NWC calls for pay increase of S$45-S$60 for lower-income workers

SINGAPORE — Although the Republic’s economy is expected to do better this year, the National Wages Council (NWC) has lowered its recommended range of wage increments for low-income earners, citing the lingering economic headwinds for businesses.

However, at the same time, it raised the wage threshold to S$1,200 — from S$1,100 previously — covering more workers and answering calls 
by unionists over the years to raise the bar. 

Under the council’s recommendations, which kick in next month, it proposed that a built-in wage increase of between S$45 and S$60 — lower than last year’s range of S$50 to S$65 — be given to low-wage workers earning up to S$1,200 a month in basic wages.  

The wider coverage is expected to benefit 40,700 more full-time resident workers, going by last year’s figures from the Manpower Ministry (MOM). 

The number of full-time resident workers drawing a basic monthly wage of up to S$1,200 stood at 133,100 last year, compared with 92,400 workers who earned up to S$1,100 a month. 

In the prevailing economic climate, the NWC stressed that wage increases need to be “sustainable and fair” and employers should share productivity gains fairly with workers. 

Amid an uneven labour market outlook and business climate across industries, the NWC said there was “merit” in continuing to set a range for quantitative wage recommendations. It did so for the first time last year, departing from a single sum, to accommodate firms’ performance and offer flexibility to employers.

The Singapore economy grew 2 per cent last year and is forecast to expand between 1 and 3 per cent this year. Barring downside risks, the Government expects growth to be better than last year.

Still, Dr Robert Yap, the Singapore National Employers Federation’s president and an NWC member, noted that economic headwinds remain and some firms are “not doing well”. “It’s all about responsible, sustainable growth,” he said. The lower recommended range would make adoption more “sustainable” for firms, so that a bigger number could jump on board, he added.

The MOM’s yearly report on wage practices - released on Tuesday - showed that last year a higher proportion of firms (21 per cent) gave increments equal to or more than the NWC’s guidelines, compared with 18 per cent in 2015, when the recommended quantum of wage increase was at least S$60.

Permanent Secretary (Manpower) Aubeck Kam said the improved adoption was “encouraging”, and was testament to the outreach efforts by the labour movement and employers to drum up awareness. 

Ms Cham Hui Fong, the National Trades Union Congress’ (NTUC) assistant secretary-general, said that nearly 50 per cent of unionised companies had granted wage rises within last year’s range. Among these, at least half of them raised wages by a minimum of S$65 — the upper end of the range. A “significant number” of these firms had gave a raise of more than S$65, added NTUC’s tripartism director Melvin Yong. 

For low-wage workers earning above S$1,200, the NWC called on employers to grant this group a “reasonable” wage rise or a one-off lump sum based on their skills and productivity. 

Over the years, Dr Yap noted that real wage increases have outstripped productivity gains, which is “not sustainable”. The Republic risks falling behind its competitors if productivity does not pick up, he added.

Employers should make greater use of variable payments to reward workers and improve flexibility, he said. 

Since the quantitative guidelines were rolled out five years ago, the NWC said that the proportion of full-time citizen and permanent resident employees earning a basic monthly wage of up to S$1,000 is estimated to have fallen gradually from 10.6 per cent in 2011 to 6.8 per cent in 2014, and 4.7 per cent last year. The proportion of those earning up to S$1,100 in basic monthly wages was also estimated to have dropped from 8.2 per cent in 2014 to 5.7 per cent last year. 

In 2013, a year after the NWC started unveiling quantitative guidelines, unionists had called for the wage threshold  – S$1,000 then  – to be raised to S$1,200, to reflect labour-market realities better. The council bumped up the threshold to S$1,100 in 2015, before raising it further this year.  

Acknowledging that some low-wage workers are hired on contract, the council called on employers and service buyers to incorporate its wage recommendations into outsourced service contracts. It also urged them to take into account workers’ experience and performance when employment contracts are offered or renewed. 

For companies in general, the council stressed the need for increments to be “sustainable and fair”, in line with firms’ business prospects as the economy undergoes a transition. Variable payments should reflect both the firms’ performance and contributions of workers, it added. For instance, employers that have performed well but confront uncertain prospects may “exercise moderation” in wage increases but should reward their employees with variable payments according to the firms’ performance. Those hit by the double whammy of lacklustre performance and uncertain prospects may “exercise wage restraint”, and the management should lead by example and take greater steps to transform and grow their businesses, the NWC said.

Accepting the NWC’s recommendations, the Government said it will continue to lead by example and reference the guidelines in its yearly wage-increment exercise, although all its employees earn more than S$1,200.