The Ministry of Manpower has reported that it has accepted the recommendations of the National Wages Council (“NWC”) for 2015/2016. The NWC Guidelines cover the period 1 Jul 2015 to 30 Jun 2016. These recommendations are applicable to all employees, inclusive of PMETs and Rank-and-File Employees in both the private and public sectors, whether they are unionised or not.
Highlights of the NWC Recommendations are summarized here.
- Focus on Skills to Ignite Productivity Growth– the NWC recognizes that the labour situation will continue to remain tight and that this might lead to upward pressures on wages. To improve productivity, the NWC recommends that:
- real wage increases should be in line with productivity growth over the long term in order to remain competitive and sustainable
- firms move toward productivity driven growth rather than employment driven growth. Employers should focus on quality, not quantity of the workforce as a key source of growth, productivity, and competitiveness
- employers leverage on SkillsFuture to upgrade the workforce
- firms employ more manpower-lean methods to drive business growth, tapping PIC which has been extended to 2018, the new PIC+ targeted at SMEs, and the wage credit scheme which has been has been extended to 2017
- employers augment the workforce by attracting the economically inactive (eg housewives, mature workers etc) back to work
- Share Productivity Gains Equitably with Workers– the NWC recommends that
- employers consider the prevailing economic and labour conditions when deciding on wage increases
- employers give built in wage increases to workers, after taking into consideration business performance, prospects, and long-term sustainability
- employers who perform well further reward workers through variable wage components in line with business performance and workers’ contributions
- employers leverage on the Temporary Employment Credit (TEC) and enhancements to the Special Employment Credit (SEC) when considering the quantum of wage increases
- For Low-Wage Workers – the NWC recognizes the challenges faced by low wage workers and recommends that
- employers help low wage workers improve their skills by tapping on various schemes such as the Workfare Training Support
- employers grant low-wage workers a built in wage increase of a dollar quantum and a percentage. This gives low-wage workers a higher percentage of built-in wage increase, allowing these workers to better manage cost increases
- employers grant a built-in wage increase of at least $60 for workers earning less than $1,100 per month
- employers grant an equitable and reasonable wage increase and/or one-off lump sum based on skills and productivity for low wage workers earning more than $1,100 per month
- employers consider incorporating NWC wage recommendations into outsourced service contracts, and factor annual wage adjustments for outsourced workers into the service contracts.
Key Indicators Influencing the NWC Recommendations
Other NWC Recommendations
These are some of the other recommendations by the NWC.
- The NWC welcomes efforts in introducing the progressive wage model across various sectors. It appreciates how progressive wage models allow employers to make better use of manpower and pay higher wages, commensurate with workers’ job responsibilities and productivity. The NWC encourages other industries to adopt the concept of “progressive wages” and provide a clear progression path for workers to up-skill and upgrade.
- The NWC encourages unions and employers to restructure medical benefits to portable medical benefits to improve cost effectiveness.
Follow-Up
Contact us if you have any questions or face any difficulties implementing the recommendations, improving labour productivity, establishing a structured training plan, or introducing a progressive wage model and employee career progression pathways.