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Government accepts National Wages Council's recommendations

The Singapore government said on Friday that it has accepted the recommendations of the National Wages Council (NWC) for 2015/2016.

Earlier, the NWC said real wage increases should be in line with productivity growth over the long term. Among its recommendations, the NWC said employers that do well should further reward employees with variable wage components where appropriate, in line with the firms' performance and workers' contributions.

As announced in Budget 2015, there will be an increase in the CPF salary ceiling from S$5,000 to S$6,000 from January 2016. There will be further increases to older workers' CPF contribution rates, to help them build up more savings for their retirement needs. To help employers adjust to the associated cost increases, there will be an enhancement and extension of the Temporary Employment Credit (TEC) and enhancements to the Special Employment Credit (SEC). Employers should take these into account when considering the quantum of wage increases.

"The Government supports the NWC's recommendation that real wage increases should be in line with productivity growth over the long term, and that employers should share productivity gains fairly with workers and in a sustainable manner. The Government urges employers, unions and workers to work together towards this goal," the Ministry of Manpower said in response to the NWC's recommendations.

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The government endorses the NWC's focus on skills to ignite productivity growth and sustain wage increases. It noted that the labour market is expected to remain tight in 2015 and this will place some upward pressure on wages.

"Raising productivity is essential for wage growth to be sustainable and to enhance Singapore's economic competitiveness," it said.

It supports the NWC's recommendation for employers to grant a built-in wage increase of at least S$60 for workers earning a basic monthly salary of up to S$1,100.

"This makes it clear that there should be continued efforts to improve wage outcomes for low-wage workers," the manpower ministry said.

It also supports the NWC's recommendation for employers and unions to work towards restructuring employer medical benefits to portable medical benefits to improve the cost-effectiveness of medical expenses.

Leading by example, the government will continue to take reference from the NWC guidelines in its annual wage adjustment exercise, and strongly encourage service suppliers to the public sector to adopt NWC recommendations on wage increments for their workers.