NWC urges employers to provide workers with one-off payments to help with rising living costs

SINGAPORE: The National Wages Council (NWC) has urged employers to go beyond government assistance and consider providing additional support to their staff to help them cope with rising costs.

The council has released its wage guidelines for the period of December 2023 to November 2024, emphasizing the importance of giving a one-off special lump sum payment to employees, with a heavier focus on lower to middle-income workers.

The NWC, comprising representatives from employers, employees, and the government, made similar recommendations in 2008 and 2011 when inflation rates were high.

For unionized companies, the decision to provide this special payment should be reached through mutual agreement between management and the union.

NWC chairman Peter Seah stressed the significance of not specifying a fixed number or percentage, as it may not address the varying circumstances of employers. He said, “But the general call, I think, is a very positive call – to give a lump sum, particularly to the lower-wage and middle-wage people so that they can better navigate the inflationary pressures that they are now facing.”

In a bid to address the economic challenges faced by lower-wage workers, the NWC recommended a 5.5% to 7.5% increase in gross monthly wages for this segment of the workforce, with a minimum pay bump of at least S$85 to S$105, whichever is higher.

The extent of this increase is expected to be determined by the financial performance and outlook of individual businesses. Companies with a strong financial standing and positive prospects are encouraged to provide increases at the upper end of this range, while those with uncertain prospects should consider increases at the lower to middle bounds.

Underperforming companies should aim for wage increases at the lower bound of the suggested range. The NWC also urged employers to revisit wage increases if business prospects improve.

Lower-wage employees, earning a gross monthly wage of up to S$2,500, constitute a significant portion of the workforce, approximately at the 20th percentile wage level of full-time employed residents.

The NWC further emphasized the importance of aligning wage growth with productivity growth and ensuring that wages are reflective of increased productivity. It encouraged companies to adopt a flexible wage system with a substantial variable component to better adapt to economic fluctuations.

The Ministry of Manpower (MOM) expressed its support for the NWC’s wage guidelines, particularly the differentiation based on performance and outlook. MOM promised to assist employers through the five-year progressive wage credit scheme, which co-funds salary increases for eligible lower-wage workers.