National Wages Council calls for 5.5% to 7.5% wage hike for lower-income workers amid living cost surge

SINGAPORE: In a move to combat the pressures of rising living costs, Singapore’s National Wages Council (NWC) has recommended that employers grant a one-off special lump sum payment to their employees, prioritizing those in the lower to middle-income brackets.

The council issued these guidelines for the period from December 2023 to November 2024, echoing similar advice from past high inflation periods in 2008 and 2011.

NWC’s chairman, Mr Peter Seah, highlighted the importance of this move, particularly for lower-wage and middle-wage workers, to help them cope with the current inflationary pressures. While no specific amount was mandated, the emphasis was on a collective positive action across the board.

In a detailed strategy to uplift lower-wage workers, the NWC has outlined a wage increase recommendation of 5.5 to 7.5 percent in gross monthly wages, or a monetary increase of at least S$85 to S$105, whichever is higher.

The extent of these increases is suggested to correlate with the companies’ performance and future prospects, urging well-performing businesses with positive outlooks to aim for the upper bound of the recommended range.

The council also stressed the need for wage growth to align with productivity growth and for wage structures to be resilient and adaptable, encouraging the adoption of a flexible wage system. This system would include a substantial variable component, allowing companies to reward employees during prosperous times and manage costs during downturns.

The Ministry of Manpower (MOM) has expressed its support for the NWC’s differentiated wage guidelines and the push for a one-off lump sum payment. In tandem, the government is set to continue its support for employers through initiatives like the progressive wage credit scheme.

Current adoption rates from MOM show that while 30 per cent of companies are meeting or surpassing the NWC’s salary raise recommendations, there remains a gap with the remaining 70 per cent. The flexible wage system has seen an 89 per cent uptake in either the monthly or annual variable component among resident employees, but only 22 per cent have incorporated both.

Mr Kenny Tan, deputy secretary for workforce at MOM, said, “The government stands together with our tripartite partners to encourage employers to press on with business and workforce transformation.”

Leaders from the Singapore National Employers Federation and the National Trades Union Congress have echoed the council’s sentiments, recognizing the complexity of the economic landscape. They both advocate for business and workforce transformation as a sustainable path forward, especially for small and medium enterprises.

Additionally, the NWC has provided specific wage increase recommendations for resident administrators and drivers under the occupational progressive wages model, with new wage requirements set to take effect from July 2024 to June 2026.

These include a significant one-off wage adjustment for administrative assistants and incremental raises for administrative executives and supervisors.