National Wages Council calls for another round of wage hikes for the low-income

SINGAPORE - For the second year in a row, the National Wages Council (NWC) has recommended that firms give a minimum raise to employees who earn less than $1,000 a month.

It called on such workers to have their monthly salary increased by at least $60. Last year, the recommended increase was $50.

While eight in 10 companies in the unionised sector accepted the recommendations and boosted the pay of their low-wage workers by at least $50 last year, but only three in 10 non-unionised companies followed suit. Employer group Singapore National Federation of Employers say that the progress was a "good start", but the National Trades Union Congress said that it was "very concerned" with the slow pace.

Besides boosting low-wage workers' pay, the council recommended that companies that outsource their work should also consider wage hikes for outsourced workers by reviewing and adjusting the contracts.

The NWC also said that wage hikes have to be based on productivity gains, and firms should share their productivity gains with workers in a sustainable manner.

The council which is made up of union leaders, employer groups and government officials meet yearly to set wage guidelines. While companies are not compelled to accept the guidelines, the recommendations are nonetheless closely watched because they set the wage direction for the economy.

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Government accepts NWC guidelines for 2013/2014

Here is the press release from MOM:

The Government has accepted the National Wages Council (NWC)'s recommendations for 2013/2014.

The Government endorses the NWC's focus of its 2013/2014 guidelines to raise real wages for wo rkers by improving productivity, and to achieve higher wages for low-wage workers.

In particular, the Government suppor ts the NWC's move to build on the momentum generated further to its recommendation last year to give low-wage workers larger built-in wage increases.

The Government recognises the need to complement its efforts to upskill and uplift this group of workers with the direct commitment of employers to improve their wages. It also recognises that for the NWC recommendation to be effective, buyers of outsourced services will also need to play a part.

The Government will lead by example, not only as an employer but also a service buyer. It will also continue to take reference from the NWC guidelines in its annual wage adjustment exercise. The Government will also strongly encourage service suppliers to the public sector to adopt NWC recommendations on wage increments for their workers.

The NWC has recommended that real wage increases should be in line with productivity growth over the long term, and that employers should share productivity gains fairly with workers and in a sustainable manner. The Government strongly supports this guideline, and urges companies, unions and workers to work to gether towards this goal.

Quality growth driven by productiv ity and innovation is important if our economy is to restructure toward s higher value-added activities, and generate higher wages for our workers. Employee skills and training will also need to be kept relevant for us to remain competitive.

The Government today provides a range of support to help the industry make productivity improvements and our workforce stay right-skilled and resilient.

The Quality Growth Programme announced in the 2013 Budget and the 3-year $5.3billion Transition Support Package provide furt her assistance for our companies to manage this period of restructuring. Companies should make full use of the various funding and assistance programmes available.

Over the years, strong tripartite support has ensured that NWC wage guidelines have been implemented to reward workers for their contributions while at the same time helping our companies remain resilient and competitive.

This balanced approach is essential for the continued progress of our nation and to achieving shared and inclusive growth. The Government is confident that with the commitment of the tripartite partners, the 2013/14 NWC guidelines will be successfully implemented.Here are NWC's wage guidelines for 2013/2014:

Economic Performance and Labour Market in 2012 1 In 2012, the Singapore economy grew by 1.3 per cent, moderating from the 5.2 per cent growth in 2011.

Total employment increa sed by 129,100 or 4.0 per cent in 2012, slightly above the growth of 12 2,600 or 3.9 per cent in 2011. The overall unemployment rate remained at a low of 2.0 per cent, unchanged from 2011; while the unemployment rate for residents fell s lightly to 2.8 per cent, from 2.9 per cent in 2011.

The Consumer Price Index (CPI) rose by 4.6 per cent in 2012, easing from the 5.2 per cent increase in 2011. The two largest contributors to CPI-All Items inflation last year were accommodation costs, pa rticularly imputed rentals on owner- occupied accommodation (OOA), and car prices. CPI less imputed rentals on OOA inflation, a measure which relates more directly to the actual cash spending of households, was lower at 3.6 per cent.

Reflecting slower GDP growth and continued robust employment creation, labour productivity contracted by 2.6 per cent in 2012, after rising by 1.3 per cent in 2011.

Basic wages of employees in the pr ivate sector grew by 4.5 per cent in 2012, comparable to the increase of 4.4 per cent in 2011. Taking into account bonuses (annual variable component) and employer Central Provident Fund (CPF) contributions, total wages in the private sector increased by 4.2 per cent, lower than the gain of 6.1 per cent in 2011.

This was on account of the decline in bonuses from 2.32 months of basic wages in 2011 to 2.19 months in 2012, given the weaker economic conditions.

Accounting for CPI-All Items inflati on, real basic wages declined by 0.1 per cent while real total wages fell by 0.4 per cent. When adjusted using CPI less imputed rentals on OOA inflation, basic wages rose by 0.9 per cent, and total wages by 0.5 per cent in real terms in 2012

 Outlook for 2013

While Singapore's economic growth eased to 0.2 per cent on a year-on-year basis in the first quarter of 2013, it is expected to see a gradual improvement for the rest of the year. Global macroeconomic conditions have stabilised since late 2012, although uncertainties remain.

Singapore's externally-oriented sectors are expected to improve on the back of a recovery in external demand, whereas growth in construction  and some key services sectors should continue to provide support to overall GDP. Barring downside risks, Singapore's GDP is expected to grow by 1 per cent to 3 per cent this year.

The Monetary Authority of Singapore (MAS) forecasts that the 2013 CPI-All Items inflation will be between 3 per cent and 4 per cent, and that more than half of this will be accounted for by imputed rentals on OOA and car prices.

Raising Real Wages for Workers by Improving Productivity

Over the long term, average real wage increases have been supported by productivity growth. Over the decade from 2002 to 2012, labour productivity grew by 1.6 per cent per annum, exceeding th e growth in real total wages of 1.2 per cent per annum. In the immediate post-SARS years, labour productivity grew strongly on the back of robust GDP growth. However, in the last 5 years, labour productivity shrank by 0.4 per cent per annum as economic growth was driven primarily by employment.

The NWC recommends that real wage increases should be in line with productivity growth over the long term. Real wage increases need to be sustainable and not erode the long term competitiveness of our economy.

The NWC notes that the Quality Growth Programme was introduced in the 2013 Budget to drive the restructuring of our economy towards quality growth driven by productivity and innovation. To help companies through this period of restructuring, the Quality Growth Programme includes a 3-year $5.3 billion Transition Support Package wh ich comprises: Productivity and Innovation Credit (PIC) bonuses, Corporate Income Tax rebates, and the Wage Credit Scheme (WCS).

The NWC applauds NTUC's efforts in championing the Progressive Wage Model (PWM) to improve the job prospects and income of workers in a variety of industries. The NWC is heartened to see strong employer support for the initiative in these industries and exhorts companies to implement the PWM as soon as possible.

Companies in other industries should also adopt the progressive wages concept and provide a clear progression path for their workers to upskill and upgrade. PWMs will allow companies to make better use of manpower and pay higher wages, commensurate with larger job scopes and higher productivity levels.

The NWC therefore recommends that management work with their unions a nd workers to develop and implement appropriate progressi ve wage models for their companies.

The NWC notes that in a tight labour market, wages are likely to rise. The Wage Credit Scheme helps companies manage rising labour costs while still allowing employers to retain, deve lop and train workers. This frees up resources for businesses to invest in productivity. It will also mitigate inflationary pressure arising from businesses passing on higher wage costs. The Wage Credit Scheme also encourages companies to share productivity gains with their employees. These will enable wages to rise in a sustainable manner.

Companies should take concerted steps to tap on the Quality Growth Programme. Businesses will have to a pproach restructuring with greater urgency, as wages continue to face upw ard pressures. The NWC strongly urges companies and their management teams to lead the drive for productivity and, with the support of the unions, upgrade their operations and invest in their workers.

Improved productivity will benefit co mpanies and enable our workers to enjoy real wage increases. The NWC urges employers to share productivity gains fairly with workers and in a sustainable manner.

Taking into account the challenging business conditions, tight labour market, and economic growth forecast of 1 per cent to 3 per cent, the NWC further recommends that:

a) companies give built-in wage incre ases to workers, taking into account the companies' business performance and prospects; and

b) companies reward employees with variable wage components where appropriate, in line with their performance and workers' contribution

Higher Wages for Low-Wage Workers

The NWC notes the continued efforts by the Government, union and employer groups to help low-wage workers raise their skills, employability and incomes. In particular, the Government has introduced various financial support measures including the $200 million Workfare Training Support (WTS) Scheme and the $100 million Inclusive Growth Programme (IGP).

The higher Workfare Income Supplement (WIS) cash and CPF payouts from January 2013, accompanied by the changes in the CPF contribution rates for low-wage workers from 2014, and other Government transfers including the additional GST Voucher Special Payment, on top of the regular GST Vouchers, will also help supplement the disposable income and CPF savings of this group.

The NWC notes that the unions, employers and the Government have developed a PWM for the cleaning sector and the Government is supporting its roll-out by procuring only from accr edited cleaning companies which have adopted progressive wages.

A progressive wage requirement will also be introduced in a licensing framework for all cleaning companies in 2014.

The NWC recognises that helping lo w-wage workers improve their skills, employability and income requires concer ted and multi-faceted intervention by the Government and key stakeholders. To complement these efforts, the NWC recommends that companies pay special a ttention to this group in their annual wage adjustment exercise, given that th e income growth of low-wage workers has lagged the rest of the workforce.

To help the low-wage workers, the NWC recommends that:

a)companies grant these workers a built-in wage increase in the form of a dollar quantum and a percentage. This will give the low-wage workers in the company a proportionately higher built-in wage increase; and

b) companies that are doing well also grant these workers an additional one-off lump sum payment to help them better cope with the cost of living.

Give At Least $60 in Built-In Wage In creases to Workers Earning Up to $1,000

Last year, the NWC made the r ecommendation for at least $50 built-in wage increases for low-wage workers earning a basic monthly salary of up to $1,000.

The NWC notes that as of D ecember 2012, almost 6 in 10 of private establishments gave wage increases to their employees earning a monthly basic salary of up to $1000. This comprised nearly half (48 per cent) of private establishments that had given (40 per cent) or decided to give (8.1 per cent) a built-in wage increase, and those that provided ot her forms of wage increases (11 per cent).

Specifically, about three in ten gave at least $50 built-in wage increases. While this is a positive step forward, the NWC is of the view that we can build further on the momentum generated.

To give this group of workers continued focus and attention, the NWC therefore recommends thatcompanies employing workers earning a basic monthly salary of up to $1,000 grant these workers a built-in wage increase of at least $60.

The NWC recognises that some comp anies, particularly the Small and Medium Enterprises (SMEs), may find it challenging to meet the above mentioned recommendations.

The NWC urges these companies to earnestly consider how to make good use of Government assistance schemes such as the Quality Growth Programme to improve their productivity and bottomlines, so that their employees can also bene fit from sustainable wage increases.

In addition, many low-wage wo rkers work in industries where outsourcing practices are widespread. Employers of such workers are often locked into multiple-year contracts where there may be limited room to make yearly wage adjustments.

The NWC calls on employers and service buyers in these industries to make a special effort to uplift the pay of the low-wage workers and incorporate NWC wage recommendations into outsourced service contracts. Buyers of outsourced services should also factor the annual wage adjustments for the workers into their contracts, or allow for the contract values to be adjusted accordingly.

Other NWC Recommendation

To contain business costs in this period of economic restructuring, the NWC also urges the Government and companies to continue to look at ways to reduce non-wage costs. Application of NWC's Recommendations

The NWC recommendations cover the period from 1 July 2013 to 30 June 2014.

These recommendations are applicable to all employees - management, executives, professionals and rank-and-file employees, unionised and non- unionised companies in both public and private sectors. This includes workers who have been re-employed.

To facilitate wage negotiation, companies should share relevant information, such as company performance and business prospects, with employees and their representatives.