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NWC wants S$50-65 hikes for low-wage workers (Amended)

Wage restraint okay for firms not doing well and facing uncertain prospects, but management must take lead
Wednesday, June 1, 2016 - 05:50
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The economy is shaky but the National Wages Council still wants employers to give low-wage workers earning up to S$1,100 monthly a built-in wage increase.

Singapore

THE economy is shaky but the National Wages Council still wants employers to give low-wage workers earning up to a basic income of S$1,100 monthly a built-in wage increase. However, instead of the minimum S$60 raise in last year's guidelines, the council said that this year's monthly wage increment should be S$50 to S$65 - the first time the NWC recommended a range in the four years it has focused on low-wage workers through quantitative wage guidelines.

"Notwithstanding the uncertain economic environment, the NWC believes there is merit to continue according low-wage workers special consideration in their annual wage adjustments, to build on sustained efforts to uplift their incomes," the NWC said in its report.

The guidelines also provided for bosses to grant "an equitable and reasonable wage increase and/or one-off lump sum based on skills and productivity" for low-wage workers making more than a basic monthly income of S$1,100.

NWC chairman Peter Seah said at a press conference on Tuesday that the range was not meant to cap increments at S$65; it was to give employers some flexibility in the tough economic conditions. "It is to take into account affordability. Employers should give more if they can afford it."

Robert Yap, president of the Singapore National Employers Federation (SNEF) and a member of the NWC, said that the range was a compromise between the employers' and workers' representative in the tripartite council - the former wanted a lower while the latter pushed for a higher increment.

The introduction of a range wage guideline for low-wage workers also came in the wake of a drop last year in the proportion of employers who gave increments equal to or more than the NWC's recommended built-in wage hike of S$60. In 2014, 31% of employers with employees earning up to a basic monthly salary of S$1,000 gave increments equal or more than the NWC recommended built-in wage hike of S$60,  compared to 18 per cent of employers with employees earning up to basic monthly salary of S$1,100 in 2015 .

Mr Seah said that this was because of a fall in the number of workers who earn up to a basic monthly income of S$1,100 and the challenging business climate.

In giving its support to this year's guidelines, SNEF noted in a statement that the productivity-wage gap has widened by 10 percentage points in the past five years. "There is a need to rein in wage cost increases to ensure that our cost competitiveness is not eroded."

But SNEF said that the NWC has been mindful of this and calibrated its guidelines by business performance and prospects. "A right balance between built-in wage increases and variable payments according to each company's situation would enable employers to reward workers sustainably and fairly."

In urging employers to press on with restructuring and productivity growth, the latest NWC guidelines also said that employers not doing well in business and unsure of their business outlook should exercise wage restraint, with management leading by example.

Those who have done well but face uncertain prospects may go easy with built-in wage increases. Still, they should reward workers with variable payments in line with the company's performance, according to the guidelines.

The government has accepted the NWC guidelines and said in a statement that the recommendations would build on efforts to help low-wage workers, including strong funding for skills upgrading through the Workfare Training Support Scheme and the sharing of productivity gains through the Inclusive Growth Programme.

The National Trades Union Congress (NTUC) said that it wants employers to ensure wage hikes are "fair, sustainable and reflective of workers' performance". The labour movement also called on employers to apply the guidelines to all groups of workers, including freelancers and contract workers.

"We also believe that productivity-driven growth is key to sustainable wage increases," it said in a statement. "Thus, it is imperative that employers and workers change their mindset and recognise the urgency in reviewing current business practices to improve productivity."

Amendment: The Ministry of Manpower has clarified that the "income" in our earlier report should be "basic income". The "number" of employers who adopted NWC guidelines in 2014 and 2015 referred to the "proportion" and the comparison was for workers who earned up to S$1000 in basic wage in 2014 and up to S$1100 in 2015.

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