Outlook too cloudy for new wage guidelines but firms should reward workers fairly: NWC

Singapore

THE economic outlook remains too uncertain and uneven for the tripartite National Wages Council (NWC) to issue fresh guidelines on wages and employment at this time.

Still, all businesses should re-evaluate their situations, and those that are doing well should reward their employees fairly.

Last year's guidelines and supplementary guidelines, released in March and October respectively, had been due to expire on June 30.

On Friday, the NWC said these guidelines remain relevant, and extended them until the end of November via an addendum. The government has already accepted this recommendation.

In a rare move, the council will meet a second time later this year, to develop new guidelines that will apply from Dec 1 this year to Nov 30, 2022.

The NWC typically only meets once a year, except in times of economic crisis. It met twice in a year in 1998, 2001, 2009 and 2020.

"What weighed on us this time round was how volatile the forward situation would be. We do have to see how the situation evolves, and we have to remain very agile," said Permanent Secretary in the Ministry of Manpower and NWC member Aubeck Kam at a media briefing.

In its addendum note, the council noted the uncertainty and unevenness of the current economic outlook.

It also noted that the labour market has yet to recover to pre-Covid-19 levels, with unemployment rates easing from their September 2020 peak, but still higher than before the pandemic struck.

Businesses in Singapore continue to face increased costs, such as higher freight and transport charges, reduced capacity due to safe distancing measures, and increased operating expenses to comply with pandemic measures.

The Jobs Support Scheme has also ended for many industries, and will expire in September.

Under the NWC's guidelines, businesses that are doing well are encouraged to reward employees fairly through variable payments, and to bring forward their hiring plans. They should also grant built-in basic wage increases.

Businesses that are recovering should restore wage cuts that were implemented earlier, starting with any cuts made to basic wages. They should also roll back other cost-saving measures, like reductions in allowances and commissions, shorter work weeks, temporary lay-offs and no-pay leave.

On the other hand, employers that continue to be adversely affected should continue to make full use of relevant government support schemes. They are advised to retain employees through appropriate cost-saving measures, and by retraining and redeploying staff in affected business units to new jobs within the company.

Where alternatives have been exhausted, companies should seek their employees' support to implement temporary wage cuts. To this end, companies should adopt a flexible wage system (FWS) if they have not already done so. The FWS consists of monthly and annual variable components, on top of basic wages. Wage costs may be reduced by adjusting the variable components.

Unionised companies should negotiate on wage adjustments, cost saving measures and FWS implementation with the union.

The NWC also urged employers to give special consideration to low-wage workers. If the business is doing well or recovering, employers should consider built-in wage increments.

Employers who are implementing wage reductions should instead implement a wage freeze for low-wage workers.

The council's guidelines apply to all employees in the private and public sectors, although they are not legally binding.

"Today, workers in different sectors have different expectations on their wages depending on how their industry performs," said National Trades Union Congress president Mary Liew.

She stressed that companies that are doing well should reward their workers fairly, and called on employers to continue to pay the Annual Wage Supplement - known as the "13th month pay" - which she said was especially helpful for low-wage workers.

Singapore National Employers Federation (SNEF) president Robert Yap said the increase in the number of Covid-19 cases in the community is a reminder that "we are still in the midst of the pandemic" and that Singapore's economy has not fully reopened yet.

"However, due to the vaccination programme and strong tripartite cooperation, SNEF is cautiously optimistic of our economic prospects in 2021. Therefore, it is timely for employers to look beyond business survival and focus on business sustainability as well," he said.