NWC proposes raising basic wage threshold, S$45-S$60 pay hike for low-wage workers

NWC proposes raising basic wage threshold, S$45-S$60 pay hike for low-wage workers

Despite the uncertain economic environment, low-wage workers may be in for a pay increment if the fresh guidelines from the National Wages Council (NWC) are accepted by their employers.

SINGAPORE: Despite the uncertain economic environment, low-wage workers may be in for a pay increment if the fresh guidelines from the National Wages Council (NWC) are accepted by their employers.

On Wednesday (May 31), the NWC recommended an increase of S$45 to S$60 for low-wage workers earning a basic monthly pay of up to S$1,200.

The council first proposed a range for recommended pay increments last year, when it suggested a hike of between S$50 and S$65 for those earning a basic monthly salary of up to S$1,100. According to the NWC, the greater flexibility provided by the range has increased the adoption rate of its quantitative guidelines from 18 per cent in 2015 to 21 per cent last year.

With Singapore’s labour market outlook and business conditions remaining uneven across sectors, the NWC saw the need to continue to set a range for recommended wage increases, its chairman Peter Seah said at a press conference held at the headquarters of the Ministry of Manpower (MOM).

The NWC also stressed on the need for wage increases in an uncertain economic climate to be “sustainable and fair”, with Mr Seah noting that pay increments should be “given in line with the firm’s business prospects while variable payments should reflect firms’ performance and workers contributions”.

He said: “Employers who have done well and have good business prospects should reward workers with built-in wage increases and variable payments commensurate with the firm’s performance... Employers who have not done well but face uncertain prospects may exercise wage restraint, with management leading by example, and make greater efforts to transform and grow.”

Dr Robert Yap, president of the Singapore National Employers Federation (SNEF), described the lowered range of recommended wage increments from the NWC as a “reflection of sustainability” amid persistent headwinds in the economy.

“We want to give (employers) a more sustainable situation for them to jump in… When employers are concerned, we are not afraid to give increases to our employees but the question is can we keep on giving?” The lowered range of pay hikes to S$45 to S$60, from last year’s S$50 to S$65, will also help more employers to adopt the guidelines, Dr Yap added.

Echoing similar sentiments, CIMB Research’s regional economist Song Seng Wun noted that the NWC had to provide “enough leeway” for all businesses to take up the recommendations given the uneven recovery in the economy and some industries still struggling to regain traction.

“Although we saw fourth-quarter and first-quarter growth holding up, it is still narrow based on the contributors to growth,” said Mr Song, referring to how a resurgent manufacturing sector has been the key driver for growth in Singapore over the past two quarters. The economy clocked a quicker-than-expected 2.7 per cent growth in the first quarter of 2017 from a year earlier.

“The NWC understands the challenges ahead. Growth may have come back up and there are industries that have seen things improve of late but for the recommendations to take on a more positive tone, this pick-up in growth needs to be followed by broad-based quality growth,” the veteran economist added.


The NWC also pushed for a rise in the basic wage threshold of quantitative wage guidelines for low-wage workers to S$1,200, from S$1,100. It last raised this threshold from S$1,000 to S$1,100 in 2015.

According to Mr Seah, the decision is spurred by “significant improvements and reductions” of the number of full-time resident employees earning basic monthly wages of S$1,000 and S$1,100.

Since the quantitative guidelines were introduced in 2012, the proportion of full-time resident employees earning a basic monthly wage of up to S$1,000 decreased from 10.6 per cent in 2011 to 4.7 per cent in 2016, figures from NWC showed. Meanwhile, those earning a basic monthly wage of S$1,100 is estimated to have dropped from 8.2 per cent in 2014 to 5.7 per cent in 2016.

“Building on this progress that we’ve made, the NWC believed there is merit to continue to provide quantitative guidelines and have decided to raise the (basic) wage threshold from S$1,100 to S$1,200,” Mr Seah said. “We are raising the bar to cover a larger pool.”

For low-wage workers who earn slightly above the basic wage of S$1,200, the NWC has included a recommendation for employers to grant them a “reasonable wage increase and/or a one-off lump sum based on skills and productivity”.

Quoting MOM figures, Labour MP Melvin Yong said the proposed adjustment will likely benefit an additional 40,700 workers.

"We hope that by raising the basic wage threshold, we will be able to benefit more workers that are earning a lower salary,” Mr Yong, also the MP for Tanjong Pagar GRC, added.

MP for Tanjong Pagar GRC Melvin Yong
MP for Tanjong Pagar GRC Melvin Yong. (Photo: Tang See Kit)

In a Facebook post, Labour chief Chan Chun Sing wrote that “the Labour Movement is committed and ready to partner our employers to mobilise our workers to deep skill, upskill and reskill”. 

“Though this may seem a challenging task, I believe that working together with our tripartite partners, the Labour Movement can play an important role in helping our businesses to transform and workers to deepen their skills, so as to achieve higher productivity and sustainable wage growth,” he wrote.

NTUC, SNEF and the Singapore Chinese Chamber of Commerce and Industry (SCCCI) have expressed their support for the recommendations from NWC.

The Government has accepted NWC's proposals, which are not legally binding.

In a statement, the Government said it welcomes the recommendations for a pay hike and in particular, supports the council’s move to build on the progress made by the five rounds of quantitative wage recommendations to raise the wage threshold and cover more low-wage workers.

“Although all Government employees are already earning above S$1,200, the Government will continue to lead by example as an employer and take reference from the NWC guidelines in its annual wage increment exercise,” the statement said.

In other recommendations, the NWC highlighted the need to continue employing older workers, noting that it welcomes the Government’s move to raise the re-employment age from 65 to 67 from Jul 1.

NWC’s Mr Seah also described the MOM’s decision to make retrenchment notifications mandatory as a “welcome move”. “Tripartite partners are now using the information to better assist affected locals to find alternative employment and relevant training… Retrenchment should be responsibly done and the welfare of the workers should always be placed as an important factor,” he said.

NWC’s guidelines take effect for one year from July 1. 

Source: CNA/sk