Saturday, 2 June 2018

National Wages Council 2018/2019 Guidelines

NWC recommends monthly wage hikes of $50-$70 for workers earning up to $1,300
More low-wage workers to benefit from pay rises
By Yasmine Yahya, Senior Political Correspondent and Hariz Baharudin, The Straits Times, 1 Jun 2018

A bigger swathe of low-wage workers should receive higher basic pay increases this year, the National Wages Council (NWC) said yesterday as it urged companies to share the gains from economic and productivity growth with their workers.

The reason is that the NWC has raised the $1,200 basic monthly pay threshold of these workers to $1,300, and recommended that they be given built-in increments of between $50 and $70.

This will cover about 24,000 more workers than last year, when it proposed that those earning up to $1,200 get pay hikes of $45 to $60.

In all, about 150,000 workers will come under the new pay threshold.

United Overseas Bank economist Francis Tan said the recommendation strikes a good balance.

A $50 increment for a worker earning, say, $1,000, would amount to a 5 per cent bump in salary.

This surpasses inflation, which is forecast to be in the upper half of the zero to 1 per cent range this year.

"It is not too low and not too high. If it were too high, then companies' margins would be hit, and if it falls below last year's wage growth, it would be too low," Mr Tan said.

Real wage growth for private-sector workers slowed to 3.2 per cent last year, after factoring in inflation, which was 0.6 per cent, Ministry of Manpower (MOM) data showed on Wednesday.

The NWC, in its annual wage guidelines, made a third recommendation for low-wage workers.

It proposed - for the first time - that companies with productivity gains last year give them a one-off bonus of between $300 and $600, either in a lump sum or over several payments.

The proposal follows healthy growth in the Singapore economy, which grew 3.6 per cent last year, up from 2.4 per cent in 2016, while labour productivity jumped 3.8 per cent, more than double that in 2016.

MOM's Permanent Secretary Aubeck Kam said at a media briefing that the suggested one-off bonus is a good symbolic move that demonstrates the importance of "fairly sharing with workers the exceptional productivity gains and economic performance seen last year".

The wage guidelines were accepted yesterday by Singapore's biggest employer, the civil service, and will take effect on July 1.

There are fewer than 20 civil servants earning below $1,300.

The guidelines, which apply to full-time resident employees, are not legally binding but have benefited a majority of low-wage workers.

Last year, almost two out of three private businesses that hire low-wage workers gave them a pay rise as suggested by the NWC, MOM had said. It benefited 68 per cent of all low-wage employees who had worked for at least one year.

Employers that have done well but face uncertain prospects may moderate built-in wage increases, but they should reward workers with variable payments that reflect the companies' performance, the NWC added.

Those that did poorly and face uncertain prospects may exercise wage restraint, with management leading by example.

The NWC also welcomed the Government setting up a work group to look at how to better support older workers. It also urged firms to have flexible work arrangements to recruit and retain working mums.

Singapore National Employers Federation chairman Robert Yap called on bosses to take a long-term approach to help low-wage workers "by embarking on initiatives to enhance their earning capacity through better skills and better jobs".

NWC proposes one-off bonus as economy and productivity grow
By Yasmine Yahya, Senior Political Correspondent and Hariz Baharudin, The Straits Times, 1 Jun 2018

A one-off bonus has been proposed for the first time by the National Wages Council (NWC) as a reward for workers, following the robust growth of the economy and labour productivity more than doubling last year.

It made the call to companies that achieved productivity gains to share them with workers.

But it did not suggest any amount or proportion, except for workers earning a basic monthly wage of up to $1,300. They should get between $300 and $600 of this special payment, either in a lump sum or over several payments, the NWC said yesterday when issuing its annual wage guidelines.

The recommendation was made as labour productivity more than doubled to 3.8 per cent last year, from 1.4 per cent in 2016, while the economy expanded 3.6 per cent, up from 2.4 per cent the year before.

Speaking at a media briefing on the NWC guidelines, which takes into account input from employers and unionists, NTUC assistant secretary-general Melvin Yong said the bonus was the most difficult item for the parties to agree on.

"I am sure you can guess that each party asked for more," he quipped.

"A range gives us flexibility in terms of implementation when you negotiate with the companies. At the same time, just like the annual wage increment, the range gives a guideline to employers," he added.

When asked how the range was reached, Singapore National Employers Federation chairman Robert Yap quipped: "After a lot of negotiations."

NTUC president Mary Liew added: "Into the early mornings."

Dr Yap said it was important for the recommended range to be sustainable for companies.

"It has to be something manageable, rather than something that companies would regret paying out," he said. "Recommending a range also allows more companies to participate. Those that enjoyed higher productivity gains can give more."

CIMB Private Bank economist Song Seng Wun noted that much of the productivity gains made last year were due to big boosts in export-oriented sectors such as manufacturing, wholesale trade, and transport and storage.

Productivity in outward-oriented sectors surged by 6.7 per cent last year, while that in domestically oriented services fell by 0.2 per cent.

"However, service sectors are doing better this year amid a broadening of the economic recovery, so perhaps workers in these industries could receive the bonus later this year or in 2019," Mr Song said.

Some employers told The Straits Times that they were open to the special payment, which they said would boost the morale of their workers, while others were more circumspect.

Mr Raj Joshua Thomas, chief executive of security firm TwinRock, said: "Low-wage workers' days could be filled with routine and administrative tasks, and they might not feel like they belong. When companies share their gains, these workers would see they have a stake in the company.''

Mr Raj, who has about 150 workers, added that employees who feel this sense of belonging may be motivated to work harder, resulting in even higher productivity.

Mr Vicky Nathan, chief executive of Assured Protection and Consultancy, agreed the bonus is a good idea. But his company may not offer it as it already shares productivity gains with workers through bursaries and awards.

Similarly, Mr Darren Lim, executive director of home-grown sauce and paste manufacturer Hai's, said instead of the one-off payment, he prefers to raise the salaries and performance bonuses of his workers.

A leg-up for lower-wage workers
The Straits Times, 2 Jun 2018

The National Wages Council (NWC) has recommended that a larger swathe of low-wage workers should get higher basic pay increases this year. Those earning a basic salary of up to $1,300 a month should get built-in increments of between $50 and $70. This will cover 24,000 more workers than in 2017, when the NWC recommended that those earning up to $1,200 should get pay hikes of $45 to $60. This recommendation will be a gift to about 150,000 full-time workers who will come under the new basic salary threshold.

Indeed, the council has proposed, for the first time in its annual wage guidelines, that companies which achieved productivity improvements last year should give their low-wage workers a one-off bonus of between $300 and $600. The guidelines are not legally binding but reflect what can be expected reasonably of employers in a tripartite system based on cooperation and non-confrontation among the state, capital and labour.

Low-wage workers exemplify the truism that a chain is only as strong as its weakest link. These workers represent a vulnerable part of the economy. Their academic qualifications and skills are hardly marketable in a globalised economy compared to those who have benefited from tertiary education or who took the opportunity to upgrade their skills level. The jobs of lower-income workers are also in acute danger during periods of economic downturn, when they may be the first to go. But their jobs are not particularly safe even in other periods because there is only so much that such workers can do to increase productivity levels. Yet, like other better-placed workers, they have families to support and expectations to fulfil of their children, whom they wish to see in better-paying and higher-status jobs. It has usually fallen on the NWC, along with the National Trades Union Congress (NTUC), to ensure that such workers are not left behind. The council and NTUC are not unaware of the fundamental operation of market forces and the effect that increased costs can have on the bottom line of companies. Which is why the NWC's quantitative guidelines for low-wage workers consider factors such as Singapore's economic performance, competitiveness, labour market conditions and productivity performance. Measures to raise the skills and incomes of low-wage workers, operating alongside previous guidelines, have led to better wage outcomes for low-income workers.

The NWC's latest guidelines are timely, given recent concerns on the ground about wage levels, the adequacy of savings for retirement, and come against the backdrop of efforts by the Government to tackle inequality in its different guises. These will have cost implications. It remains important for employers and consumers to recognise the significant role they also play in helping narrow social and income gaps that exist here.

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