keep pace with the market.”

Since Sep 1, 2022, all companies that employ foreign workers have had to pay the corresponding salaries for workers covered by the relevant PWM.

They have also had to pay at least the LQS – currently set at S$1,400 – to all other local employees.

The LQS also determines how local employees count when calculating a firm’s work permit and S Pass quota entitlement.

A local employee counts in full if they earn at least the current LQS. If they earn less than that, but at least half the LQS – that is, S$700 – they count as half a worker for quota purposes.

With the government’s review of the LQS still underway, the National Trades Union Congress and Singapore National Employers Federation declined to comment.

Singapore Computer Society president Sam Liew noted that if the LQS is raised, then depending on the level of potential government support, manpower costs could rise for businesses with salaries at or near the current LQS.

“We do need to be conscious that the small and medium-sized enterprises (SMEs) might feel the pinch, as local salaries go up,” he said. But any labour cost increase could also serve as a catalyst for SMEs – especially those with some inertia – to invest in automation and other productivity-enhancing tools, he added.

Separately, a new Progressive Wage Portal has been developed for lower-wage workers. With this online portal, workers can check whether they are being paid in line with the relevant PWM or LQS requirements. They can also examine whether their job role matches their actual responsibilities.