Budget 2024: Progressive Wage Credit Scheme (PWCS) Enhancements

The Singapore government unveiled significant measures aimed at bolstering support for lower-income workers and alleviating the financial burdens faced by businesses in Budget 2024.

Central to these initiatives are enhancements to the Progressive Wage Credit Scheme (PWCS), designed to provide substantial assistance to employers in raising the salaries of their lower-wage employees.

Introduced in 2022, the PWCS has been a cornerstone of government efforts to address income inequality and ensure fair compensation for lower-wage workers.

Under the scheme, the government co-funds salary increases for eligible employees, helping to mitigate the impact of rising business costs while improving the financial well-being of workers.

Key Enhancements to PWCS

1. Increased Co-Funding Levels: One of the most significant enhancements to the PWCS is the increase in co-funding levels. Previously capped at 30%, the government will now provide co-funding support of up to 50% for wage increases given in the qualifying year 2024. This substantial boost in financial support aims to incentivise employers to raise wages for their lower-wage workers, thereby fostering a more equitable and sustainable workforce.
2. Expansion of Wage Ceiling: Additionally, the gross monthly wage ceiling for PWCS co-funding will be raised from S$2,500 to S$3,000 in qualifying years 2025 and 2026. This expansion ensures that more lower-wage workers can benefit from the scheme, allowing them to receive higher wage increases while maintaining the affordability for businesses.
3. Introduction of Wage Cut-Off: To maintain the targeted focus of the PWCS on supporting the wage growth of lower-wage employees, a wage cut-off at S$4,000 will be implemented from 2024 onwards. This means that PWCS support will not be applicable to employees whose average monthly wage exceeds S$4,000 post-wage increase, ensuring that resources are directed towards those who need it most.

Summary

The expansion of the wage ceiling and introduction of a wage cut-off ensure that the scheme remains targeted towards those most in need, maximising its effectiveness in uplifting lower-income workers.

As Singapore continues its journey towards a more inclusive and sustainable economy, initiatives like the PWCS play a vital role in promoting social mobility, economic resilience, and shared prosperity.

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