Singapore has spent the last few years steadily lifting the wages of lower-income workers through the Progressive Wage Model and the Local Qualifying Salary. To help employers absorb the cost of those increases, the Government runs the Progressive Wage Credit Scheme (PWCS) — a transitional co-funding scheme that pays employers a share of the wage rises they give to eligible lower-wage staff.
For 2026 the scheme is more generous than many employers realise, following an enhancement in Budget 2026. This guide explains how the PWCS works, the co-funding rates and wage ceiling for 2026, who qualifies, and what you need to do to receive the payout — which, importantly, is almost nothing.
What Is the Progressive Wage Credit Scheme?
The PWCS was introduced at Budget 2022 to defray the cost to employers of raising the wages of lower-wage workers as the Progressive Wage Model expanded across sectors. Rather than a one-off subsidy, it co-funds sustained wage increases over a multi-year window, encouraging employers to keep wages up rather than reverse them once support tapers.
Crucially, the PWCS is administered by IRAS and requires no application. Payouts are computed automatically from the CPF contribution data employers already submit, and disbursed directly. That makes timely and accurate CPF contributions the single most important thing an employer must get right to benefit.
2026 Co-Funding Rates and Wage Ceiling
The Government has repeatedly enhanced the co-funding rates. At Budget 2025 the rates for 2025 and 2026 were raised, and at Budget 2026 the 2026 co-funding was lifted again — from 20% to 30%. The gross monthly wage ceiling for co-funding was also increased to S$3,000 for qualifying years 2025 and 2026.
| Qualifying Year | Government Co-Funding | Gross Wage Ceiling |
|---|---|---|
| 2022 | 75% | S$2,500 |
| 2023 | 75% | S$2,500 |
| 2024 | 50% | S$2,500 |
| 2025 | 40% | S$3,000 |
| 2026 | 30% (enhanced at Budget 2026) | S$3,000 |
Payouts for qualifying year 2026 are scheduled for the first quarter of 2027. The enhanced 2026 rate also applies to wage increases given in 2025 that are sustained into 2026, rewarding employers who hold the line on pay.
Who and What Qualifies?
Eligible employees
The scheme targets lower-wage Singapore Citizen employees whose gross monthly wage falls at or below the wage ceiling. The employee must have received CPF contributions from the employer for the relevant period, and must not be the business owner in certain related-party situations.
Qualifying wage increase
For qualifying years 2022 to 2026, the gross monthly wage increase must be at least S$100 to attract co-funding, up to the wage ceiling. The scheme co-funds both the increase given in the qualifying year and the sustained portion of increases given in earlier years. From qualifying years 2027 and 2028 the minimum increase rises to S$200.
Because the calculation runs off CPF data, the wages must be paid and the CPF contributed on time. Late or missed contributions can reduce or delay the payout.
How the PWCS Fits with Other Support
The PWCS sits alongside a suite of employer support measures. It complements the Progressive Wage Model and Local Qualifying Salary requirements it was designed to cushion, and works in parallel with schemes such as the SkillsFuture Enterprise Credit for training and transformation. Employers should also keep the Skills Development Levy and their broader CPF obligations in view when budgeting payroll for the year.
Unlike most grants, there is no stacking approval to manage — the PWCS runs automatically and does not require you to forgo other support. The practical planning question is simply whether a wage increase you are considering will fall within the ceiling and minimum-increase rules, so you can factor the co-funding into your cost.
What Employers Should Do
Because payouts are automatic, the employer’s job is mainly hygiene: pay eligible staff correctly, make CPF contributions accurately and on time, and keep payroll records that reconcile to CPF submissions. When the payout notification arrives from IRAS, check it against your own records so you can query any discrepancy promptly. Employers should also review whether planned pay rises for 2026 are structured to fall within the co-funded band — a small adjustment can materially change how much support you receive.
Conclusion
The Progressive Wage Credit Scheme remains one of the most employer-friendly forms of Government support in Singapore for 2026: generous co-funding, a raised wage ceiling and no application to file. The catch is that it rewards good payroll discipline — get CPF right, and the co-funding follows automatically. As the scheme tapers toward 2027 and 2028, now is the time to make the most of the enhanced 2026 rate.
Full scheme details are published by IRAS, and the broader lower-wage worker framework is explained by the Ministry of Manpower.
— The Editorial Team, Raffles Corporate Services