Understanding Singapore’s wage laws is crucial if you work as an employer there. Although Singapore does not have a minimum wage, some businesses are required to adhere to the Progressive Salary Model (PWM), which establishes minimum salaries for particular job roles. This class will teach you how to properly set up a salary, what regulations you must follow, and how Singapore’s minimum wage affects your company. Whether you’re evaluating payroll policy or employing new employees, this article will provide you with a straightforward and easy way to get all the information you need.
Table of Contents
- What’s the minimum wage?
- Does Singapore have a minimum wage?
- What Is the Impact of Singapore’s Local Qualifying Salary (LQS) on Businesses?
- What is the minimum hourly wage for LQS part-timers?
- How much does it cost in Singapore to get an Employment Pass (EP)?
- What is the minimum wage requirement to obtain an S Pass for skilled foreign workers?
- What is the minimum wage requirement to apply for a Work Permit?
- Conclusion
What’s the minimum wage?
The minimum wage is an essential part of labor regulations that ensures workers are appropriately compensated for their effort. The government establishes this minimum wage level to prevent exploitation, alleviate poverty, and promote social welfare. Enforcing minimum wage laws aims to provide workers with financial security and dignity while also reducing economic inequalities.
Does Singapore have a minimum wage?
There are no laws or rules governing minimum wages in Singapore. Rather, Singapore uses the Progressive Wage Model (PWM), which raises lower-paid workers’ wages by increasing productivity and skill development. Some of the industries that PWM supports include the following:
- Maintaining a Secure Landscape
- Escalator and life
- Food services for retail
- Occupational PWs for drivers and administrators
- Management of waste
What Is the Impact of Singapore’s Local Qualifying Salary (LQS) on Businesses?
Since 1 September 2022, any company hiring foreign workers must meet these rules:
Progressive Wages (PWs):
If you employ local workers in cleaning, security, landscaping, or retail, you must pay them according to the Sectoral or Occupational Progressive Wage requirements.
If you have in-house workers covered by the Progressive Wage Model (PWM), you must follow those wage guidelines too.
Local Qualifying Salary (LQS) for Other Local Workers:
- All local workers not in the above sectors must earn at least the LQS.
- How many local workers meet the LQS affects your foreign worker quota.
Specifically:
- A full-time local worker counts as 1 local worker if they earn at least S$1,400 per month (LQS).
- A part-time local worker counts as 0.5 local worker if they earn between S$700 and below S$1,400 per month (half the LQS).
Why This Matters:
In the Singapore Budget 2024, it was announced that the LQS will rise from S$1,400 to S$1,600 per month on 1 July 2024.
When LQS increases:
- You may face tighter foreign worker quota limits.
- Your labor costs could go up if you need to pay local employees more.
- Failing to meet these requirements can stop you from renewing or applying for work passes for foreign staff.
Understand Your Foreign Worker Quota:
- The number of local workers earning LQS determines how many foreign workers you can hire.
- If too few locals meet LQS, your foreign worker quota shrinks.
Learn About the Foreign Worker Levy (FWL):
- The levy is a monthly fee you pay for each work permit holder.
- Knowing levy rates helps you budget accurately.
Helpful Guides to Bookmark:
- Foreign Worker Quota Guide for Employers in Singapore
- Foreign Worker Levy (FWL) Guide for Employers in Singapore
What is the minimum hourly wage for LQS part-timers?
To count as a local worker under LQS, a part-timer must earn at least S$9 per hour (for now). Here’s how you check:
Calculate Hourly Gross Rate:
Total monthly pay ÷ Total hours worked that month.
Example:
Sam works 20 hours a week (about 80 hours a month) for XYZ Company.
He earns S$800 in gross pay each month.
Hourly gross rate = S$800 ÷ 80 hours = S$10 per hour.
Because S$10 ≥ S$9 and his monthly pay is between S$700 and S$1,400, Sam counts as 0.5 local worker.
Upcoming Change (Effective 1 July 2024)
- The part-time LQS hourly rate will go up from S$9 to S$10.50.
- After this date, part-time local workers must earn at least S$10.50 per hour to count toward LQS.
How much does it cost in Singapore to get an Employment Pass (EP)?
Managers, executives, and professionals from other countries can work in Singapore with an EP-type work visa. Candidates need to have a Singaporean job offer before they may apply for an EP.
EP candidates need to earn at least:
Current criteria:
- $5,000 a month (in general)
- $5,500 a month (for financial services)
- From 1 January 2025, the EP qualifying salary:
- $5,600 a month (in general)
- $6,200 a month (for financial services)
- Applicants with more work experience will also correspondingly require a higher salary to qualify.
Tip:
Applying an EP for your employee? Head over to our comprehensive Employment Pass guide for employers in Singapore, which includes the application process, eligibility requirements, and documentation needed.
What is the minimum wage requirement to obtain an S Pass for skilled foreign workers?
The S Pass is a mid-level work visa for qualified workers. The target audience consists of people who are not qualified for the Employment Pass but have the required work experience and qualifications.
Candidates need to at least:
- Current norms: an average of $3,150 per month
- Financial services cost $3,650 per month.
- The minimum qualifying wage is $3,300* per month (average) for new applications beginning September 1, 2025, and for renewals beginning September 1, 2026.
- Financial services cost $3,800* each month.
- Candidates with more work experience will also need to make more money to qualify.
- To be finalised by the Ministry of Manpower (MOM)
Tip:
Need a one-stop solution for S Pass queries? Explore our S Pass guide for employers in Singapore. From step-by-step application procedures to essential eligibility criteria and the required documents.
What is the minimum wage requirement to apply for a Work Permit?
Applying for a work visa in Singapore does not require a minimum pay. However, businesses are encouraged to pay their employees, whether they are domestic or foreign, based on their abilities, skills, and competencies. Putting in place a competitive pay plan encourages workers and increases staff retention.
Tip:
Learn more about the Work Permit process and what you need to do in order to get your new foreign employees working in Singapore. Our Work Permit guide for employers covered everything you need to know about obtaining Work Permits for foreigners in Singapore.
Conclusion:
The LQS and PWM, two minimum wage rules in Singapore, have a significant impact on how businesses treat their workers. Maintaining compliance while employing foreign workers keeps you out of problems and allows you to continue meeting your quota. Given the frequent compensation revisions, it is imperative to regularly review pay and procedures. DigiSME streamlines this procedure by offering automatic payroll software that adheres to MOM requirements and upholds your business’s compliance. By monitoring pay eligibility and computing CPF, DigiSME gives you peace of mind while assisting you in better managing your employees. Choose DigiSME to intelligently handle your HR duties.