Low-wage workers are set for another pay bump after the National Wages Council (NWC) recommended a minimum $60 increase for those earning a basic salary of up to $1,100 a month.
The move, which works out to be at least a 5.5 per cent pay rise, could benefit at least 127,000 workers, if all employers follow the recommendations.
New NWC chairman Peter Seah, who took over the reins last month, announced this at a press briefing yesterday, saying that the council recognises that these workers have been upgrading their skills and increasing their productivity.
"The council wanted to focus on low-wage workers given that they are the most vulnerable group and should continue to benefit from Singapore's growth," he said.
The economy is expected to grow by 2 to 4 per cent this year.
In making the recommendation, the NWC noted that the proportion of full-time resident workers who earn a basic monthly salary of $1,000 and below has been falling. It stood at around 6.8 per cent last year, down from 9.8 per cent in 2012.
This partly explains why only three in 10 of their employers in the private sector followed the council's wage recommendations last year, down from over five in 10 in 2013, said the NWC.
Mr Seah said the aim is to encourage wage increases which are sustainable, and urged employers and unions to focus on helping workers to deepen their skills and raise productivity. Productivity fell 0.8 per cent last year while real basic wages rose 3.9 per cent.
"Real wages should be in line with productivity growth over the long term," said Mr Seah.
The NWC added that other workers can be given built-in wage increases taking into account business performance, prospects and sustainability.
Some of the remaining companies unable to raise low-wage workers' salaries according to the recommendation put it down to poor business last year, said Singapore National Employers Federation Robert Yap.
Besides pay raises, the council urged unions and employers to shift towards the use of portable medical benefits for workers.
The National Trades Union Congress (NTUC) and business chambers came out in support of the guidelines, which take effect from July 1 and have been accepted by the civil service.
NTUC assistant secretary-general Cham Hui Fong said the NWC's decision to raise the income cap for its recommendations from $1,000 to $1,100 allows a larger group of vulnerable workers to be helped.
Yesterday, the NWC also said that it is reviewing whether to continue giving fixed minimum figures for its recommendations for low-wage workers, which it has done since 2012.
But labour economist Walter Theseira said a quantum is useful in coordinating efforts to raise wages, especially as such workers lack bargaining power.
Without such guidelines, bosses may not have a benchmark for their wage increases, he said.
Association of Small and Medium Enterprises president Kurt Wee said that the pay raise recommended by the council should be manageable for small and medium companies.
But he said this may not last, as demand for labour may weaken if poor global growth and the tight labour market continue to curb business expansions. "If fewer jobs are available and there is less demand, wages may see moderation," he said.
This article was first published on May 30, 2015.
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