SINGAPORE’S lower-wage workers should get a built-in monthly wage increase of 5.5 to 7.5 per cent, or at least S$100 to S$200, whichever is higher, the National Wages Council (NWC) said in its latest guidelines on Thursday (Oct 10).
The percentage range is the same as what was proposed last year, but the dollar range has been raised from at least S$85 to S$105 previously.
This applies to employees earning a gross monthly wage of up to S$2,500, corresponding to the 20th percentile wage level of full-time employed residents in 2023.
The proposal is part of NWC’s broader wage guidelines, which apply from Dec 1, 2024, until Nov 30, 2025, and have been accepted by the government.
For employers in general, NWC encouraged them to give wage increases that are fair, sustainable and share the gains from labour productivity improvements.
The latest guidelines take into account sustained productivity growth over the longer term, the improved economic outlook, and an expected moderation in inflation in 2024.
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The council also considered near-term cost pressures faced by businesses and continued downside risks in the global economy, said NWC chairman Peter Seah at a press conference on Thursday.
“So the NWC has adopted a more positive tone this year – but very finely balancing between caution and a sense of optimism, which we have because of the improvements in the economy.”
Raises for lower-wage workers
NWC said employers that have done well and have positive business prospects should give lower-wage workers a raise at the higher end of the 5.5 to 7.5 per cent range. Those that face uncertain prospects should give wage increases in the middle to lower end of that range.
Employers that have not done well should give lower-wage employees a raise at the lower end of the range – but consider further increases if business prospects improve.
In 2023, 62.3 per cent of companies that did well and had positive business prospects gave employees both wage increases and an annual variable component (AVC), said Ministry of Manpower (MOM) permanent secretary Ng Chee Khern.
Of those that did well but faced uncertain business prospects, 73.8 per cent provided an AVC.
NWC also called for higher salary increases for lower-wage workers earning S$2,500 and below. When implementing these raises, employers should ensure sustained basic wage growth for these employees.
Service buyers and providers should adopt outcome-based contracting and adjust contract values where possible to support the adoption of wage guidelines and progressive wage models.
NWC also urged employers that have not yet implemented the Flexible Wage System – with an AVC and monthly variable component (MVC) – to do so.
This lets employers quickly cut wages in downturns instead of cutting jobs, and swiftly raise wages in an upturn to retain talent.
Of 5,000 companies surveyed by MOM, 80.4 per cent have implemented either the AVC or the MVC, while 10.3 per cent have implemented both.
Help with cost of living
K Thanaletchimi, president of the National Trades Union Congress (NTUC), said the labour movement supports NWC’s guidelines and its recommendation for “fair and sustainable” wage growth.
Noting that cost of living is a key concern for workers, she said: “We hope that the NWC’s recommendations take into consideration the plight of workers, and ensure that employers will be more magnanimous in giving increments and bonuses in a variable form, in a more calibrated way.”
MOM’s Ng pointed out that outward-oriented sectors such as information and communications and manufacturing have shown stronger productivity growth, and “will need to continue growing to create good jobs for Singaporeans”.
Meanwhile, domestically oriented sectors such as food and beverage services as well as administrative and support services are “currently lagging”, he said.
“These sectors must press on with business transformation to become more manpower-lean and sustainable in the longer-term.”
Singapore National Employers Federation president Tan Hee Teck warned that wage adjustments must reflect sectoral differences in productivity. “If not aligned, wage growth can lead to rising costs that can cripple businesses and jeopardise jobs.”
Industry representatives also emphasised that NWC’s guidelines applied to all workers, including the broad middle group.
NTUC assistant secretary-general Patrick Tay said: “The percentages are focused on lower-wage workers, but for the broad middle and the rest, we hope that employers will come forward, especially if they are profitable, have good forecasts, or have done well, to adequately and fairly (reward) their workers.”
In order for wage growth to continue to be supported by productivity growth, employers and employees should press on with transformation efforts, said NWC.
The council noted that the share of employers providing structured training rose to 79.6 per cent in 2023, from 76.5 per cent in 2022. The share of employees receiving structured training also rose, to 54.3 per cent in 2023 from 52.8 per cent.