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Pay hikes only possible if productivity is increased, say HR experts

The Singapore Human Resources Institute also says wage increases should only happen if progressive productivity increases are seen.

SINGAPORE: The labour movement's desire for national wage guidelines to cover more low wage earners has been backed by observers such as the Singapore Human Resources Institute.

However, the institute also says that it should only happen if progressive productivity increases are seen.

On Sunday, labour chief Lim Swee Say said that unionists had asked to raise the wage ceiling so that more low wage earners can get the recommended pay hikes, but were unsuccessful.

The National Wages Council, comprising government officials, unionists and employers, recommended a minimum pay hike of S$60 for low wage earners drawing up to S$1,000 monthly.

However, employers, citing cost concerns at a time when productivity growth is still somewhat lagging, have resisted a call by unionists to extend this to all those drawing up to S$1,200 monthly.

Employers do not necessarily disagree with giving low wage earners a pay hike. Instead, the disagreement seems to be over the wage ceiling to which the pay hikes should apply. A higher ceiling naturally means employers may be looking at a larger wage bill.

Singapore's tight labour market is already putting upward pressure on wages.

The Singapore Human Resources Institute says one way firms can grant pay hikes while being productive is to adopt the labour movement's Progressive Wage Model.

The model calls for upgrading workers' skills and with resulting productivity growth, wages can rise.

"Employers will understand that there is a cost pressure on them and that they really have to ensure they put in sufficient training and also change some business model -- put in more innovation," said Erman Tan, president of the Singapore Human Resources Institute.

Security firms Aexis and Evtec employ some 1,000 security officers, 400 of whom earn a monthly basic wage of S$1,000 and under. Overtime pay just about doubles their pay, so the need for a pay hike is not as pressing.

The two security firms support the National Wages Council's recommendations, but would not be giving all employees a S$60 raise at one go.

Robert Wiener, general manager at Aexis and Evtec, said: "Let's assume on a thousand staff that we employ, we make ‘x’ amount of dollars. Now if we times that by 60 dollars every month -- a thousand staff yeah, so what's that? A thousand, that's S$10,000, that's S$60,000 yeah? Do you honestly think a small business like us could tolerate or even consider a hit of S$60,000 a month? I don't think we could."

Aexis and Evtec say they plan to introduce the pay hike in batches, upon renewing security contracts with service buyers.

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