Singaporean employers urged to hike wages in 2023

Employers across Singapore are being urged to raise wages and implement the Flexible Wage System (FWS), as stated in the 2022/23 guidelines from the National Wages Council (NWC).

"The NWC calls on employers to reward employees with wage increases or variable payments that are fair," the guidelines said. "Employers should recognise the contributions of employees during the COVID-19 pandemic, where some employees experienced wage cuts and freezes, and supported other cost-cutting measures."

In its guidelines, the NWC, which comprises members from employers, trade unions, and the government, outlined the following regulations for wage growth:

• Employers that have done well and have good business prospects should reward employees with built-in wage increases and variable payments commensurate with the employers' performance and employees' contributions
• Employers that have done well but face uncertain business prospects may exercise moderation in built-in wage increases, but should still reward variable payments commensurate with the employers' performance and employees' contributions
• Employers that have not done well may exercise wage restraint, with management leading by example. These employers should make greater efforts to improve business processes and productivity
• Employers that have not done well but face good business prospects may consider setting out future variable payments                                                                                   

To carry out the guidelines, the NWC called on employers to implement the FWS. It said the system helps employers make quick adjustments and will benefit employees by securing their jobs instead of being laid off.

"Employers that have not yet adopted the FWS, or who need to build up the variable wage components to recommended levels, should put wage increases into variable wage components, and transfer part of fixed wages to variable wage components as needed," the NWC said.

Wage hike for lower-wage workers

The guidelines also made the following recommendations in increasing the wages of lower-wage workers (LWWs):

• Employers that have done well and have good business prospects should provide LWWs with a built-in wage increase at the upper bound of 5.5 to 7.5% of gross monthly wage, or a wage increase of at least $80 to $100
• Employers that have done well but face uncertain prospects should provide a built-in wage increase at the lower to middle bound of 5.5 to 7.5% of gross monthly wage, or a hike of at least $80 to $100
• Employers that have not done well should provide a built-in wage increase at the lower bound of 5.5 to 7.5% of gross monthly wage

According to the NWC, employers can tap the five-year, $3.5-billion Progressive Wage Credit Scheme introduced by the government to co-fund their wage hikes for LWWs.

"The scheme will soften the cost impact to business and consumers in the near term. It will also give employers time to invest in upskilling employees and improve firm-level productivity so that the wage increases are sustainable in the long term," the NWC said.

Employers react

The Singapore National Employers Federation (SNEF) said it "strongly endorses" the NWC 2022/23 Guidelines, while underscoring its call for "fair and sustainable" wage increases. Dr. Robert Yap, president of the SNEF, said he is strongly encouraging employers to implement the FWS. 

"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," Yap said.

He also supported the wage hike for LWWs, who are part of Singapore's cleaning, waste management, security, retail, and food services.

"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," Yap said.

Yap also advised employers to take advantage of government support and invest in the skills development of employees so they can keep up with the evolving nature of businesses.

"SNEF stands ready to help employers in job redesign as well as training and career planning of their employees," Yap said.

The SNEF noted that productivity should also be sustained while wages grow. It said that it is ready to help employers navigate the challenges to achieve wage and business growth.