Roll back crisis-prompted wage policies if business has recovered: NWC

EMPLOYERS should roll back wage cuts and cost-saving measures if their businesses have recovered or are recovering, the tripartite National Wages Council (NWC) said in its latest guidelines released on Oct 29.

The overall approach is that wages should move in tandem with the pace of business recovery, similar to calls made in the NWC's May 2021 addendum.

The NWC also repeated an earlier recommendation for firms to implement a flexible wage system. The government has accepted the new guidelines, which apply from Dec 1, 2021 to Nov 30, 2022.

The top priority for employers that have recovered or are recovering is to restore any earlier wage cuts, first for fixed wage components and then variable components.

In addition, they should roll back wage-related cost-saving measures such as shorter work weeks, temporary layoffs and no-pay leave.

Employers that are doing well should grant build-in wage increases and variable payments, in line with business performance, prospects and productivity growth, as well as employees' contributions.

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And discretionary cost-saving measures such as cuts in allowances should be rolled back.

Employers that have yet to implement a flexible wage system should do so, said the NWC, adding: "The sharp impact of Covid-19 has underscored the need for resilience and wage flexibility." In 2020, only 31.4 per cent of employees had both the monthly variable component and annual variable component in their wage structure. (see Amendment note)

Noting that flexible wage systems have acted as a shock-absorber during the pandemic crisis, helping employers manage costs to save jobs, Singapore National Employers Federation (SNEF) president Robert Yap said SNEF would help members and employers implement such systems if needed.

Manpower Minister Tan See Leng noted that the Council convened an unprecedented four times in two years. Amid "difficult times" last year, the NWC guidelines were "to implement necessary wage cuts and appropriate cost-saving measures to save jobs", he said.

"In many cases, management took earlier and deeper cuts to their wages, as business owners sought the support of workers to implement wage reductions. It is with mutual support and understanding between employers and workers that we managed to move forward."

Now, the latest guidelines come while things are "looking up" for the economy and the labour market, he said.

The guidelines take into account the improving economic and labour market conditions, while recognising that recovery remains uneven, said the NWC.

Employers that are still adversely affected by Covid-19, such as those in tourism- and aviation-related sectors, should continue to tap government support for transformation, retain employees via appropriate cost-saving measures, and retrain and redeploy affected staff.

They should consider non-wage cost-saving measures as far as possible, and endeavour to pay the Annual Wage Supplement.

If they have done the above, but still face significant cost pressures and poor prospects, then they may seek unions' or employees' support for temporary wage cuts to minimise retrenchments.

The guidelines also include recommendations for progressive wage growth ranges for lower-wage workers, as well as for training and transformation.

The NWC called on employers to offer structured training and implement productivity initiatives, and on employees to support such efforts.

READ MORE:National Wages Council recommends built-in pay rise of 4.5 to 7.5% for lower-wage workers

Amendment note: An earlier version of the story stated that about 31.5 per cent of employers had flexible wage systems in 2020. The Manpower Ministry has clarified that in 2020, 31.4 per cent of employees had a flexible wage structure with both a monthly variable component and annual variable component. The story has been updated accordingly.