National Wages Council suggests S$50-S$70 pay hike, one-off payment for low-wage workers
Singapore’s National Wages Council has recommended that low-wage workers receive a pay increase of S$50 to S$70 per month, with a further recommendation that employers which achieved productivity gains give employees a one-off payment.
This is the fourth time that NWC is proposing a pay hike range for low-wage workers. At the same time, it is also increasing the basic wage threshold for low-wage workers by S$100 to S$1,400. Explaining the need for the increase, it said: “The proportion of full-time resident employees earning a basic monthly wage of up to S$1,300 is estimated to have decreased from 9.2 per cent in 2017 to 7.9 per cent in 2018.” Increasing the threshold would cover more employees within the quantitative guidelines, it added. NWC Chairman, Peter Seah, said that the higher threshold would cover 22,000 more low-wage workers, or a total of about 154,000 people.
As part of its latest recommendations, NWC also said that employers that achieved productivity gains in 2018 should provide a one-off payment of S$200 to S$360 to low-wage workers earning a basic monthly wage of up to S$1,400. At the same time, employers could grant low-wage workers earning more than S$1,400 a “reasonable wage increase and/or a one-off lump sum based on skills and productivity”.
Its recommendations came after it considered the Ministry of Trade & Industry’s assessment that the Singapore economy is likely to see slower growth of 1.5 per cent to 2.5 per cent in 2019, compared to the 3.1 per cent achieved last year amid a weakening of the global growth outlook. NWC noted that most employers have “some form of flexible wage system” that allows them to adjust wage costs “responsively and sustainably while remaining competitive”.
It also said that in 2018, both real basic wage and real total wage grew faster than the year before, and more than productivity. However, real basic wage rose at a slower pace (from 3 per cent to 3.6 per cent), than real total wage growth (from 3.2 per cent to 4.2 per cent). As such, NWC suggested that employers have directed more of wage increases towards variable components.
On companies that achieved productivity improvements in 2018, NWC recommended that they “share the gains” with employees through a one-off payment. This is despite NWC noting that productivity growth slowed to 2.4 per cent in 2018 from 3.9 per cent in 2017. It said that employers “that have done well and have good business prospects” should reward their employees with built-in wage increases and variable payments in line with the company’s performance and employees’ contributions. Employers “that have done well but face uncertain prospects” may exercise moderation in built-in wage increases, but should still reward employees with variable payments in line with the company’s performance and employees’ contributions, it recommended. NWC said firms “that have not done well and face uncertain prospects” may exercise wage restraint, with management leading by example. Such companies are to “make greater efforts” to improve business processes and productivity by upgrading the skills of employees.
The NWC reaffirmed that wage increases will need to be “sustainable and fair”, and must be supported by productivity growth “based on business transformation and reskilling of the workforce”. With that in mind, it recommended that employers offer structured training for their employees. They should also continue to innovate, roll out productivity initiatives and work towards better wages and skills.
The Government has accepted NWC’s recommendations.
“The Government welcomes the stronger emphasis placed on employer-led training this year, and agrees that training is key to continued productivity gains and sustainable wage growth,” said a statement from the Ministry of Manpower. The NWC guidelines cover the period from Jul 1, 2019 to Jun 30, 2020.
The National Trades Union Congress (NTUC) on Thursday affirmed its support for NWC’s guidelines for 2019/20 and said that it remains committed to working with tripartite partners to help workers enjoy better wages, welfare and work prospects. NTUC said in a statement that the NWC guidelines are inclusive, and that employers should apply them to all workers including professionals, managers and executives). “The NWC guidelines will support our workers in their transformation to take on current and future workplace challenges. To do so, employers must help their workforce skill up and move up,” it said.
NTUC also encouraged more companies to work with the Labour Movement to set up Company Training Committees that will identify the training and skills that workers in the company require, and develop the necessary training programmes to help them keep up with industry transformation.