Businesses welcome wage guidelines but say pay hikes should be backed by productivity boost

Companies are encouraged to beef up the flexible wage component of employees’ pay to increase wages. ST PHOTO: LIM YAOHUI

SINGAPORE - The Association of Small and Medium Enterprises (Asme) has welcomed the National Wages Council’s (NWC) new wage guidelines, as the broad framework gives businesses the room to tailor implementation of the wage increases on a case-by-case basis.

Small and medium enterprises (SMEs) employ about 70 per cent of the workforce, according to a UOB report.

Mr Ang Yuit, vice-president of Asme, said that “as an association, we want to encourage the business owners to adopt the guidelines of flexible wages and implement what works for their business”.

The NWC has recommended a “fair and sustainable” rise in wages for the period from Dec 1, 2022, to Nov 30, 2023.

To achieve this, companies are encouraged to beef up the flexible wage component of employees’ pay.

Lower-wage workers also get higher wage increments of 5.5 per cent to 7.5 per cent, or at least $80 to $100, up from the range of $70 to $80 in the past year’s guidelines.

Dr David Leong, managing director of HR consulting firm Peopleworldwide Consulting, said employers should consider wage adjustments to retain workers and hire more.

He added that working on the monthly variable component is the most sensible way for companies to increase wages as it can be adjusted when times are difficult.

This ensures they do not lose their talents and, when the business environment picks up, “their core team is intact and the rank and file are ready to run”, he said. 

Ms Tricia Liverpool, general manager of executive recruitment firm Cornerstone Global Partners, said employers should look at more regular salary reviews for high-performing employees and give bigger bonuses as a reward for productivity.

She said non-financial benefits are also important and “could include perks like hybrid working as an option for those who need it, more days off, improved healthcare plans and an investment on learning and development”.

For lower-wage workers, like security guards, cleaners and landscape workers, the wage increase is also welcome.

Mr Toby Koh, group managing director of security services company Ademco Security Group, said the security guard industry is facing a severe shortage of manpower and if salaries do not go up, it will not be able to attract better and younger talent into the trade.

“We are paying above-market rates. Let’s not talk about the very new hires with no experience. With experienced staff, they are definitely getting above the market norms,” he said.

As wages rise, the Singapore National Employers Federation (SNEF) said this should be supported by productivity growth.

SNEF said real total wage growth, which include bonuses, was 2.7 per cent a year between 2016 and 2021.

During that period, productivity growth was 3.2 per cent per annum as wages grew at a slower pace, against the backdrop of a weaker economy.

Asme’s Mr Ang said productivity has already been affected by the high manpower turnover SMEs are facing.

“There is a lot of movement in the job market. When you lose people, you need time to find and train people. We are seeing this in the last nine months, ever since opening up (after the pandemic),” he said.

To boost productivity, NWC said employers should continue with business transformation and job redesign initiatives.

Employees should also reskill and upskill to ensure their skills remain relevant in the current environment.

Ademco’s Mr Koh said the industry is already using technology to boost productivity and trying to get clients to understand how technology can complement the physical security guards on site.

He said there are instances where technology can do a better job and there are instances when human judgment is still necessary.

“Why do we still want guys to do endless patrols around our premises? Wouldn’t computer vision actually be more efficient than human eyes?” he said.

But he added that when someone is seen loitering, a security officer would still need to go and chat with the person to assess if there is a threat.

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