NWC proposes multi-pronged approach to lift lowest wages

Singapore

A HIGH-LEVEL panel in Singapore is proposing a multi-pronged approach to lifting basic wages of the lowest earners in its economy, while keeping an eye on firms' profitability amid uneven economic growth.

The National Wages Council's (NWC) new guidelines suggest that more low earners be considered for basic wage increases by employers. It is also proposing a lower range for the increases so that more employers can consider their recommendations.

At the same time, the NWC said that having a range of wage increases, as opposed to a fixed number, is needed to give employers flexibility in adopting its suggestions.

These guidelines were released by the NWC on Wednesday. The council is made up of 36 representatives from the private sector, unions, chambers of commerce and the government. The guidelines are not binding.

"These will ensure that increases in real wages are in line with productivity growth over the long term," said Peter Seah, chairman of the NWC, at a press conference on Wednesday. "This is quite critical to the future of our economy."

Wednesday's guidelines follow five recent rounds of quantitative wage recommendations from the NWC for low-wage workers. In 2012, it recommended a S$50 built-in basic wage increase for workers earning a basic monthly wage of up to S$1,000.

Before the 2012 suggestion, the proportion of full-time resident employees with a basic monthly wage of up to S$1,000 was at 10.6 per cent in 2011. It fell to 6.8 per cent in 2014.

Then in 2015, the NWC raised the basic monthly wage threshold to S$1,100, and proposed a S$60 built-in basic wage increase. Prior to the 2015 guideline, the proportion of those who earned up to S$1,100 was at 8.2 per cent in 2014. The proportion fell to 5.7 per cent in 2016.

Last year, the NWC proposed a range of between S$50 and S$65 for the increases instead. Employers' adoption rate rose from 18 per cent in 2015 to 21 per cent in 2016, data on Wednesday showed.

On Wednesday, the NWC proposed to raise the threshold to S$1,200. An additional 40,700 full-time resident employees will be up for consideration with this, said the Ministry of Manpower. Previously, 92,400 were earning basic monthly wages of up to S$1,100.

The NWC is showing continued commitment "to support our lower-wage workers", said Melvin Yong, tripartism director at the National Trades Union Congress (NTUC).

The NWC on Wednesday also proposed that firms give low-wage workers built-in basic wage increases in the range of S$45 to S$60 - lower than the range proposed last year.

Council member Robert Yap, who is president of the Singapore National Employers Federation, said this encourages more employers who may have been put off by a higher range to also start considering raising low-wage workers' basic wages.

Employers have to be "responsible in this regard, he said. "We are a small country, we don't have a lot of people, and if we leave some people behind, it won't be good for the economy."

The proposed lower range of wage increases also comes at a time when growth this year is expected to be stronger. The Ministry of Trade and Industry had previously hinted that 2017 growth could come in better than 2016's 2 per cent if downside risks do not materialise.

Though the range may be lower than last year's, CIMB economist Song Seng Wun said that it takes into consideration employers' concerns. Overall economic growth may be stronger, but there are still pockets of weakness, he said.

"Ultimately it's for companies working in sectors that are not doing so well. With the lower range, the council is also pragmatic that growth can be slower and uneven this year," he said.

The NWC also cast its focus on workers doing outsourced work, who may not be covered by these guidelines. It urged service providers of outsourced services, starting with cleaning, security, and landscaping services, to factor in annual wage adjustments and annual wage supplement for workers into new contracts. Service buyers should also recognise and support such efforts, NWC added.

As for the wider pool of employees, the NWC reaffirmed its principle that built-in wage increases should be given in line with firms' business prospects, while variable payments should reflect firms' performance and workers' contributions.

The Singapore government has accepted the proposals, which will cover the period from July 1, 2017 to June 30, 2018.