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5 Things For Employers & Workers To Know About The National Wage Council Recommendations For 2024

Employers should also consider providing one-off special lump sum payment to help their employees with the cost of living.

Year-end is a timely period for salary reviews so it’s only fitting that the National Wage Council (NWC), a tripartite body comprising representatives from the three social partners – the employers, the trade unions and the Government, would provide their recommended guidelines for how worker salaries can be adjusted for the upcoming year of 2024 (the period that NWC suggests is from 1 December 2023 to 30 November 2024).

While the guidelines suggested by NWC are not mandatory for employers, it’s important to note that the government has also accepted these guidelines for the upcoming year.

Whether you are an employer, HR manager or a rank-and-file worker, it’s good to know what the recommended guidelines are. This will allow you to make an informed decision on any wage adjustments that you might give your workers, propose to your CEO what salary increments ought to be, or tailor your expectations so you do not get disappointed if your salary does not increase in line with what you were hoping for.

Read Also: Guide To Understanding Singapore’s National Wages Council – And How They Affect Your Salary

#1 One-Off Special Lump Sum Payment To Employees

Inflation has been a concern for many in Singapore. For the first three quarters of 2023, the Consumer Price Index (CPI) was at 5.1% while the MAS Core Inflation (which excludes the costs of accommodation and private road transport) was at 4.4% on a year-on-year basis.

Of greater significance would be real income, which refers to the income level of individuals after taking into consideration inflation. According to the NWC report, mean real income in Singapore declined by 3.07% on a year-on-year basis in the first half of 2023.

To help employees cope with higher living costs, the NWC suggests that employers consider giving a one-off special lump sum payment to employees, with heavier weightage for lower to middle income employees.

#2 Wage Increase Should Be Fair & Sustainable, And Based On The Flexible Wage System (FWS)

Taking into account the sustained productivity growth of workers, NWC encourages employers to reward employees with wage increases that are fair and sustainable.

It also suggests that 1) built-in wage increases should be given in line with firms’ business prospects while 2) variable payments should reflect firms’ performance and workers’ contribution. For companies that are looking to increase the salaries of their workers, it’s important to take into consideration this distinction.

Doing so means implementing a flexible wage system (FWS). Introduced in 1986, the Flexible Wage System is a wage system that gives employers more flexibility by introducing a variable component into wages. This is different from the standard wage system where the wage is fixed and there may be an annual wage supplement (AWS) or 13th-month bonus, depending on the company.

Under the Flexible Wage System, wages can comprise a monthly fixed component, a monthly variable component (MVC), and an annual variable component (AVC). The reason that NWC and their tripartite partners are pushing for a move towards a Flexible Wage System is that it allows companies the flexibility to use wage adjustments to respond quickly to business conditions.

The NWC also calls on all employers to implement the FWS if they have not already done so.

Read Also: Annual Wage Supplement (AWS), Annual Variable Component (AVC), Monthly Variable Component (MVC): Here’s What You Need To Know About Flexible Wage System

#3 Wage Increment For Lower-Wage Workers Of Between 5.5 to 7.5%

While you may have read about the NWC recommended wage increment of between 5.5 to 7.5% of gross monthly wages in other news reports, it’s important to stress that this suggested wage increment is recommended in the context of lower-wage workers (LWWs), defined as those earning $2,500 or lower. This corresponds approximately to the 20th percentile wage level of full-time employed residents.

NWC’s recommendations are as follows.

Employers who have done well and have positive business prospects should provide their LWWs with a built-in wage increase at the upper bound of 5.5-7.5% of gross monthly, or a wage increase of at least $85-$105, whichever is higher.

Employers who have done well but face uncertain prospects should provide their LWWs with a built-in wage increase at the lower to middle bound of 5.5-7.5% of gross monthly wage, or a wage increase of at least $85-$105, whichever is higher.

Employers who have not done well should provide their LWWs with a built-in wage increase at the lower bound of 5.5-7.5% of gross monthly wage. If business prospects subsequently improve, employers should consider further wage increases.

#4 Administrators & Drivers To Get Higher Salaries Under Occupational Progressive Wages (OPW)

Progressive wages, which were first introduced to uplift wages in specific sectors such as cleaning, security and landscaping, were extended on 1 March 2023 to cover certain occupations. Known as Occupational Progressive Wages, this started with two occupations, Administrative Assistants and Drivers.

From 1 July 2024, workers in these occupations can enjoy higher baseline gross wages. There will also be a further increment in base wages from 1 July 2025 onwards.

#5 Companies Need To Continue Transforming Jobs & Upskilling Their Workforce

Simply paying higher salaries each year without an increase in productivity will not be sustainable for both employers and employees. As such, NWC recommends that employers tap on SSG-supported providers and other Government subsidies to reskill and upskill employees.

Employers can also work with NTUC to establish Company Training Committees (CTC) to drive business transformation, increase productivity and implement training plans. Other initiatives include building up their capabilities to train their employees and strengthen HR capabilities to support transformation.

Read Also: Upskilling Isn’t Just An Individual Responsibility. How SkillsFuture For Enterprise on GoBusiness Can Help SMEs Transform Their Workforce

While it’s easy to presume that these recommendations are meant for employers to know, consider and implement, it’s also useful for workers to be aware of these recommendations. By understanding these recommendations, workers can better understand and appreciate the salary-related decisions that their companies may make.

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