Employers might question why the National Wages Council (NWC), in its recommendations last week, has asked them to consider paying a one-off inflation lump sum to rank-and-file employees.
The simple answer is, they should not be bystanders in the widening efforts to help low-wage earners cope with rising prices, especially of food and other basic necessities. The Government is spending more than $3 billion this year to help Singaporeans defray higher living costs.
Measures include the GST offset package, Budget 2008 surplus sharing and Workfare Income Supplement Scheme to boost low-wage workers' earnings and CPF savings. The NTUC is helping as many as 80,000 members with $4 million worth of discount vouchers. Community organisations are lending a helping hand.
Employers who are able to pay should heed the NWC's call. Some of them will not be in a position to do so or can give only a token amount. Some will point to the uncertain economic outlook and slowing growth as well as inflation as excuses not to pay. These economic trends do not affect businesses equally.
In suggesting the payment, the NWC has not departed from its key principle - that wages should not outpace productivity growth. Its main recommendation this year also takes into account wage sustainability and market competitiveness as well as companies' performance and business prospects. Last year, real basic wages outstripped productivity gains for the second year running. But over the last five years or longer, productivity has grown faster than have such wages.
The NWC noted that Singapore's relative unit labour cost in manufacturing did rise by 2.2 per cent against that of 16 other economies last year, due partly to the rising Singapore dollar. But with wages growing below the longer-term productivity curve, the recommended lump sum payment should not fuel inflation.
Generally, employers should see the payment as an opportunity to reinforce the cooperative and sound industrial relations to which the NWC, through its tripartite deliberations, has contributed over the years. Fairness and equity are desirable sentiments that bosses sometimes choose to ignore.
But those who do act on them and do the right thing by their employees just as often find it pays in loyalty and performance in the long run. If there is a deepening sense of pessimism about the economy among most low-income Singaporeans, inflation looms larger than most other fears. Whatever financial relief employers can extend will supplement government and community help and go some distance in reassuring the most vulnerable they do not stand alone in bad or uncertain times.
