SINGAPORE – Lower-wage workers earning up to $2,000 gross monthly should get a pay hike of $70 to $90, or a 4.5 per cent to 7.5 per cent raise if it is higher, to ensure that pay for such workers grow faster than those at the median wage level.

This guidance on the rate of progressive wage growth was outlined by the National Wages Council (NWC) on Friday (Oct 29) in its guidelines that will apply from Dec 1 this year to Nov 30 next year.

At the same time, the council said its recommendations for lower-wage workers going forward will reference gross monthly wages and be relevant for employees earning up to $2,000 gross monthly – which covers about one-fifth of full-time employed residents in Singapore. Its previous recommendations were made with reference to workers’ basic monthly wages. 

This is in line with the Tripartite Workgroup on Lower-Wage Workers’ recommendation set out in August that progressive wages for lower-wage workers be expressed in terms of gross monthly wage, instead of basic monthly wage, to give employees greater certainty of the expected monthly wage for a set of standard working hours.

Gross monthly wage refer to the sum of basic monthly wage, overtime payments, commissions, allowances and other regular cash payments.

Labour chief Ng Chee Meng said in a Facebook post on Friday that having the guidelines apply to workers earning up to $2,000 gross monthly means more workers will be covered by these recommendations. 

This is the first year that the NWC is making recommendations for the range of progressive wage growth for lower-wage workers, following recommendations by the tripartite workgroup, which the Government accepted.

This progressive wage growth range will be used to determine the wages for workers under the Progressive Wage Model – which covers lower-wage workers in such sectors as cleaning and security.

In its guidelines, the council said that employers which are doing well and have seen healthy revenue growth even during the Covid-19 period should aim for the upper bound of the range, while employers who are recovering or have recovered may aim for the lower to middle part of the range.

Its recommendation takes into consideration various factors, including the expected rate of wage growth in the medium term, the current economic climate, and the tripartite-agreed pace to uplift lower-wage workers so they can gain ground on the median worker.

The NWC also called on employers to provide a higher percentage wage increase for lower-wage workers who are earning comparatively lower pay, in line with the tripartite workgroup’s recommendation to aim for higher wage growth for those who are lower-paid.

The minimum dollar quantum of $70 to $90 also helps to ensure that the lowest-paid employees receive a proportionately higher increase, it noted.

Recognising that some sectors or employers are still facing economic headwinds and are considering a continuation of wage freeze or further wage reduction, the NWC set out a differentiated approach for such employers.

Those freezing or continuing to freeze wages should consider a built-in wage increase of up to $50 for lower-wage workers, while those implementing further wage reduction should freeze wages for such workers instead, it said.

The council said that given this is its first year of implementing progressive wage growth recommendations and the need for lower-wage workers to gain more ground with the median-wage worker, it will consider a higher range of progressive wage growth next year should the economic situation improve.

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In a separate statement, the Ministry of Manpower reiterated that the Government too will do its part in uplifting lower-wage workers through transitional support to help employers absorb part of the additional wage costs.

Responding to the guidelines, the Singapore National Employers Federation (Snef) said the recommendations are flexible enough for employers with varying business performance and outlook to implement while aiming to narrow the gap between lower-wage workers’ pay and the median-wage level.

“As many lower-wage workers are in essential roles such as cleaners and security officers, Snef also urges service buyers and consumers to play their part in the whole-of-society effort to uplift the group by paying a reasonable price for better services,” it said.

Commenting on the significance of the NWC’s progressive wage growth recommendations, Permanent Secretary for Manpower Aubeck Kam noted that the tripartite workgroup’s recommendations included leveraging the work pass system to ensure that firms which employ foreign workers have to pay progressive wages and the local qualifying salary to all local workers.

In the light of this, the council’s recommendation for progressive wage growth becomes a sort of “pre-condition” for employers to hire foreign workers going forward, he added.

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