NWC offered dog biscuit for low wage workers

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SINGAPORE, May 31 — The National Wages Council (NWC) yesterday recommended a minimum monthly increment of S$60 — the same amount it proposed last year — for workers earning a basic salary of up to S$1,000 (RM2,561) a month.

And in a nod to concerns among unionists about low-wage workers who earn above S$1,000, the council recommended that this group of employees be given an “equitable and reasonable” wage increase and/or a one-off lump sum based on skills and productivity.

NWC chairman Lim Pin said: “The feeling is that we should build on the momentum generated (in the) past two years and give the same amount of S$60, and after that, we will continue to monitor the situation.”

The council noted that the previous rounds of quantitative guidelines in 2012 and last year have contributed to strong real wage growth last year for low-wage workers.

In 2012, the NWC recommended a minimum monthly increment of S$50 — marking the first time since 1984 that it had recommended a minimum quantum of pay rise.

The council said that as of December last year, almost eight in 10 private establishments gave or intended to give wage increases to their employees earning a monthly basic salary of up to S$1,000, up from six in 10 that did so in 2012. “This was a substantial increase,” the NWC said.

Specifically, the proportion of firms that gave increments equal to or more than the NWC’s recommended built-in wage increase in the respective years doubled from 28 per cent in 2012 to 57 per cent last year.

After expressing its concern about the low adoption rate among non-unionised companies last year, the labour movement said it was pleased with the significant improvement. Within the unionised sector, 90 per cent of employers adopted the NWC guidelines last year.

Welcoming the council’s latest guidelines, the labour movement and the Singapore National Employers Federation (SNEF) attributed the high adoption rate to the tight labour market.

Stephen Lee, SNEF president, added that other factors included the Wage Credit Scheme and the Progressive Wage Model, which has been rolled out in several industries.

The Ministry of Manpower (MOM) said the Government has accepted the council’s recommendations and recognises that buyers of outsourced services will need to play a part for the NWC recommendations to be effective. The Government pledged to lead by example not only as an employer, but as a service buyer too, the MOM said.

The National Trades Union Congress (NTUC) also called on employers, service buyers and outsourcing contractors to recognise the service and contributions of other low-wage workers — apart from those earning up to S$1,000.

When the NWC unveiled its guidelines last year, there were calls to increase the salary threshold of S$1,000 to better reflect current realities. Unionists told TODAY they had tried very hard to lobby for a higher wage threshold this time, but they were rebuffed by employers.

Latest available figures showed there were about 150,000 full-time resident employees — Singaporeans and permanent residents — who earned below the S$1,000 line in 2012.

Lee reiterated that employers had “responded positively to the quantitative guidelines last year”. “Hence, we supported the continuation of the recommendation for another year to give low-wage workers another boost,” he said.

The SNEF pointed out that the tightening of the foreign manpower policies had caused wages to rise, especially for those that employed work permit holders and “S” pass holders. “This has caused some ripple effect on wage increases in such companies, thus further driving up wage costs,” it said.

Noting the NWC’s call for employers to raise productivity, the SNEF warned against “unsustainable wage increases”, which would erode companies’ competitiveness and result in businesses passing on higher labour costs to consumers. It also reiterated that productivity growth had lagged behind real wage growth since 2010.

Economists TODAY spoke to pointed out that given the tight labour market, wages in general — including for those earning up to S$1,000 — would be on the rise, with or without the NWC’s guidelines.

Even so, they said the NWC was still relevant. CIMB Research economist Song Seng Wun said: “If you want to hire or retain your workforce, you will have to pay more, even without the guidelines ... The NWC’s guidelines should be seen as a reference point, as opposed to a benchmark, for companies to adopt.”

Increasingly, market forces “are taking over as the determinant factor for wages”, Song said. Barclays economist Leong Wai Ho added that the NWC’s guidelines were “supplementary in nature”.

Formed in 1972, at a time when Singapore was rapidly industrialising, the NWC’s main purpose is to formulate guidelines that are in line with long-term economic growth.

On the need to ensure productivity rises in tandem with wages, Song noted that the salaries of some low-wage workers had been previously distorted due to the aggressive influx of foreign workers — a situation that the Government is now addressing.

For this group, “what is happening now is a catch-up in wages. It is not that productivity is lagging behind”, he said. — TODAY
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