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News analysis

Guidelines not binding but National Wages Council has influence

The annual National Wages Council (NWC) press conferences are pretty routine affairs.

This is how the council works.

The mammoth 36-member body is made up of unionists, employer groups and public sector officials. It meets every year between April and May to set wage guidelines for companies.

 
 

The meetings are held behind closed doors. Once the guidelines are hammered out, they go to the Cabinet for approval.

When the parties are ready to talk to the public, a tightly scripted press conference is held where the council releases its guidelines. The Government, Singapore National Employers Federation and National Trades Union Congress (NTUC) then release simultaneous statements to support the NWC guidelines.

How can they not support the guidelines, one wonders, when they are part of the council that decided on them?

But here's the rub - the guidelines are not compulsory for companies, which appears to make a mockery of the process. Is the council even relevant then when salaries are largely dictated by market forces?

The sceptics were surprised in 2012 when the council showed it was no mere rubber stamp.

In a bold move to help low-wage workers, it recommended that year that those earning up to $1,000 a month should receive a minimum pay hike of $50. It was an NTUC idea that both the council and Government backed.

The council continued in the same vein for four more years, progressively raising the minimum pay hike to $60 and the salary bar to $1,100.

This year, it spelt out the pay hike as a range between $50 and $65. It is the most significant aspect of the NWC guidelines this year, to give companies leeway so those doing better can give more.

When asked yesterday when the pay hikes for low-wage workers would stop, NWC chairman Peter Seah said the council is committed to lifting the lot of low-wage workers and would review every year how to help them.

"There is a social dimension to it," he said. "There is no fixed formula (on when the minimum increases will stop)."

For low-wage workers, this is the single most important function of the NWC - that it works with employers, unions and government officials to raise the salaries and improve the well-being of low-wage workers.

Official data showed that the council has had a positive impact, despite its naysayers. In 2012, when the NWC first started the minimum pay hikes, there were 150,000 local workers earning $1,000 and below.

The salary bar is now $1,100, but the number of workers earning below the higher bar has fallen to 112,900 last year.

The council and its work remain acutely relevant. Even though its guidelines are not binding, it can still influence salaries and improve workers' lives. Its work should not be undermined by employers who ignore or cannot adopt the guidelines.

A version of this article appeared in the print edition of The Straits Times on June 01, 2016, with the headline 'Guidelines not binding but council has influence'. Print Edition | Subscribe