With the National Wages Council (NWC) now in session, Prime Minister Lee Hsien Loong has called on workers and employers to shoot for 'sustainable' wage adjustments and reach 'realistic' settlements this year.

While food prices have surged and hit workers hard, Mr Lee assured them there are adequate supplies - and reminded them that the government has provided relief, especially to low-wage workers.

The Monetary Authority of Singapore's (MAS) policy of keeping the Singapore dollar strong has also eased the impact of imported inflation and helped maintain the buying power of workers' wages, according to him.

'I hope that workers and employers will take into account these important factors in their wage settlements this year,' Mr Lee said in his May Day message yesterday. 'They should aim for sustainable wage adjustments and put increases into variable bonuses as far as possible to make our wage structure more flexible.'

He said 'realistic' settlements will address the concerns of workers, yet allow companies to respond quickly to sudden changes in the economic environment.

With the US probably already in recession and the possibility that the financial problems sparked by the sub-prime mortgage loans crisis will worsen, Mr Lee said the economic outlook is highly uncertain.

But Singapore - thanks largely to strong tripartite cooperation - is in a strong position to deal with the challenges, he said.

'We still expect to grow by 4-6 per cent this year. But we must watch closely how the situation in the US unfolds, and be ready to respond if things take a turn for the worse. We have the resources and ability to do so.'

Jobs remain plentiful and as major projects like the two integrated resorts come up, many more jobs will be created, he said.

'In this environment, the vast majority of workers with useful skills and qualifications will have no difficulty getting a job. But they should take advantage of the many opportunities for continuous education and training to refresh their skills and knowledge.'

More vulnerable will be older, low-wage workers, but Mr Lee said the government is doing all it can to help them.

'We are working with the NTUC, helping them to upgrade their skills, become more employable and do better for themselves.'

The external turbulence will put the solidarity of workers, employers and government under stress, Mr Lee said.

'But we must not end up arguing among ourselves - or, worse, quarrelling over how to divide what we have - or else we will be worse off. Overall, however, the US financial problems will play out, and I am confident of our ability to cope. The global environment is in flux and we are sailing into choppier waters. But our economic fundamentals are sound and we are in a strong position.'

This article was first published in The Business Times on May 1, 2008.