Minimum $60 pay rise for low income

Singapore

THE National Wages Council (NWC) has recommended that employers continue paying at least $60 in a built-in wage increase to workers earning a basic salary of up to $1,000 a month.

Not forgetting workers just above this threshold, it also called for those earning above $1,000 to be given an "equitable and reasonable" pay hike, or a lump sum based on skills and productivity.

As in the past two years, the NWC said in its 2014-15 wage guidelines that the built-in wage increase for these low-wage workers should take the form of a dollar quantum and a percentage, so they get a bigger built-in raise.

The government has accepted the recommendations.

Cham Hui Fong, NTUC's assistant secretary-general and a member of the NWC, referring to workers making above $1,000, said: "We want to tell employers to also look out for them because they still belong to the lower 20 per cent.

"Let's look at how we can tier the percentages, so that, while they may not enjoy a 6 per cent increase (in wages), they will not be disadvantaged just because they have crossed the $1,000 mark."

The NWC does not know the number of workers in this group, but agrees there are such workers across the various industries.

As at the end of last year, almost eight in 10 employers in the private sector had given or said that they intended to give a raise to workers earning less than $1,000 a month, up from six in 10 in 2012.

The NWC also said that wage growth must be guided by "prevailing economic and labour market conditions" - conditions which it described as "challenging" for businesses; it added that upward pressure will be exerted on wages as the labour market grows even tighter. Firms should thus take into account their business performance, prospects and sustainability before offering built-in wage increases.

"(But) employers who do well should further reward employees with variable wage components where appropriate, in line with the firm's performance and workers' contributions," said the NWC.

It repeated its call for real wage hikes to stay in line with productivity growth over the long run, so that the increases are sustainable and do not blunt competitiveness.

Stephen Lee, the president of the Singapore National Employers Federation, noted that real- wage increases in the last three years have been higher than productivity growth in the last three years, though the reverse was true before that.

The SNEF, endorsing the NWC guidelines, added that along with other labour-cost increases, the real unit labour cost of the economy rose by 2.8 per cent a year in the last three years.

The employers' group thus cautioned against "unsustainable wage increases which will erode the competitiveness of businesses and the real-wage increases of workers, as businesses pass on the higher labour cost to consumers".

In its statement accepting the NWC guidelines, the government through the Ministry of Manpower stressed the need to improve productivity "in order for wage growth to be sustainable and not erode Singapore's economic competitiveness".

The NWC, addressing also industries which outsource a big chunk of their operations and hire many low-wage workers, urged these businesses "to make a special effort" to build NWC wage recommendations into their contracts for outsourced services.

"Buyers of outsourced services should also factor the annual wage adjustments for the worker into their contracts, or allow the contract values to be adjusted accordingly," it said.

The NWC also suggested that the Progressive Wage Model, which sets out a career ladder with pay standards for low-wage workers, need not be confined to the cleaning, security and landscaping industries, where low-wage workers are concentrated.

It proposed that tripartite committees be set up in other sectors as well to develop and implement the Progressive Wage Model, so firms there can raise the skill levels of their workers.