NWC recommendations: $60 is a big deal

The National Wages Council (NWC) recently issued its wage-related guidelines for 2013 where it specifically addressed low-wage workers’ conditions by appealing for a “special effort” from employers to raise the wages of the lowest paid.

As it did last year, the council proposed a percentage wage hike combined with a specified dollar quantum—$60, a $10 increase from last year’s $50. This applies to employees earning up to $1,000, whose income has noticeably failed to keep pace with the rest of the workforce.

The NWC also urged companies that are doing well to grant these workers a one-off lump sum payment on top of the increments in assisting them with the rising costs of living. This is apt because although the total wages of workers rose 4.2% last year, real wages fell 0.4% after inflation was factored in.

NTUC expressed great concern on the low adoption rate of last year’s wage recommendations; according to them, 8 in 10 unionised companies have heeded the increment proposal but only 3 in 10 of their non-unionised counterparts did!

Hopefully this will lead to the natural movement of poorly-paid workers from non-unionised companies to higher-paying unionised companies.

Contract workers and re-employed older workers were also mentioned, as the NWC called on employers and service buyers to incorporate their recommendations into outsourced service contracts by locking in an increased fixed price over a fixed period.

Of course, things like sustainability and productivity were also included in the recommendations. Despite the government’s newly-launched three-year Wage Credit Scheme (WCS) committed to co-funding 40% of wage hikes, some companies remain reluctant to raise wages for fear of not being able to sustain the increased wages after 2016.

The SNEF has also endorsed NWC’s guidelines, reiterating its support of the progressive wage system on May Day. However, these thoughts on creative ways to help allocate more to low-income earners are not new, and have been in the pipeline for a while now.

What is troubling is the fact that not all profitable firms appear to be sharing their gains. As General Secretary of the United Workers of Petroleum Industry, K Karthikeyan, points out, “I understand if the 18% still don’t give, as they’re really not making the money . . . But the 82% which are profitable – what stops them from giving?”

So then it becomes clear where the gap lies, and this begs the question: how do we make profitable companies share their wealth with hard-working labouring staff? This is the tricky bit.

SNEF, MOM, and NTUC can applaud NWC’s recommendations and echo them loud and proud, but the current system gives employers no incentives to encourage companies to follow these guidelines. Would tax breaks and other similar advantages help? But then we’d be rewarding companies for doing what should come naturally – value their workers – and then they’d come to expect rewards every time they did something right.

Would forcing them be better? After all, as long as NWC’s recommendations remain simple “recommendations” and not “enforceable guidelines”, no employer will take them seriously. Maybe if they faced fines or tax increases for failing to follow the guidelines they’d listen up? But then we’d be punishing employers and entrepreneurs and discouraging them from hiring.

Or maybe employers should be cut out of the loop and the government could directly provide cash to those that need it the most? But then we’d be passing the burden of protecting workers’ welfare onto the government, which may not be equipped to see after each and every particular case.

Professor Lim Pin, Chairman of the NWC called $60 an “achievable target—not something wild, something in the sky”—and he’s right.

The real issue here is how to ensure the execution of the reasonable proposal.

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