Saturday 26 May 2012

NWC Guidelines 2012/2013: Give built-in pay rises, low-wage workers to get higher increase

Low-wage workers to get higher increments; Govt accepts guidelines
By Toh Yong Chuan, The Straits Times, 24 May 2012

THE National Wages Council (NWC) yesterday recommended that workers here get built-in wage increases this year, to cushion against rising inflation and cost pressures.

It said low-wage workers should receive higher built-in increases because their income growth in the last 10 years has lagged behind that of the rest of the workforce.

It recommends that companies grant them a built-in wage increase in the form of a dollar quantum and a percentage wage increase.

'This will give the low-wage workers in the company a proportionately higher built-in wage increase,' it said.

Companies that are doing well may also consider giving these workers an additional one-off lump-sum payment, to help them better cope with the cost of living.

For the first time in nearly three decades, the NWC also specified the amount of wage increase some workers should get this year. It said those earning a basic monthly salary of up to $1,000 should get a built-in increase of at least $50 - a figure reported by The Sunday Times this week.

However, it recommends that companies that are doing well give these workers a larger increase.

In pushing for real wages to be raised over the long term, the NWC said that Singapore's economic growth should benefit all Singaporeans, and that it strongly supports the Government's objective of inclusive growth for all workers.

'Efforts to uplift the lower- wage groups should therefore go beyond providing wage assistance and, more importantly, be channelled through measures to improve their earning ability in general.'

The NWC also urged companies to improve productivity by using technology and innovating their work processes.

The guidelines are drawn up by employers, workers and government representatives, and are closely watched by the public and private sectors as they set the direction for wage policies.

The Government said in a statement that it accepted the recommendations for built-in wage increases this year, with higher increases for low-wage workers, and urged companies to pay special attention to this segment.

The Singapore National Employers Federation (SNEF) and the National Trades Union Congress also issued statements supporting the recommendations.

In a six-page release, the NWC pointed out that real basic wages fell 0.8 per cent last year, after taking into account headline inflation which includes imputed rentals. With rentals taken out of the calculation, real basic wages rose, but only by 0.2 per cent.

At a press conference, NWC chairman Lim Pin said the $50 increase was the 'basic floor level' of pay increase for low-wage workers who are 'the lowest of the low'. The 270,000 workers, including part-timers, who earn below $1,000, are believed to be mostly in the cleaning and security industries.

Professor Lim said the $50 monthly pay rise had the 'clear and unequivocal' support of all members in the NWC.

Explaining the unusual move to stipulate the amount of increase, he said the council looked at the 'social aspect' of low-wage workers' pay, and decided to give them a lift as they have fallen behind.

SNEF president Stephen Lee said some companies might face difficulties implementing the $50 wage hike, but he felt the sum was a 'bearable one'.

The guidelines will be gazetted before they take effect for one year from July 1.

SNEF: Give leeway to implement hike
It 'strongly endorses' $50 pay rise but says bosses will need flexibility
By Toh Yong Chuan, The Straits Times, 24 May 2012

WHILE the National Trades Union Congress (NTUC) is pleased that the National Wages Council (NWC) has accepted its proposal to boost the pay of low-wage workers, the Singapore National Employers Federation (SNEF) hopes companies will be given some leeway to implement the $50 hike.

Although the SNEF 'strongly endorses' the recommendations, its president Stephen Lee told reporters yesterday that employers will need some flexibility to comply.

He said companies are worried about how to distinguish between good and poor performers, if all were to get a $50 hike.

He added that firms should be allowed to pay more to top performers and less to those who are not so deserving, as long as the average hike for all workers is $50.

'I hope that NTUC can also understand this,' said Mr Lee.

Still, these are practical issues to be ironed out and they will not derail the pay-rise plan, he said.

The Singapore Chinese Chamber of Commerce and Industry said it understands the need to do more for low-income earners.

But this has to be 'properly managed so that it would not exert undue cost pressures' on small and medium-sized enterprises and 'jack up wages too much across the board', it added.

NTUC's assistant secretary- general Cham Hui Fong said the $50 hike will ensure that those earning up to $1,000 monthly will at least have a 5 per cent wage increase.She noted that those earning up to $1,000 have received pay rises of as low as $10 to $15 in the past.

NTUC will not stop at $50, she added, and it will seek higher pay increases for workers in companies that are doing well.

Unionists cheer the move to help low-wage workers.

Mr Hareenderpal Singh, an executive council member of the 11,000-strong Union of Security Employees, said a $50 hike in basic pay means an even higher overall pay when security guards work overtime.

'It also means more to their CPF,' he added.

The Building Construction and Timber Industries Employees' Union, which represents 5,000 cleaners, will step up its drive to recruit more members so that it can get pay hikes for them, said its president Nasordin Mohamad Hashim.

But while unionists and employers in the NWC may differ in their views in implementing the pay hike, they agreed on one thing: that former NWC chairman Lim Chong Yah had played a positive part.

When asked whether Professor Lim's ideas to boost the pay of low-wage workers had a bearing on the NWC discussions, current NWC chairman Lim Pin said without hesitation: 'I would say yes, indirectly, Prof Lim Chong Yah's proposal stimulated a lot of discussions.'

The proposal to raise the pay of those earning less than $1,500 a month by 50 per cent over three years sparked much discussion, including a warning from Prime Minister Lee Hsien Loong that it could make things worse for the workers in the long run.

'But we have to make sure that whatever we implement is sustainable and balanced,' said Professor Lim Pin.

Prices may have to rise too, say companies
By Jessica Lim, The Straits Times, 24 May 2012

BUSINESSES were yesterday braced for the knock-on effects of an expected increase to workers' basic pay.

They told The Straits Times that a rise in base salaries would lead to higher payouts for overtime and CPF contributions.

Companies that take out loans to pay workers in advance may also face larger interest payments.

Meanwhile, others said they would be forced to raise prices, and feared losing their competitive edge.

They were responding to news that the Government had backed a recommendation to increase the basic pay of workers for a year. This includes at least $50 extra for those earning a base of $1,000 or less a month.

'This is a lot for us,' said Ang Chin Moh Casket's human resource manager Nicole Yeo. 'It's actually way more than $50. It affects everything from year-end bonuses to overtime pay.'

She expects the move to increase costs by about 10 per cent but her company is biting the bullet. Plans are afoot to pay its 10 funeral assistants, who earn a base pay of about $980 a month, $50 more by the end of the year.

Mr Shane Shim, 47, runs Westminster Investigation and Security Management, which has 150 guards, each earning a basic pay of between $600 and $800.

He thinks he will have to charge customers $80 more per guard to keep the same profit margins, and may have to lay off some of the guards. 'What if we increase prices and clients don't accept our proposals?' he said.

The company also takes out bank loans to pay its staff in advance, as it can take months for clients to pay up. Mr Shim said this means more interest payments.

'The Government should educate our clients so that they understand why we have to increase prices,' he said.

Security company Pico Guards already gives its workers a basic pay of more than $1,000, but will be conducting a review in the light of the new recommendations.

'This could be good for the industry,' said a spokesman. 'It may attract better workers and raise the bar.'

Mr Chan Chong Beng, president of the Association of Small and Medium Enterprises, said: 'Businesses that can't absorb the $50 should re-examine their business models and cost structure.'

However, he added that pay would take time to adjust as many companies had already signed contracts at fixed rates.

Mr Chan said he supported the increment but most of the association's 7,000 members did not.

Many were worried that increasing their prices would lead to a snowball effect - that they would lose business, struggle to retain workers and eventually shut down.

'But these companies should be more confident,' said Mr Chan, adding that everyone faced the same changes. 'This may also mean they hire fewer workers and will be forced to make sure each worker contributes more. That means increased productivity.'

Employees, on the other hand, welcome the recommendations.

Security guard Chong Peng Suang, 70, hopes they mean he will finally get his first pay increase in his 22 years with his company. He earns a basic pay of $650 per month but is guaranteed four hours a day of overtime. 'The basic pay is so low,' he said.

Miss Cindy Lai, 20, who earns $900 a month managing the daily schedules of cleaners, said the $50 would come in handy.

'It's better than nothing,' she said. 'But I won't rejoice yet. Let's see the money first.'

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