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Dec 19, 2023

Guide To The Progressive Wage Model For Retail Sector

A cashier at a retail store in Singapore can safely take home $1,850 per month

A cashier at a retail store in Singapore can safely take home $1,850 per month of salary and not worry about his/her wages shrinking. That's the wage baseline support provided to lower-wage retail workers following the rollout of the sector's Progressive Wage Model (PWM) last year.

The retail sector has often been stigmatised as a sector that has long working hours, lower pay, and a perceived lack of career progression. It is a sector that hires a lot of lower-wage workers too. The PWM attempts to attract workers to the sector and provide meaningful long-term jobs to Singaporeans.

In Singapore, there are over 29,000 retail enterprises in diverse sub-sectors such as department stores, consumer electronics, and supermarkets. The retailers provide jobs to about 87,000 resident employees, of which a large group are lower-wage workers. The sector also employs a sizeable amount of part-timers.

Read Also: How Much More Should You Pay Your Employees In 2023 As Recommended By National Wages Council?

The PWM was developed by the Tripartite Cluster for Retail Industry (a group that consists of unions, employers, and the government). The PWM is a key initiative for the sector to build a future-ready workforce and to transform retailers into employers of choice.

The PWM maps out a career pathway for the workers that includes training and productivity improvements. For lower-wage workers to meet the PWM criteria, workers will have to upgrade their skills and improve productivity.

The retail PWM (which started on September 2022) has an adjustment period of 6 months given by the Ministry of Manpower (MOM) to give employers time to adjust and comply with the progressive wage requirements. The phased implementation of retail PWM will end in February 2023.

Employers are required to comply with the requirements in this transition period, and failure to do so will lead to enforcement measures, including the suspension of their work passes privileges.

Singapore Citizens (SC) and Permanent Residents (PR) who are full-time or part-time employees in retail job roles or on a contract-of-service fall into the retail PWM purview. The retail PWM also includes SC and PRs who are employed by firms that hire foreign workers.

The following retail job roles are included in the PWM:

The workers are paid wages that are aligned with their skills and productivity. The salary band differs according to how skilled and experienced the worker is.

This PWM structure makes it easier for retailers to adopt as there is a staggered salary level per worker type. For a worker to promote to the next job level, he/she will have to go for specific training courses.

A full-time Cashier for example, should earn a monthly gross wage (excluding overtime payments) equal or more than $1,850. A Senior Cashier's salary should be equal or more than $2,035. As the wages of Retail Supervisors and Retail Managers are generally above the 20th percentile, the salaries were recommended to be left to market forces.

The monthly gross wage is calculated by the sum of basic wage, allowances (travel, food, housing), and productivity incentive payments. It does not include bonuses (annual wage supplement), stock options, reimbursement of special expenses, payment-in-kind, and employer CPF contributions.

Full-time retail workers

A part-time employee is one who is under a contract of service to work less than 35 hours a week. These workers are to be paid based on pro-rated PWM gross wages. The formula to compute the PWM hourly gross wage for part-timers is as follows:

Part-time retail workers

The PWM baseline gross wages for full-timers and part-timers will be adjusted upwards from 1 September 2023 and from 1 September 2024 to provide "sustained wage increases" for retail workers. A review will commence again in 2024 for further steps.

Read Also: Progressive Wage Model: How Much Will Singapore Employers Have To Pay Their Workers

Full-time workers who work more than 44 hours a week are covered by the Employment Act Part IV.

The Employment Act Part IV only applies to:

Employers will need to follow the PWM gross wage requirements for workers who work overtime (OT). The rate for overtime must be paid at least 1.5 times of the basic rate of pay.

Here is an example of how much you need to pay your workers for OT

The fluctuation in sales for the sector varies and is often dependent on the seasons. For example, the Christmas and New Year period will see a jump in orders as more do festive shopping. Similarly during the June period when the Great Singapore Sale kicks in, more people may do their shopping to get bargains.

Therefore, the calculations of the wage requirements for workers covered by the retail PWM are allowed to average over a 3-month period.

To qualify and meet the seasonal PWM requirements, either of these conditions have to be met:

SC and PRs must meet the retail PWM training requirements of getting at least 1 Workforce Skills Qualification (WSQ) Statement of Attainment according to their job role, out of the list of approved WSQ training modules.

Inhouse WSQ training modules (with prefix "RET" in the accompanying Technical Skills and Competencies code) can be used to meet the training requirements too.New hires are given 6 months from the date of employment to comply with the retail PWM training requirements. Existing employees are given grace notice until 31 August 2023 to comply to the requirements.

List of WSQ training modules for a Retail Assistant/Cashier

Employers will be advised on the appropriate rectification actions to take within a reasonable timeframe.

If employers underpay workers the mandated retail PWM wages, they are required to make up for the shortfall.

They also have to make the corresponding Employee's Central Provident Fund (CPF) deduction and Employer's CPF contributions in accordance with the CPF Act.

If you fail to comply, enforcement measures may be imposed and you will not be able to renew existing work passes or apply for new work passes (Work Permit, S Pass, Employment Pass).

Read Also: Progressive Wage Model (PWM) For Retail Sector: Is Raising Prices The Only Option For Businesses?

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