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National Wages Council Releases Its 2021/2022 Guidelines

With the economy on track towards recovery, the National Wages Council (NWC) calls on employers who are doing well to ease tightened wage policies, and to implement Flexible Wage Systems for those who are still struggling.
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By Ian Tan Hanhonn 29 Oct 2021
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The National Wages Council (NWC) has made three broad recommendations in its annual guidelines on wage and employment-related issues for the period of 1 December 2021 to 30 November 2022.

With the economy on track towards recovery, the NWC hopes that wages will be paid in tandem with businesses’ pace of recovery, that there will be sustained wage growth for lower-wage workers (LWWs), and that companies continue to forge ahead in transforming jobs and upskilling their workforce.

The guidelines were released on 29 October 2021. They have been accepted by the Government on the same day.

In a media statement, NTUC said that that wage growth needs to be balanced and sustainable in this current economic climate to ensure job security and income stability for workers.

It added that employers ought to recognise the contributions and sacrifices made by workers during the pandemic, a sentiment shared by both SNEF and the Government.

NTUC said: “We call on employers to reward their workers fairly in tandem with the company’s business performance and outlook, and to pay special attention to uplifting our LWWs. This is an important part of our social compact for Singapore to remain cohesive as one united people.

“We encourage employers to work with NTUC and our affiliated unions through the formation of Company Training Committees [CTCs] to invest in productivity improvements and skills upgrading. It is equally important that our workers support employers’ transformation efforts with continuous training and lifelong learning to keep themselves relevant and stay competitive.”

Many union leaders have stood in support of the recommendations, and they hope that employers will do their part to adopt the recommendations.

United Workers of Electronics & Electrical Industries (UWEEI) General Secretary Tan Richard said that prior to the release of the guidelines, he has seen companies rolling back cost-saving measures and granting higher built-in wage increases and variable payments to workers compared to 2020.

“I urge companies that have been doing well to continue to share their gains with workers and look at upskilling and transformation initiatives. For companies that are recovering, I hope that they will reward their workers fairly, in a timely manner,” he said.

Singapore Industrial & Services Employees’ Union (SISEU) Branch Official Shawal Surati said that many companies implemented cost-cutting measures and underwent retrenchment exercises as a result of the impact COVID-19 had on the aviation sector and the aerospace sector.

“However, we have seen a gradual recovery in these sectors - companies are beginning to push forth, while continuing to be prudent with expenses. We know that our workers have made many sacrifices to support companies through the pandemic. We hope that employers will recognise the efforts of their workers tangibly as the economy gradually picks up,” he said.

Wages and Flexible Wage Systems

The NWC also urged employers, who have implemented exceptional wage policies to keep businesses afloat and workers employed during the height of the pandemic, to ease on the measures.

Employers who have recovered or are recovering from the economic fallout of the pandemic should start restoring wage cuts that were implemented earlier.

Employers who reduced fixed wages to save jobs should first restore the fixed wage component before reinstating any variable wage components.

They should also:

  • ease wage-related cost-saving measures, such as shorter work week, temporary lay-offs, and no-pay leave;
  • have built-in wage increases and variable payments that commensurate with business performance, prospects and productivity growth, as well as employees’ contributions;
  • rescind discretionary cost-saving measures such as reduced allowances.

However, the NWC also recognised that the rate of recovery varies across industries, and it hopes that employers in sectors that are dependent on wage flexibility, such as tourism and aviation, will implement initiatives such as a Flexible Wage System (FWS) if they have not already done so.

The NWC has published an FWS Guidebook.

For employers who continue to be hard hit by the pandemic, they should:

  • continue to tap on Government support measures to accelerate their business and workforce transformation;
  • do their utmost to implement non-wage cost-savings measures and strive to still pay workers their Annual Wage Supplement (AWS);
  • seek both employees’ and unions’ support if they must resort to wage cuts in order to minimise retrenchments, after having exhausted the aforementioned measures.

Ensuring Sustained Wage Growth for Lower-Wage Workers

In August 2021, Tripartite Workgroup on Lower-Wage Workers (TWG-LWW) recommended that the NWC guides the rate of Progressive Wage growth for LWWs.

This was to ensure that the wages of LWWs can keep up with that of the median wage level, and that the NWC can recommend the wage growth of Occupational Progressive Wages (OPW).

The NWC will:

  • alter their recommendations for LWWs to be reflected as gross monthly wage instead of basic monthly wage;
  • increase the scope of relevance for its recommendations for LWWs to include employees earning up to $2,000 in gross monthly wage.

In this 2021/2022 set of guidelines, the NWC recommended that employers provide LWWs earning a gross monthly wage of up to $2,000 a built-in wage increase of 4.5 per cent to 7.5 per cent of their gross wages or $70 to $90, whichever is higher.

The NWC also calls on employers to provide a greater percentage wage increase for LWWs who are earning moderately lower salaries.

Employers who are still trying to recover financially from the pandemic and who are considering the implementation of a wage freeze or further wage reductions should consider a built-in wage increase of up to $50 for their LWWs, as well as a wage freeze instead of reduction for these LWWs.

As for the recommendation of Progressive Wage growth, the NWC said it has considered the continued economic uncertainties faced by employers and will consider a higher range of progressive wage growth come next year, if the economic situation improves.

This is the first time that the NWC has included recommendations for the range of progressive wage growth for LWWs, said Manpower Minister Tan See Leng.

He said: “I encourage employers to take reference from these guidelines, which can help shape business as well as workforce development.

“At the same time, the Government will continue to support our businesses and workforce where needed, and I believe that together we can forge ahead in rejuvenating our businesses in transforming jobs and upskilling our workforce.”

Transforming Jobs and Upskilling Workforce

While COVID-19 has accelerated workplace transformation, the NWC is concerned about the decreased proportion of employers who provided structured training to their employees last year.

In 2019, 79.1 per cent of employers provided their workers with structured training, which fell to 65.4 per cent in 2020.

The proportion of employees receiving structured training also fell some 9.3 percent last year, from 55.8 percent in 2019 to 46.5 per cent.

The NWC has therefore recommended that:

  • all employers offer structured training for their employees, so that they can keep up with the pace of transformation at work;
  • employers seek the assistance of SNEF, Singapore Business Federation (SBF), trade associations and chambers, the unions, NTUC LearningHub, or consultancy services offered by the National Centre of Excellence for Workplace Learning (NACE) to develop their training plans.

To innovate and implement productivity initiatives that will bring about better skills and wages, employers need to:

  • redesign jobs and train their employees to take on these new jobs;
  • be proactive in reskilling and upskilling existing employees for new job roles within the company, particularly those who are at greater risk of being made redundant;
  • take advantage of various SkillsFuture Work-Study Programmes to build a robust talent pipeline and improve staff retention;
  • improve their HR capabilities in emerging areas and adopt best practices. This could be done through working with the Institute for Human Resource Professionals (IHRP) to certify and upskill their HR professionals, which will in turn, allow them to develop HR strategies to maximise employee potential and support business transformation.

Download the NWC 2021/2022 infographics below.