The journey in lifting wages of low waged workers

The letter below has been submitted by S.C Woo, ex-civil servant. 

cleaner (1)

Hi,

I read about your article about how the NTUC chief is also in the Cabinet. I thought it would be interesting to share some insight as to how the journey to lift the wages of low waged workers came about.

I was a civil servant in the Ministry of Environment and Water resources back in the day and had the good fortune to be in the position to observe how the man worked to improve both wages and public cleanliness at the same time.

In 2001, the new minister was given the portfolio of Environment and water resources and his job was to helm environment policies. Hawker centers was part of this job. Visiting hawker centres frequently, he observed and watched how cleaners went about their work.

In those days, a worker would take a pail of water and a cloth and cleaned tables with it. As you can imagine, the cloth and pail would become increasingly dirty with each table cleaned.  This didn’t make sense.

Three years of previous union experience as the NTUC’s Deputy Secretary General (since 1997) reminded him that perhaps the problem with the cleaning process was systemically embedded in how the workers were paid. Speaking to hawkers, he learnt how they paid the cleaners…and how much the cleaners were paid.

The fact was, the hawkers each paid $80 a month towards the cleaner for the cleaning of tables. This meant that the take home pay of the cleaner was only several hundred dollars. Now in the cleaner’s point of view, if he/she was paid that much then that was all the work that they’re prepared to do.

Now would the hawkers pay more? Say $120 each? The hawkers said they would, provided that the cleaners could do their work better and not have customers complain about the state of uncleaned and uncleared tables. They would pay more if the tables got cleaned faster. They would certainly pay more for equipment that would improve the status of the work – though the equipment was expensive to buy, costs would amortise and would turn out cheaper in the long run.

Incidentally, this may also have been the origination of the famous Lim Swee Say catch phrase “cheaper, better, faster” – used by the labour movement to talk about macroeconomic changes.

Through these interactions with hawkers and cleaners, he sought a dual task of improving both salaries and efficiency of the business owners. Because without productivity, any pay increase was not going to be sustainable.

The Ministry was then directed to work with the contractors to see if the cleaners could do a better job as well as handle more stalls. The cleaning trolley, which  people now see in hawker centres, with different compartments for detergents and several “washing’’ containers, is one outcome. It allowed the cleaners to do their rounds a lot quicker. Cleaners could now handle 12 stalls instead of eight. And it was a lot cleaner too. As a result, pay went up, businesses were happier and customers had a better environment to dine in.

This background provides a history as to why the labour chief is so obsessed with labour-saving technology. As many an economist (and businessman) would tell you, wages could only go up if workers could contribute either in terms of productivity or profit.

However, there is still problem #2.

Problem #2 is set within the management of the company. As Singapore privatised (SP Power Ltd, SingTel Ltd etc), the trend for outsourcing started. Now, outsourcing is a highly producvitive operation. No longer do the companies have to directly hire and manage their own cleaners, they now source from third parties.

The mall owners, building management and hawker centre committees work by setting a head-count requirement to the cleaning contractor, rather than by defining a job scope. This means they ask for X number of cleaners. The company with the cheapest bid wins. Guess who suffers? It is now in the interest of the cleaning company to pay the cleaners as low a wage as possible in order to win a tender. Lim calls this “cheap sourcing”, a zero-sum where one’s gain is another’s loss.

Lim had tackled the problem of raising wages at the employer/employee level, but here.. cheap sourcing was now threatening to reverse all this work.

When Lim returned to the NTUC, this time as Secretary General, he created the Best Sourcing Initiative (or BSI for short). What this meant was, clients should define the cleaning work required and to allow for the contractors to decide the number of cleaners required. This way, the tender would be won on the best performing, most value for money company, rather than just winning on cheapness.

Yet, to  change mindsets from cheap sourcing to best sourcing is slow and painful. When a company loses a contract the next time bidding comes around or when the contract expires, it does not mean the cleaners or security guards lose their jobs. What happens then is that the new company hires them instead, and since the new company probably got the tender because it under-cut the rest, their pay does not go up. In fact, it might go down, if they prefer to stay in familiar surroundings. Hence, you sometimes see the same people all the time – in different uniforms. This is a spiral which goes on and on, leaving wages stagnant.

The next step in the wages battle was to refine it further into what we know today as the “Progressive Wage Model”. To build in a structural change that gives the employer no choice but to give higher pay. It works like minimum wage, but a lot more.

Minimum wage cares not for productivity, nor does it care for sustainability. The Progressive Wage Model requires employers to pay a base minimum and at the same time, build in a model where the company must sustainably increase salaries over the career of the worker.

Ladder+cleaner

You might think that the journey to raise wages was long. But it should be. Can you imagine a country where wage policies was introduced on a whim? Would companies still have confidence to continue running their businesses in Singapore? Where there are no businesses, there are no wages – its as realistic as that.

Today with the implementation of the Progressive Wage Model, wages of many a low wage worker had been lifted… and it is no temporary thing. They will continue to see salaries improve, because the PWM is designed to do so. There is no need to review this yearly, or to peg it to something as fickle as inflation/deflation.

It ties back to your previous story about why the labour chief is in cabinet. If otherwise, the journey to install progressive wage would have taken even longer.

 

 

Must reads

        »  So you wanna run a tech startup?
        »  Entertainment: The Way We Go (20th – 29th November 2014)
        »  What’s the point of a HR department?
        »  Nasty letter to nurse: netizens fight back
        »  Retrenchment: How union membership gives you better bargaining power

 

 

 

About the author

The Editor

Hello, I am the Editor of FiveStarsAndAMoon :)

View all posts

Share your thoughts!