More low-wage workers to benefit from pay rises

Real wage growth for private-sector workers slowed to 3.2 per cent last year, after factoring in inflation.
Real wage growth for private-sector workers slowed to 3.2 per cent last year, after factoring in inflation.PHOTO: REUTERS

NWC ups pay threshold from $1,200 to $1,300, recommends built-in increments of $50 to $70

A bigger swathe of low-wage workers should receive higher basic pay increases this year, the National Wages Council (NWC) said yesterday as it urged companies to share the gains from economic and productivity growth with their workers.

The reason is that the NWC has raised the $1,200 basic monthly pay threshold of these workers to $1,300, and recommended that they be given built-in increments of between $50 and $70.

This will cover about 24,000 more workers than last year, when it proposed that those earning up to $1,200 get pay hikes of $45 to $60.

In all, about 150,000 workers will come under the new pay threshold.

United Overseas Bank economist Francis Tan said the recommendation strikes a good balance.

A $50 increment for a worker earning, say, $1,000, would amount to a 5 per cent bump in salary.

This surpasses inflation, which is forecast to be in the upper half of the zero to 1 per cent range this year.

"It is not too low and not too high. If it were too high, then companies' margins would be hit, and if it falls below last year's wage growth, it would be too low," Mr Tan said.

Real wage growth for private-sector workers slowed to 3.2 per cent last year, after factoring in inflation, which was 0.6 per cent, Ministry of Manpower (MOM) data showed on Wednesday.

The NWC, in its annual wage guidelines, made a third recommendation for low-wage workers.

It proposed - for the first time - that companies with productivity gains last year give them a one-off bonus of between $300 and $600, either in a lump sum or over several payments.

The proposal follows healthy growth in the Singapore economy, which grew 3.6 per cent last year, up from 2.4 per cent in 2016, while labour productivity jumped 3.8 per cent, more than double that in 2016.

MOM's Permanent Secretary Aubeck Kam said at a media briefing that the suggested one-off bonus is a good symbolic move that demonstrates the importance of "fairly sharing with workers the exceptional productivity gains and economic performance seen last year".

The wage guidelines were accepted yesterday by Singapore's biggest employer, the civil service, and will take effect on July 1.

There are fewer than 20 civil servants earning below $1,300.

The guidelines, which apply to full-time resident employees, are not legally binding but have benefited a majority of low-wage workers.

Last year, almost two out of three private businesses that hire low-wage workers gave them a pay rise as suggested by the NWC, MOM had said. It benefited 68 per cent of all low-wage employees who had worked for at least one year.

Employers that have done well but face uncertain prospects may moderate built-in wage increases, but they should reward workers with variable payments that reflect the companies' performance, the NWC added.

Those that did poorly and face uncertain prospects may exercise wage restraint, with management leading by example.

The NWC also welcomed the Government setting up a work group to look at how to better support older workers. It also urged firms to have flexible work arrangements to recruit and retain working mums.

Singapore National Employers Federation chairman Robert Yap called on bosses to take a long-term approach to help low-wage workers "by embarking on initiatives to enhance their earning capacity through better skills and better jobs".

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A version of this article appeared in the print edition of The Straits Times on June 01, 2018, with the headline 'More low-wage workers to benefit from pay rises'. Print Edition | Subscribe