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National Wages Council to reconvene in January to review guidelines
By Imelda Saad & Valarie Tan, Channel NewsAsia | Posted: 16 December 2008 1205 hrs
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Professor Lim Pin
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National Wages Council to reconvene in January to review guidelines
SINGAPORE: The National Wages Council (NWC) will reconvene in January 2009 to review its wage guidelines issued in May this year.
This follows Singapore's weakening economic growth as a result of the global financial crisis.
In May, the council had recommended that companies grant built-in wage increases commensurate with performance as well as business prospects to ensure such increases would be sustainable.
It also asked companies to consider giving a one-off special lump sum payment to rank-and-file workers to help cope with the high inflation.
Other recommendations included pushing for productivity improvement; enhancing the employability of older workers; enhancing efforts to help low wage, contract and informal workers; and enhancing wage flexibility.
The Manpower Ministry (MOM) said these guidelines were made under a more favourable economic environment with a GDP growth forecast of between 4 and 6 per cent for 2008, while taking into account the global economic uncertainty and high inflation.
Since then, the Trade and Industry Ministry (MTI) has moderated the growth forecast to around 2.5 per cent for 2008 and between -1 and 2 per cent for 2009.
MOM said an increasing number of companies are also facing issues of low demand and overcapacity, and are looking at cost-cutting measures to cope with the severe business downturn.
NWC chairman, Professor Lim Pin, said: "Given the weakening economic situation, there is a need for the NWC to take stock of the new situation and review its May guidelines to help companies and workers manage the downturn."
Analysts agreed that the move comes at a right time.
Derek Berry, head, Human Capital (ASEAN), Mercer, said: "They would want to try to find a way to protect the lower paid workers. They'd want to retain and maximise employment.
"The guidelines are expected to say, if you're going to reduce pay, then do it at the senior levels. If you can, use the variable component of pay to actually reduce costs for organisations so that they can retain as many employees as possible in difficult times."
One observer said companies may trim base pay as well if the variable component is small and it is possible that the council will recommend wage cuts or hold back increments.
During the Asian financial crisis some ten years ago, NWC recommended wage cuts of between 5 and 8 per cent.
In 2001, it revised guidelines again after the 9-11 incident in the United States and called on companies to use retrenchment as a last resort. That year, the council also said companies may initiate wage freezes or cuts to deal with the slowdown.
NWC is expected to release its recommendations by mid-January. Even though it is not compulsory for companies to follow the guidelines strictly, the recommendations are expected to set the direction for wage policies.
National Wages Council to reconvene in January to review guidelines
By Imelda Saad & Valarie Tan, Channel NewsAsia | Posted: 16 December 2008 1205 hrs
Photos 1 of 1
Professor Lim Pin
Related Videos
National Wages Council to reconvene in January to review guidelines
SINGAPORE: The National Wages Council (NWC) will reconvene in January 2009 to review its wage guidelines issued in May this year.
This follows Singapore's weakening economic growth as a result of the global financial crisis.
In May, the council had recommended that companies grant built-in wage increases commensurate with performance as well as business prospects to ensure such increases would be sustainable.
It also asked companies to consider giving a one-off special lump sum payment to rank-and-file workers to help cope with the high inflation.
Other recommendations included pushing for productivity improvement; enhancing the employability of older workers; enhancing efforts to help low wage, contract and informal workers; and enhancing wage flexibility.
The Manpower Ministry (MOM) said these guidelines were made under a more favourable economic environment with a GDP growth forecast of between 4 and 6 per cent for 2008, while taking into account the global economic uncertainty and high inflation.
Since then, the Trade and Industry Ministry (MTI) has moderated the growth forecast to around 2.5 per cent for 2008 and between -1 and 2 per cent for 2009.
MOM said an increasing number of companies are also facing issues of low demand and overcapacity, and are looking at cost-cutting measures to cope with the severe business downturn.
NWC chairman, Professor Lim Pin, said: "Given the weakening economic situation, there is a need for the NWC to take stock of the new situation and review its May guidelines to help companies and workers manage the downturn."
Analysts agreed that the move comes at a right time.
Derek Berry, head, Human Capital (ASEAN), Mercer, said: "They would want to try to find a way to protect the lower paid workers. They'd want to retain and maximise employment.
"The guidelines are expected to say, if you're going to reduce pay, then do it at the senior levels. If you can, use the variable component of pay to actually reduce costs for organisations so that they can retain as many employees as possible in difficult times."
One observer said companies may trim base pay as well if the variable component is small and it is possible that the council will recommend wage cuts or hold back increments.
During the Asian financial crisis some ten years ago, NWC recommended wage cuts of between 5 and 8 per cent.
In 2001, it revised guidelines again after the 9-11 incident in the United States and called on companies to use retrenchment as a last resort. That year, the council also said companies may initiate wage freezes or cuts to deal with the slowdown.
NWC is expected to release its recommendations by mid-January. Even though it is not compulsory for companies to follow the guidelines strictly, the recommendations are expected to set the direction for wage policies.
