NWC guidelines ensure low-income workers are not forgotten, say analysts

SINGAPORE — Despite a falling proportion of employers adopting its proposed wage increments, economists said the National Wages Council (NWC) still serves several important functions, including as an information-sharing platform for the private sector, while its recommendations can be a bargaining tool for unions.

Nevertheless, some economists wondered if the NWC needed to pay greater attention to not only helping low-income earners, but perhaps also professionals or older workers, as market conditions change.

Statistics in recent years show a smaller proportion of employers matching the council’s recommendations. Among those who signalled to give raises, 57 per cent had at least matched the NWC’s recommendations in 2013.

This fell to 31 per cent in 2014, and when the wage threshold was raised by S$100 to S$1,100 last year, this dipped to 18 per cent, as businesses said profit margins and staff performance superseded the NWC’s suggestion.

“The proof of the pudding is whether private sector companies adhere,” said OCBC economist Selena Ling. “At the end of the day, businessmen are very pragmatic folks and they’ll do their calculations.”

She added that the guidelines worked as a “signal” to the public sector and unionised companies, which could use them as a bargaining chip during wage negotiations.

CIMB private banking economist Song Seng Wun, however, felt the guidelines provided assurance of sorts that low-wage workers would not be left in the lurch.

Dr Faizal Yahya, a senior research fellow at the Institute of Policy Studies, added: “The wage gap between low-wage earners and high-income earners is likely to widen in future despite all efforts to narrow them. Hence the NWC does still play a very important role to try and lift wages of low income workers.”

On Tuesday, the NWC recommended for the first time a range of wage increments for low-income earners, instead of a fixed quantum, against a gloomy economic landscape.

The increment NWC proposed falls between S$50 and S$65 for full-timers earning up to S$1,100 a month, so as to give companies flexibility to give out raises that factor in how they are managing.

The NWC, comprising unionists, companies, and government representatives, was formed in 1972, against a backdrop of heavy industralisation and rising wage expectations.

Their proposed wage guidelines were meant to strike out potential industrial action.

Asked whether the NWC’s recommendations ought to be made mandatory, DBS senior economist Irvin Seah waved aside the idea.

“At the end of the day, what we need is to encourage companies and Singaporeans to be self-reliant. It’s cumbersome and restrictive for companies (to be legislated), and if things go bad, they will close down,” he added.

Professor Hoon Hian Teck of the Singapore Management University pointed out that the other role the NWC plays is providing an information-sharing platform for firms so that they can decide on their increments.

Economists also said that, given Singapore’s rapidly changing workforce, the NWC might have to consider paying greater attention to the increasing number of professionals and older workers returning to the workforce.

“Professionals will form increasingly a bigger segment of the labour population, as more Singaporeans become higher-educated. If you’re talking about refocusing, this is where (the NWC) should be heading,” said Mr Seah.

He noted, however, that it would be a challenge to tailor wage recommendations for professionals, given their diverse pay.

Mr Song added that as the population ages, the job market will see an influx of older workers looking for work and this group would need help.

“It boils down to social norms — do we want the elderly to be engaged by finding part-time work? If we do, then we have to ensure that they’re being paid fairly as well,” he added.

But Prof Hoon noted: “As a mature economy, there is too much heterogeneity across firms and across workers for the NWC to provide quantitative wage guidelines for every type of worker.”