Give one-off special lump-sum payment and increase wages, says National Wages Council

As the usual cai fan fare approaches the S$10 mark, coupled with rising costs of electricity, water, and transportation, here’s another kicker: GST is set to climb to nine per cent in 2024. Everything seems to be on the rise except for our salaries, don’t you think?

Well, the government is doing something about it. Apart from the cash disbursements that have been announced, the National Wages Council (NWC) on Oct 31, 2023 released a set of wage guidelines, which the government accepted. 

These guidelines encourage employers to “reward employees with wage increases or variable payments that are fair and sustainable” to help address people’s concerns over rising costs of living. 

Here are four things from the NWC guidelines that employees can benefit from: 

One-off special lump sum payment 

The first is that employers should consider giving a one-off special lump sum payment to employees, especially those who are in the lower-to middle income range. 

For companies that are unionised, the payment can be decided through mutual agreement with the company and the union. 

Singapore’s core inflation was three per cent in September 2023 and it is expected to ease to between 2.5 per cent to three per cent year-on-year by December. Overall headline inflation is about an average of five per cent for 2023 and 2024 inflation is expected to be three per cent to four per cent, according to the Monetary Authority of Singapore.

There’s no escaping inflation, but at least it won’t be so high next year.

The lump sum payment that the NWC is encouraging employers to provide can make a difference for lower-wage workers to at least help defray some costs. After all, any additional money always helps, right? 

Fair and sustainable wage increases

The NWC encourages employers to increase wages in a “fair and sustainable” manner. What exactly does this mean? 

According to its guidelines, “​​employers should ensure that wages reflect the increased labour productivity over the longer term” and that “built-in wage increases should be given in line with firms’ business prospects, while variable payments should reflect firms’ performance and workers’ contributions.” 

To do so, the wage structure should be set based on the Flexible Wage System (FWS) which comprises the Monthly Variable Component (MVC) and Annual Variable Component (AVC). If you’re an employer, there’s a whole guidebook on how to go about implementing it.

Basically, it means that your employer should set out a long-term structured plan to decide how much workers’ salaries increase each year and determine what the bonus structure should be like. 

The NWC does recognise that not all companies can afford to give the same increases if they are not performing well. Its guidelines state that companies with growth should reward their employees with built-in wage increases and variable payments commensurate with business performance and employees’ contributions. 

For those that are not doing so well, the management should lead by example and exercise wage restraint — i.e. your management should not be taking home extra fat paychecks or lavishly spending while the regular folks don’t get any increment. And they should work on improving their business and invest in upskilling employees. 

Wage increment for lower-wage workers

For lower-wage workers earning up to S$2,500, the NWC recommends a 5.5 per cent to 7.5 per cent increase in gross monthly wages, which amounts to a pay increase of at least S$85 to S$105. 

Employers who have performed well are urged to provide an increase at the upper bound of the range. Similarly, companies facing uncertain prospects should raise salaries within the lower to middle bound of the range. 

By tailoring increments based on performance, the NWC addresses income disparities, ensuring that the most vulnerable workers receive essential financial support.

Strengthening support for lower-wage workers in administration and driving jobs

NWC has also set out the 2024 to 2025 Occupational Progressive Wages (OPW) for those who work as administrators and drivers. There are currently about 64,000 in these jobs and about 52,000 can see their pay increase from July 1, 2024. 

From the table above, those in these occupations can see an increase of 13 to 32 per cent in their pay. 

An incoming increase in the future?

With the cost of everyday items and everything else only going to get higher, it’s high time our salaries did too. While the NWC has come up with these guidelines, it’s ultimately up to employers to decide how much of an increase they will give to employees. 

Given the economic situation, not all companies are doing well and those that are not performing well may not be in a position to give any increases too. However, the NWC does recommend that even companies that are currently not doing well should set plans to give variable payments in the future if they foresee positive business prospects. 

While these are guidelines and employers are not bound to enforce them, unions such as NTUC encourage employers to follow them. It may be worth checking out if your company is unionised or the perks you can get as a member if you think you can benefit from it. 

At the same time, employers should continue to focus on upskilling their staff so that they can evolve with changing technology and improve their skills which ultimately places them in a better position to contribute to the company’s growth. So here’s your chance to tell your employer to increase your training budget! Gahmen say one! 

How do you think your salary will change next year? Or…not?

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This article was first published in MoneySmart.