More low-wage workers to benefit from pay rises

A bigger swathe of low-wage workers should receive higher basic pay increases this year, the National Wages Council (NWC) said yesterday, as it urged companies to share the gains from economic and productivity growth with their workers.

The reason is the NWC has raised the $1,200 basic monthly pay threshold of these workers to $1,300, and recommended that they be given built-in increments of between $50 and $70.

This will cover about 24,000 more workers than last year, when it proposed that those earning up to $1,200 get pay hikes of $45 to $60.

In all, about 150,000 workers will come under the new pay threshold of $1,300 a month.

United Overseas Bank economist Francis Tan said the recommendation is a good balance.

A $50 increment for a worker earning, say, $1,000, would amount to a 5 per cent bump in salary. This surpasses inflation, which is forecast to be in the upper half of the 0 to 1 per cent range this year.

"It's not too low and not too high. If it were too high, then companies' margins would be hit, and if it falls below last year's wage growth, it would be too low," Mr Tan said.

Real wage growth for private-sector workers slowed to 3.2 per cent last year, after factoring in inflation, which was 0.6 per cent, Manpower Ministry (MOM) data showed on Wednesday.

The NWC, in its annual wage guidelines, made a third recommendation for low-wage workers. It proposed - for the first time - that companies with productivity gains last year give them a one-off bonus of between $300 and $600.

The proposal follows a healthy growth in the Singapore economy, which grew 3.6 per cent last year, up from 2.4 per cent in 2016, while labour productivity jumped 3.8 per cent, more than double that in 2016.

The wage guidelines were accepted yesterday by Singapore's biggest employer, the civil service, and will take effect on July 1.The guidelines, which apply to full-time resident employees, are not legally binding but have benefited low-wage workers.