Better productivity, better wages – here’s how it works

It is common sense to say that employers would make pay increases where there is profit or good reason to give increases. You can’t control a company’s profit…but you can control its productivity and help lowering its costs: for the reason of sharing savings with employees.

And it is for this reason why the Labour machinery (ie. NTUC, MoM and SNEF) are obsessed with productivity.

 ntuc logo

“You will not find anywhere in the world where a labour movement is such a key advocate for productivity” said the Secretary General, Lim Swee Say.

“…in Singapore we recognise that the wage increase is sustainable only if it’s supported over the medium and long term through productivity gains. If we are not able to achieve a breakthrough in the productivity ladder, the wage ladder and job ladder will be constrained.”

What Mr Lim says is in tandem with statistics. In the years leading up to 2014, productivity rates have dipped sub-zero, returning negative numbers. This was reflective on a landscape where foreign manpower was easily available and employers didn’t give two hoots about productivity.

Since then, the numbers have increased to 0% – which if the trend were to continue, would return us to positive numbers in the years to come.

The improvement resulted in improved wages for society.

Earlier this year, the government announced that the basic wage for cleaners will be revised to $1,000 from $850. Last month, it was announced that the basic wage for security guards will be revised from $800 to $1,100.

progressive-wage-scale

The wage revisions were announced as part of the Progressive Wage Model (or ladder) which takes care of both the salary floor (minimum wage) and salary increases over the years.

Understanding productivity is key to getting your wages increased, if you know how to do this – you’ll be in a better position to bargain for better salary.

 

 

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About the author

Tay Leong Tan

Tay Leong Tan is a collective of 3 writers. Tay, Leong and Tan. (Who were you expecting?!) We are enthusiastic about labour issues, economics and current affairs in particular.

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