During the recent National Day Rally (NDR) announcement, Prime Minister Lee Hsien Loong announced that companies MUST pay a Local Qualifying Salary (LQS) of $1400 to ALL its local employees if they wish to hire foreign employees. Many Singaporeans are confused by this announcement and what the LQS is, mistakenly thinking that PAP has finally conceded to a Minimum Wage (MW).
Let’s see what conspiracy theories the netizens cooked up.
The LQS was in place since 2007
The LQS is something set by the Ministry of Manpower (MOM) and its purpose is to prevent companies from solely hiring foreign workers. Hence, the LQS is in place to ensure that companies that wish to hire foreign workers to pay their local employees a salary of at least $1400 to obtain a quota for hiring foreign employees. This means it’s a system to protect locals, so that they won’t lose jobs to cheaper foreign workers.
In addition, the amount $1400 is to discourage companies from gaming the system. Some errant companies can “hire ghost employees” for $500 or $600 for example, when actually those are their family and friends. Long story short, they can bluff MOM that they hire a lot of locals but actually it’s for really low salary and it’s all for show.
What PM Lee actually announced
So, what are the changes PM Lee announced? PM Lee announced that companies now have to pay ALL local employees the LQS of at least $1400 if they want to hire any foreign workers. In the past, companies only had to pay SOME local employees the LQS to obtain a certain foreign workers quota.
Govt is still expanding the PWM in more sectors
PAP did not change gears and suddenly decided to adopt MW because of WP’s lobbying. The Government and NTUC is still actively implementing the Progressive Wage Model (PWM) in more sectors. In fact, PM Lee also announced that the PWM will be in the retail sector next, followed by food services and waste management.
The reason for implementing PWM instead of MW? Many workers have seen tangible and real salary growth from the PWM, which is giving them promotion opportunities and significant pay increments. They are actually earning more under the PWM than what WP proposed, which is a MW of $1300.