Thursday, 2 June 2016

NWC Wage Guidelines for 2016/2017

National Wages Council recommends $50-$65 pay hike for low-wage workers earning up to $1,100 a month
By Olivia Ho and Toh Yong Chuan, Manpower Correspondent, The Straits Times, 1 Jun 2016

A monthly pay rise of $50 to $65 is being recommended by the National Wages Council (NWC) this year for low-wage workers earning a basic salary of up to $1,100, in a continuing effort to lift their incomes.

And in a nod to tough economic conditions, the NWC is suggesting a range of pay increments instead of a fixed sum as it did in the past four years.

The range is not to put a cap on the pay increase but to allow for flexibility, said NWC chairman Peter Seah yesterday when he announced the annual wage guidelines. "It is to take into account affordability. Employers should give more if they can afford it."

Singapore's economy is expected to grow 1 per cent to 3 per cent this year.

For low-wage workers earning more than $1,100, the NWC recommends that they be given a "reasonable" wage increase and/or a one-off lump sum based on their skills and productivity.

In general, the NWC calls on companies that have done well and have good prospects to reward workers with pay hikes. But those that have not or have poor prospects should exercise wage restraint, with "management leading by example", it said.

The move to raise the basic wage of low-income workers has been one of the NWC's major efforts.

The move began in 2012, when it backed the National Trades Union Congress in its push for low-wage workers earning up to $1,000 each month to receive a built-in pay hike of at least $50. And since 2013, the sum was raised to $60. The salary bar was raised to $1,100 last year.

But non-unionised companies have largely ignored the NWC guidelines, which are not legally binding.

Only 18 per cent of companies, the majority of which are not unionised, gave their low-wage workers a pay rise of at least $60 last year, as specified by the NWC. In contrast, half of the unionised companies here followed the NWC guidelines.

Still, workers have generally benefited from the guidelines.

Local workers earning a monthly pay of up to $1,100 fell from 130,100 in 2014 to 112,900 last year, said the Ministry of Manpower.

With local employment growing in the same period, this shows workers have moved out of the $1,100 income bracket.

The Singapore National Employers Federation will step up efforts to educate employers on the guidelines. "For companies that really cannot afford it, we are not pushing," said its president Robert Yap.

The Government yesterday accepted the NWC guidelines, which take effect for one year from July 1.

The NTUC said more can be done for workers in outsourced jobs who face possible pay cuts when contracts are renewed.

The Government, noting that buyers of outsourced services need to play a part, said it will lead by example.

It "strongly encourages suppliers to the public sector to adopt NWC recommendations on wage increments for their workers".

Need to get more firms to adopt NWC guidelines, say unionists
Unionists express concern, with only 18% of private firms following 2015 proposals to raise low-wage workers' pay
By Olivia Ho and Sherry Xuerui Sun, The Straits Times, 1 Jun 2016

As it has done for the last five years, the National Wages Council (NWC) yesterday called for more pay hikes to lift the salaries of low-wage workers, but unionists are concerned not enough companies are following the non-legally binding recommendations.

Just 18 per cent of private sector employers followed NWC's guidelines last year to give increments of $60 or more to workers earning up to $1,100 a month.

National Trades Union Congress assistant secretary-general Zainal Sapari called for the Manpower Ministry (MOM) to dangle more carrots to incentivise companies to adopt the NWC guidelines.

"MOM has many levers it can use, such as approval for work permits or grants, and we could explore some of these," he said. He suggested making the wage hikes part of the criteria for the Lean Enterprise Development Scheme, an initiative that allows firms temporary leeway on their foreign worker quota to help them restructure.

This year, NWC has suggested employers give workers earning monthly wages of up to $1,100 pay rises of between $50 and $65. It is the first time it has suggested an increment range instead of a minimum amount, to give employers breathing room in raising wages.

Unionists hope this will make companies more amenable to the increments. Noted Mr Nasordin Mohd Hashim, president of the Building Construction And Timber Industries Employees' Union: "Only 50 per cent of (unionised) companies gave increments last year, and many workers in outsourced companies don't even benefit."

In a Facebook post, NTUC assistant secretary-general Patrick Tay addressed naysayers doubting the effectiveness of the NWC. He said that when NTUC had taken employers to the Industrial Arbitration Court (IAC) in the past few years, the IAC president had made "explicit reference" to the NWC guidelines in his grounds of decision.

Employers welcomed the more flexible guidelines in view of a gloomy economic forecast.

Singapore Business Federation chief executive Ho Meng Kit said the range "offers flexibility to businesses to reward their workers (in a way that is commensurate) with the companies' performance and prospects amid the sluggish global economy".

Association of Small and Medium Enterprises president Kurt Wee said: "I think it signals that they want to offer employers a bit of leeway."

He said companies, especially small and medium-sized enterprises, are suffering cash-flow issues from falling orders, and productivity has not necessarily risen in tandem with wage hikes in past years.

Singapore Chinese Chamber of Commerce and Industry president Thomas Chua stressed that "continued emphasis on skills upgrading is necessary to underpin wage increases".

Eight out of 10 employers The Straits Times spoke to supported the new recommendations.

Ms Helen Thiang, executive director of piping supplier Soonsteel International, called the measures a "win-win situation".

"The recommended wage increases are fair enough in accommodating the current cost of living, and employers can also retain talent that way," she said.

But others felt they might not be able to handle the hikes.

Mr Rodney Seah, head of talent management at a Keppel subsidiary, said: "With the current market conditions, especially in the oil and gas industry, it may be quite difficult for us to adhere to the recommendations."

Guidelines not binding but National Wages Council has influence
By Toh Yong Chuan, Manpower Correspondent, The Straits Times, 1 Jun 2016

The annual National Wages Council (NWC) press conferences are pretty routine affairs.

This is how the council works.

The mammoth 36-member body is made up of unionists, employer groups and public sector officials. It meets every year between April and May to set wage guidelines for companies.

The meetings are held behind closed doors. Once the guidelines are hammered out, they go to the Cabinet for approval.

When the parties are ready to talk to the public, a tightly scripted press conference is held where the council releases its guidelines. The Government, Singapore National Employers Federation and National Trades Union Congress (NTUC) then release simultaneous statements to support the NWC guidelines.

How can they not support the guidelines, one wonders, when they are part of the council that decided on them?

But here's the rub - the guidelines are not compulsory for companies, which appears to make a mockery of the process. Is the council even relevant then when salaries are largely dictated by market forces?

The sceptics were surprised in 2012 when the council showed it was no mere rubber stamp.

In a bold move to help low-wage workers, it recommended that year that those earning up to $1,000 a month should receive a minimum pay hike of $50. It was an NTUC idea that both the council and Government backed.

The council continued in the same vein for four more years, progressively raising the minimum pay hike to $60 and the salary bar to $1,100.

This year, it spelt out the pay hike as a range between $50 and $65. It is the most significant aspect of the NWC guidelines this year, to give companies leeway so those doing better can give more.

When asked yesterday when the pay hikes for low-wage workers would stop, NWC chairman Peter Seah said the council is committed to lifting the lot of low-wage workers and would review every year how to help them.

"There is a social dimension to it," he said. "There is no fixed formula (on when the minimum increases will stop)."

For low-wage workers, this is the single most important function of the NWC - that it works with employers, unions and government officials to raise the salaries and improve the well-being of low-wage workers.

Official data showed that the council has had a positive impact, despite its naysayers. In 2012, when the NWC first started the minimum pay hikes, there were 150,000 local workers earning $1,000 and below.

The salary bar is now $1,100, but the number of workers earning below the higher bar has fallen to 112,900 last year.

The council and its work remain acutely relevant. Even though its guidelines are not binding, it can still influence salaries and improve workers' lives. Its work should not be undermined by employers who ignore or cannot adopt the guidelines.

Give low-wage workers a boost
Editorial, The Straits Times, 3 Jun 2016

Raising the wages of workers at the very bottom has always been a delicate tripartite exercise. Firms must remain viable but unconscionable wage gaps would undermine social stability and place a greater burden on support systems funded by taxpayers. Uplifting basement-level wages by government fiat has been avoided because it has led to negative results elsewhere. Hence the approach here of patient wage negotiation involving unionists, employers and the Government, as well as of reliance on a progressive wage model. That is applied via licensing to sectors where cheap tenders have fuelled a race to the bottom.

The fifth iteration of the National Wages Council's (NWC's) annual push to improve the lot of the lowly paid serves as a reminder of the embedded resistance to providing them a decent wage. They struggle to maintain households on monthly pay that is below $1,100 - a mere 28 per cent of the median monthly income. To put that in greater perspective, the average four-person household's monthly spending on essential needs such as food, clothing and shelter is about $1,250.

To begrudge those at the bottom a pay rise of $50 to $65, as recommended by the NWC, could consign them to a hand-to-mouth existence. Meanwhile, those benefiting from their cheap labour would be employers chasing after multiple contracts in the cleaning, security and landscaping sectors; as well as customers who demand the lowest prices, never mind the social impact of wage inequality.

To help push up wages, the Government awards contracts for cleaning and security, for example, to companies that demonstrate a focus on quality and performance standards, and not just to those offering the cheapest quote. But this is not changing industry practices as government contracts cover only 11 per cent of local cleaners and security guards. Clearly, the private sector has to play the bigger role in this respect. Disappointingly, only 18 per cent of firms accepted the NWC's guidelines for low-income workers last year. Notably, unionised companies were more willing to do so. The Singapore National Employers Federation was undoubtedly being realistic in saying that while it is explaining the guidelines to members, "for companies that really cannot afford it, we are not pushing". But shouldn't it be giving those who can more of a nudge? Differences between a nudge, push and shove are significant, of course. The NWC has been nudging firms for years, and the Government is not shoving, to stay true to the spirit of tripartism. Therefore, it's for buyers of outsourced services to scrutinise the business model, human resource management and performance commitment of suppliers. Do the firms value skills training, productivity, service quality and progression pathways for Singaporean workers? If not, society at large must push.

* Private-sector wages rise despite challenging times
But proportion of private-sector firms giving pay rises fell from 72% in 2014 to 64% in 2015
By Joanna Seow, The Straits Times, 3 Jun 2016

Companies had a tougher time last year, with a bigger proportion seeing falling profits or even losses.

Of 5,100 firms with 10 or more employees surveyed by the Ministry of Manpower (MOM), 59 per cent said they were less profitable than the year before or incurred losses, up from 50 per cent in 2014.

As a result, the proportion of private-sector employers that gave pay rises to staff dropped from 72 per cent in 2014 to 64 per cent last year.

But total wages still rose in the private sector because of the tight labour market and higher employer Central Provident Fund (CPF) contributions. Including bonuses and employer CPF contributions, total wages rose by 4.9 per cent last year, the same rate as in the year before.

Real total wages grew by 5.4 per cent last year, compared with 3.9 per cent in 2014, after accounting for negative inflation of 0.5 per cent, said MOM's latest Report on Wage Practices released yesterday.

Earlier MOM data showed that for Singaporeans, real median incomes for full-time workers rose 7 per cent last year, including employer CPF contributions.

The industries that saw the strongest growth in total wages last year were administrative and support services (6.5 per cent), financial and insurance services (5.4 per cent), and community, social and personal services (5.1 per cent).

But given the tough economic conditions, some 11 per cent of firms cut wages last year, up from 7.7 per cent a year earlier. The cuts were also steeper at 4.7 per cent, compared with 3.9 per cent the year before.

Overall bonuses were lower last year - the average annual variable component was 2.17 months of basic wages, down from 2.21 months for 2014. Financial and insurance service employees continued to command the highest bonuses at 3.38 months of basic wages.

Economists were less sanguine about salary rises this year, as the labour market has shown signs of slackening. More workers were let go in the first three months of this year, compared with the same period last year, and labour productivity growth is slow.

Given the "sluggish macro-environment and cautious business sentiments", OCBC economist Selena Ling said real wage growth could be around 2 to 3 per cent this year, assuming headline inflation remains negative, at minus 0.4 per cent.

Already, low-wage workers did not get as good a deal last year. Just 46 per cent of private-sector firms with employees earning basic monthly pay of up to $1,100 gave or intended to give them wage increases, down from 59 per cent who did or intended to do so for their workers earning up to $1,000 in 2014.

The salary bar was raised last year to account for rising salaries.

Fewer than two in 10 of the firms with employees earning up to $1,100 surveyed by MOM adopted the National Wages Council's recommended wage increment of at least $60 to these workers.

Those with outsourced workers fared slightly better - 42 per cent adopted the recommendation. Still, three in 10 of these firms did not give any increment at all to these workers, saying they were already paying market rates or constrained by contracts.

SIM University economist and Nominated MP Randolph Tan said firms may feel that the extent to which they can use wage support to raise wages at the lower end of the spectrum has run its course. "The motivation could be fizzling out."

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