NWC raises low-wage threshold to S$1,100

Singapore

THE National Wages Council (NWC) has stressed the importance of focusing on skills to ignite productivity growth and sustain wage increases, despite its call coming amid the lower economic and productivity growth of recent years.

Releasing its 2015/2016 guidelines, it has recommended a wage increase of at least S$60 for workers earning up to S$1,100 in basic monthly salary - up from the previous low-wage threshold of S$1,000.

It is a guideline NWC chairman Peter Seah has acknowledged as difficult for small and medium-sized enterprises (SMEs) to meet. At a press conference on Friday, he said the NWC panel saw merit in giving low-wage workers special consideration in their annual wage adjustment this year.

The government has accepted the wage recommendations, which cover the period between July 1 this year and June 30, 2016.

Since the quantitative wage guidelines for low-wage workers were introduced in 2012, the proportion of full-time resident employees earning a basic salary of up to S$1,000 has fallen from 9.8 per cent in 2012 to 6.8 per cent last year.

But the Singapore National Employers Federation (SNEF) said the proportion of companies which gave a wage increase of at least S$60 to workers earning up to S$1,000 in basic salary - the NWC guideline for both 2013 and 2014 - fell from 57 per cent in 2013 to just 31 per cent last year. The SNEF said its members who did not follow the recommendation last year had indicated that it was because business had been poor.

Assistant secretary-general at the National Trades Union Congress (NTUC) Cham Hui Fong said at the press conference that, poor business aside, the drop happened also because of a smaller base: nine in 10 unionised firms had followed the recommendation in 2013, and of the remaining 10 per cent, six in 10 companies did so in 2014.

"We still have some sticky ones. These are in a few sectors such as cleaning ... and security. There are some small SMEs where cleaners and tea ladies earn below S$1,000. But the labour market continues to be tight, so employees can walk. Those who are earning less than S$1,000 must know (that there are companies paying more) and they must be prepared to move," she said.

Tackling lacklustre productivity figures is another concern. Overall productivity growth fell by 0.8 per cent in 2014, after rising marginally by 0.3 per cent in 2013.

SNEF president Robert Yap, noting the resources put into upgrading the workforce, said: "I would encourage companies to look at this, make use of all the incentives, grants and assistance to help their companies transform, to be more competitive and sustainable. ... I think we need to put some pressure on companies. Today, we have this productivity issue, but is it because of the situation or an unwillingness to change?"

NTUC Secretary-General Chan Chun Sing, reacting to the NWC recommendations wrote in a Facebook post: "I am happy that the new NWC Chairman Peter Seah has continued to reinforce a strong tripartite commitment in the recommendations, particularly the effort to do more for our lower-wage workers by raising the income threshold to $1,100, which means more workers will stand to benefit."

Separately, the NWC urged unions and employers to consider making medical coverage portable. With MediShield Life to debut at year's end, it is a good time to restructure medical benefits; portable medical benefits improve the cost-effectiveness of medical expenses, it said.

The tripartite partners urged employers to offer workers special one-off SG50 bonuses, an idea outside the guidelines.

Accepting the guidelines, the Ministry of Manpower said it endorsed the NWC's focus on skills to raise productivity and sustain wage increases. On granting a built-in wage increase of at least S$60 for those earning up to S$1,100, it said this made it clear that efforts to improve wage outcomes for low-wage workers should continue. It added that, with the wage market expected to stay tight, there would be an upward pressure on wages.