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Employers should reward workers with fair, sustainable wage increases and adopt flexible wage scheme: National Wages Council

Employers should reward workers with fair, sustainable wage increases and adopt flexible wage scheme: National Wages Council
The National Wages Council said that employers should reward workers with built-in wage increases and variable payments if possible
PHOTO: The Straits Times file

Employers should reward employees with fair and sustainable wage increases, said the National Wages Council (NWC) on Thursday (Oct 10). 

Companies that have done well should reward workers with built-in wage increases and variable payments commensurate with the firm's performance and employees' contributions, it added. 

While employers who have not done well may exercise wage restraint, they should focus on improving business processes and productivity, especially by upskilling their employees. 

The above are part of the NWC's recommendations for wage guidelines for the period from December 2024 to November 2025. 

In a press conference on Thursday, NWC chairman Peter Seah said that NWC has adopted a more "positive tone" for this year's guidelines, while balancing caution and optimism. 

"This is consistent with the NWC’s long-standing principle that wage growth should be in line with productivity growth," he said. 

The council's guidelines take into consideration the sustained productivity growth, as well as Singapore's improved economic outlook and expected moderate inflation.

Singapore's economy is expected to expand by two to three per cent in 2024, according to projections by the Ministry of Trade and Industry. 

Inflation has also fallen to 2.9 per cent for the first half of this year, compared to the 4.8 per cent for the same period in 2023.

No one-off payment this year 

When asked why NWC did not recommend a one-time payment like it did last year, National Trade Union Congress (NTUC) president K Thanaletchimi said that the guidelines set an "intention" for employers who have done well to provide a variable component. 

Rewarding workers can also help employers retain workers, added Seah. 

The NWC also called for all employers to implement the Flexible Wage Scheme (FWS) in full, which comprises the annual variable component and monthly variable component, if they have not already done so. 

The FWS allows employers to make quick adjustments during downturns sustain their business, said the council.  

80.4 per cent of 5,000 firms surveyed by the Ministry of Manpower last year have implemented the FWS. 

Wage increases for lower wage workers

To further narrow the wage gap between lower wage workers (LWW) and median wage workers, NWC recommends that employers who have done well to provide a built-in wage increase at the higher end of 5.5 to 7.5 per cent of a LWW's gross monthly wage, or a wage increase of $100 to $120, whichever is higher.

This is higher than the pay bump of $85 to $105 suggested in last year's guidelines.

For companies that have done well but face uncertain prospects, they should offer low wage workers a built-in pay increase of the middle- to lower-end of 5.5 to 7.5 per cent, or a wage increase of $100 to $120, whichever is higher. 

Employers who have not done well should provide a built-in wage increase at the lower end of 5.5 to 7.5 per cent of a LWW's gross monthly wage. 

They should consider further wage increases should business prospects improve, said the NWC. 

Lower wage workers are those who earn a gross monthly wage of up to $2,500, which corresponds approximately to the 20th percentile wage level of full-time employed residents in 2023. 

READ ALSO: 'A consistent and strong advocate for workers': NTUC Sec-Gen Ng Chee Meng says Lawrence Wong has labour movement's full support

claudiatan@asiaone.com

For more original AsiaOne articles, visit here.

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