{"id":5683,"date":"2020-12-12T09:58:55","date_gmt":"2020-12-12T01:58:55","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=5683"},"modified":"2021-03-16T16:32:50","modified_gmt":"2021-03-16T08:32:50","slug":"guide-understanding-singapore-national-wages-council-affect-salaries","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/guide-understanding-singapore-national-wages-council-affect-salaries\/","title":{"rendered":"Guide To Understanding Singapore\u2019s National Wages Council \u2013 And How They Affect Salaries"},"content":{"rendered":"\n

This article was first published on\u00a0DollarsAndSense.sg<\/a><\/em><\/strong>.<\/p>\n\n\n\n

By now, you\u2019ve probably read about the National Wages Council (NWC) being convened for a second time<\/a> this year (in August 2020), on the back of its recommendations issued in March 2020. This was due to the extraordinary circumstances brought about by the global COVID-19 pandemic.<\/p>\n\n\n\n

To better understand how NWC\u2019s recommendations will affect workers in Singapore, we need to first learn about the council\u2019s purpose, their members, and how their recommendations are formulated.<\/p>\n\n\n\n

Read Also: <\/em><\/strong>#Resilience \u2013 The Reason Why Singapore Will Not Only Survive The COVID-19 Recession \u2013 But Thrive<\/em><\/strong><\/a><\/p>\n\n\n\n

Origins And Evolving Work Of The National Wages Council<\/h3>\n\n\n\n

According to the National Library Board<\/a>, the National Wages Council (NWC) was formed in 1971, at a time when there was an acute labour shortage. Instead of allowing companies to raise wages to compete for talent \u2013 for fear that this will be unsustainable \u2013 the government formed the NWC as a tripartite advisory body to keep wage increases in check.<\/p>\n\n\n\n

NWC makes its recommendations through consultation, discussion and eventual consensus  among tripartite stakeholders. Proposed wage adjustments take into account economic performance today, growth outlook for the future, productivity levels, Singapore\u2019s competitiveness in the global market, local employment rate, and inflation, among other things.<\/p>\n\n\n\n

It is important to note that NWC\u2019s recommendations are not legally binding, but they are usually accepted by the civil service, which is the largest single employer in Singapore, and sets the pace for government-linked companies, as well as being a point of reference for unionised and non-unionised companies alike.<\/p>\n\n\n\n

Over the years, the size, scope and sophistication of NWC has grown. For example, after the 1985\/1986 recession, NWC did away with quantitative guidelines and moved to qualitative guidelines instead to give companies more flexibility in applying NWC\u2019s recommendations. NWC has also taken into account the needs of our diverse workforce today, with recent guidelines<\/a> specifically covering outsourced workers, seniors, and encouraging flexible work arrangements (FWAs).<\/p>\n\n\n\n

Amid the changes, fundamental goal remains to ensure wages in Singapore are in line with actual economic growth and are sustainable in the long-run, thereby protecting and enhancing Singapore\u2019s competitiveness.<\/p>\n\n\n\n

Today, the NWC of August 2020\/2021<\/a> has 22 members (and 14 alternates), chaired by Peter Seah (DBS Chairman) and comprising representatives from the National Trades Union Congress, Singapore National Employers Federation, Singapore Business Federation, chambers of commerce and industry, and the government (MOM, MTI, Workforce Singapore, Economic Development Board, SkillsFuture, Enterprise Singapore).<\/p>\n\n\n\n

Read Also: <\/em><\/strong>How Companies Can Use Enhanced Work-Life Grant And Flexible Working Arrangement (FWA) Incentives To Help Employees Defray Costs Of Remote Work<\/em><\/strong><\/a><\/p>\n\n\n\n

Key Recommendations Made By NWC In March 2020<\/h3>\n\n\n\n

The NWC was convened earlier than usual and released its recommendation in March 2020<\/a> in response to the COVID-19 crisis. NWC\u2019s recommendations were for companies to focus on four main areas (in order of priority):<\/p>\n\n\n\n

Reducing non-wage costs and find ways to utilise excess manpower productively:<\/strong> Companies were encouraged to be flexible in allowing employees to seek a second job to supplement their income and explore Flexible Work Schedules (like reduced hours for pro-rated wages). Other ways to utilise manpower include sending staff for upskilling and training while there is a lull in business activities. This can position companies to be stronger on the uptick.<\/p>\n\n\n\n

Tapping on government support measures to manage business costs and undergo workforce upgrading:<\/strong> The enhanced Jobs Support Scheme<\/a> support companies in retaining their Singaporean core of talent and capabilities, while SkillsFuture funding helps defray upskilling programmes. Companies are encouraged to make full use of these schemes to undergo organisational transformation with an eye on the longer-term, such as bringing forward strategic initiatives, training plans, and productivity improvements.<\/p>\n\n\n\n

Reducing wage costs: <\/strong>Concrete suggestions were made in view of the fall of business activity, which could make existing wage levels unsustainable. These include implementing a flexible wage structure that includes a Monthly Variable Component, which allows for rapid adjustments in wages in tandem with improvement in business environment. Companies are advised to pay particular attention to lower-wage workers, who would be more greatly affected by any wage reductions.<\/p>\n\n\n\n

Only if absolutely necessary, to perform retrenchment in a responsible manner: <\/strong>If all else fails and a reduction in headcount is necessary, companies are reminded to make the selection of staff to let go using fair, objective criteria, as well as provide the appropriate retrenchment benefits according to tripartite guidelines. They should also observe prevailing regulations around notifying the authorities and notice period under the Employment Act.<\/p>\n\n\n\n

Read Also: <\/em><\/strong>Understanding Employment, Unemployment And Retrenchment In Singapore: Here\u2019s What The Statistics Mean<\/em><\/strong><\/a><\/p>\n\n\n\n

NWC\u2019s Impactful Work Continues In Good Times And Bad<\/h3>\n\n\n\n

As we can see NWC\u2019s practical, broad-ranging guidelines reflect the wide range of stakeholders represented by the council\u2019s members, protecting the interests of employees while ensuring Singapore as a whole remains a viable, vibrant economy for years to come.<\/p>\n\n\n\n

So even though, NWC\u2019s guidelines are not legally-binding, these are adopted by a large portion of companies and organisations, affecting hundreds of thousands of employees. NWC takes into account the realities of the changing business environment, and it would be instructive for companies to closely study NWC\u2019s recommendations for implementation in their own firms.<\/p>\n\n\n\n

As reported in the news, NWC is reconvening in August to adjust their guidelines for companies in light of the ongoing COVID-19 situation, and weaker labour market in 2Q2020<\/a>.<\/p>\n\n\n\n

Companies, workers, and concerned citizens are invited to\u00a0share their views<\/a>\u00a0with the council on wage and employment issues to aid their work from now till 28 August 2020. The council is expected to release their updated recommendations by September 2020.<\/p>\n\n\n\n

Read Also: <\/em><\/strong>4 Steps We Can Take Today To Improve Our Financial Resilience (Without Needing To Earn A Higher Salary)<\/em><\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"In response to the COVID-19 crisis, the NWC guidelines recommend how companies can sustain business and save jobs.\n","protected":false},"author":1,"featured_media":5684,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[95],"tags":[227],"yoast_head":"\nGuide To Understanding Singapore\u2019s National Wages Council \u2013 And How They Affect Salaries | DollarsAndSense Business<\/title>\n<meta name=\"description\" content=\"The National Wages Council is a tripartite body comprising employers (SNEF), the trade unions (NTUC) and the Government (MOM).\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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