For Retailers: How the Progressive Wage Credit Scheme can help employee retention
Find out more about the Progressive Wage Credit Scheme Model and how it can further aid your business!
Employees are an essential part of any business, and their productivity is very much linked to how they are being rewarded for their efforts. The Government has been providing support to employers to encourage the sharing of productivity gains with their workers. Through the Wage Credit Scheme (2013-2021) and most recently, the Progressive Wage Credit Scheme (PWCS) starting from 2022, employers can receive financial support from the Government for raising the wages of low wage workers under their employment. This article will tell you all you need to know about the PWCS and how you, as an employer, can utilize the support that our Government is providing for eligible businesses in Singapore!
What do I need to know in a nutshell?
  1. The PWCS is the Governments' latest support to employers

2. Increase in wages for low wage workers from 2022-2026 entitles eligible employers to be co-funded through PWCS

3. Employers can calculate their co-funding amounts with the computation formula provided in this article

4. No application is required on the side of employers (Check eligibility)

5. Start planning for wage increases! Your efforts to reward your employees will also be supported by the Government through the PWCS
What is the Progressive Wage Credit Scheme?
With effect from 1 September 2022, more employers will be required to meet the expanded Progressive Wage Model (PWM) and Local Qualifying Salary (LQS) requirements. To help employers transition into these mandatory wage adjustments, the PWCS was announced in the Singapore Budget 2022.

The PWCS is being implemented to support and also encourage employers to voluntarily raise the wages of lower-wage workers. In short, the Government will co-fund employers the wage increases of eligible resident employees from 2022-2026.
Government co-funds retailers for PWM scheme
Eligible businesses that increase the wages of eligible employees in the years 2022 to 2026 will qualify for the co-funding depending on the Tiers in which their employee's wage falls into. Refer to Table 1 (taken from IRAS website), to see what are the amounts of co-funding that you can get for wage increases. The amount will vary depending on the Tier that the increased wage falls in and also the year in which it is increased.
Table 1: Information is retrieved from the official IRAS website
How to calculate the co-funding amount an employer will get (with example):
You can calculate the amount of co-funding that you are eligible for with the infographic below:
Image 1: Taken from the official IRAS website
Next, below is an example of an employer who has qualified the PWCS payout and how to calculate it. The first Qualifying year is in 2022, where the employer has increased the salary by $100 from the preceding year (2021). In this scenario, there are more increases in the later years and the calculations are also included.
Image 2: Taken from the official IRAS website
Image 3: Taken from the official IRAS website
How do I know if my company is eligible?
Your company will automatically qualify if you raise the wages of your employee who:

  1. is a Singapore citizen or Permanent Resident;

  2. has received CPF contributions from a single employer for at least 3 calendar months in the preceding year;

  3. has received CPF contributions from your company for at least 3 calendar months in the qualifying year;

  4. the wages of the employee in the preceding year must be below the wage ceilings for PWCS as shown in Table 1;

  5. the gross monthly wage increase must be at least $100 in the qualifying year.
There are also companies that are excluded from grant eligibility. You can see the full list on the official IRAS site.
How do employers apply and receive payouts?
The payouts and qualifications will be automatic! IRAS will notify eligible employers of the PWCS payouts and disburse them by Q1 of the subsequent year. The first payout of PWCS will be Q1 2023.
Qualifying year - refers to the year in which the wage credit is being computed (the year in which there is a wage increase)

Preceding year - refers to the year before the qualifying year

Gross monthly wage - total wages (basic salary and additional wages such as overtime pay and bonuses, but excluding employer CPF contributions) paid by the employer to the employee in a calendar year / Number of months in which CPF contributions were made

Qualifying wage increase - refers to the amount of wage increase given to an employee that qualifies for co-funding in any qualifying year
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