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Government accepts NWC's wage guidelines for 2005/2006



The Government has accepted the National Wages Council (NWC)s wage recommendations for July 2005 to June 2006.
Agree with the greater use of variable bonuses to reward workers
Real wage growth has lagged behind productivity growth in the past 3 years. However, the cumulative real wage gains since 1989 outstripped productivity in the earlier years prior to the Asian financial crisis.
We must continue to ensure that our built-in wage increases lag productivity growth. Singapores cost competitiveness over the long term can be sustained if we achieve strong productivity growth and moderate wage increases.
In this regard, and in consideration of the global competition and economic uncertainties, the Government accepts the NWCs recommendation that companies make greater use of variable bonuses to reward workers for their contributions.
Built-in wage increases could be given if they are sustainable and as the Monthly Variable Component (MVC), so that in severe business downturns companies can use this component to reduce wage costs, instead of CPF cuts.
Special attention to be given to help low wage workers
The Government agrees with the NWC that low wage earners will require attention and assistance. Their wage increases have lagged behind other workers as a result of greater downward wage pressures due to globalization.
It therefore supports the NWCs recommendation that companies giving a wage increase should grant these workers a higher increase and that companies should actively redesign these jobs to enhance the job worth and enable low wage workers to earn more.
The Government will give special attention to this group of workers. It has put in place various measures to help these workers cope with economic restructuring, such as supporting the unemployed to find and stay in new jobs through initiatives such as the Re-Employment Assistance Programme (REAP), as well as stepping up the skills upgrading of these workers. The Government will actively look into other measures to help this group.
Working closely with tripartite partners to drive wage restructuring, strengthen HR practices and in implementing PMBS
The Government supports the NWCs call to continue with wage restructuring efforts and to strengthen HR practices.
The Ministry of Manpower (MOM) will work closely with the tripartite partners to drive the implementation of wage restructuring across all sectors and companies. This will ensure that our wage structures allow companies to respond quickly to changing business conditions.
The Government will also work together with the tripartite partners to adjust the Portable Medical Benefits Scheme (PMBS) to facilitate its implementation. This will complement the revamped MediShield scheme to better meet the needs of Singaporean workers.
With the strong partnership established amongst the tripartite parties, the Government is confident that the NWC wage guidelines will be implemented smoothly and help to further enhance our international competitiveness.

Source: Ministry of Manpower Press Release 31 May 2005

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1 June 2005