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

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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 made proposals for a range of pay increments in 2016, recommending an increase 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 to 21 per cent last year, from 18 per cent in 2015.

With the labour market outlook and business conditions remaining uneven across sectors, the council saw the need to continue to set a range for the recommended wage increases, its chairman Peter Seah said.

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

“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,” he said.

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

“When employers are concerned, we are not afraid to give increases to our employers, but can we keep on giving and sustaining?” The lowered range will also help more employers to adopt the recommendations, Dr Yap added.

RISE IN SALARY BAR OF LOW-WAGE WORKERS TO S$1,200

The NWC is also pushing for a rise in the basic wage threshold of low-wage workers to S$1,200, from S$1,100.

According to chairman Peter Seah, this decision is spurred by “significant improvements and reductions” of the number of resident employees earning a basic monthly of up to S$1,000 and S$1,100.

“Over the last five years, the council focused on low-wage workers and we are glad to note that we have significantly reduced the share of resident employees earning up to S$1,000 from 10.6 per cent in 2011 to 4.7 per cent in 2016. Those earning up to S$1,100 decreased from 8.2 per cent in 2014 to 5.7 per cent in 2016,” Mr Seah said at a press conference held at the headquarters of the Ministry of Manpower (MOM).

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

For low-wage workers who earn slightly above S$1,200, the NWC recommends employers to grant low-wage workers a reasonable wage increase or a one-off lump sum based on skills and productivity.

Commenting on that, labour MP Melvin Yong said: “Given the momentum after we introduced the quantitative guidelines, I think it’s about time we take a look at the number of low-wage workers out there… There were some negotiations but in the true spirit of helping low-wage workers, we have come to this understanding to raise this basic wage threshold to S$1,200.” 

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

This is the sixth round of pay hikes suggested by the NWC. Last year, it recommended for the first time a range of pay increments, instead of a minimum sum.

NTUC and SNEF supported the guidelines and the Government has accepted the NWC recommendations which are not legally binding.

In a statement, the Government said it welcomes the NWC’s 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.

“The Government notes that the quantum of this year’s range reflects the uneven labour market outlook and business conditions, while encouraging employers to adopt the quantitative guidelines which now cover workers earning between S$1,100 and S$1,200.”

The NWC also said it welcomes the Government’s move to raise the re-employment age from 65 to 67 from Jul 1. The council’s chairman also described the MOM’s move to make retrenchment notifications mandatory as a “welcome move”. “Retrenchment should be responsibly done and the welfare of workers should always be placed as the important consideration,” Mr Seah said.

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

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