Oral Answer by Mr Tan Chuan-Jin, Minister for Manpower, to Parliamentary Question on Considering The Recommendations of the National Wage Council as Mandatory Implementation

1. Since the establishment of the tripartite National Wages Council (NWC) in 1972, the NWC’s annual Guidelines have played an important role in setting a framework for collective wage bargaining by unionised companies, and as a reference point for wage increases in the non-unionised sector. This has helped maintain moderate and orderly wage increases that take a broader view of the labour market and economic conditions. The NWC’s Guidelines have never been mandatory, as they should not supplant market forces in determining wages for individual companies. Where appropriate, the NWC has used its discretion to include quantitative elements, for instance recommendations starting in 2012 for a minimum built-in wage increase for employees earning a monthly basic salary of up to $1,000.
2. In a competitive and tight labour market, there has been improved adoption of the NWC’s Guidelines. For example, in 2013, 77% of private establishments gave or intended to give wage increases to their employees earning a monthly basic salary of up to $1,000, up from 60% in 2012. Some 57% of establishments gave at least a $60 wage increase to these workers in 2013, and this is up from 28% that gave the $50 recommended in 2012. This has in turn helped to narrow the wage disparity – from 2012 to 2013, real income growth for full-time employed citizens was 6.7% at the 20th percentile, compared to 4.6% at the median. A similar trend was observed over the past five years, where annualised real income growth at the 20th percentile (2.0%) was stronger compared to the median (1.7%).
3. The NWC will continue to play an important role in ensuring that real wage movements are sustainable and in line with productivity growth over the long term. The NWC should retain its principles of consensus-building and flexibility for businesses to take into account their business performance, prospects and importantly, sustainability because it has a very real impact on employability, jobs and ultimately wages as well. Mandatory wage increases could be detrimental to businesses which do not have the financial means to give the increases, and this will in turn, be detrimental to their workers. The commitment of the tripartite partners in encouraging the adoption of the NWC’s Guidelines has been an important feature of our wage system, and we should continue to work towards sustainable wage increases for all Singaporeans.