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MOM Committee of Supply 2024: Local Qualifying Salary to increase from 1 July

MOM Committee of Supply 2024: Local Qualifying Salary to increase from 1 July

With the increase, to be counted as one local workforce count for the purpose of foreign worker quota for firms, the local worker will need to be paid at least S$1,600, up from S$1,400 today.

At the 2024 Committee of Supply debates, Singapore's Ministry of Manpower announced a series of initiatives taking effect over the course of this year and the next few years, in efforts to 'strengthen, uplift, and care for Singaporeans'.

Among the initiatives announced, was the raising of the Local Qualifying Salary (LQS), as well as enhancements to the Progressive Wage Credit Scheme (PWCS) and Workfare Income Supplement Scheme.

Raising the Local Qualifying Salary (LQS)

First talked about at Budget 2024the LQS, which determines the number of local employees who can be used to calculate a firm’s Work Permit and S Pass quota entitlement, will be raised from S$1,400 to S$1,600 for full-time workers; while that for part-time local employees will be increased from $9 to $10.50 per hour. 

Correspondingly, foreign worker quota computation will be adjusted. Painting a scenario, Senior Minister of State for Manpower Zaqy Mohamad said at the Debates: "To be counted as one local workforce count for the purpose of foreign worker quota for firms, or one LWC, the local worker will need to be paid at least S$1,600. This is up from S$1,400 today.

"For firms hiring part-time workers, locals who earn at least half the LQS are counted as half an LWC. With the LQS increase, such locals have to be paid at least S$800, up from S$700 today."

SMS Zaqy added that the changes will be implemented on 1 July 2024.

Workfare enhancements

As further announced at Budget 2024, the Government will be further enhance Workfare an approach that comprises two pillars that provide additional support to lower-wage workers: the Workfare Income Supplement (WIS), and the Workfare Skills Support Scheme (WSS).

Delving into the details of this enhancement, SMS Zaqy shared that from 2025, Singapore will raise the qualifying monthly income cap further—from S$2,500 to S$3,000 — for both WIS and WSS. This, he added, will ensure that Workfare continues to help workers in the bottom 20th income percentiles, with some support for those slightly above.

The Government will also be raising WIS payments, i.e., increasing the maximum payment to S$4,900 per year, up from S$4,200:

  • Those aged 60 and above will benefit from this highest payment tier, as well as all persons with disabilities regardless of age.
  • Payments for all other qualifying age groups will also be increased.
    • Those aged 30 to 34 will receive a maximum payment of S$2,450 per year;
    • Those aged 35 to 44 will receive a maximum payment of S$3,500 per year, and
    • Those aged 45 to 59 will receive a maximum payment of S$4,200 per year.

SMS Zaqy noted: "These enhancements will benefit around half a million lower-wage workers. In total, WIS payments will increase to S$1.4bn in 2025, up from S$1.1bn last year."

Updates to the Progressive Wage Credit Scheme (PWCS)

Coming to updates to the PWCS, it was shared at Budget 2024 that the Government will be further enhancing the PWCS this year to help employers cope with PWM and LQS increases amid a more challenging economic environment. This builds on earlier enhancements which saw more than 345,000 employees by over 70,000 employers receiving co-funded wage increases, through about S$1bn of PWCS funding.

In that vein, SMS Zaqy announced the following updates to be taking place:

  • First, building on the 2022 and 2023 enhancements, the Government will increase its co-funding for wage increases given in 2024. With this year’s enhancement, the Government will co-fund up to 50% of wage increases given by employers to eligible lower-wage workers in 2024 – up from the original 30%. This includes workers who are not covered by any Progressive Wage Model.
  • Second, the Government will raise the wage ceiling in 2025 and 2026 to S$3,000 – up from S$2,500 per month. With this enhancement, PWCS will continue to support increases of wages up to S$3,000 beyond 2024.

According to an announcement on the Inland Revenue Authority of Singapore's (IRAS) website, eligible employers can note the following:

  • Companies with an existing GIRO arrangement as at 16 February 2024 with IRAS, or is registered for PayNow Corporate as at 26 Mar 2024, will receive a payout titled “Progressive Wage Credit Scheme” (GIRO) or “GOVT” (PayNow Corporate) in your bank account from 28 Mar 2024. There would not be any PWCS payout made via cheques.
  • Selected companies will receive a letter from IRAS to submit supporting documents for review. If you are selected for review, your March 2024 payouts will be withheld and you may be required to provide a declaration or documents, in order to substantiate your eligibility for PWCS payout. The payout will only be disbursed after the completion of the review.

More details, such as eligibility, can be found here

SMS Zaqy commented:  "Collectively, both enhancements will offset a significant proportion of immediate cost pressures on employers arising from our efforts to uplift lower-wage workers, and mitigate cost transfer to consumers. To provide for these enhancements, DPM has announced a top-up of S$1bn to the PWCS Fund. This brings the total PWCS budget to S$6.2bn.

"Together with the increased WIS payments of up to S$1.4bn per year, I am sure members can see that the Government has committed and invested significant resources into strengthening and supporting our lower-wage workers."

Read a summary on the support measures here.

Lead image and infographic: MOM

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