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Singapore

National Wages Council recommends 5.5% to 7.5% salary increments for lower-wage workers

The new guidelines apply to all employees earning a gross monthly wage of up to S$2,200.

03:45 Min
Lower-wage workers earning up to S$2,200 a month should receive salary increments of 5.5 per cent to 7.5 per cent for the year ahead, according to new guidelines from the National Wages Council (NWC) issued on Monday (Nov 14). 

SINGAPORE: Lower-wage workers earning up to S$2,200 a month should receive salary increments of 5.5 per cent to 7.5 per cent for the year ahead, according to new guidelines from the National Wages Council (NWC) issued on Monday (Nov 14). 

NWC will continue to issue additional wage guidelines specific to lower-wage workers, said its chairman Peter Seah at a press conference on Monday.

"NWC recommends employers provide a built-in wage increase of 5.5 per cent to 7.5 per cent of gross wages, or at least S$80 to S$100, whichever is higher, to all employees earning a gross monthly wage of about S$2,200," he said at a press conference.

The S$2,200 threshold corresponds to the lowest 20 per cent of the workforce in terms of wage level, said the NWC in a press release. 

This is an increase from the previous wage threshold of S$2,000, noted National Trades Union Congress (NTUC) president Mary Liew. 

“This is the first time that the wage increase guideline for the lower-wage workers has crossed the three-digit mark, I think that is significant for us as well,” she added. 

Ms Liew urged employers to leverage the progressive wage credit scheme and consider channelling the wage increases towards basic wage components, which would improve long-term income stability for lower-wage workers. 

The Government has accepted the NWC guidelines, said permanent secretary for the Ministry of Manpower (MOM) Ng Chee Khern at the press conference on Monday. 

“The focus last year was on encouraging employers to restore wages, roll back cost-saving measures and adopt the flexible wage system,” he said. 

“With the economic and labour recovery last year, it is timely for employers to reward employees with wage increments or variable payments that are sustainable.” 

Rewarding employees with wage increments or variable payments that are “fair and sustainable” will help to address their concerns about inflation and rising costs of living, said MOM in a press release. 

"At the same time, we recognise that inflation also affects business costs and prospects," said the ministry.

"Hence, the Government supports the tripartite agreement to have differentiated wage guidelines for employers, to account for the different performance and outlook of businesses."

Employers that have done well and have good business prospects should provide their lower-wage workers with either a gross monthly wage increase at the upper bound of 5.5 per cent to 7.5 per cent, or an increment of at least S$80 to S$100, whichever is higher, the guidelines read. 

Businesses that face uncertain prospects should provide their lower-wage workers with either a gross monthly wage increase at the lower to middle bound of 5.5 per cent to 7.5 per cent, or an increment of at least S$80 to S$100, whichever is higher.

For companies that have not done well, they should provide their lower-wage workers with a wage increase at the lower bound of 5.5 per cent to 7.5 per cent. If business prospects subsequently improve, employers should consider further wage increases, said the NWC.

In its latest guidelines for December 2022 to November 2023, NWC noted that the Singapore economy grew by 4.4 per cent year-on-year in the third quarter of this year. 

The labour market improved in the first three quarters of 2022 and retrenchments fell to a record low, said the council. 

Labour productivity, measured by real value-added per actual hour worked, improved by 1.5 per cent on a year-on-year basis in the first half of 2022. 

"Indeed it’s important to note that there is a call to reward employees for sacrifices and staying on despite the circumstances over the past year," said Mr Seah.

While the Singapore economy is experiencing growth and recovery, it is expected to grow slower this year and next year, noted the president of the Singapore National Employers Federation Robert Yap. 

Businesses are also facing wage pressures, a tight labour market and rising business costs due to inflation, Dr Yap said.

“I’d like to take the opportunity to strongly urge employers to build up what we call wage flexibility when granting these wage increases,” he said.

Employers are concerned that wage growth may outstrip productivity growth, said Dr Yap, adding that a flexible wage system allows businesses to determine how to reward employees through built-in wage increases and variable bonuses.

This will help ensure that wage growth is sustainable, he said. 

Responding to a question about the threat of a wage-price spiral, Mr Ng said that wage growth has matched productivity over the last 10 years. 

"That’s the key thing behind sustainable wage growth. If wage growth overtakes productivity growth in the long term then it’s unsustainable. On the other hand, if wage growth does not keep up with productivity growth, then in some ways, wages are not fair.

In the short term and with inflationary pressures, there could be "some possibility" of a wage-price spiral, said Mr Ng, adding that MOM is monitoring the situation. 

This is why the NWC included specific guidelines that depend on business performance and outlook, he added. 

To keep pace with wage growth, NWC recommends that companies invest in upskilling and reskilling their workers, said Mr Seah. 

“It’s not just retrain and prepare our workers for the changing economy, but it’s to improve productivity, arming them with better skills and transforming their ability to contribute,” he added. 

“That will truly enable productivity to be addressed, and our workers could then be better skilled.” 

Source: CNA/hw(mi)
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