National Wages Council calls for employers to do more for lower-income workers

In its annual exercise to propose salary recommendations, the National Wages Council (NWC) has urged employers to give lower-income workers earning up to $2,500 an annual salary increment of 5.5 per cent to 7.5 per cent or at least $100 to $120.

The council announced its recommendations for 2024/2025 on 10 October 2024. The guidelines will cover the period from 1 December 2024 to 30 November 2025.

On the same day, the Government accepted the NWC’s recommendations, and NTUC and the Singapore National Employers Federation (SNEF) expressed their support.

NWC’s 2024-2025 recommendations for lower-income workers aim to grow their salaries faster than the average Singapore worker.

In 2023, the tripartite body proposed similar wage increases of 5.5 per cent to 7.5 per cent or $85 to $105 for employees earning $2,500 or less.

In 2022, the council suggested comparable salary increases of 5.5 per cent to 7.5 per cent or $80 to $100 for workers earning up to $2,200.

Greater support for lower-income workers

The latest guidelines call on employers who have performed well and expect growth to offer the higher percentage increase of the recommended 5.5 per cent to 7.5 per cent if it is more than the proposed $100 to $120.

Companies facing uncertainty should provide a lower-to-middle percentage increase if it exceeds the suggested monetary values.

Meanwhile, employers who have not done well can give a lower percentage increase but consider additional increments if their situation improves.

The NWC also encourages employers to consider paying more to workers who earn less to boost their wage growth.

The guidelines also propose that employers who outsource services and their contractors adopt deliverable-based contracting practices whenever possible to align with the NTUC-initiated Progressive Wage Model (PWM) and wage guidelines.

The NWC’s latest recommendations complement existing efforts to raise lower-income workers’ salaries. These efforts include the PWM, Local Qualifying Salary and the Progressive Wage Mark accreditation scheme.

The Progressive Wage Credit Scheme, which received a $1 billion boost this year, will also provide employers with additional support to offset higher salary costs due to mandatory wage increases.

The guidelines will also serve as a reference when setting PWM workers’ wage requirements.

Noor Irdawaty, General Secretary of the Building Construction and Timber Industries Employees' Union, which represents PWM workers like cleaners and landscape technicians, said that the NWC's guidelines "will provide a valuable benchmark for wage negotiations in upcoming review of the PWM in the Built Environment industries beyond 2028." 

"Furthermore, these recommendations will empower unions to advocate for fair wages on behalf of Built Environment sector workers not currently covered under the PWM structure," she added.

Union of Security Employees' General Secretary Raymond Chin added that the security PWM could be enhanced further to improve security officers' livelihoods.

"The security sector currently operates under a five-stage Progressive Wage Model. We strongly believe that this model can be integrated into the broader skills and career roadmap of the Built Environment sector, allowing for more flexibility across different PWM frameworks.

"By equipping security workers with additional skills and offering value-added services, we can enhance the value of our workers and provide more comprehensive service offerings," he explained.

Fair and sustainable salary increases for all workers

The NWC also encouraged employers who have performed well and have growth prospects to pay salary increases and bonuses based on workers’ performance and contributions.

Meanwhile, employers who have not done so well can limit the pay increases, with management making the first move. They should also enhance their workers’ skills to improve productivity.

Amalgamated Union of Public Employees' (AUPE) General Secretary Sanjeev Tiwari said that the guidelines are key to retaining employees.

"Being one of the largest employers [in Singapore], the public sector needs to have competitive, fair and equitable wages for its officers that is reviewed on a periodic basis to retain its talent pool.

"The sustenance of such recommendations are dependent on a prudent framework agreed upon by the Government, AUPE and the public sector unions that takes into consideration the overall national economic climate now and in the near future, Singapore GDP and contributions of public officers during the period," he said.

Additionally, the NWC recommended that companies, especially those facing uncertainty, implement the Flexible Wage System (FWS).

The FWS enables companies to move salary increases and part of fixed wages into the annual variable component (AVC) or monthly variable component (MVC), allowing quick adjustments during different times to save jobs or retain talent.

With the higher CPF monthly salary ceiling and senior worker CPF contributions starting in January 2025, the NWC urged employers to consider these changes when making salary increases.

Economy growing, but risks persist

The latest recommendations came on the back of a growing Singapore economy. However, Singapore also faces global risks that could impact business confidence and slow the pace of growth.

The Trade and Industry Ministry projects economic growth of 2 per cent to 3 per cent in 2024, with further growth expected in 2025.

Meanwhile, the Labour Market Second Quarter 2024 Report indicated that labour demand remained strong in the first half of the year, with total employment growth more than doubling amidst low unemployment rates.

Additionally, the NWC shared that labour productivity, which measures the efficiency with which workers produce goods and services, grew by 3 per cent on a yearly basis in the same period.

NTUC Assistant Secretary-General Patrick Tay said: “We hope employers in those sectors with positive productivity gains will share the gains with workers. This year’s guidelines also make specific mention of the broad middle workers because some of the cost-of-living pressures affect not just lower-wage workers, but all segments of workers.

“Therefore, there’s a big drive towards calling out to employers to have fair and sustainable wage increases when they are doing well, have done well or expected to do well."

The NWC also called on employers to share productivity gains and provide employees with fair and sustainable salary increases, in response to strong labour demand and sustained productivity growth in recent years.

The NWC highlighted that while overall productivity has gone up, some sectors are lagging.

Role of Company Training Committees

Encouraged by employers’ enhanced efforts in training employees, the tripartite body called on employers and employees to continue training and transforming jobs with the support of the Government, unions, and trade associations and chambers.

The guidelines also urged employers to redesign jobs to boost productivity through initiatives like the NTUC Company Training Committees (CTC).

The NTUC CTC involves company, union and worker representatives working together to enhance business operations and equip workers with new skills for better job prospects.

NTUC President K. Thanaletchimi echoed the NWC’s call to employers to set up a CTC.

“The two outcomes that they [employers] need to deliver out of the CTC is to ensure the wages grow by 5 per cent in addition to the annual improvement and have a career development pathway for workers to climb up.

“Workers can also look at some skills-based allowance. That is the outcome expected of companies that take on the NTUC CTC Grant, which is capped at $1 million,” she said.

Over 2,300 CTCs have trained and improved the salaries and career prospects of over 200,000 workers in various industries.

The committee can help employers apply for the CTC Grant, which can cover up to 70 per cent of business improvement or productivity project costs.

As of March 2024, around 3,000 workers involved in CTC Grant projects enjoy an average pay increase of 5 per cent on top of their annual increment or from career development plans. 

The NWC also recommends that employers train workers for future jobs by tapping into Government subsidies for training programmes, recently enhanced career conversion programmes and the new Overseas Market Immersion Programme.

The guidelines also advised employers to strengthen worker-training capabilities through the National Centre of Excellence for Workplace Learning’s programmes. They can also take advantage of the resources offered by SkillsFuture Singapore’s programmes and the training and job-matching services provided by the Jobs-Skills Integrators.

The NWC also encouraged employers to strengthen their HR capabilities by having their HR practitioners take the Institute for Human Resource Professionals (IHRP) certification to implement responsible employment practices within their companies.

Workers can stay proactive in updating their skills by utilising the $4,000 SkillsFuture Credit top-up, urged the NWC. Those aged 40 and above can also access the Mid-Career Enhanced Subsidy, and the new SkillsFuture Mid-Career Training Allowance come 2025.

Meanwhile, employers and employees can also consult various resources, like Jobs Transformation Maps, to track emerging skills and industry trends.

Click here for more information on implementing an FWS. Employers who need help with the FWS can approach NTUC, its affiliated unions, SNEF, or the Tripartite Alliance for Fair and Progressive Employment Practices.