NWC urges employers to target training amid looming slowdown

Singapore

WITH an economic slowdown looming, the National Wages Council (NWC) has extended its focus to training, calling all employers to provide workers structured training to increase productivity in support of wage growth.

The NWC's recommendations on wage hikes remained largely the same as those made last year, except that for low-wage workers where, among other things, the government advisory body proposes to raise the basic wage threshold from S$1,300 to S$1,400.

NWC chairman Peter Seah said this is expected to benefit 22,000 more workers. In all, about 154,000 full-time workers will come under the new basic salary threshold.

The "broadening of approach" to include training in the deliberations of this year's NWC wage guidelines was noted in Mr Seah's opening remarks at a press conference on Thursday. He said the NWC has put the spotlight on training because it's key in re-skilling workers and restructuring the economy to face the challenges ahead.

The importance of training was underscored by the government in its response to the latest wage guidelines. "Training is key to continued productivity gains and sustainable wage growth," the Ministry of Manpower said in a media release.

"The focus on training is in line with industry transformation," said the ministry's permanent secretary Aubeck Kam, also a member of NWC, at the press conference.

Robert Yap, the president of Singapore National Employers Federation (SNEF), another NWC member, said the best time to train workers is during a slowdown in the economy when there's plenty of down-time.

"That's why we (NWC) are pushing for training this year because of the (economic) challenges expected next year," he noted.

Added Claus Trenner, president of the Singaporean-German Chamber of Industry and Commerce (SGC), in a written statement: "In regard to more turbulent and slower projected economic growth for 2019 and beyond, training and up-skilling are the key to stay competitive and to ensure higher wages."

In its 2019-20 wage recommendations, the NWC noted that the Ministry of Trade and Industry sees the economy - against an uncertain backdrop in global growth - slowing from 3.1 per cent in 2018 to 1.5-2.5 per cent in 2019 in growth.

While labour productivity posted healthy gains of 2.4 per cent last year, the gains were smaller than in 2017 when productivity rose 3.9 per cent.

In its response to the NWC guidelines, SNEF said the productivity-wage gap has continued to widen over the past three years despite productivity growth.

It noted that productivity grew only by 1.0 per cent yearly between 2010 and 2015, while real wages increased by 1.7 per cent yearly.

"We must arrest this to ensure that our cost competitiveness is not eroded," it noted.

SGC's Mr Trenner warned: "Even though Singapore is currently recognised as the most competitive economy worldwide, it is paramount to keep wages in line with productivity gains to ensure sustainable development."

Though the training participation rate of the resident labour force has been rising since 2011, hitting 48 per cent last year, the NWC said it could still do better. It noted that the share of employers which provided structured training for employees has not risen for over a decade. It was actually lower in some sectors and among small firms.

And the slice of employees given structured training "in training providing establishments" has stayed largely flat at the same time, at around 56-57 per cent, according to the NWC.

Affirming that wage hikes must be backed by productivity gains, the NWC said all employers should draw a training plan that meets today's and tomorrow's needs in the structured training. They must continue to innovate and implement productivity initiatives.

On wages, the NWC said employers who did well and have good business prospects should reward their staff with built-in wage increases and variable payments that are in line with performance and contributions.

Employers who have done well but face uncertain prospects may exercise moderation in built-in wage hikes. However, they should still reward employees with variable payments commensurate with performance and contributions.

For employers who have not done well and face uncertain prospects, the recommendation is that they may exercise wage restraint, with management leading by example.

"These employers should make greater efforts to improve business processes and productivity, especially by investing in up-skilling their employees," the NWC said.

To encourage productivity improvement, the NWC proposes that all employers who made productivity gains in 2018 share the gains with employees through a one-off payment.

Explaining the need to raise the basic monthly wage from S$1,300 to S$1,400 - a raise much applauded by the National Trades Union Congress - the NWC said the share of resident workers with wages of up to S$1,300 is estimated to have slipped from 9.2 per cent in 2017 to 7.9 per cent last year.

To press on with the support for low-wage and vulnerable workers, it recommends a built-in wage hike of S$50 to S$70 for those earning a basic monthly wage of up to S$1,400.

Employers who made productivity gains last year should also make a one-off payment of S$200 to S$360 to these workers.

A "reasonable" wage increase and/or one-off lump sum based on skills and productivity is recommended for low-wage workers earning more than S$1,400.