SINGAPORE — Companies TODAY spoke to are divided in their opinions on the Wage Credit Scheme (WCS), which was introduced in the Budget 2013 partly to help companies raise the salaries of their Singaporean employees to assist in the drive to improve productivity.

The scheme, which will cost about S$3.6 billion over three years, will see the Government co-funding 40 per cent of salary increases given to Singaporean employees earning a gross monthly wage of up to S$4,000.

While some companies are concerned about what will happen in 2015 when the scheme is due to end, others are keen to tap the scheme as a means to incentivise productivity growth by offering higher salaries.

“I review the wages of my employees regularly, and I will increase wages even further now that there’s WCS,” said Mr Juan Jimenez, Executive Director of Lawry’s the Prime Rib steak restaurant, which employs around 55-60 workers in Singapore, of which around 90 per cent earn less than S$4,000 a month.

Mr Jimenez added that he will be happy to receive assistance from the WCS as he tries to boost productivity, while noting that the scheme’s three-year time-frame is long enough to help Lawry’s transition into a more productivity-driven company.

Seng Hua Hng Foodstuff’s Human Resource Manager Damien Tong also welcomed the introduction of the scheme as an effective pro-business resource. “It’s an incentive for me to review my company’s wage-increase policy. In fact, I already have a few productive workers in mind for wage increase,” said Mr Tong.

However, despite their support for the scheme, the companies pointed out that the WCS is only a means to an end — wage increases must be balanced with gains in employee performance and productivity.

“I will increase wages on a case-by-case basis,” said Mr Jimenez. “One possible benchmark I can set is for workers to learn to multitask more. For example, to take customers’ orders, serve and prepare beverages.”

Meanwhile, a number of other companies are more reserved about WCS, citing the impact on margins and uncertainties after 2015 as their main concerns. Wages already make up 40 per cent of operating costs at marine industry solutions provider Maxcorr Asia Pacific, said Managing Director Gary Khoo. “I will not be introducing significant wage increases, unless I do it gradually. But even then it will be a cost burden.”

“The main question is what is going to happen after three years,” Mr Khoo added. “Is this a sustainable long-term measure to increase productivity?”

Steel construction company Sterling Engineering shares the same worry. “SMEs may bear the full burden of higher wages after 2015 when the Government ends its co-funding,” said Business Development Manager Marc Sim. “I am not utilising the WCS until the situation becomes clear.”

Another concern lies in the fact that the WCS currently only covers existing workers. “That means the scheme is good for retention but does not help attract new talent,” said Mr Sim.