Friday 10 January 2014

Progressive Wage Model To Help Low-Wage Workers

Proposed tiered-wage model to up cleaners' pay
Amendment to law will lead to tiered pay system; security sector next in line
By Toh Yong Chuan and Joanna Seow, The Straits Times, 9 Jan 2014

In a bold move, the government is introducing an amendment to the law in Parliament this month which, when passed and implemented, will in effect set a tiered wage system for different jobs in the cleaning sector.

A full-time indoor cleaner will earn at least $1,000 a month.

Those who are trained to handle cleaning machines will earn at least $1,400, and a supervisor, $1,600 - all salary levels which are negotiated with employers and unions.

This move to boost cleaners' pay is a "targeted approach, not a national minimum wage", emphasised Deputy Prime Minister Tharman Shanmugaratnam yesterday.

"We are not setting wages by political decree."

Instead, the Ministry of the Environment and Water Resources, which regulates the cleaning sector, will amend the law this month to introduce a new compulsory licensing scheme for cleaning companies.

Cleaning firms must have a licence to operate, and a key requirement of the licence is that they use a "progressive wage model" to pay their workers. The model sets a wage ladder, where workers in low-wage jobs can earn higher pay through training.

The licensing condition itself will not spell out the salaries on the ladder, explained Mr Tharman.

Instead, a committee of government officials, unionists and employers will negotiate the salaries.

Cleaning companies that do not follow the wage guidelines will be punished for not complying with the licensing requirements, including having their licences revoked, the Deputy Prime Minister warned.

Customers who hire cleaning firms without licences will also be punished.

A similar model will be introduced in the security sector, added Mr Tharman, without spelling out a time frame.

The latest move is the strongest attempt yet by the Government to raise persistently low salaries in the cleaning and security sectors. Industry players there have suppressed wages in order to submit price-competitive bids for new business.

Checks with town councils showed that the move will not affect them. "Town councils have already adopted the progressive wage model," said Mr Lim Biow Chuan, chairman of the Marine Parade Town Council.

But at least one buyer is worried about higher cleaning costs.

"I'm glad that they're trying to raise the wages of low-income workers, but we are concerned about how this will eventually affect contract prices," said a manager from a building management company, who did not want to be named.


This is a targeted approach, not a national minimum wage. We are using licensing rules to ensure progressive wages in these industries because of the prevalence of cheap-sourcing in the two industries. Cheap-sourcing practices discourage wages, skills and quality from moving up in the way they do in most other industries.

- Mr Tharman, referring to the cleaning and security industries

Govt 'not setting minimum wage'
Raising cleaners' pay is a targeted move: Tharman
By Toh Yong Chuan, The Straits Times, 9 Jan 2014

THE move by the Government to raise the salaries of cleaners and security guards is targeted and not the setting of a national minimum wage, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.

In any case, having a national minimum wage is not the best way to help low-wage workers, he reiterated, citing the experience of both the United States and Europe.

In drawing the distinction between the two systems, Mr Tharman said that the Government's move is a targeted one.

"We are using licensing rules to ensure progressive wages in these industries because of the prevalence of cheap sourcing in the two industries," he said.

"Cheap-sourcing practices discourage wages, skills and quality from moving up in the way they do in most other industries. This is compounded by the preponderance of older workers with low education in the two industries - workers whose job choices in the labour market are unfortunately limited."

The second difference between this system and a national minimum wage is that the wages are not set by "political decree", but negotiated between the Government, unionists and employers.

"This tripartite approach, and especially the involvement of both unions and employers in setting appropriate wages and a wage-skills ladder, is important," he said. "It reduces the risk that workers, especially our older and more vulnerable ones, will lose their jobs as wages go up."

"Our approach is therefore different from one of legislating a national minimum wage," he added.

Mr Tharman pointed to problems in Europe and the US as lessons for Singapore, saying "there is more than meets the eye in how minimum wages impact the poor". The high minimum wages in most European countries have been accompanied by high unemployment and the workers with the lowest skills are most badly hit.

Said Mr Tharman: "Politicians are keen to take the credit for raising minimum wages, without accepting responsibility when those with low skills and experience are unable to find an employer at the minimum wage."

Even in the US where the minimum wage is much lower than in Europe, reputable economists have pointed out that the poor are the ones who are not being helped, he added.

"This is because the majority of the poor in the US are unemployed, not at work. Higher minimum wages will reduce their opportunities to find an employer, not help them," he said.

"On the other hand, more than a third of those who actually earn the minimum wage are teenagers, many of whom come from better-off families."

The latest move by the Government comes after it tried to influence the wages of cleaners and security guards by awarding contracts to firms based on quality and performance standards, and not just pricing.

But these government contracts cover only 11 per cent of local cleaners and security guards.

"Clearly therefore, (the) Government cannot transform industry practices on its own," said Mr Tharman.

Mr Milton Ng, president of the Environmental Management Association of Singapore, said compulsory licensing will raise standards in the cleaning sector. "It levels the playing field and firms cannot undercut one another through low bidding. Workers suffer when there is undercutting because their salaries are also cut," he said.

Mr Robert Wiener, president of the Association of Certified Security Agencies which represents more than 110 security firms, hopes that the security sector gets 24 to 36 months to adjust before the progressive wage model is legislated.

Incentive to curb 'cheap sourcing'
By Joanna Seow, The Straits Times, 9 Jan 2014

BIGGER grants are now available for organisations that do not just focus on price when awarding contracts to companies providing cleaning, security or landscape services.

A scheme introduced yesterday will give them as much as 10 per cent or $150,000 of the contract's value when they take into consideration the pay and training received by workers of the companies tendering for the project.

This Progressive Wage Incentive (PWI) scheme, set up with $5 million from the Government, is to encourage companies to adopt the Progressive Wage Model, which gives guidelines on pay increments for workers as they climb the skills ladder.

The PWI's goal is to help firms "move away from a vicious circle of a downward spiral of wages, to a virtuous circle that focuses on skills and productivity", said chief executive Gilbert Tan of the Employment and Employability Institute, the training arm of the National Trades Union Congress.

The institute will administer the PWI scheme, which replaces an existing fund giving grants of up to 5 per cent of the contract value to organisations that pick firms with good employment practices.

About 1,500 local low-wage workers in the three sectors are set to benefit from the scheme, which is open to other industries.

This latest move, to coax companies to move away from awarding contracts based on just the lowest price, is part of the NTUC's relentless effort to end "cheap sourcing" and improve the pay of low-wage workers.

"Working as tripartite partners with the service buyers, we can make cheap sourcing a bad practice of the past," labour chief Lim Swee Say said yesterday at a seminar on best-sourcing practices.

Employers like Changi Airport Group told companies at the seminar that evaluating tenders based on other factors like pay and training benefits service buyers too.

Said Mr Yeo Kia Thye, Changi Airport Group's senior vice-president of airport operations: "We have roughly the same number of cleaners now as three to four years ago, but our traffic has grown by more than 30 per cent.

"What this means is that our cleaning force productivity has increased by more than 30 per cent."

Mr Milton Ong, president of the Environmental Management Association, which represents cleaning companies, said that the NTUC grant can be of immediate benefit to cleaners "because some firms can raise their pay in the interim without waiting for the current contract to end".

Cleaners already earning at least $1,000
Firms cite tight labour market, criterion to meet foreign worker quota as reasons for higher pay
By Joanna Seow, The Sunday Times, 12 Jan 2014

The tight labour market has already forced cleaning companies to raise their workers' monthly pay above the prescribed $1,000 mark, bosses told The Sunday Times.

This has driven cleaning costs up - some by almost 40 per cent - over the years.

Contract clients, including those who run hawker centres and building management firms, say they are bracing themselves to be hit harder when their deals are up for renewal later this year.

All cleaning companies will have to adhere to a progressive wage model in order to be licensed after new wage guidelines kick in September.

Basic pay, for instance, will start at $1,000 for a full-time indoor cleaner, with guidelines set on pay rises as staff climb up the skills ladder.

The Sunday Times spoke to 10 cleaning firms, which employ between 15 and 2,000 cleaners, last week. More than half of their cleaners are taking home a monthly pay of at least $1,000, they say, with five paying all their cleaners that much.

"The market rate is already higher than $1,000," said Mr William Peh, a director of operations at a company which employs some 1,000 cleaners.

"We have been paying more since last year. If we don't pay, we cannot get the cleaners we need."

Another reason is that local workers must be paid at least $1,000 if they are to make up the headcount at firms which need to meet the foreign worker quota.

Latest figures show that office and building cleaners earn a median gross wage of about $850, but this is based on data collected in the second half of 2012.

Companies servicing government contracts are already required to adopt the progressive wage model since last April. But smaller firms dealing mostly with the private sector have found it hard to convince clients to look beyond the lowest bidder.

Most bosses, however, are backing the new guidelines. They say they will help level the playing field and give them more leeway to raise wages.

Sales director of Clean Solutions Sunny Khoo said his company has raised the pay of more than 80 per cent of its cleaners since 2012, in part because of a requirement under an enhanced accreditation from the National Environment Agency.

As a result, his contract cleaning costs have risen by 25 to 30 per cent. Existing contracts, he added, are likely to follow suit when they are renewed.

"We did lose out on some private contracts, but with licensing, hopefully companies can win contracts not by cheap labour costs but by promising clients better service," Mr Khoo said.

Mr Patrick Lee, managing director of Biostar Cleaning Services, which employs around 150 cleaners, said his profit margins fell after he decided to raise the pay for 90 per cent of his workers to $1,000 since July last year. "Almost all our customers are from the private sector and most don't accept the higher prices, but as long as the loss is not too much, we will try to bear it," he added.

Cleaning companies and their clients are not the only ones who will feel the pinch. Some say ultimately the increase in costs will be passed on to consumers. For instance, Bedok North 216 Food Centre & Market Hawkers' Association president Goh Ah Kee said hawkers have had to pay an additional $30 for table-cleaning charges since last year. "If it goes up further, hawkers will have to pay more, and (food) prices may also go up by a few tens of cents."

Ms Stephanie Ho, general manager of AsiaMalls Management, said the additional cost "may possibly be in the range of 20 to 35 per cent". She added that the company will have to manage costs to "cushion the impact".

Condominium residents should not worry, however, said Mr Jimmie Ling, chief executive of the Association of Management Corporations in Singapore. Estate managers will face higher cleaning costs, he said, but cleaning standards will improve and "there are areas where you can cut costs, like energy savings through LED lights".

Guards' wage model 'different'
Their pay structure may differ from cleaners' as overtime work is common
By Toh Yong Chuan, The Straits Times, 10 Jan 2014

THE wage model for the security sector may be different from that for the cleaning sector when it is eventually legislated by law.

This is because the model will have to take into account overtime pay, said security firms and industry players.

Unlike cleaners, who work 44-hour weeks, guards typically work 72 hours each week, or 12-hour shifts each day over six days.

Although the Manpower Ministry's latest wage data showed the guards' basic monthly salary of $800 is lower than the cleaners' $850, their gross monthly salary is much higher at $1,700 because of overtime pay.

"It is slightly more complicated (working out a wage model) because of the nature of the industry, where overtime is more prevalent," said labour MP Zainal Sapari, who is spearheading the implementation of the progressive wage model to bring up low-wage workers' pay.

Mr Zainal said it is important to look at a guard's overall monthly pay package because that matters to most, adding there could be two options for guards - they can work the same 72-hour week for higher monthly pay, or reduce the hours of overtime work without having to suffer a pay cut.

His comments came one day after the Government announced on Wednesday it would amend the law to make it compulsory for cleaning firms to pay cleaners a basic monthly wage of at least $1,000 from September.

A committee of government officials, unionists and employers will negotiate a tiered-salary scale for cleaners, and firms will be required by law to pay those salaries. Cleaning firms that do not comply can have their licences to operate revoked.

The security sector is next in line, although no implementation date was set.

The Government added that the targeted move to raise the salaries of cleaners and guards does not amount to setting a national minimum wage.

Mr Zainal, who is in the committee drawing up the salaries for guards, declined to be drawn into saying what the salary structure might be.

The Straits Times understands the committee has not started discussing the structure yet.

Security firms were divided on whether the focus should be on raising pay or reducing overtime work. Some said it was not up to them.

"We can only wait to see what is announced. It is not like we have a choice," said a director of a security firm who declined to be named.

But Mr Paul Lim, chief executive of security firm Soverus, said the "ridiculous" levels of overtime work should be cut first.

"It is the biggest obstacle stopping people from joining the sector, worsening the manpower shortage," he said.

Specialised cleaning firms exempted from licensing regime for now
Others must be licensed within five months from April, when proposed changes to Act will come into effect
TODAY, 25 Jan 2014

Firms that offer domestic cleaning services, including part-time housecleaning, will be exempted from the mandatory licensing regime that will soon cover the cleaning industry. Those who clean swimming pools, large structures such as fountains, statues, tourist attractions, as well as animal enclosures will also be exempted.

Announcing the exemptions yesterday, the National Environment Agency (NEA) said cleaning businesses will have to be licensed within five months from April, when proposed changes to the Environmental Public Health Act come into force. Amendments to the Act were tabled in Parliament on Monday by the Ministry of the Environment and Water Resources.

The licensing regime will require cleaning businesses to have mandatory written employment contracts, provide training and implement a tiered wage system, known as the Progressive Wage Model. Under the system, cleaning companies must pay an entry-level salary of S$1,000 each month, up from the current median gross monthly wage of about S$850, and subsequently give increments in tandem with skills upgrading.

Those who are trained to handle cleaning machines will earn at least S$1,400 and a supervisor will get S$1,600. An estimated 55,000 local cleaners are expected to benefit from the change.

An NEA spokesperson yesterday said specialised cleaning firms are exempted from the new licensing regime for now, as the focus is on raising the cleaning standards and professionalism of the general cleaning industry. “Cleaners engaged to perform specialised cleaning jobs are generally already better skilled than their counterparts,” she added.

The NEA also said licensed cleaning companies will have to factor in the Progressive Wage Model when tendering for new contracts or renewing contracts. For contracts awarded before changes to the Act come into force, businesses will have until September next year to transit to the new regime. “Businesses will, however, be encouraged to start paying progressive wages earlier,” the NEA said.

A person who operates a cleaning business without a licence may be fined up to S$10,000 and jailed for 12 months. Those who engage the cleaning services of unlicensed persons may also be fined up to S$10,000 upon conviction, unless they could prove “on a balance of probabilities” that they did not know and could not reasonably have been expected to know that the contractor did not hold a valid cleaning business licence.

Cleaning firms will also have to ensure that at least 50 per cent of their staff are trained in at least one module within the Singapore Workforce Development Agency’s Workforce Skills Qualifications Environmental Cleaning framework at the point of application. All staff should be trained at the time of licence renewal, the NEA said.

Higher pay for cleaners unlikely to spike fees
Town councils chief explains impact of new law, other factors on S&C fees
By Toh Yong Chuan, The Straits Times, 27 Jan 2014

HOUSING Board residents need not worry that higher pay for cleaners alone will lead to higher service and conservancy (S&C) charges.

Town councils say that higher cleaning costs on their own will not lead to higher fees, as cleaning charges make up only a fraction of estate maintenance costs.

Rather, any fee hike would come because estate maintenance costs have risen and some town councils have not raised S&C fees in a decade.

Under a new law kicking in later this year, cleaning firms must pay cleaners minimum basic wages according to the jobs they do.

Coordinating chairman for all 15 People's Action Party (PAP) town councils, Dr Teo Ho Pin, said: "The increase of S&C rates depends on various factors, such as increases in maintenance costs, inflation and electricity costs.

"With prudent management and cost-saving measures, the town council would increase the rates only when it is absolutely necessary."

Cleaning costs, such as for sweeping and trash collection, have risen by about 20 per cent over the past few years due to higher manpower and material costs, he said.

Town councils' annual reports show that cleaning costs typically make up only 20 per cent of routine estate maintenance costs. Public utilities take up the largest chunk, about 35 per cent. The rest includes fees for lift maintenance and managing agents.

Town councils are required by law to keep 30 to 35 per cent of S&C fees collected as sinking funds for large-scale maintenance. Monthly fees range from below $20 for one-room flats to above $80 for executive flats.

Seven PAP town councils raised their charges in 2012 and two in 2010, including the former Aljunied town council now under the Workers' Party (WP).

Sources familiar with town council operations say those that have not raised fees since the last hike in 2004 face the greatest pressure to increase charges. "Maintenance costs go up as estates get older," said a council volunteer.

WP's Ms Sylvia Lim, chairman of Aljunied-Hougang-Punggol East Town Council (AHPETC) said its cleaning costs have risen substantially in the last two years.

"Government grants to town councils have not increased for many years, and should be reviewed. While AHPETC would not want to increase S&C charges as a first resort, we may have to do so," she said.

The National Development Ministry said grants are based on the number and types of flats. It spends about $90 million a year on about 15 per cent of town councils' annual budgets.

While residents were worried about higher S&C fees, some back the move to raise cleaners' pay.

Said Jurong resident S.L. Chan: "As long as the Government bears the bulk of cost increases, I don't mind paying a few dollars more each month if it means the cleaners getting higher pay. I feel for these Singaporeans too."


No comments:

Post a Comment