On 29 May, the National Wages Council issued its 2015/2016 Guidelines, covering the period from 1 July 2015 to 30 June 2016. The NWC’s call for “a minimum S$60 built-in wage increase for low-wage workers” has overshadowed its call “on companies to drive up productivity” in order “to sustain wage increases” over the long haul.
Whilst the quantitative guidelines have been effective in raising the basic monthly salaries of low-wage workers, they have contributed to the widening “gap between productivity and wage growth” noted by Singapore National Employers Federation president. However, the hike is instrumental in ensuring that the “most vulnerable group” of low-wage workers “benefit from Singapore’s growth” and this has been widely endorsed.
Given the NWC chairman’s emphasis for real wage increases to be in line with productivity growth over the long term, there has to be a more concerted move to link wage increases with productivity.
This can begin with companies:
- Granting the recommended built-in wage increase to low-wage workers who meet job or performance expectations; and
- Significantly higher wage increases to those who exceed expectations.
The key is considerably differentiated wage increases to motivate greater discretionary effort on the part of employees and catalyse productivity growth. This virtuous cycle of growth in productivity and wages would benefit both companies and their employees.