Minimum Qualifying Salary for Local Workers Mandated for All Companies Employing Foreigners
In a significant move to strengthen Singapore’s social framework, all businesses employing foreign workers are now required to pay local employees a minimum salary of S$1,400 per month. This was announced by Finance Minister Lawrence Wong in his Budget 2022 address on February 18. The initiative aims to bolster the country’s workfare system as part of broader efforts to elevate lower-wage workers.
Supporting Low-Wage Workers
Wong emphasised that Budget 2022 would contribute to the upliftment of lower-wage workers in Singapore. A key component of this effort is the expansion of the Progressive Wage Model (PWM), which will now include retail, food services, and waste management sectors over the next two years. Additionally, in-house cleaners, security officers, landscape workers, administrators, and drivers across all industries will also benefit from this model.
Alongside this, companies employing foreign workers will be required to pay all their local employees at least the Local Qualifying Salary (LQS) of S$1,400 per month. A new Progressive Wage Mark (PW Mark) will be introduced to recognise companies that meet these wage requirements. By March 2023, the government will mandate that all eligible suppliers be accredited with the PW Mark.
Progressive Wage Credit Scheme (PWCS)
To help businesses transition, the government is introducing the Progressive Wage Credit Scheme (PWCS), which will receive a S$2 billion funding injection in 2022. Under the PWCS, the government will co-fund wage increases for lower-wage workers from 2022 to 2026. For workers earning up to S$2,500, the government will fund 50% of wage increases for the first two years, 30% for the next two, and 15% in 2026. There will also be limited co-funding for workers earning between S$2,500 and S$3,000.
Enhancing the Workfare Income Supplement
In addition to the PWM, the Workfare Income Supplement will be enhanced. Effective January 1, 2023, the income cap for eligibility will rise from S$2,300 to S$2,500 per month. A new minimum income criterion of S$500 per month will also be introduced to encourage part-time or casual workers to transition to full-time employment.
Younger workers, aged 30 to 34, will also be eligible for the Workfare Income Supplement, with a maximum annual payout of S$2,100. Payouts for older workers will also be increased: those aged 35 to 44 can receive up to S$3,000 annually, while workers aged 45 to 59 can receive up to S$3,600. Workers aged 60 and above, as well as all persons with disabilities (PwDs), will be eligible for the highest payout of S$4,200 annually.
Government’s Financial Commitment
The Singaporean government plans to spend approximately S$9 billion over the next five years on the PWCS and enhanced Workfare initiatives. These measures will benefit around 94% of the nation’s full-time lower-wage workforce and provide support to over half a million workers.
Additional Government Measures
Wong also highlighted other key measures, including increased CPF contribution rates for workers aged 55 to 70, and an additional 3.5% increase to the CPF Basic Retirement Sum for the next five cohorts turning 55 between 2023 and 2027.
For persons with disabilities, the government will continue to support them through the Enabling Masterplan 2030, which focuses on employment, lifelong learning, and respite care.
Finally, in an effort to bolster the charity sector, the government has committed an additional S$100 million to the Tote Board’s Enhanced Fund-Raising Programme and will extend its support for three more years until FY2024.
