Flexible Wage Increment Proposal to Share ‘Productivity Gains’ with Workers

July 25, 20189:55 am
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The proposal for companies that enjoyed productivity gains to provide a one-off payment for workers was finally agreed by the National Trades Union Congress (NTUC) after a sticky negotiation. The National Wages Council (NWC) assistant secretary-general Melvin Yong said on Thursday (May 31) that the recommendation was the most difficult for the council members to agree on. The council is made up of representatives from employers, trade unions and the Government.

Dr Robert Yap, president of Singapore National Employers Federation (SNEF), said that there were proposals for the payment to be much higher than the S$300 to S$600, Channel News Asia reports.

He said that the whole idea behind this kind of a one-time productivity (payment) is the sustainability of it. The organisation wants to ensure that it is something that is manageable and will allow them to sustain rather than something that is one-off and then regretted.

On the matter, Mr Yong added, “But we all agree that the message we want to send is that when there are productivity improvements, we want to make sure that we share the productivity gains with the workers and to tell the workers … that we will work harder in the coming year to continue to strive for productivity improvements.

“Only with productivity improvements can we have sustainable annual wage growth.”

See: Real Wages Growth in Singapore Rose Faster than Productivity in Recent Years

Meanwhile, Permanent Secretary for Manpower Aubeck Kam said that firms can look to their own productivity measures to determine if they have achieved productivity gains. This can be a sale per person or an efficiency-related measure.

While NWC’s recommendations also encourage companies that have done well in productivity growth to share the gains with all workers regardless of wage level, through a one-off special payment, it does not really specify a figure or range unlike the case for low-wage workers.

NWC member who is also the governor of the American Chamber of Commerce, Laurence Chin stated that firms will appreciate the flexibility to give such bonuses as they like.

“The key point from a lot of companies is the flexibility to make decisions. … There’s a wide variance in terms of industries and how to calculate productivity and different companies they decide what particular key indication or qualities are considered important,” Mr Chin added.

NWC chairman Peter Seah said that this is the first time a lump sum quantum has been proposed for productivity gains and it signals the council’s emphasis on productivity, especially because last year’s productivity growth was “very commendable”.

The Government and various tripartite stakeholders have accepted the NWC’s recommendations.

Apart from the one-off payment, the council also recommended a wage increment of between S$50 and S$70 for workers earning up to S$1,300.

Representing the Government, Mr Kam said that the higher quantum of this year’s wage increase range reflects the improvement in general business conditions, while maintaining the flexibility for employers to provide wage increases.

“The Government supports the NWC’s move to build upon the success of earlier tripartite efforts to raise the wage threshold and cover more low-wage workers,” Mr Kam said.

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