10 October 2024

The Singapore National Employers Federation (SNEF) strongly endorses the National Wages Council (NWC) 2024/25 Guidelines. These guidelines provide a clear framework for businesses to align wage increases with productivity growth, ensuring the long-term sustainability of wage improvements in Singapore.

Aligning Wage Growth with Productivity

2         SNEF reiterates that wage growth must be supported by productivity gains to ensure economic resilience. In the first half of 2024, Singapore’s labour productivity, measured by real value-added per actual hour worked, rose by 3.0% year-on-year. However, productivity growth was uneven across sectors, with outward-oriented sectors achieving a 5.4% increase, while domestically-oriented sectors saw only a modest 0.4% rise.

3         At the same time, overall unit labour cost increased by 3.3% year-on-year in the first half of 2024, driven by rising nominal labour costs that outpaced overall labour productivity growth. Even though the mean nominal income over the period from 2016 to 2023 grew at 3.0% per annum, in the first half of 2024, the mean nominal income grew by 7.0% on a year-on-year basis. This further underscore the importance of linking wage adjustments to productivity improvements, particularly as businesses face increased costs pressures.

4        As such, SNEF supports the NWC’s call for fair and sustainable wage increases coupled with the Flexible Wage System (FWS) and encourages businesses to adopt FWS to manage wage costs effectively. In Singapore’s evolving economic landscape, FWS is essential for fostering resilience and adaptability in the workforce. It enables businesses to align wages with performance and market conditions, enhancing overall productivity. Through tailored resources, training, and best practice sharing, SNEF supports employers in navigating the transition to implement FWS more effectively. The NWC has also provided flexibility for employers to implement the guidelines based on their business performance and prospects.

5        As the CPF monthly salary ceiling will be increased from $6,800 to $8,000 by 2026, SNEF echoes NWC’s call for employers to take the increased CPF contributions into account when considering the quantum of wage increases.

Supporting Lower-Wage Workers

6        To support employers as they raise the wages of Lower-Wage Workers (LWWs), the Government provides support to employers through the Progressive Wage Credit Scheme (PWCS) which was recently enhanced in February 2024 with a $1 billion top-up.

7         Considering the current economic outlook, SNEF supports the NWC’s recommendation for granting LWWs earning gross monthly wage of up to $2,500:

a. a built-in wage increase of 5.5-7.5% of gross monthly wage
or
b. wage increase of at least $100-$120, whichever is higher

8        SNEF would like to reiterate that this recommendation applies specifically to LWWs and not for the rest of the workforce. The significantly higher recommendation in terms of wage increases for LWWs is a deliberate move, to narrow the wage gap between LWWs and the median wage worker.

Driving Workforce Transformation

9        SNEF emphasises the need for continued enterprise and workforce transformation to drive productivity growth. With the government’s support, businesses can upskill their workforce, redesign jobs, and improve productivity.

10      To facilitate reskilling and upskilling, WSG’s Career Conversion Programmes, some of which SNEF has been appointed as a programme manager of, encourage employees to take up new skills to remain relevant amid the evolving business needs. By leveraging these benefits, firms can create a more resilient and adaptable workforce.

Concluding Remarks

11        Mr. Tan Hee Teck, President of SNEF, said, “With shorter and more volatile business cycles, coupled with shrinking births and rapidly ageing workforce, we will need to work even harder to make sure that there is continued enterprise and workforce transformation to drive productivity growth. I call on all employers to work together with SNEF to align wage growth with productivity, support LWWs, and drive workforce transformation. This collective effort will strengthen Singapore’s competitiveness and create a resilient, adaptable workforce equipped to meet the challenges of the future.”