Jan 17, 2014

    Mandatory wage ladder a clean sweep for workers

    FROM September, cleaning companies will come under a new licensing scheme under which they have to abide by some wage guidelines: All cleaners must be paid at least $1,000 each month. Those with higher skills are assured of at least $1,400 and supervisors, $1,600.

    The Government calls this a "progressive wage model", which assures cleaners of a $1,000 starting pay and provides a "wage ladder" where they can get higher salaries as they gain better skills.

    This new system is the boldest attempt yet by the Government to raise persistently low salaries in the cleaning sector. Industry players, it appears, have suppressed wages in order to submit price-competitive bids to provide cleaning - and security - services.

    It came after persuasion and leading by example failed. In 2011, a voluntary accreditation scheme was introduced for cleaning firms. Only accredited companies could bid for government contracts. But as such contracts covered only 11 per cent of cleaners, the move failed to lift wages across the sector.

    Industry experts and analysts, however, think that this latest move will work. They cite four reasons.

    First, it has the full bite of the law, even though a higher wage is not directly legislated.

    Cleaning firms must have a licence to operate, and a key requirement of the licence is that they use a progressive wage model to pay their workers. A committee of government officials, unionists and employers will negotiate the tiered salaries. Cleaning firms that do not follow the scheme can have their licences suspended or revoked.

    Second, the move is backed by the Government, unions and employers.

    Raising salaries of less-skilled workers while helping them become more productive is in line with this Government's priorities.

    As for the labour movement, it has been pushing for measures to raise low-wage workers' pay for years.

    Employers have said they would like to raise wages of cleaners but were unable to unless other cleaning companies did so. Otherwise, they would not be able to put in competitive bids for cleaning contracts.

    Mr William Peh, operations director at Eng Leng Contractors, which has some 1,000 cleaners, said: "Firms that pay workers lower salaries can definitely submit cheaper quotes to get the jobs, but now that everyone has to pay at least $1,000, it is fairer."

    Third, timing favours this new move to raise cleaners' wages. The curbs on foreign workers in the cleaning sector have started to bite.

    Foreign workers can form no more than 40 per cent of a cleaning firm's workforce now, down from 45 per cent last year and 50 per cent two years ago. Firms have also been paying higher levies for foreign workers since 2010.

    This means that firms have been trying to raise productivity by buying more cleaning machines in the past few years, said Mr Sunny Khoo, sales director of Clean Solutions, which hires some 2,000 cleaners.

    The fourth reason why the new scheme will work: It's a practical move that raises salaries for the lowest-wage earners without adding onto business costs as a whole.

    Describing the move as "pragmatic", labour economist Randolph Tan, an associate professor at UniSIM, said: "I believe the Government views the cleaning sector as probably the safest sector to implement such a policy, that is, in that sector, there should be more consensus than for any other sector that workers deserve help to advance their lot."

    But several questions remain: Will raising wages of cleaners raise cleaning costs for companies? Will business tenants pay more for cleaning of premises? Will households in Housing Board flats and private condominiums see higher conservancy fees for cleaning services?

    Several cleaning companies said their profit margins are thin: At between 5 per cent and 10 per cent. Wages amount to up to 80 per cent of total cost, so a spike in wages will certainly raise their costs.

    Cleaning contracts are typically for two to three years. Contracts due for renewal in the coming months could see costs rising by up to 30 per cent, in line with wage rises in recent years, cleaning companies said.

    Apart from the worry about rising costs, the biggest uncertainty lies in the details of the new wage model and licensing framework. Are in-house cleaners and companies that provide cleaners for private residences governed by this framework? What other penalties are there apart from loss or revocation of licences?

    Answers will hopefully be forthcoming on Monday when the Government tables changes to the law to allow for this licensing-and-wage-ladder scheme to be introduced.

    For most policies, the devil is in the details. This time, though, while details still matter, the broad outlook is already clear: Prospects of lifting cleaners' wages have never looked better.