Low-wage workers to get $50 pay rise?

If the Government says yes to recommendations from the National Wages Council (NWC), workers earning below $1,000 are likely to see their pay rise by at least $50 plus a percentage increase.

Sources told The Sunday Times that the NWC has accepted a proposal from the National Trades Union Congress (NTUC) to increase the basic pay of low-wage workers by $50.

The recommendations have been signed by all NWC members, who include employer group representatives, unionists and public-sector officials, and awaits approval from the Cabinet, where an announcement is expected to be made this week.

If approved, it will be the first time since 1984 that the NWC has recommended a minimum quantam of pay rise. They had recommended that companies raise the pay of workers by $27 plus 4 to 8 per cent then.

From 1985, NWC had stopped setting wage specific requirements and left it to unions and employers to negotiate based on broad recommendations, reported The Sunday Times.

According to the Manpower Ministry's latest Report on Wages 2010, there are more than 296,000 workers earning below $1,000.

A $50 pay rise would mean that those earning $1,000 will see a real increase in pay, said a source who is familiar with the annual wage talks.

President of Association of Small and Medium Enterprises (Asme) Mr Chan Chong Beng said that a $50 increase would be manageable for most SMEs.

However, he added that it would not be enough to achieve productivity gains and preferred a higher payout which would allow employers to do more to increase productivity.

Chief executive of security company Soverus Mr Paul Lim is worried about the adjustment period when companies face higher labour costs while remaining locked into existing contracts, and hoped unions would be flexible during wage negotiations.

His company will see a 3 per cent hike in wage bill for 140 full-time security officers who earn a basic pay of up to $800 a month.

Mr Lim says he supports the pay rise for security officers as this would help raise professionalism too.

"It is for this reason that I am prepared to stomach what I need to stomach," he added.

MP for Bishan-Toa Payoh GRC Zainudin Nordin, who is also the chairman of the Government Parliamentary Committee for Manpower, said he would welcome the pay rise too.

"It will help low-income earners with living expenses, but they also have to be prudent and don't overspend," he said.

However, labour MP Zainal Sapari, who heads the NTUC unit for contract, casual and low-wage workers, said that he is concerned about workers in companies without unions.
He asked: "Who is going to ensure that these companies follow NWC guidelines?"
Mr Chan said these companies will face pressures from their workers and will end up having to do something to match the market rate, or else they will lose workers too.

HR experts recommend pay rise

SINGAPORE: Human resource practitioners have called for salary increments this year, to be built into workers' salaries.

They said such increments, instead of a one-off payment, are more sustainable to meet the rising cost of living in Singapore.

This is in line with calls by the labour movement for the National Wages Council (NWC) to propose a minimum dollar amount, as an increment to the basic pay of low-wage workers.

The council is expected to announce its annual wage recommendations later this month.

The NWC recommendations will be closely watched by the public and private sectors.

With a projected inflation rate of between 3.5 and 4.5 per cent this year, there have been concerns about its impact especially on low-wage workers.

Inflation rose to 5.2 per cent in March.

Last year, the NWC suggested bosses give a one-off lump-sum payment to help employees offset inflation.

But some observers said that may not be enough this year.

Randstad regional director Karin Clarke said: "The reason is that, in six months' time, and inflation is still high, the average worker will still be struggling to meet the rising costs.

"So I think the only way and the sustainable way is to really impact peoples' monthly salary by an on-going incremental increase.

"It's a smarter recommendation than giving a one-off band aid payment."

Workers have welcomed such a move.

One said: "Of course, progressive increments will be much better.

"You can see a longer income difference, but if you give a one-time [increment], you can't see much right?"

While such increments will raise business costs, HR experts said there is still some room for companies to absorb wage increases.

Hays Singapore general manager Chris Mead said: "Certainly, whenever organisations face wage increase pressures, that is a challenge for business.

"However, the solution is to focus on retaining good staff and then on productivity.

"secondly, it is to reward staff on performance-based pay over and above their base salary. So for staff who over perform in their duties, they can have a bonus or a reward for that and then, the company wins as well because they've raised productivity."

Experts agree that is key to any real-wage growth.

Ms Karin said: "At the end of the day, Singapore is moving towards higher productivity and we have to drive productivity.

"Wage increases has to be something that contributes to productivity.

"But we're in a very high inflationary environment and if we don't address the inflationary environment, what we may see is more people exiting the Singapore market and that will not help Singapore in an uncertain time."

Industry players said being able to offer increments to retain staff can contribute to a company's employment branding and make them more attractive for job seekers.

Last year, the NWC recommended that workers be given higher wage increases.

Then, it was an easy call to make, given the buoyant economy in 2010.

So, it will be interesting to see what kind of recommendations the NWC will make this time, given the outlook, for the economy this year is still very uncertain.