SINGAPORE: The National Wages Council (NWC) announced in its latest guidelines on Thursday (Oct 10) that employers should raise salaries for lower-wage workers earning up to S$2,500 a month. This group makes up the lowest 20% of full-time workers in 2023. Employers should offer salary increases of 5.5% to 7.5%, or at least S$100 to S$200, whichever is higher.
The percentage range is the same as proposed last year, but the dollar amount has risen from S$85 to S$105.
According to The Business Times, the NWC’s guidelines will take effect from Dec 1, 2024, to Nov 30, 2025, and have been approved by the government. The council aims to ensure fair wage growth across all jobs. They stressed that employers should give raises that are fair and sustainable, sharing the benefits of productivity gains with their employees.
The new guidelines considered long-term productivity growth, positive economic outlook, and an expected moderation in inflation this year.
At a press conference on Thursday, NWC chairman Peter Seah noted that the council also considered the near-term cost pressures businesses are facing and ongoing risks in the global economy.
He added that the NWC has embraced a more positive outlook this year, “but very finely balancing between caution and a sense of optimism, which we have because of the improvements in the economy,” he said.
NWC said that employers who are doing well and have a positive business outlook should give lower-wage workers raises at the higher end of the 5.5% to 7.5% range. Those with uncertain prospects should aim for increases in the middle to lower end of this range.
Meanwhile, employers that have not performed well should provide lower-wage workers with raises at the lower end of the range. However, they should also keep in mind the possibility of offering additional increases if their business outlook improves.
According to the Ministry of Manpower (MOM) permanent secretary Ng Chee Khern, in 2023, 62.3% of companies that were doing well and had positive prospects gave their employees both pay increases and an annual variable component (AVC). Among those with uncertain business prospects, 73.8% still provided an AVC.
The NWC also called for higher salary increases for workers earning S$2,500 or less. While making these raises, employers should focus on maintaining basic wage growth for these employees, as the cost of living remains a pressing concern for many in Singapore.
Service buyers and providers should use outcome-based contracts and adjust contract values when possible to support the wage guidelines and progressive wage models.
NWC also encouraged employers who have not yet adopted the Flexible Wage System, which includes an Annual Variable Component (AVC) and a Monthly Variable Component (MVC), to do so. This approach allows employers to lower wages during downturns without cutting jobs and to raise wages quickly in better times to retain talent.
MOM’s survey found that of 5,000 companies, 80.4% have implemented either the AVC or MVC, while only 10.3% have adopted both.
K Thanaletchimi, president of the National Trades Union Congress (NTUC), expressed support for the NWC’s guidelines, highlighting the need for “fair and sustainable” wage growth.
She noted that the cost of living is a major concern for Singapore workers, hoping that the NWC’s recommendations will address these challenges and lead employers to provide “magnanimous” pay increases and bonuses.
Mr Ng also pointed out that sectors like information and communications and manufacturing are showing better productivity growth. He noted that these sectors need to keep expanding to generate good jobs for Singaporeans.
Meanwhile, areas such as food and beverage services are lagging. Mr Ng stated that these industries must continue transforming their businesses to become more efficient and sustainable in the long run.
Tan Hee Teck, president of the Singapore National Employers Federation, warned that wage changes must reflect differences in productivity across sectors. If wage growth does not match productivity, it could lead to rising costs that may “cripple businesses and jeopardise jobs”.
Industry leaders reiterated that the NWC’s guidelines apply to all workers, including those in the broad middle group.
Patrick Tay, NTUC assistant secretary-general, pointed out that while the focus is on lower-wage workers, it’s important for employers to reward all employees “adequately and fairly,” especially if they are profitable.
To keep wage growth in line with productivity, the NWC urged ongoing efforts from both employers and employees to transform their work practices.
NWC noted that the share of employers providing structured training increased to 79.6% in 2023, up from 76.5% in 2022, while the percentage of employees receiving structured training increased to 54.3% from 52.8%. /TISG
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