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As part of the guidelines, this recommendation aims to assist the workforce with the higher cost of living.
Under the newly announced wage guidelines 2023/2024, Singapore's National Wages Council (NWC) has urged employers to give employees a one-off payment to help with higher cost of living.
The NWC convened from August to October 2023 to formulate the guidelines for the year effective 1 December 2023 to 30 November 2024.
As such, the key message NWC affirmed was that wage growth should be in line with productivity growth. "Taking into account the sustained productivity growth over the longer term, employers should ensure that wages continue to reflect the increased labour productivity."
The productivity growth that NWC has talked about refers to the advance labour estimates, which found that Singapore's economy grew by 0.7% on a year-on-year (y-o-y) basis in Q3 2023, following the 0.5% growth in Q2 2023. Linked to this, labour productivity, as measured by real value-added per actual hour worked, fell by 5.7% on a y-oy basis in the first half of 2023. However, labour productivity did increase by 2.7% per annum if we look at the data from 2016 to 2022.
Taking into account this sustained productivity growth over the longer term, NWC has encouraged employers to reward employees with wage increases that are fair and sustainable. Their guidelines state: "Built-in wage increases should be given in line with firms’ business prospects, while variable payments should reflect firms’ performance and workers’ contributions."
The Council did also acknowledge the uncertainties ahead, which continue to underscore the need for resilience and flexibility in wage structures. "The NWC therefore also calls on all employers who have not yet done so to implement the flexible wage system (FWS)," the statement noted.
Keeping all of this context in mind, the NWC has set out the following wage guidelines for all employers:
- Employers who have done well and have positive business prospects should reward their employees with built-in wage increases and variable payments commensurate with the employers’ performance and employees’ contributions.
- Employers who have done well but face uncertain business prospects may exercise moderation in built-in wage increases but should still reward employees with variable payments commensurate with the employers’ performance and employees’ contributions.
- Employers who have not done well may exercise wage restraint, with management leading by example. NWC encourages these employers to make greater efforts to improve business processes and productivity, especially by investing in upskilling their employees. Employers who have not done well but face positive business prospects may also consider setting out future variable payments that are linked to appropriate business indicators.
According to the NWC, the adoption of the FWS will help employers in implementing the wage guidelines above, by making full use of variable wage components. It also advised employers who have not yet adopted the FWS, or who need to build up the variable wage components to recommended levels, to put wage increases into variable wage components, and transfer part of fixed wages to variable wage components as needed.
The FWS enables employers to make quick adjustments during periods of economic uncertainty to sustain their businesses. At the same time, it can provide greater job security for employees as companies can cut costs rather than cut jobs, and allow wages to be more quickly restored in tandem with business recovery.
Complementing efforts to offset the higher costs of living this year such as enhancements to the permanent GST Voucher (GSTV) scheme, and the Assurance Package (AP) in Budget 2023, the NWC encourages employers to consider giving a one-off special lump sum payment to employees, with heavier weightage for lower to middle income employees. This should be by mutual agreement between management and the union for unionised companies.
The NWC 2022/2023 guidelines further recommended an annual range of wage growth for all lower-wage workers (LWWs), with a minimum dollar quantum increase. They also serve as a reference for the Progressive Wage Model (PWM) Tripartite Clusters in setting wage requirements for their respective sectors.
This year, taking into account the uncertain global economic outlook, the NWC recommends the following for LWWs:
- Employers who have done well and have positive business prospects should provide their LWWs with a built-in wage increase at the upper bound of 5.5-7.5% of gross monthly wage, or a wage increase of at least S$85-$105,
- Employers who have done well but face uncertain prospects should provide their LWWs with a built-in wage increase at the lower to middle bound of 5.5-7.5% of gross monthly wage, or a wage increase of at least S$85-$105, whichever is higher.
At the same time, the NWC acknowledges that some employers continue to face economic difficulties, and thus recommends that:
- Employers who have not done well should provide their LWWs with a built-in wage increase at the lower bound of 5.5-7.5% of gross monthly wage. If business prospects subsequently improve, employers should consider further wage increases.
The above wage guidelines for LWWs will apply to employees who are earning a gross monthly wage of up to S$2,500. The NWC calls on employers to provide higher percentage wage increases for LWWs who are earning comparatively lower wages. In implementing these wage increases, employers should ensure sustained basic wage growth for their employees.
The NWC also set out a mandate for wage increases that will help occupational progressive wages (OPW) workers narrow the wage gap with the median, while keeping in mind the uncertain economic conditions ahead. The recommendations support meaningful uplifting of LWWs in occupational progressive wage jobs. The guidelines for OPW roles are listed below:
For administrative assistants and administrative executives:
There is a one-off adjustment of wage requirements in 2024 to account for the fact that 2023 wage requirements were set by TWG-LWW in advance. For administrative supervisors, the increase is more moderate as the wage requirement is already above the 20th percentile wage level, which was approximately S$2,500 in 2022.
The higher 2024-2025 administrator OPW wage levels apply to about 48,600 full-time resident LWWs in firms that employ foreign workers. Of these, about 43,500 were earning below the stipulated 2024 OPW wage requirement in 2022, and can expect to see a wage increase from 1 July 2024.
For general drivers and specialised drivers:
The NWC recognises that drivers’ wages typically comprise more variable, performance-based wage components. The 2024-2025 wage levels are intended to support good wage growth while allowing variable wage components to be retained within the wage structure, to mitigate impact on firms’ operational and manpower planning, as well as workers’ livelihoods.
The higher 2024-2025 driver OPW wage levels apply to about 15,400 full-time resident LWWs in firms that employ foreign workers. Of these, about 8,400 were earning below the stipulated 2024 OPW wage requirement in 2022, and can expect to see a wage increase from 1 July 2024.
Transforming jobs and upskilling the workforce
Lastly, NWC noted an increase in the proportion of employers that provided structured training to employees from 57.1% in 2021 to 76.5% in 2022. The proportion of employees receiving structured training also increased from 45.4% in 2021 to 52.8% in 2022.
However, recognising there is scope for employers to do more, the Council calls on employers and employees to take decisive steps to transform jobs and invest in upskilling and reskilling the workforce.
The NWC recommends that employers do the following:
Upskill employees for future jobs.
Employers can leverage training by SSG-supported providers, and tap on Government subsidies to reskill and upskill employees, absentee payroll, and Workforce Singapore’s Career Conversion Programmes which provide up to 90% of monthly salary for training duration. Employers can also tap on Government funding for enterprise and workforce transformation. Employers are also encouraged to adopt a proactive approach to reskill and upskill existing employees to prepare them for changes in job functions, and provide support for employees themselves to initiate training.
Redesign jobs to increase productivity.
Employers can work with NTUC to establish Company Training Committees (“CTCs”), which help companies drive business transformation to increase productivity and implement training plans. The CTCs also allow companies to tap into the wider NTUC training and placement ecosystem, which includes NTUC’s e2i and LearningHub.
Build up capability to train employees.
Employers can tap on capability building programmes offered by the National Centre of Excellence for Workplace Learning (NACE to enhance workplace learning, which cater in particular to Small and Medium Enterprises (SMEs). Employers can also leverage resources and support offered by SSG’s partners.
Strengthen HR capabilities to support transformation
The NWC recommends that employers encourage their HR practitioners to upskill and take the certification by the Institute for Human Resource Professionals (IHRP), which will be approved for SkillsFuture Credit usage from end-2023.
Lead image / 123RF
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