SINGAPORE — On the back of productivity improvements and an expected pick-up in the global economy this year, the National Wages Council (NWC) has increased its recommended range of wage increments for low-income earners.

It also raised the wage threshold for the second consecutive year, covering more workers.

Under the council’s recommendations released on Thursday (May 31), it proposed a built-in wage increase of between S$50 and S$70 for low-wage workers earning up to S$1,300 a month in basic pay.

This was higher than last year’s range of S$45 to S$60, as well as 2016’s range of S$50 to S$65.

The wage threshold also went up from S$1,200 to S$1,300 this year. Last year, there was a similar increase of S$100. 

The wider coverage this round is expected to benefit about 24,000 more full-time resident employees, bringing the total number to about 150,000 low-wage workers.

For the first time, the NWC proposed that companies which recorded productivity growth last year should also provide an extra one-off special bonus of S$300 to S$600 for low-wage workers. This can be paid in a lump sum or over several payments.

In 2011, there was a recommendation for a one-time payment to help these workers cope with inflation. No specific amount was mentioned then.

Explaining their recommendations on Thursday, the NWC said that previous efforts to increase the wage threshold, along with ongoing efforts to “upskill” workers, have resulted in more low-wage workers getting better wages.

The proportion of full-time resident employees earning a basic monthly salary of up to S$1,200 fell from 8.1 per cent in 2016 to 7.7 per cent last year, the council said.

Over the same period, the proportion of those earning a basic monthly wage of up to S$1,100 fell from 5.7 per cent to 5.3 per cent, while that of those earning a basic monthly wage of S$1,000 also fell from 4.7 to 4.2 per cent.

Accepting the NWC’s guidelines, the Government noted that the higher range of this year’s pay hikes reflects the improvement in general business conditions, while maintaining the flexibility for employers to provide wage increases.

The NWC recommendations were also supported by the National Trades Union Congress, the Singapore National Employers Federation (SNEF) and the American Chamber of Commerce Singapore.

Unionists agreed that the higher quantum will help them in negotiating better pay packages for their employees.

Mr Hareenderpal Singh, president of the Union of Security Employees, said: “With a higher range of S$50 to S$70, we will now be able to better negotiate with our service providers, the  security agencies, for higher pay for our security officers.

“They might not be able to give us exactly within this range, but the higher range gives us standing to ask for higher increases.”

The recommendation to raise the wage threshold to S$1,300 also shows a “concerted and continued” effort to help low-wage workers.

Mr Zainal Sapari, chairman of the Tripartite Cluster for Cleaners (TCC), said: “The continued focus on low-wage workers sends a clear signal of a concerted effort by the Government, union and employers in trying to help low-wage workers have wage increases yearly. The increase (in threshold) to S$1,300 will ensure that a large proportion of workers in the cleaning, landscape and security industry will still be covered.”

OBSTACLES IN ADOPTING GUIDELINES

The council noted that the adoption rate of its quantitative guidelines increased from 21 per cent in 2016 to 48 per cent last year — the highest rate since 2013 (56 per cent).

Nevertheless, the NWC noted the difficulty in getting firms performing outsourced work — such as cleaning, security and landscaping services — to take up its recommendations.

The adoption rate for such companies fell from 49 per cent in 2016 to 44 per cent last year. Employers who did not adopt the wage recommendations cited constraints over contractual agreements, and said that they were already paying the market rate, the NWC added.

The council said that these service providers should factor in the annual wage adjustments and the annual wage supplement for workers entering into new contracts. They should also practise greater flexibility in allowing contract values to be adjusted when necessary.

Mr Zainal, who is also assistant secretary-general of NTUC, said that “realistically speaking”, there were still many obstacles for service providers to adopt the recommendations.

For one, employers may have to draw up new contracts for the many workers, especially cleaners, who are already bound by contracted terms.

While the NWC guidelines do gain traction with unionised companies, Mr Zainal is not so sure about non-unionised ones.

“There are also a lot of low-wage workers in the small and medium enterprise sector, which can be hard to track,” he added.

Mr Nasordin Mohammed Hashim, president of the Building Construction and Timber Industries Employees’ Union, agreed, saying that “more work still has to be done” to convince service buyers of the need to raise wages for workers, especially in the construction industry.

“It’s not easy to get employers to increase pay by S$100, because it is an additional cost," he added.

Most unionists also welcomed the special one-off bonus of S$300 to S$600, stating that it would be a “great boost” to workers’ morale.

Mr Zainal said that it may even motivate these workers to “upgrade themselves”, to ensure that the company continues to sustain its growth, “because they now know that they get a share of the pie”.

During the discussions over the recommendations, the tripartite parties had to agree on what to put out. Mr Melvin Yong, assistant secretary-general of NTUC, said that deciding on the amount of special bonus was “among the most difficult recommendations” for the unions.

Ultimately, the range of S$300 to S$600 was decided to allow more flexibility in terms of implementation and to ensure that the move is sustainable.

SNEF president Robert Yap noted that there will be companies which “might have productivity gains, but might not be able to afford a higher range, (so) we don’t want to set it at a higher amount and regret it after”.

Mr Yong reiterated that the council hoped the one-time payment would emphasise the importance of sharing productivity gains to employers.

NWC’s wage guidelines, while not legally binding, applies to all employees in public and private sectors.