Productivity in Singapore must improve as firms pay higher wages in tight market: NTUC

THE manpower crunch will put pressure on companies this year to pay higher wages to retain and attract talent, but productivity must improve in tandem to ensure wage increases are sustainable in the long run, said the National Trades Union Congress (NTUC).

In its 2015 outlook for the unionised sector, NTUC highlighted that the labour market here is expected to remain tight as foreign manpower quotas continue to shrink this year. As such, the Labour Movement will continue to push for broad-based real wage increases by advocating greater adoption of the progressive wage model, emphasising productivity improvements in particular.

According to preliminary estimates, workers in unionised companies saw healthy basic wage increases of about 4.1 per cent in 2014, down slightly from 4.63 per cent in 2013, while bonus payments worked out to three months last year, versus 3.16 months in the previous year.

The Labour Movement also flagged its concern on the trend of negative productivity growth experienced in recent quarters, noting that this could lead to wage stagnation.

"In 2015, NTUC renews its call to our tripartite partners to strengthen alignment and work together on raising productivity and income growth," said NTUC. "One of the ways will be to delve into looking at productivity at the sectorial level."

The data also showed that 2,212 unionised workers were retrenched last year, down 27 per cent from 2013. Reasons given for lay-offs include high costs, poor business and the ongoing restructuring which prompted eight companies to move operations out of Singapore and to countries such as Thailand, Malaysia and China. In the first quarter of 2015, unionised companies may see retrenchment affecting about 300 workers from the chemical and electronic sectors, NTUC said.

At the national level, 7,710 workers were retrenched in the first three quarters of 2014, higher than the 7,220 laid-off in the corresponding period a year before. This is based on figures from the Ministry of Manpower as at 3Q 2014.