Government Accepts National Wages Council’s Recommendations For 2007/2008

1.   The Government has accepted the National Wages Council (NWC)'s wage recommendations for 2007/2008.

Sound wage policies for sustainable and shared economic benefits

2.   The Government notes that last year, total wages increased by 4.5% in tandem with our strong economic growth and tight labour market. Basic wages grew by 3.6% last year compared to 3.1% in 2005. But labour productivity growth fell from 2.1% in 2005 to 1.2% in 2006, causing the growth in real wages (both total and basic wages) to outpace productivity growth for the second consecutive year in 2006. However, over a longer period, growth in productivity still outpaced increases in real total and basic wages, though the gap has narrowed in recent years.

3.   The Government supports the NWC's recommendation that companies grant wage increase to workers for the good corporate and economic performance achieved. The Government also agrees with the NWC that wage increase and bonus payment should be more closely linked to company and individual performance. Despite current short term pressures on wages to rise in tandem with a tight labour market, it is important that wage increases should continue to lag behind productivity growth over the long term to be sustainable. NWC's call for employers and unions/workers to work together to achieve higher productivity and innovation is therefore timely. This forms the basis for sound wage policies that will help maintain our economic growth and cost competitiveness, leading to sustainable and shared economic benefits for all Singaporeans.

Enhancing older workers' employability and helping low wage/informal workers to benefit from economic growth

4.   The Government welcomes the NWC's call for companies to implement policies and programmes to facilitate the employment, retention and re-employment of older workers. The Government strongly urges employers to do so quickly, to help meet their manpower needs in a tight labour market. Companies can tap on the ADVANTAGE! Scheme for funding support to implement such programmes.

5.   The Government also supports the NWC's recommendation for a tripartite effort to help self-employed and low wage/informal workers benefit from the Workfare Income Supplement (WIS) scheme.  In response to the recommendation, the Government will form a Tripartite Committee chaired by MOS Gan Kim Yong and comprising senior representatives from employers, unions and government, to spearhead outreach efforts and encourage CPF contributions by low wage workers and self-employed persons, so that those eligible can benefit from the WIS. The Tripartite Committee will also address how to safeguard other basic employment terms and work-related benefits for such low wage workers and self employed persons.

Accelerating implementation of flexible wage systems

6.   The Government notes that wage restructuring has made further progress. It agrees with the NWC that wage restructuring efforts should be stepped up. Companies should narrow the max-min salary ratio further to 1.5 or below. This will pave the way for companies to move to job-based, competency-based and/or performance-based wage systems, and away from seniority-based wages. Companies should also ride on the positive economic outlook to build up the Monthly Variable Component (MVC) quickly.  The Government will continue to work together with the unions and employers to push ahead with wage restructuring.

7.   The Government also supports the NWC's call for companies to continue with the practice of sharing corporate information with their employees to strengthen the linkage between reward and performance.

Conclusion

8.   The Government is confident that our strong tripartite partnership will enable the NWC wage guidelines to be successfully implemented by employers and unions. This strong tripartite cooperation will enable us to sustain Singapore's competitiveness, continued economic growth and the creation of good jobs for Singaporeans.