NWC: As relevant today as it is yesterday

Year after year, Singaporeans hear news about a body which recommends some wage adjustments for employers to follow.

The National Wages Council (NWC) was set up in 1972 as a tripartite advisory body on wage adjustments.

Before that, wage adjustments were negotiated based on the bargaining power of trade unions and managements. This led to industrial disputes and strikes.

But through the years, while the number of members that make up the council has increased to include more diverse views and representation, the focus and mission of the NWC remains the same.

Here are 4 ways the NWC has expanded in its impact and role.

1. It has grown in number

Then (1972)

(Photo Credit: The Story of NWC: 40 Years of Tripartite Commitment & Partnership)

The NWC started in 1972 with three representatives each from the tripartite partners. It’s first Chairman was Professor Lim Chong Yah (in suit and tie), dean of the faculty of arts and social sciences at NUS.

Now (2017)

Today, the NWC is represented by 36 members and alternate members from the tripartite partners, i.e Unions, Government and Employer groups, including those from the international chambers of commerce.

2. Moving from quantitative wage increase to qualitative wage increase

Then (1972)

(Photo credit: NLB Archives)

Back then, the council focused on recommending fixed quantum wage increases to help the workers.

Now (2017)

(Photo credit: Straits Times Online)

These days, as the economy grows more complex, besides recommending wage increases that is relative to the economy, the NWC also recommends wage adjustments that are in line with skills and productivity growth. Recommending qualitative wage increases.

3. The Cabinet has never ever rejected the recommendations

Except for an occasion where a request was made to change a word or two, the cabinet has never ever rejected the recommendations of the NWC.

After the guidelines are agreed upon, a report is sent to the Prime Minister for cabinet approval. Hence, it shows the support and faith the cabinet has in the NWC’s work, year after year.

While the recommendations are not binding, the guidelines carry weight because they are published in the Singapore Government Gazette after the recommendations are approved by the cabinet.

The Public Service Division and the unionised employers use the recommendations to negotiate wages with unions.

In terms of implementation, 21% of employers provided wage increments according to last year’s recommendations. At least half of the unionised companies provided wage increments of at least $50, and over half of this group giving increments of over $65 above the higher bound of last year’s recommendations, a testament to the collective power of Tripartism.

4. They are starting to help more workers earn more

The increase in this year’s threshold from $1,100 to $1,200 is likely to benefit another 40,700 workers, according to Labour Member of Parliament and Executive Secretary of the National Transport Workers’ Union Melvin Yong.

In fact, since 2012, when the quantitative guidelines were introduced, the number of full-time resident employees earning a basic monthly wage of up to $1,000 has decreased from 10.6% in 2011 to 4.7% in 2016, while those earning a basic monthly wage of $1,100 is estimated to have dropped from 8.2% in 2014 to 5.7% in 2016.

With such statistics, it is evident that while the NWC recommendations are not binding, still, the collective power of Tripartism and moral suasion still works for our economy and labour market.

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Arthur Lee

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