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NWC Calls for Sustainable Wage Increases

Recommends productivity growth to lead wage increases; tripartite partners urged to work together closely to raise productivity and enhance competitiveness

Employment practices Skills, training and development

The Government has accepted the National Wages Council’s (NWC) wage guidelines for 2010/2011. These include the recommendation for companies to give sustainable wage increases, taking into account company performance and business prospects. For companies that have yet to get back on their feet or are facing cost pressures, the council suggests giving variable payments to employees instead. Companies are also advised to take into consideration the impact of the increase in employers’ CPF contribution rate during wage negotiations.

With the new emphasis on productivity, the NWC called for productivity growth to lead wage increases. It strongly urged the tripartite partners to work closely together to raise productivity, because higher productivity would enhance Singapore’s competitiveness and translate into sustainable increases in wage levels in the long run.

The NWC recommends companies to put in place a dollar quantum for built-in wage increases and/or variable payment for low wage workers. Companies are also encouraged to share productivity gains with workers in the form of productivity incentives or bonuses. In addition, in consultation with unions or employees, companies can formulate Key Performance Indicators (KPIs) to tie rewards to employees' contributions to productivity gains. Apart from wage recommendations, the NWC pushes for companies in need of workers to retain or hire older workers, as well as encourage more women to enter the workforce.

The Government encourages companies to tap on the Productivity and Innovation Credit and the National Productivity Fund to invest in productivity improvements. To help low-wage workers, the Government has enhanced the Workfare Income Supplement (WIS) scheme and will be introducing the Workfare Training Support (WTS) scheme to encourage them to upgrade their skills and to incentivise their employers to send them for training.