OCBC gives staff $3 million in Wage Credit payouts

By Chia Yan Min, The Straits Times, 19 May 2014

LOCAL lender OCBC is handing out $3 million to about 1,500 staff members - the bank's first payout from a government scheme introduced last year to help firms restructure and cope with a tighter job market.

The bank is believed to be the first major company here to completely refund its Wage Credit Scheme payout to its workers.

OCBC's employees - most of whom will receive between $1,000 and $3,000 - can either credit the money to their Central Provident Fund accounts or invest in shares via the bank's Blue Chip Investment Plan.

The payouts are part of the $3.6 billion Wage Credit Scheme introduced in the 2013 Budget.

Under the scheme, the Government subsidises 40 per cent of the pay rises given to Singaporean workers earning up to $4,000.

It expires next year.

The first tranche of payouts went out to companies in March, with 74,000 employers from a range of industries receiving about $800 million in total. Some 75 per cent of the cash went to small and medium-sized enterprises.

The 1,500 OCBC employees make up a quarter of the total staff strength across the bank itself and its OCBC Securities unit, and they will get the payouts in the next two months.

"The amount... may not be large but we hope to contribute to his or her long-term saving or investment plan," said OCBC chief executive Samuel Tsien.

The payout due to employees who have since left the bank will be channelled to its training budget, OCBC added.

Mr Gabriel Lee, an associate with the bank's global consumer financial services division, said he intends to put the money towards an investment plan which allows investors to buy into blue-chip shares with monthly payments.

"I've wanted to invest since last year... This is a good chance to make the first move," said Mr Lee, 29, who has been with the bank for about two years.

When the Wage Credit Scheme was unveiled last year, there were concerns that it would create unrealistic pay expectations among staff and leave employers in the lurch after it expires.

A Singapore Business Federation poll of 215 companies late last year found that the scheme had a modest impact on whether bosses gave pay hikes.

While 37 per cent of employers surveyed said they would give staff larger salary increments, the rest said they would not change pay levels.

Firms channel productivity subsidy back to employees

By Xue Jianyue, TODAY, 19 May 2014

Some employers have channelled the payouts they received from the Wage Credit Scheme (WCS) — a government subsidy for wage increases, to help companies raise productivity — back to their employees as they keep an eye on the labour crunch.

Instead of using the cash to buy machines to improve productivity, for instance, some companies such as Genki Sushi are thinking of providing more medical benefits for their staff.

These will benefit all employees, said Mr James Chan, the food chain’s director of corporate development, which received about S$40,000 in WCS payouts last month.

Meanwhile, Laundry Network chief executive officer Chan Tai Pang said he is using the payout to raise the salary of his 300 workers even further.

“We depend largely on workers, as it is a very labour-intensive type of trade,” he said, noting the tight labour market. “Maintaining the staff, maintaining the company culture is very important for us to continue. Business continuity is very important and (it) depends on how we treat our staff.”

Similarly, OCBC, which received S$3 million in WCS payouts, will credit the entire sum to the CPF accounts of 1,500 eligible employees or allow them to invest in shares through its Blue Chip Investment Plan. CEO Samuel Tsien said: “Fulfilled employees, after all, will be more productive and serve our customers.”

Some, however, worry that adopting such an approach could lead to a sense of entitlement among workers of higher salaries.

CKE Manufacturing Enterprise development manager Kwan Lifeng, who plans to invest the more than $10,000 he received in payouts into projects and team-building events to raise productivity instead of disbursing it as a “bonus”, said productivity gains will help businesses achieve more sustainable growth.

Agreeing with the caution against workers feeling entitled to higher pay, Mr Kurt Wee, president of the Association of Small and Medium Enterprises (ASME), said firms have been using the fund for a variety of reasons. These range from boosting productivity through job redesign, to health benefits and allowances for social activities to improve staff retention.

Under the WCS, which was introduced last year, the Government co-funds 40 per cent of pay increases given to Singaporean employees earning a gross monthly wage of S$4,000 and below. The scheme will end next year.

Few will get Wage Credit payouts directly
Many large firms plan to use funds for staff training, skills upgrading
By Toh Yong Chuan And Chia Yan Min, The Straits Times, 23 May 2014

COMPANIES have received their first payouts from a scheme that subsidises wage increases, but most large firms are unlikely to hand the money directly to employees.

More than 10 prominent Singapore companies were contacted about their plans for the first Wage Credit Scheme payout, which went out in March.

While almost all declined comment, The Straits Times understands that many large companies are planning to channel the funds towards training and skills upgrading for staff.

Under the Wage Credit Scheme introduced in the 2013 Budget, the Government subsidises 40 per cent of pay rises given to Singaporean workers earning up to $4,000 a month. It expires next year.

The scheme came under the spotlight earlier this week when local lender OCBC Bank announced that it would be handing out its first $3 million payout to about 1,500 staff.

The bank is believed to be the first major company here to completely disburse the money to workers.

Mr Victor Mills, the chief operating officer and acting chief executive of the Singapore International Chamber of Commerce, said firms "should do the most appropriate thing for the companies and their employees".

"Larger companies usually focus on training and development," he said. "The point is to increase companies' capabilities."

Mr Mills added that the chamber has not found it necessary to issue guidelines to members on how to use the money, as "it is entirely up to them".

The chamber represents more than 700 global companies here.

The Singapore National Employers Federation said feedback it has received shows that most employers are using the funds to offset higher business and manpower costs.

The federation "encourages companies to share their productivity gains with employees", said executive director Koh Juan Kiat.

While human resource experts and unionists back the OCBC move, they are also realistic that not every company will be able to follow suit.

"It is a good gesture of showing appreciation to the staff," said Mr Erman Tan, president of the Singapore Human Resources Institute, adding: "But only companies that do well have the resources and ability to do it."

Veteran labour Member of Parliament Yeo Guat Kwang said small and medium-sized enterprises (SMEs) may face difficulties giving the Wage Credit payouts to workers. "Of course we want companies to share the payment with workers, but we are realistic that the SMEs that face cost constraints may not be able to do so," he said.

Mr Zainal Sapari, National Trades Union Congress assistant secretary-general, said low-wage workers will benefit most if firms share the Wage Credit refunds.

"But if the money can be used to raise productivity which leads to sustainable pay increases in the long run which is higher than the one-time payment, then I would prefer firms invest to raise productivity," he said.

But at least one worker who got a raise last year is happy with her higher pay. Madam Chua Yam Khen, a cleaner at a polytechnic, saw her monthly pay rising from $850 to $1,000 last year. Part of the increase was subsidised by the Wage Credit. But the 67-year-old does not expect her employer to share the subsidy with her.

"It is up to the boss, but having more money is definitely useful for workers who do not earn much," she said in Mandarin.