National Wages Council calls for pay cuts to be restored, rise in salaries for lower-wage workers

SINGAPORE: The National Wages Council (NWC) on Friday (Oct 29) called for recovering sectors to roll back pay cuts and for lower-wage workers to be given a salary increase of up to 7.5 per cent.

With Singapore’s economy on track to recovery, NWC said wages should move in tandem with the pace of business recovery and be based on a flexible wage system.

Under its latest guidelines, NWC said the first priority for companies that have recovered or are recovering is to restore any wages that were cut earlier.

Employers who reduced fixed wages as an exceptional measure to save jobs should also restore the fixed-wage component first, followed by variable wage components such as the Monthly Variable Component and the Annual Variable Component.

Following that, employers should roll back wage-related cost-saving measures, such as shorter work week, temporary lay-offs, and no-pay leave.

As for companies that are doing well, NWC said they should grant built-in wage increases and variable payments, commensurate with business performance, prospects and productivity growth, as well as employees’ contributions.

These companies should also roll back discretionary cost-saving measures, such as cuts in allowances.

At the same time, NWC recognised that recovery has been uneven, in particular for those in the tourism- and aviation-related sectors.

In its guidelines for companies that remain adversely impacted by COVID-19, NWC urged them to continue tapping government support measures to accelerate business and workforce transformation.

“Appropriate” cost-saving measures, as well as reskilling, can also be implemented to retain their employees.

In a separate press release on Friday, the Manpower Ministry said the Government accepts the National Wages Council's guidelines, which cover the period between Dec 1 and Nov 30 next year.

MOM noted that the labour market improved in the first three quarters of the year as resident employment grew and resident unemployment continued to ease. Retrenchments also fell to pre-pandemic levels seen in 2018 and 2019.

The ministry added, however, that the labour market recovery has been uneven across sectors and is expected to remain so.

UPLIFTING LOWER-WAGE WORKERS

For lower-wage workers, NWC said their salaries should grow faster than the median wage level to ensure sustained wage growth.

It recommended that employers provide a built-in wage increase of 4.5 per cent to 7.5 per cent of gross wages or S$70 to S$90 - whichever is higher - for workers earning a gross monthly wage of up to S$2,000.

Companies who are doing well and have experienced healthy revenue growth even during the COVID-19 period should aim for the upper bound of the range, it said.

As for companies that are recovering or have recovered, NWC said they may aim for the lower to middle of the range.

NWC said the recommendation took into consideration various factors, including the expected rate of wage growth in the medium term, the current economic climate, as well as the tripartite-agreed pace to uplift lower-wage workers so they can gain ground on the median worker.

In line with the earlier recommendations made by the Tripartite Workgroup on Lower-Wage Workers, the NWC called on employers to provide a higher percentage wage increase for workers who are earning comparatively lower wages.

With some hard-hit sectors and companies still considering an extension of wage freeze, NWC suggested having a built-in wage increase of up to S$50 for employees earning a gross monthly wage of S$2,000 and below.

As for those planning to implement further wage cuts, they should implement a wage freeze for this group of workers instead.

NWC said it is moving using from basic monthly wage to gross monthly wage as a new reference, following recommendations from the tripartite workgroup. 

Responding to a question from the media on the rationale for this, National Trades Union Congress (NTUC) deputy secretary-general Chee Hong Tat said it will provide “a more standard yardstick” to compare across different groups of low-wage workers in different sectors.

“So from the workers’ perspective, what matters most is how much he or she actually earns per month and this is the total package including allowances ... and some (overtime pay), it can also include other forms of payment from the employer,” said Mr Chee.

“(Using gross monthly wage) will ensure that we uplift, over time, the wages of this group of Singaporean workers to catch up with the median income gradually."

TRANSFORMING JOBS AND UPSKILLING

Beyond restoring wage cuts and increasing salaries, NWC called on all parties, including the Government, employers, unions and employees, to take decisive steps to transform jobs and upskill the workforce.

It expressed concern following a drop in the proportion of employers who provided structured training to employees in 2020, compared to the year before.

According to NWC, 65.4 per cent of employers provided training for their employees in 2020, down from 79.1 per cent in 2019.

The proportion of employees receiving structured training also dipped from 55.8 per cent in 2019 to 46.5 per cent in 2020.

To address this, NWC encouraged employers to work with the labour movement to establish Company Training Committees to build up their in-house workplace learning capabilities, so that employees can continue to keep up with the pace of transformation.

Beyond this, employers and employees must innovate and implement productivity initiatives, and work towards better wages and skills, said NWC.

This includes redesigning jobs and reskilling and upskilling employees for new job roles within the company, in particular for those who are at greater risk of redundancy.

NTUC affirmed its support for NWC's latest guidelines, adding that wage growth needs to be balanced and sustainable in the current economic climate to ensure job security and income stability for workers.

In a media statement, NTUC called on employers to reward their workers fairly in tandem with the company’s business performance and outlook, and to pay special attention to uplifting lower-wage workers.

“This is an important part of our social compact for Singapore to remain cohesive as one united people,” it added.

NTUC also encouraged more companies to work with the labour movement to set up Company Training Committees and invest in productivity improvements and skills upgrading.

The Singapore National Employers’ Federation (SNEF) said it will continue to work with the Government, the labour movement and employers to help the country emerge stronger.

“Even as the Singapore economy is recovering, it is crucial for employers to be agile, resilient and inclusive so that employers and their employees can be united in confronting any challenges along the way,” said SNEF’s president Robert Yap.

“By transforming business and upskilling employees, employers will be more agile to seize new growth opportunities as the economy rebounds. By enhancing wage flexibility, employers can be more resilient in facing future economic downturns,” he said.

“By being inclusive, employers can better motivate their lower-wage workers to do their best in their jobs."