Media Statement by the Singapore National Employers Federation on the National Wages Council 2022/23 Guidelines

14 Nov 2022

The Singapore National Employers Federation strongly endorses the National Wages Council (NWC) 2022/23 Guidelines.

  1. According to the Ministry of Trade and Industry, the Singapore economy grew by 7.6% in 2021, after a contraction of 4.1% in 2020. Employment (excluding foreign domestic workers) also grew by 41,400 in 2021, as compared to the decline of 166,000 in 2020.[1] By September 2022, employment had recovered to surpass pre-pandemic level by 1.7%.[2]
  2. However, there are three challenges facing employers in ensuring their wage costs remain sustainable. First, the economy is expected to grow slower at three to four percent in 2022 and may moderate further in 2023. Second, there are wage pressures exerted on employers even as they are also facing rising business costs due to higher inflation. Third, due to the tight labour market, employers in growth and recovering sectors may inevitably need to compete on wages to attract and retain workers.
  3. Therefore, SNEF supports the NWC call for wage increases to be fair and sustainable, and based on the Flexible Wage System (FWS).

Achieving Sustainable Wage Growth

  1. In particular, SNEF strongly urges employers to take the opportunity to enhance their wage flexibility when granting wage increases. Employers could build up their monthly variable component (MVC) by putting a portion of the built-in wage increases into the MVC. By taking pre-emptive measures to enhance wage flexibility, this could make a difference in saving businesses and jobs during future economic downturns. The value of FWS was amply demonstrated in 2020 and 2021 during the covid pandemic, where job losses were minimised.
  2. SNEF would also like to reemphasize that wage growth should be supported by productivity growth to be sustainable. Between 2016 and 2021, real total wage growth, which include bonuses, was 2.7% per annum and supported by productivity growth of 3.2% per annum. This was due to the slower total wage growth in 2020 and 2021, against the backdrop of weaker economic performance.

Supporting Lower-Wage Workers

  1. Nonetheless, SNEF recognises that higher inflation has impacted lower-wage workers (LWWs) disproportionately. Taking into account that the Government has introduced a five-year $3.5 billion Progressive Wage Credit Scheme (PWCS) to co-fund the wage increases for LWWs, SNEF supports the NWC recommendation for workers earning gross monthly wage of up to $2,200:
    a.from 4.5%-7.5% in 2021 to 5.5%-7.5% in 2022 or
    b.from at least $70-$90 to $80-$100, whichever is higher.
  2. The NWC has also provided flexibility for employers to implement the recommendation based on their business performance and prospects.
  3. At the same time, SNEF would like to reiterate that the significantly higher recommendation in terms of wage increases for LWWs is a deliberate move to uplift the wages of LWWs. It may even result in employers deviating from the principle of linking wages to productivity for LWWs.  However, this cannot be the case for the remainder of the workforce.  Consequently, other workers should not expect similar wage increases as LWWs. In addition, SNEF notes that the Government had announced a $1.5 billion support package in October 2022 to further support all Singaporean households to cope with higher inflation and will enhance the Assurance Package in Budget 2023.

Persevering in Business and Workforce Transformation

  1. Concurrently, SNEF strongly urges employers, especially those which employ LWWs, to persist and persevere in raising productivity. With PWCS being temporary and manpower shortage being a “permanent” feature of an ageing workforce, jobs must be redesigned to become more productive and inclusive. This would enable employers to reduce their reliance on manpower, employ different segments of the workforce, including older workers and persons with disabilities, and pay more to attract and retain workers.
  2. Employers also need to link training to job requirements to train their employees effectively. By investing continuously to broaden, deepen and refresh the skills of their employees, employers will be better positioned to reap the full benefits of their business transformation. Therefore, SNEF echoes the NWC in calling on employers and employees to take decisive steps to transform jobs and invest in upskilling and reskilling the workforce, with the support of the Government, trade associations and chambers, and unions.

Concluding Remarks

  1. Said Dr Robert Yap, President, SNEF, “As Singapore emerges from the COVID-19 pandemic, there are valuable lessons that both employers and workers should learn so that we do not waste a crisis.
  2. Firstly, the flexible wage system is a “shock-absorber” which can mitigate the impacts of business downturns on employers and workers. It will be disappointing if employers have not learnt the lesson and built up their wage flexibility over the last two to three years. I exhort employers to implement the flexible wage system if they have not done so yet.
  3. Secondly, many lower-wage workers are in essential roles such as cleaning, waste management, security, retail and food services who have kept Singapore clean and safe, and provided Singaporeans continued access to daily necessities during the pandemic. As we emerge from the pandemic, all of us can show our appreciation by doing our part in ensuring that these workers can earn progressive wages. As group of responsible employers, SNEF will rally our members and employers in uplifting lower-wage workers too.
  4. Last but not least, employers have to continue with the momentum of business transformation, which had accelerated during the pandemic, to be competitive and sustainable. This will also mean that workers have to upskill and reskill constantly and consistently to keep pace with the changes. Employers should leverage Government support and proactively invest in the skills development of their employees. SNEF stands ready to help employers in job redesign as well as training and career planning of their employees.
  5. As the economic environment has become “never normal”, SNEF will work alongside our tripartite partners to help employers and workers navigate the challenges to achieve sustainable business growth and wage growth respectively.”

[1] Source: Ministry of Manpower, Labour Market Report 2021

[2] Source: Ministry of Manpower, Labour Market Advance Release Third Quarter 2022

About Singapore National Employers Federation

The Singapore National Employers Federation (SNEF) is a trade union of employers. Our mission is to advance tripartism and enhance labour market flexibility to enable employers to implement responsible employment practices for sustainable growth. SNEF has a membership of over 3,300 companies with a combined workforce of over 800,000. For more information, please visit www.snef.org.sg