Time for a makeover at 40, NWC

The National Wages Council can galvanise more public views and give more specific wage guidelines for sectors such as cleaning

By Toh Yong Chuan, The Straits Times, 31 May 2012

THE National Wages Council (NWC) has done the unexpected in recommending a fixed increment for low-wage workers this year, the first in nearly three decades.

It accepted a National Trades Union Congress (NTUC) proposal for a $50 raise for those with a monthly basic pay below $1,000.

Explaining the decision, the affable NWC chairman Lim Pin said that the incomes of these low-wage workers have fallen behind, prompting the NWC to make the bold move of specifying a minimum pay rise, going beyond qualitative guidelines as is the norm.

The council, now in its 40th year, has done a good job in helping keep wages stable. It is an opportune time for a makeover. There are a few areas which merit a bolder approach.

First, it can work harder at engaging Singaporeans, since its recommendations make such a deep impact.

Its current method is to make a public call for suggestions once a year, at the start of the wage talks. It follows up with a media conference at the end.

But there is no word on suggestions received and how they weighed in the council's final recommendations. A good first step would be to update the public on the views received.

To be sure, wage negotiations cannot be conducted in public. But the council can shed more light on how it comes to key decisions. When it presented its guidelines last week, the council said there was 'clear and unequivocal support' for boosting the pay of low-wage workers. But it is clear that some employers will face problems implementing the proposal. To what extent were these problems discussed behind closed doors?

A better understanding of the difficulties and trade-offs in difficult choices can boost the council's credibility and public support. At the very least, it will dispel the misperception that the three-way partnership among unions, employers and the Government is so warm and chummy that the yearly wage talks are not rigorous enough.

A second area of improvement has to do with the nature of the council's guidelines. How effective is its current approach of issuing broad guidelines and leaving it to unions to negotiate with companies?

It was not always like this.

Before 1986, the council gave fairly specific guidelines, including spelling out the minimum quantum of pay increase and the increments range. In 1982, it even set the minimum pay rise at $18.50, the only time in its history where 50 cents appeared in its recommendations.

But that changed in 1985 when the Government decided that it would stop asking the NWC to recommend annual pay increases. It reasoned that it was impossible for the council to find a single increase suitable for all sectors and all jobs while Singapore moved towards a flexible wage system. The seniority-based wage system, where workers get fixed pay increases with more years on the job, was updated with variable pay based on productivity and performance.

With broad guidelines, the onus falls squarely on unions to negotiate wages directly with companies. This left workers in companies without unions at the mercy of employers' interpretations of NWC's broad guidelines.

Coincidentally, the sectors plagued by problems of low-wage workers now - cleaning and security - are industries where unions are weak, until recent years.

Broad guidelines will not help low-wage workers in these sectors. To really help them, the NWC can do right by making a third improvement: issue sector-specific guidelines. It does not have to do so for all sectors, but it can target specific sectors for wage enhancements.

Targeting specific industries for wage enhancements to achieve inclusive growth was one of the ideas by Professor Tommy Koh in an essay in The Straits Times two weeks ago ('What Singapore can learn from Europe'; May 19).

The defunct wage councils in Britain suggest a way. Before they were abolished in 1993 to pave the way for a national minimum wage law, they were responsible for setting a legally enforceable minimum wage in the various industries. Their aim? To prevent employers from exploiting workers in low-paid industries where it was difficult for workers to organise themselves and unions were weak.

That description may well fit the current state of Singapore's cleaning sector.

The Government has made it clear that it is not going down the minimum wage path. But it has said it would require accredited cleaning companies to pay 'appropriate wages' to workers who have gone for training and are more productive.

What might these wages be? The NWC can provide an answer, and more, by setting a formula where companies can share productivity gains with workers through higher pay and bonuses.

Better still, it can even take on a watchdog role in monitoring how wage guidelines for specific sectors are implemented. This is the fourth area of improvement.

It is not widely known that the NWC guidelines actually do have some teeth. The annual guidelines are gazetted by the Government, thus making them official and giving unions and companies a basis to negotiate annual wage increases.

If both parties hit a deadlock, they can turn to the Manpower Ministry or the Industrial Arbitration Court. The court can refer to the gazetted wage guidelines and order companies to pay up.

There is however a rub: Workers in non-unionised companies do not have unions to turn to for help. The NWC can thus be a lifeline for them, if it were to take on this additional monitoring role.

Not all sectors will need, or want, the NWC's help. For example, the National Transport Workers Union was able to up the basic starting pay of Singaporean bus drivers in the two public transport companies from $1,200 to $1,600 this year, through the sheer bargaining power of the union.

Likewise, cleaning companies that want government contracts will soon have to pay cleaners higher wages under the new accreditation scheme.

But many workers are left out of such arrangements: workers in industries without union collective bargaining like in the security and cleaning sectors; and workers in companies that are not unionised.

In these situations, the NWC can step in to enhance the pay of workers in the entire sector by setting specific wage guidelines, and having them gazetted and monitored for implementation.

But in its present form, there is a constraint to what the NWC can do. As a national body, it may not be able to give full attention to all sectors.

If the council were to undergo a makeover, it can take a peek at the National Trades Union Congress' reorganisation. In March, the NTUC announced it was regrouping its more than 60 unions into 10 to 12 industry clusters. This way, the unions can work out industry-specific plans with employers and government officials to boost productivity and raise wages.

Can these clusters form the nucleus of 'mini-NWCs' to formulate more focused and effective productivity and wage guidelines to boost workers' pay?

In short, while the NWC retains a relevant, indeed vital, role in Singapore, it can do with an update to make it galvanise more public views and target specific low-wage sectors for pay enhancements through more specific guidelines.