Mr Pritam Singh: Sir, the Progressive Wage Model for the lift and escalator sector was approved by the Government in 2018 after a tri-sector committee comprising of union representatives, the Government and lift companies made its recommendations.
Arising from this agreement to raise the wages of Singaporeans and PRs in the lift and escalator sector, a move that all Singaporeans should support, it is inevitable that some maintenance costs for lifts and escalators will rise.
The lift and escalator industry is one with relatively high barriers to entry and it is dominated by a handful of major players.
Some years ago, arising from a number of high profile accidents in the Town Council setting, many Town Councils moved to, as far as possible, tag the maintenance of their lifts to their original equipment manufacturers. This was also done in anticipation of a smoother rollout of HDB Lift Enhancement Initiatives.
Currently, Town Councils are in discussions with various lift companies that seek to increase the maintenance costs of lifts in HDB estates arising from the implementation of the Progressive Wage Model in the lift and escalator sector. In tandem, lift companies are also increasing the fixed schedule of rates for their lift parts. The latter move should not have any direct connection with the rollout of the Progressive Wage Model in this sector as the costs of spare parts generally rise in tandem with inflation, accounting for a reasonable 3% to 4% increase in costs for Town Councils.
In my discussion with lift companies as an elected Member of Parliament of Aljunied/Hougang Town Council, the starting position of some lift companies has been to throw in a steep increase in maintenance cost. One major lift company started with a more than 40% jump in lift maintenance fees, positing that costs would likely rise by 40% on account of the implementation of the Progressive Wage Model in this sector. When this company was questioned what percentage of this increase would go to workers, considering it maintained thousands of lifts across various Town Councils and should benefit from significant economies of scale to accommodate a mandated rise in wages through the PWM, company representatives demurred and argued that a rise in excess of 40% was just an opening position and that this amount was subject to negotiation.
Sir, I recognise that such discussions with lift companies are commercial arrangements. The argument from some, when a minimum wage like the Progressive Wage Model is applied, is that costs will rise and the burden will have to borne by consumers. But it would appear that some vendors could take advantage of the Progressive Wage Model to profiteer under the pretext of increased costs. In view of the design of the Progressive Wage Model, and the extended conversations that take place between union representatives, the Government and the companies, I would like to know how the tripartite partners ensure that the prospects of profiteering by unscrupulous vendors is kept in check under the guise of rising wages for workers. This is especially in sectors like the lift and escalator sector where a number of the major players dominate and have a large footprint in that sector.
Sir, I filed this cut before Senior Minister of State Koh Poh Koon delivered his speech last Wednesday, where he recommended the setup of a committee to guard against companies profiteering from the rollout of the Progressive Wage Model. To this end, what role do Government bodies like the BCA, for example, play to ensure that the interest of Singaporean HDB dwellers and other consumers are protected from unjustified hikes in the guise of adherence to the Progressive Wage Model, in this case, in the lift and escalator sector? Thank you.
Ministry of Manpower
2 March 2021