Against the backdrop of a weaker economic outlook, the National Wages Council (NWC) has called for employers to implement the Flexible Wage System (FWS) to promote fair and sustainable wage increases, press on with sustained wage growth for lower-wage workers (LWWs) and workforce transformation, and provide support for cost-of-living pressures.
NWC shared these recommendations in its annual wage guidelines for 1 December 2023 to 30 November 2024.
The council announced the guidelines on 31 October 2023 at the Manpower Ministry’s headquarters in Havelock Road. The Government accepted them on the same day.
According to NWC, the labour market continued to expand in the third quarter of 2023 despite the economic slowdown. Total employment increased, but so did retrenchments and unemployment. The unemployment uptrend may continue to rise further.
The Trade and Industry Ministry predicts Singapore’s economy will expand by 0.5 to 1.5 per cent in 2023. Looking ahead to 2024, it expects growth to pick up modestly from 2023.
Believing that wages should reflect the sustained labour productivity growth over the long term, NWC urged employers to implement the FWS if they have not done so.
The FWS enables employers to transfer the wage increases and part of fixed wages into variable wage components. Employers can then 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 provide 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 who have not done so well can moderate the increases and variable payments based on their business situation.
More importantly, employers who are not doing well should also step up efforts to improve processes and productivity, particularly in upskilling their workers.
NWC also urged employers to take note of the increasing CPF monthly ceilings when considering the wage increase quantum.
NWC’s recommendations to sustain lower-wage workers’ wage growth complement the Tripartite Workgroup on Lower-Wage Workers’ (TWG-LWW) progressive wage initiatives like the Progressive Wage Model (PWM) and Progressive Wage Credit Scheme (PWCS).
The PWCS was enhanced in February this year to help employers offset the higher wage burden.
In the latest guidelines for workers earning a monthly salary of up to $2,500, employers that have done well and have good prospects are encouraged 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 $85 to $105, whichever is higher. Employers who have not done so well can moderate the increases based on their business situation.
Employers can also consider paying more to lower-wage workers who earn less to boost their wage growth.
NWC also set the Occupational Progressive Wages’ (OPW) mandatory wage requirements for Administrators and Drivers from 1 July 2024 to 30 June 2026. It follows TWG-LWW’s earlier OPW wage schedule from March 2023 to February 2024.
Around 48,600 administrators and 15,400 drivers will benefit from higher wages.
The council also encouraged workers and employers to continue tapping into existing resources and programmes to upskill and implement productivity measures.
To complement current initiatives to help workers cope with rising costs, NWC recommended that employers give a one-off lump sum payment to all workers, with bigger amounts for those in the lower-to-middle-income bracket.
NWC encouraged employers and workers to press on with transformation and training to ensure sustainable wage growth underpinned by higher productivity and build agility and resilience during uncertain times.
Employers should upskill their workers for future jobs, build capabilities to train employees and strengthen their HR capabilities to support transformation.
Employers should also enhance productivity through job redesign by working with NTUC to set up Company Training Committees (CTC). They can utilise the NTUC CTC Grant or grants to drive business transformation.
Workers should also take charge of their upskilling and stay abreast of what their sector and the economy need.
In a media statement, NTUC President Mary Liew called on employers to adopt the latest NWC guidelines for all workers, especially the middle-income and sandwiched class, to ensure they enjoy fair, inclusive, and sustained wage growth.
At the NWC press conference, Ms Liew also urged employers to continue raising lower-wage workers’ salaries.
“This year’s quantitative guidelines for lower-wage workers will apply to those earning a gross monthly income of up to $2,500, which will benefit more workers.
“In implementing these wage increases, we hope employers aim for higher increases for lower-paid, lower-wage workers as well as consider channelling the wage increases towards basic wages to improve income stability,” she said.
NTUC Deputy Secretary-General Desmond Tan acknowledged employers’ efforts in supporting the guidelines amidst a more challenging economic environment.
He said: “We do appreciate that this year’s guidelines prescribe sustained wage increases and built-in wage increases to give our workers assurance, that, as much as they put in the hard work and efforts on the ground, they will be recognised and rewarded by their employers.
Mr Tan also stressed the importance of upping productivity to sustain wage growth in the long run.
“What is important about the Company Training Committee is that it is company-initiated training. CTCs don’t just support businesses in their transformation, they also support job redesign, upskilling workers, and ultimately wage increases as an outcome of this training.”
“We want to encourage companies to continue to come onboard and journey with us [through] the Company Training Committees to ensure that all workers stay relevant, and their businesses can transform.
“We talk about every worker matters in NTUC. We also launched the Forward Singapore report last week looking at how, as a social compact, we can work together with the Government, employers, workers, and unions to protect the interests of all workers and our businesses,” he said.
Of the over 1,600 CTCs that have been formed to date, many have succeeded in improving productivity and wages. Mr Tan urged employers to apply for the NTUC CTC Grant to fund their projects.
He also urged workers to utilise the NTUC Union Training Assistance Programme (UTAP), which provides NTUC members with a subsidy of up to $250 annually.
Union leaders NTUC spoke to also supported the recommendations and urged employers to focus on upskilling their workers and enhancing productivity.
“It is critical to ensure sustainable wage growth. For the workforce to thrive in the long run, we need not only boost wages but also focus on continuous development. So, there must be efforts to transform jobs, upskill the workforce and improve productivity, so that both workers and employers will benefit.
“Employers are encouraged to form Company Training Committees with NTUC. The NTUC CTC Grant is available to support companies in their transformation efforts,” said ST Engineering Staff Union General Secretary Sazali Zainal.
“The recommendations from National Wages Council guidelines 2023/24 aim to strike a balance between sustainability for businesses and ensuring a fair and reasonable recognition for employees. This is also with greater emphasis on lower to middle income wage employees to ensure their wages continue to grow in a high-cost environment where they are impacted the most.
“We urge employers and the public service to adopt the NWC guidelines and continue to focus on upskilling our employees to enhance productivity for a sustained growth for both the business and their employability,” added Amalgamated Union of Public Employees General Secretary Sanjeev Kumar Tiwari.
For more information on implementing the FWS, log on to https://go.gov.sg/fwsguidebook. Alternatively, you can approach NTUC, its affiliated unions, the Singapore National Employers Federation, and the Tripartite Alliance for Fair and Progressive Employment Practices.
To apply for the NTUC CTC grant, form a CTC, develop a transformation project, and apply to NTUC’s e2i (Employment and Employability Institute). You are strongly encouraged to contact www.e2i.sg/ctcqueries on your project application before submission.