Sunday, 1 June 2014

NWC calls for another round of wage hikes for the low-income

At least $60 pay rise for low-wage workers: NWC
Wages council recommends built-in minimum increase for a third year
By Toh Yong Chuan, The Straits Times, 31 May 2014

LOW-WAGE workers earning below $1,000 each month can expect a pay hike of at least $60 this year, if their employers accept national wage guidelines issued yesterday.

"This will give low-wage workers... a higher percentage built-in wage increase than for other workers," said council chairman Lim Pin at a media briefing, noting it would build on momentum generated in the last two years.

For low-wage workers whose salaries have crossed the $1,000 monthly threshold, the council called for an "equitable and reasonable" wage increase without specifying any amount.

And as for other workers, the council stuck to its practice of the past 30 years of giving general guidelines, urging employers to give built-in wage increases that take into account firms' business performance, prospects and sustainability.

The wage guidelines take effect from July 1. In making these recommendations, the council noted the economy is expected to grow by between 2 and 4 per cent, and labour demand is likely to remain strong this year.

The council also singled out the impact of MediShield Life premiums that will be introduced next year, saying employers and unions should negotiate how to help workers pay for them.

It also urged firms not to let up on the productivity drive, noting that real wage increases should be in line with productivity growth over the long term, in order to be sustainable.

Official data showed that while real wages grew by 3.4 per cent last year, labour productivity fell 0.2 per cent.

Made up of representatives from the Government, unionists and employers, the NWC meets each year to negotiate and issue non-binding wage guidelines closely watched by firms.

The National Trades Union Congress (NTUC) and Singapore National Employers Federation (SNEF) yesterday welcomed the latest guidelines.

NTUC was "very happy", said its president Diana Chia.

While more firms followed the guidelines last year - about six in 10 compared to three in 10 in 2012 - NTUC noted that they still lag behind the nine in 10 unionised firms.

While supporting the wage guidelines, SNEF president Stephen Lee cautioned: "If productivity does not catch up to real wage increases, in the long run, the economy will start to lose competitiveness."

The civil service, Singapore's largest employer, has also accepted the recommendations.

Labour economist Randolph Tan supported the NWC move to spell out minimum pay hikes for low-wage workers again. But he suggested re-looking the $1,000 salary threshold to single out workers for extra help. "It is likely to become less clear-cut going forward, as the next threshold is not as easily identifiable."

Unions, bosses back new wage guidelines
But two big employer groups also call for help with some rising costs
By Joanna Seow, The Straits Times, 31 May 2014

UNIONISTS have backed new guidelines issued by the National Wages Council (NWC) yesterday - especially those recommending a pay rise for low-wage workers.

Two big employer groups also came out in support, but called on the Government to help with some rising costs that firms face.

Workers earning up to $1,000 a month can expect a pay hike of at least $60 this year, if their employers accept the guidelines.

The labour movement also praised a recommendation encouraging employers to grant a reasonable pay rise to workers after their monthly salary passes the $1,000 mark - though the NWC did not say what the increment should be.

National Trades Union Congress (NTUC) assistant secretary-general Cham Hui Fong said that while those earning close to $1,000 last year enjoyed pay hikes of around 6 per cent, once they crossed that threshold, subsequent raises fell back to around 3.5 to 4 per cent.

"For people whose pay is below $1,400 or $1,500, special consideration must be given," she said.

Unions also supported a guideline encouraging outsourced service contracts to take NWC pay recommendations into account.

Mr Nasordin Mohamad Hashim, president of the Building Construction and Timber Industries Employees' Union, said: "For outsourced workers, if the buyers don't pay, employers can't increase the workers' salary."

He said his union includes workers in facilities management, where tender prices are falling.

All government bodies are required to take wages into consideration when outsourcing, said the Manpower Ministry.

Unions and employers also emphasised that real wage increases should be in tandem with productivity growth over the long term.

Although non-union firms lag behind unionised ones in adopting the guidelines, Singapore National Employers Federation president Stephen Lee said he had seen an improvement: "If you are consistently behind, maybe you will start to lose workers."

Smaller companies have been increasing wages to help recruit and retain workers, said Mr Kurt Wee, president of the Association of Small and Medium Enterprises.

"But costs are going up substantially... so it's important that the Government continues to support some cost factors," he said.

Singapore Chinese Chamber of Commerce & Industry president Thomas Chua said: "We hope the Government can contain non- wage business costs that are within its control, for example, government charges, regulatory compliance costs and rentals."

School cleaner Chu Gi Ti, 63 - who earns $1,000 a month - said: "Any pay rise is good. Right now, I can't save money and I'm worried I won't have a job in future."

Cautious approach gives firms breathing space
By Toh Yong Chuan, The Straits Times, 31 May 2014

AT FIRST glance, the National Wages Council (NWC) wage recommendations announced yesterday were like deja vu.

The guidelines were nearly identical to those that were announced last year - a minimum pay hike of at least $60 for those earning below $1,000 each month; real wage increases should be in line with productivity growth in the long term; and employers should share productivity gains with workers.

As with last year and previous years, the NWC also decided that it should give firms more elbow room to decide for themselves how best to reward their workers.

Just don't let pay hikes outstrip productivity growth, cautioned the council.

But before workers jump at the council for recycling their recommendations this year, it is useful to bear in mind that the cautious approach taken is a necessary one - at least for now.

Firms already face a slew of cost pressures. Forcing them to pay their workers beyond what they can bear will almost send them towards certain death, which means job losses. Everyone suffers.

As Singapore National Employers Federation (SNEF) president Stephen Lee puts it: "From employers' perspective, we are in a rather unusual period. A number of forces are working together and there is pressure to raise wages."

The cost pressures faced by firms come from three fronts.

First, the hike in the Central Provident Fund (CPF) contribution rate next year means larger wage bills for firms.

Indeed, the NWC recognised this when it said yesterday: "Employers should take these into account when considering the quantum of wage increases."

Second, the tight labour market is already causing wages to climb north, even outstripping labour productivity.

Labour productivity fell 1.4 per cent in 2012 and 0.2 per cent last year.

Yet in both years, real total wages - including bonuses and employers' CPF contributions - rose 0.5 per cent and 3.4 per cent respectively.

Third, workers may clamour for their bosses to pay more when new MediShield Life premiums are implemented next year. The premiums are likely to be higher than now.

But not everything is doom and gloom for firms. The economy is expected to grow by between 2 per cent and 4 per cent this year. This means that firms can continue to grow.

For now, the flexibility offered by the NWC's recommendations will give firms much-needed breathing space as they restructure.

Before critics decry the ineffectiveness of giving firms such leeway, especially when the recommendations are non-binding, consider this: Salaries have indeed gone up in the past two years and a tight labour market remains an effective check.

"There is the natural movement of labour," said SNEF's Mr Lee, adding: "If you are consistently behind (in paying market wages), you will start to lose workers."

While the NWC gave firms room to manoeuvre when deciding overall pay hikes, it took a firmer stand when it came to low-wage workers; by spelling out their minimum pay increases, and rightly so.

If it does not do so, there is no guarantee that the wages of these low-wage workers will go up.

Less than six in 10 firms have adhered to last year's NWC guidelines of giving these workers a minimum built-in pay hike of at least $60.

Although it was an improvement from the three in 10 firms that did so in 2012, the numbers are still too low, especially when compared to unionised firms, which are doing much better.

In the unionised sectors, as many as nine in 10 followed the NWC guidelines last year, up from eight in 10 in 2012.

Now that the NWC has given its recommendations, the next step of bargaining between firms and unions begins.

I hope that the firms do not squander the breathing space and will use the flexibility given to them to restructure and boost productivity.

Besides their own business survival and profitability, the well-being of their workers, especially those earning low salaries, also depends on the firms doing well.

ESM Goh: Tweak employee wage shares in companies
By Joanna Seow, The Sunday Times, 1 Jun 2014

Close the income gap within each company by tweaking the wage shares of employees - "taking some from top management and giving them to those at the bottom", Emeritus Senior Minister Goh Chok Tong suggested last night.

"If all companies can do this, we also narrow the income inequality within the country," he wrote in a Facebook post. "This will make for a more inclusive and equitable society."

ESM Goh, who is also an MP for Marine Parade GRC, added his support for the National Wages Council (NWC) annual wage guidelines announced last Friday.

He said he was "delighted" that the council recommended that workers on up to $1,000 a month get a raise of at least $60.

"These workers, like cleaners, are indispensable to our good health, clean and green environment and basic liveability as a densely populated city," ESM Goh wrote.

"Their companies' wage costs do not have to go up either. Companies can hold their total wage bill constant as a percentage of total operating costs, and tweak the wage shares of employees by taking some from top management and giving them to those at the bottom."

For workers whose pay had just crossed the $1,000 mark, the council recommended bosses grant them a reasonable pay raise, though it did not specify an amount.

The Singapore National Employers Federation said it has seen from annual surveys "some moderation of wage increase among senior management while that among non-executives has risen".

"This has led to some narrowing of the wage gap in companies over the last two years," the group told The Sunday Times.

NTUC wanted more workers to get minimum pay hike
But firms couldn't be persuaded, reveals labour chief
By Toh Yong Chuan, The Straits Times, 2 Jun 2014

IF THE unions had their way, more low-wage workers would receive a pay hike of at least $60 this year.

During closed-door wage talks with employers in April and May, the National Trades Union Congress (NTUC) lobbied for the current $1,000 threshold for low-wage workers to be raised, so that more could enjoy a minimum pay increase.

But firms could not be persuaded, said labour chief Lim Swee Say yesterday, in an uncharacteristic disclosure of the tensions that had gone on during the meetings.

His comments came on the heels of the National Wages Council (NWC) recommendations last Friday of a pay hike of at least $60 for workers earning below $1,000 each month. In 2012 and last year, the council recommended minimum pay hikes of $50 and $60 respectively for those earning below $1,000.

These recommendations are not compulsory, but at least half of the firms here implemented them last year.

A higher threshold - Mr Lim revealed that unions were gunning for $1,100 or $1,200 - would have meant more workers qualifying for a minimum pay increase.

Mr Lim, who is NTUC's secretary-general, disclosed that employers had in fact wanted to drop the minimum amount altogether, saying that wages were already going up in the tight labour market.

"We didn't get what we wanted, they didn't get what they wanted, it was a compromise position," the labour chief told reporters on the sidelines of an NTUC event. To avoid a similar deadlock for future wage talks, Mr Lim said that the NTUC, the Singapore National Employers Federation (SNEF) and government officials have formed a committee to work out guidelines on how to increase the pay of low-wage workers.

Details of the new committee were not immediately available, but Mr Lim said that its recommendations will help smoothen the NWC talks in the next three to five years.

Still, despite the hiccup this year, he said that the NTUC is happy that the wages council's efforts to raise low-wage workers' pay have borne fruit, saying that fewer workers earn below $1,000 now.

The Manpower Ministry told The Straits Times yesterday that there were 117,500 local full-time workers earning $1,000 and below last year, down from 150,000 in 2012.

The SNEF declined to comment on Mr Lim's remarks. Its president Stephen Lee would only say in an e-mail that "SNEF supported and endorsed fully the consensus reached by the NWC".

Mr Kurt Wee, the president of the Association of Small and Medium Enterprises - which was not involved in the wage talks - was more forthcoming on what a higher threshold would have meant for firms.

"Costs will definitely go up," he said.

"I understand that the labour movement always has to fight for workers... but the Government has the responsibility to reduce living costs for people, not just putting pressure on employers to increase wages."

Besides wage guidelines, the labour chief also weighed in on the current debate over the Central Provident Fund (CPF).

In his first comments on the CPF after the national pension fund was criticised online, Mr Lim reiterated a point made by the Government that "CPF money is your money".

"But the question is, do you want to spend that money at the age of 55, at the age of 60 or at the age of 65?"

He added the NTUC wants to encourage workers to keep working, even beyond age 65, so that they have more to retire on.

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