In line with continued economic improvements, the National Wages Council (NWC) has called on employers to implement the Flexible Wage System (FWS) to promote fair and sustainable wage increases, press on with sustainable increases for lower-wage workers (LWWs), and forge ahead to transform jobs and skills.
NWC shared the three key recommendations in its annual wage guidelines for 1 December 2022 to 30 November 2023.
The council announced the guidelines at a press conference on 14 November 2022. The Government accepted them on the same day.
According to the Manpower Ministry’s Labour Market Advance Release 3Q, resident employment continued to grow as unemployment continued to ease. Labour productivity grew while retrenchments fell to a record low.
Despite the improvements, the Ministry of Trade and Industry predicted that Singapore’s economic growth will moderate further in anticipation of the projected global economic slowdown in 2023.
Considering Singapore’s economic growth and improvements in labour productivity, NWC urged employers to implement the FWS if they have not done so.
Employers can transfer the wage increases and part of fixed wages into variable wage components.
Doing so will enable employers to make quick adjustments during uncertain periods to sustain their business yet be able to provide workers with fair wage increases or variable payments.
Such a move will recognise workers who endured wage cuts or other cost-cutting measures during the COVID-19 pandemic. It also provides job security for workers, as employers can cut wage costs rather than jobs and restore these cuts more quickly when their business recovers.
Employers that have done well and have good business prospects should provide built-in wage increases and variable payments in line with business and workers’ performances.
Employers that have done well but face uncertainty may take on a more cautious approach for built-in increases but should make variable payments aligned with performances.
Employers that have not done well may consider wage restraints. More importantly, they should step up efforts to improve processes and productivity, particularly in upskilling their workers. If prospects are good, however, employers should consider future variable payments.
Upon the Tripartite Workgroup on Lower-Wage Workers’ (TWG-LWW) recommendation, NWC continued to provide guidelines for LWWs earning up to $2,200.
The first set of moves under the Progressive Wage strategy was implemented in September 2022, with the second slated for March 2023.
Employers were also encouraged to tap into the Government’s Progressive Wage Credit Scheme to offset the higher wage burden.
In the guidelines for 2022/2023, NWC recommended employers that have done well with good business prospects to provide a built-in wage increase in the higher range of 5.5 to 7.5 per cent of gross wages or an increase of $80 to $100, whichever is higher.
Employers that have done well but face uncertainty should look at the lower-to-middle range or the cash increase. Employers who have not done well can adopt the lower range of built-in increases but consider further enhancements if business prospects pick up.
NWC also appealed to employers to improve the wage growth for lower-paid LWWs through higher percentage wage increases.
NWC has also reviewed the training requirements in its proposal for Occupational Progressive Wages (OPW). From March 2023, employers must ensure that OPW workers take up one Workforce Skills Qualifications course or an in-house training programme.
The guideline follows TWG-LWW’s recommended OPWs for administrators and drivers from March 2023, which will benefit 56,000 LWWs.
Employers will be given a grace period to meet OPW training requirements ― six months for new hires and one year for existing employees.
Concerned by falling employer training rates, NWC encouraged employers and workers to transform jobs and invest in upskilling and reskilling. This is to ensure sustainable wage growth underpinned by productivity.
NWC said that employers could transform their businesses by working with NTUC to set up Company Training Committees (CTCs) to increase productivity and implement training plans.
Employers can also turn to unions, NTUC LearningHub, trade associations, and chambers to access consultancy services or join a network in their sector to raise their training capabilities.
Employers can also work with the Government to prepare workers for new job functions. They can do so by encouraging workers to refer to reports on emerging trends, growth areas and in-demand skills and tap into Government subsidies to train workers. They can also incentivise workers who upgrade themselves through hiring policies or career advancements.
In a media statement, NTUC strongly urged employers to adopt the guidelines so that all workers can have fair, inclusive and sustainable wage increases.
It added that this should include middle-income workers and those in the sectors hardest hit by COVID-19 who may have taken wage cuts.
At the press conference, NTUC Assistant Secretary-General Desmond Choo stressed the importance of the FWS in uncertain times.
He said: “We are very focused on the Flexible Wage System, which allows us to reward workers when times are well. But at the same time, during COVID-19, when times weren’t so well, and the economy was rather uncertain, allowed people to exercise restraint.
“I think that sort of flexibility and kind of deep understanding that transited over the last 50 years has allowed us to prevent situations [of] price spirals from happening.”
To ensure continued focus on LWWs, NTUC also noted that the guidelines now include those earning a higher wage threshold and higher wage increments.
Noting that it was the first time that the cash recommendation crossed the three-digit mark of $100, NTUC President Mary Liew shared at the press conference that it was a national effort to reduce income inequality.
“This is close to our Labour Movement’s heart … [This is] so that our social compact will remain strong and no one will be left behind,” she said.
On business and workforce transformation, NTUC urged employers to form CTCs with the unions and leverage its Operation & Technology Roadmap to redesign jobs for the future.
“NTUC remains ready to support employers in their workforce and business transformation initiatives through our NTUC Training and Placement ecosystem to enable better wages, welfare and work prospects for our workers,” said NTUC.
NTUC also urged workers to take charge of their upskilling by combining the NTUC Union Training Assistance Programme with SkillsFuture Credit for course fee subsidies.
Union leaders NTUC spoke to stood in support of the recommendations and urged employers to bear in mind the rising cost of living when adopting the recommendations.
“I urge employers to reward workers fairly and factor in the current state of high inflation rates when making wage increments to ensure real income growth for our workers,” said NTUC Deputy Secretary-General Desmond Tan.
He is also the Executive Secretary of the Singapore Industrial and Services Employees’ Union.
“We encourage all companies to reward their workers with a fair wage adjustment and variable payments to help workers cope with the rising inflation,” added Food, Drinks and Allied Workers Union Deputy General Secretary Lim Wen Sheng.
Commenting on the guidelines for LWWs, Union of Security Employees General Secretary Raymond Chin was heartened by the national effort to improve their wages.
“With the rising inflation, I am delighted to see NWC's commitment to press on with our national effort to uplift LWWs. The recommended increase of 5.5 to 7.5 per cent of gross monthly wages or at least $80 to $100 will certainly help workers ride through uncertain times,” he said.
For more information on implementing an FWS, log on to https://go.gov.sg/fwsguidebook. Alternatively, you can approach NTUC, its affiliated unions, Singapore National Employers Federation, and the Tripartite Alliance for Fair and Progressive Employment Practices.
