Monday 14 October 2013

When firms, NTUC disagree over pay

There's resistance from companies and industry associations but labour chief Lim Swee Say still believes the progressive wage model is workers' best hope for better pay
By Janice Heng And Toh Yong Chuan, The Straits Times, 12 Oct 2013

THE flipcharts remain. Diagrams are still sketched. But the energy of the past has waned.

On a quiet weekday evening, in a room on an otherwise silent floor of the labour movement's One Marina Boulevard building, labour chief Lim Swee Say's usual optimism is tempered by more than a tinge of weariness. He wants better pay for workers through a vehicle called progressive wage model. But not all firms are keen.

"I can't force them, right? I'm not the director of HR of all these companies," he notes bluntly, after outlining his thoughts through sketches on flipcharts.

It has been more than a year since he introduced the model with much enthusiasm, drawing and cajoling. The scheme was, in the eyes of many, the National Trades Union Congress' (NTUC) response to calls for a minimum wage. It has career "ladders" which workers can scale by gaining skills and being productive, and pay benchmarks to push their salaries up, relying on persuasion rather than legislation.

But the sparkle has dimmed. As the model relies on consensus, it can stall. And it did last month, when two industry groups in the security sector baulked at the proposed $1,000 basic pay for guards - $200 more than the median.

The NTUC's talks with the Singapore National Employers Federation, the security groups, and the Ministry of Manpower (MOM) continue. But the incident raises the question: If firms refuse to come on board, how far can the progressive wage model go?

A leg up the ladder

ONE of the aims of the model is to raise wages for the workers who earn the least.

Such workers have been making headlines amid worries over inequality and stagnating pay. Last year, veteran economist Lim Chong Yah put forth a three-year plan to hike pay by 15 to 20 per cent a year for those earning below $1,500, in what was later called his "shock therapy" idea.

MOM figures from 2002 to 2012 show incomes flatlining for the bottom fifth, rising less than 0.1 per cent a year after accounting for inflation.

But a closer look shows that salaries fell in the first half of the decade, then recovered. From 2007 to 2012, pay rose 0.9 per cent each year after inflation.

The NTUC wants to push pay up even more, and has focused on the cleaning, security, and landscaping sectors as that is where most low-wage workers are.

The method of choice: sectorwide licensing and accreditation. That is because firms in these sectors compete to provide outsourced services such as cleaning and security. Those that pay workers more could thus be disadvantaged against low-cost rivals.

The first target was the cleaning sector. And the NTUC hit its mark: all cleaning firms will have to adopt the model next year.

This is when licensing becomes mandatory for the industry - and one requirement thereof is adopting the progressive wage model.

Yet this coup might be hard for the NTUC to replicate in security and landscaping, for it requires the agreement of industry - likely to be hard to get, given the security sector's slow progress.

The alternative is accreditation. Firms' clients are the deciding factor, and the NTUC will have to convince them to favour accredited firms, with the wages model, over others, says Mr Lim.

But National University of Singapore economist Hui Weng Tat thinks it is unrealistic to expect these clients,concerned about their bottom lines, to care.

This difference between compulsory licensing and voluntary accreditation highlights a key weakness of the progressive wage model: with rare exceptions such as cleaning, it cannot be enforced.

"Employers are not compelled to adopt the recommended starting wages unless these are also legislated," notes Professor Hui.

Why not just have a statutory minimum wage, he asks.

To that, the Government's response has long been that an artificially high minimum wage could result in unemployment instead.

Mr Lim takes the point that the NTUC wage model lacks the force of a mandatory minimum wage.

But he argues that this system is "more than minimum wage", saying: "What we have is a minimum wage ladder, not a minimum wage point." A minimum wage brings workers to that level but no higher. In contrast, the progressive wage model sets a minimum for each rung of the career ladder.

Of course, there is still the argument that a wage ladder is no use if firms are not forced to follow it.

But Mr Lim is realistic about the feasibility of legislating his model. "There is no country in the world that can pass a law to require every company to put in place a skills ladder, a productivity ladder," he says.

One company at a time

IN OTHER industries, the problem of compliance is even greater.

Without industrywide licensing or accreditation regimes, the NTUC has to go firm by firm. Some sectors are admittedly easier to convince than others.

Government backing helps. In public health care, the Ministry of Health has been involved in the model's implementation since its launch in September last year. By this August, 2,500 health-care support staff got pay rises of 10 per cent.

The next best thing is a cooperative industry giant. NTUC First Campus is the largest player in childcare, and the first to adopt the model there.

But in the absence of deep government involvement or helpful big players, attempts at persuasion are less effective.

For a start, firms might prefer to have their own models.

"Some companies endorse the principles behind it but have their own unique career pathways for their employees," says SNEF executive director Koh Juan Kiat.

But if such firms pay better than suggested, then as Mr Lim puts it: "If they say, 'My ladder is better than your ladder', I say 'Thank you'."

Instead, the problem is when firms do not pay at suggested levels, and do not want to. The main sticking point: costs. The NTUC says that increasing productivity should allow firms to pay more.

But as such measures take time to bear fruit, firms may be cautious, says UniSIM economist Randolph Tan: "They would prefer their productivity efforts to show results first."

No teeth? No problem

AS A "policy", the progressive wage model may look ineffectual. Any progress is likely to be slow. But Mr Lim accepts this pace, suggesting another perspective: "We look at it as the next phase of the wage system in Singapore."

What were earlier phases like? Well, it took Singapore over 15 years to move away from seniority-based pay, and over 10 years to adopt flexible wages, notes Mr Lim. In both cases, change came via tripartite wrangling and shifting norms, not legislation.

Outside the low-wage sectors, the company-by-company approach has to apply for the progressive wage model, too, he says.

In this context, the model's lack of teeth is unsurprising. The implication is that higher pay will take a while. But economists say firms, at least, will benefit - not least small firms, which would be hit hardest if the model were compulsory. "The voluntary nature of the scheme provides firms with more flexibility," says NUS economist Davin Chor. The model "is the best that can be done, short of the Government actually instituting an official minimum wage".

Yes, firms might not comply. But "what we can nevertheless hope for is that the progressive wage becomes a norm that gets gradually adopted over time".

And there is reason for workers to take heart. Even without the teeth that legislation could provide, firms face pressure of another sort - the tight labour market.

The energy returns to Mr Lim's voice as he says: "We believe the environment will become more and more conducive and supportive of (the model), because we are slowing down our workforce growth." Firms will face increasing competition for good workers.

"And in line with that, companies that put in place this progressive wage model will be in a better position to attract good workers," concludes the labour chief.

Yes, he hopes the progressive wage model can set new norms. But for him, market pressure is more reliable than the hope that bosses will "all wake up one morning" and decide to pay more.

"I live in the real world," he says with a wry smile.

MY WAY: Home-Fix's DIY training programme
By Toh Yong Chuan, The Straits Times, 12 Oct 2013

JULIANA Jalil, 35, joined hardware chain Home-Fix in 1997 as a part-time sales executive to earn pocket money while studying at a polytechnic, but she has risen up the ranks to be its in-house training expert.

The chain's managing director and co-founder, Mr Low Cheong Kee, 49, recalls his first meeting with Ms Juliana.

"I was setting up our new store at Ikea at Alexandra when she knocked on the glass door and asked whether we had a vacancy. I interviewed and accepted her on the spot," he said.

Mr Low said that Ms Juliana's progress mirrored Home-Fix's growth here from three stores in 1997 to 23 now. "As we expanded, our staff also grew with us."

The year Ms Juliana joined, the retailer set up a human resource department. It lays out career progression paths for workers, and promising staff like Ms Juliana are sponsored for tertiary studies.

Home-Fix is an example of a company with its own approach to giving its employees a leg-up, even as the NTUC rolls out its progressive-wage model.

But when asked what its strategy is called, Mr Low hesitated, then said with a laugh: "Now that you asked, we focused on making it work and don't have a proper name. We will work on it."

On NTUC's model, Mr Cheong said: "It is a useful a starting point, especially for small and medium enterprises without human resource departments, but you cannot apply one model to all firms."

He pointed out, for example, that newbies at Home-Fix start at $1,300. NTUC's wage ladder for retail assistants starts at $1,000 a month.

"And we have a five-day work week for most of the year, except the year-end festive period," he added.

On why his firm is happy to help workers upgrade, Mr Low reflected on what led him and his brother to strike out on their own as businessmen.

"My brother and I worked at our parents' hardware store for six to seven years, and we decided that it is not something anyone would want to do their whole lives.".

New hires are put through a three- to six-year training plan, during which they upgrade from being $1,300-a-month retail assistants to $2,000 retail executives.

Staff can also move out of retail sales, said Mr Low, citing a staff member who is now the chain's IT and building maintenance manager at its new six-storey building at Tai Seng.

"We are a home-grown firm, so flexibility is our strength," he said.

While Ms Juliana is happy with her progress, she has set her sights on a bigger plan. She received a sponsorship from the Singapore Workforce Development Agency this year to study for a part-time degree at UniSIM. "I hope to be a training expert one day, not just in retail sales."

NO WAY: Firms need flexibility, says association
By Toh Yong Chuan, The Straits Times, 12 Oct 2013

IT REBUFFED the labour movement's bid to raise security guards' pay, but the head of the Security Association of Singapore says it is not a bunch of "pai kia" (gangsters in Hokkien).

When the National Trades Union Congress (NTUC) tried to sell its progressive wage model to the association last month, it said no. "It is for them to support our idea, not for us to agree to their way of doing things," association president T. Mogan said then.

But last week, the 54-year-old clarified that the strongly worded comment may have been misunderstood.

"We are not saying that we do not want to increase the pay of security guards, but we want firms to have flexibility without having a model prescribed to us."

The association was worried that raising the basic monthly pay of security guards would balloon a firm's wage bill because the bulk of a guard's pay comes from overtime calculated from basic pay.

The NTUC appears to have softened its stand. Labour chief Lim Swee Say told Insight last week that it will not insist on raising the monthly basic pay of security guards in a single step.

The rebuff by the security association thrust the normally low-key body into the spotlight. Set up in 1976 to represent security firms, it opened its doors to individuals such as private eyes in 1992.

In 1997, a rival Association of Certified Security Agencies was formed to represent only firms.

On the rivalry, Mr Mogan would only say: "We are cordial and we work together, but there is an understanding that a member who is in the council of one association should not be in the council of the other."

The burly six-footer, who has been association president since 2007, attributes his "tough-guy image" to the decade he spent as a narcotics officer. "It is not like I can ask a suspect 'Sir, can I arrest you please?' right?"

The A-level holder left the law enforcement job in 1989, worked as a security guard and private eye before starting his own security firm, Dragnet, in 1993. His three grown-up children are professionals and uninterested in taking over the business.

The door is not closed entirely on the NTUC. Mr Mogan has accepted the Manpower Ministry's invitation to join a national committee to look into improving security guards' pay and work conditions.

"I care about security guards' well-being in my own way, too," he said, citing a project to boost the morale of guards by lobbying the Government to declare an annual "Security Officers' Day" on Sept 11.

"I'm not getting much support on this, but it is not going to stop me from trying."

Talks still on to raise security guards' pay
By Toh Yong Chuan, The Straits Times, 12 Oct 2013

SECURITY guards may still get their pay hike after all.

Talks which began in August are still going on between the National Trades Union Congress and the two associations representing security firms.

NTUC secretary-general Lim Swee Say told The Straits Times it is focused on improving basic pay and "the figure is now being negotiated between the union and industry players".

"We are still in the process of talking," he added.

As well as a pay rise, NTUC also wants to shorten the guards' working hours.

Security guards on average earn a monthly salary of $1,700, but their basic pay is only $800. The bulk of their salary comes from overtime work, by clocking 12 hours a day, six days a week.

Mr Lim would not be drawn into details of the talks, but his comments came three weeks after The Straits Times reported that talks between NTUC and associations had stalled because security firms were worried raising guards' pay may increase their costs.

The presidents of the Security Association of Singapore and Association of Certified Security Agencies confirmed that they had been roped into a Security Tripartite Cluster - a national panel - headed by NTUC and Singapore National Employers Federation. Both declined to comment further.

The Ministry of Manpower (MOM) said the panel was set up to raise basic wages and cut down overtime hours "over the next few years".

A spokesman said: "It will take into account the considerations of the various stakeholders, including NTUC and the security associations, to ensure that the progressive wage model is realistic for the sector."

MOM said the plans will be announced "once finalised", adding: "The tripartite partners will work together to monitor and enhance the take-up and implementation of the progressive wage model once it is implemented."

THE NTUC WAY: Earn more by moving up the ranks
By Toh Yong Chuan, The Straits Times, 12 Oct 2013

WHEN 65-year old grandmother Lim Gek Kwee joined NTUC First Campus as a part-time cleaner four years ago, she was earning $580 each month.

Her monthly pay has doubled to $1,300 now, after she upgraded to become a centre attendant, cooking for more than 90 children and washing plates.

Ms Chan Yin Jie, a newly minted principal at the pre-school operator, has a similar story.

The 27-year-old degree holder joined First Campus four years ago as an English teacher earning $2,000 a month. She was put through a special programme where she rapidly rose to become one of the youngest principals there, earning over $3,000 each month.

The duo were picked out by Ms Geraldine Lee, chief human resource officer of NTUC First Campus, as examples of employees who have benefited from the labour movement's progressive wage model launched last year.

The National Trades Union Congress launched a career progression model for 11,000 pre-school teachers in July last year, with the monthly pay for childcare teachers starting at $1,200 and principals, $3,000.

Although the pre-school player was the first to sign up, Ms Lee said the co-operative had its own career progression path for teaching staff even before that. "But adopting the model allowed us to tap on the Inclusive Growth Programme," she said, referring to the national funding programme that subsidises measures to boost workers' productivity.

With the subsidies, the pre-school operator started a $250,000 project to fit bigger sinks and new taps at all its 101 centres to make it easier for centre attendants like Madam Lim to wash plates.

It has also boosted the pay of all its 253 centre attendants by 10 per cent since last year. The monthly starting pay of new hires also rose from $1,110 last year to $1,200 this year.

Explaining the pay hikes, Ms Lee said: "We are a social enterprise and we have a culture of looking after our staff."

Although Madam Lim and Ms Chan were happy with their progression so far, the former said she is near retirement and happy to work just to kill time. But Ms Chan still looks forward to career progression: "I hope to be a curriculum specialist or a cluster principal, maybe in the next four to five years."

Responding, NTUC First Campus' Ms Lee said promising principals like Ms Chan can look forward to career advancement: "We want them to be able to grow with us as we go about serving our 11,000 families each day."

NTUC to help lift wages of 'knowledge workers'
By Janice Heng, The Straits Times, 12 Oct 2013

AFTER creating career ladders for sectors such as retail and cleaning, the labour movement wants to do so for "knowledge workers" too.

These are workers whose jobs deal with ideas and information, not physical labour.

The progressive wage model aims to help workers become more skilled and productive, so that they can move up into better jobs and earn more.

For low-wage jobs, labour-saving devices are the key driver of productivity, NTUC secretary- general Lim Swee Say told The Straits Times last week.

But for knowledge-based jobs, the approach is different. "We are now working with organisations that have expertise, not in supplying labour-saving equipment, but in managing human resources."

These organisations will help NTUC come up with a progressive wage model for knowledge workers, with an eye to boosting productivity in the "more advanced economy".

The employers to which the model will be presented are "knowledge-based organisations managing a world-class knowledge-based workforce," said Mr Lim. He did not give examples of what sort of jobs he had in mind, but said details would be available in a few months.

Besides helping highly educated workers get more productive, the labour movement also wants to help workers with limited education earn more.

Such workers might be stuck in their current salary scale because moving up requires better educational qualifications.

However, whether a worker can advance from one salary scale to another should depend on his productivity and skills, said Mr Lim. "Therefore, we should look more at their competencies rather than just qualifications alone."

NTUC thus intends to work with the Singapore Workforce Development Agency (WDA) to come up with a progressive wage model that ties career advancement to training qualifications, instead of academic ones.

To create this "qualifications ladder", NTUC plans to draw on the Workforce Skills Qualifications framework.

Under this national training framework, workers gain qualifications ranging from a certificate to an advanced diploma. Even if they do not get a full qualification, they get a statement of attainment for each module they complete, in a "bite-sized" approach.

"We are going to work even closer with WDA to see how can we roll out this qualification ladder, which is competency- based, skill-based, across more and more job sectors," said Mr Lim.


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