Reiterating its focus on Singapore's lowest-paid workers, the National Wages Council (NWC) yesterday called on companies to give a minimum raise of $60 to employees drawing a basic monthly salary of $1,000 or less. This follows last year's prescription of a minimum monthly wage hike of $50 for such workers.
With businesses struggling to stay competitive amid rising costs on the one hand, and the need to lift wages at the bottom on the other, the tripartite council's suite of wage recommendations for the year July 1, 2013 to June 30, 2014 comes after "intense discussion", said NWC chairman Lim Pin.
It was "not an easy negotiation", said National Trades Union Congress (NTUC) president Diana Chia. But the resulting recommendations and their key goals - sustainable real wage growth via productivity gains and higher wages for poorer workers - are "fully supported" by the labour movement, "strongly endorsed" by the Singapore National Employers Federation (SNEF), and have been accepted by the government. Business associations yesterday also voiced support for the guidelines which, though not mandatory, are closely watched.
Taking into account challenging business conditions, a tight labour market and 2013's official growth forecast of 1-3 per cent, Prof Lim said that the NWC recommends built-in wage increases for all workers. For low-wage workers, this increase should take the form of a dollar quantum and a percentage - to ensure a proportionately higher rise.
It also recommends that companies reward strong performance with bonuses. And firms that do well are urged to grant lower-wage workers a one-off lump sum to help them cope with the higher cost of living.
But the recommendation for those earning $1,000 or less was the most specific: a "fair and achievable" $60 wage hike, up from last year's suggested $50 pay raise. This is to "build further on the momentum" from last year, Prof Lim said.
Of the unionised companies, eight in 10 have heeded last year's call. But once non-unionised companies are included, the adoption rate fell to three in 10, as at December last year.
While NTUC was "very concerned" about the low adoption rate among non-unionised firms, SNEF president Stephen Lee viewed this as an "encouraging start" which can be built on by reaching out more to smaller firms with fewer than 50 workers.
In any case, with the labour market so tight and widely publicised disparity in pay between companies, workers will begin to move, he said. Association of Small and Medium Enterprises (ASME) president Chan Chong Beng agreed. Companies unwilling to raise the pay of workers earning $1,000 or less must be prepared to lose their employees to others, he said
As many low-wage workers are in sectors where outsourcing is common - such as cleaning, security and landscaping - NWC also advises that sellers and buyers of such services adjust sourcing contracts to take its wage guidelines into account.
The council also called for companies in more industries to adopt the progressive wages model NTUC is championing, to provide a clear ladder of skills and income levels for workers to climb up.
And, to contain business costs, NWC urged the government and companies alike to find ways to reduce non-wage costs.
The Singapore Chinese Chamber of Commerce and Industry (SCCCI) yesterday supported the wage guidelines, but asked the government "to consider keeping in check all non-wage costs, including government charges, rentals, fees and levies which add substantially to the cost of doing business in Singapore". This is especially in this "trying period where companies are contending with the challenges of changing their business models and restructuring their business processes", SCCCI said.
SNEF's Mr Lee acknowledged that SMEs will bear the brunt of restructuring stress, but has noticed a change in the mood among these smaller firms since about two months ago. "Earlier, the SMEs were harping on 'no workers, no workers, no workers' . . . But the more progressive SMEs are now turning their energies to see what they can do to help themselves," he said.
NWC is hoping companies will actively tap the $5.3 billion package of grants, rebates and incentives rolled out in Budget 2013 to raise productivity. It called on employers to share such productivity gains fairly with workers.
But not all profitable firms appear to be sharing their gains, said NTUC vice-president and general secretary of the United Workers of Petroleum Industry K Karthikeyan. "I understand if the 18 per cent still don't give, as they're really not making the money . . . But the 82 per cent which are profitable - what stops them from giving?"
To him, this is even more unacceptable given that under the three-year Wage Credit Scheme (WCS) launched this year, the government will co-fund 40 per cent of wage hikes given to Singaporeans earning a gross monthly wage of up to $4,000.
In fact, some of the "long discussions" NWC had centred on varying expectations of how the WCS should factor into wage adjustments, said NTUC assistant secretary-general Cham Hui Fong. But SNEF's Mr Lee said drawing a direct link between the WCS and wage hikes is "dicey" as it is temporary and companies must consider the longer term when adjusting wages.
"Real wage increases need to be sustainable and not erode the long-term competitiveness of our economy," NWC said.
Over the last 10 years, labour productivity grew 1.6 per cent a year, exceeding real total wage growth of 1.2 per cent a year. But in the last five years, labour productivity shrank 0.4 per cent a year, as economic growth was driven primarily by labour force growth, limiting real wage growth too.