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Incoming vendors may rehire the incumbent or new workers when a service buyer changes a vendor, and firms bid for contracts guided by what is sustainable for their business and according to their own regulatory requirements.
Singapore's Ministry of Manpower (MOM) has clarified that it "should not intervene" in the market-driven process when companies change service buyer contracts, as long as the employer complies with Progressive Wage Model (PWM) salary requirements and employment laws.
The ministry said this in a written response to a Parliamentary query in October, wherein in Member of Parliament Desmond Choo raised the question on the prevalence of a "wage resetting" practice where wages of workers are reduced to base salaries when a company changes its service buyer contract especially in outsourcing sectors.
It explained that incoming vendors may rehire the incumbent or new workers when a service buyer changes a vendor, and that firms bid for contracts guided by is sustainable for their business and according to their own regulatory requirements.
MOM also added that the existing Progressive Wage framework has been serving the lower-wage workers well over the past decade with initiatives like the PWM, Local Qualifying Salary (LQS) and Progressive Wage Mark accreditation benefitting up to 90% (nine in 10) of them collectively. As a result, real incomes of lower-wage workers at the 20th percentile have risen cumulatively by 30% from 2013 to 2023, faster than the median worker at 22%.
To add on to the positive data trend, the wage requirements for PWMs in outsourced sectors (cleaning, security and landscape) is expected to increase up to 10.8% per year from 2022 to 2028. The ministry also reminded that wage increases for outsourced sectors are announced in six-year schedules, allowing firms to account for future PWM wage increases when bidding for multiple-year contracts.
READ MORE: MOM notes more efforts to close wage gap between lower-wage and median wage workers in Singapore
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