NWC does not expect all employers to need to cut wages in next 12 months: Josephine Teo

THE National Wages Council (NWC) expects wage adjustments in the next 12 months to vary across sectors and firms, as not every employer will need to cut wages to save jobs, said Manpower Minister Josephine Teo in Parliament on Tuesday.

She was responding to West Coast Member of Parliament Foo Mee Har, who had asked about the impact of wage cuts in the next 12 months, given that NWC supplementary guidelines on Oct 16 stated that employers can consider temporarily cutting workers' basic pay, if necessary, to avoid retrenchments.

The supplementary guidelines encouraged employers and employees to work together to minimise retrenchments, noted Mrs Teo.

Not all employers will need to cut wages, as some have seen no reduction in demand, while others have already adjusted wage levels or non-wage costs in line with earlier guidelines issued in March.

"The NWC also expects that employers will deliberate carefully whether to proceed with a wage cut," she said. A key principle is for management to take the lead in taking cuts and accept steeper cuts than their workers, and employers also know that "unwarranted wage cuts" will make them less attractive to talent.

The NWC has set out a roadmap for eventual wage restoration, with employers to quickly restore wage cuts when business conditions allow, Mrs Teo added. The supplementary guidelines also recommend that for workers earning below S$1,400, employers should freeze rather than cut wages if this is necessary to avoid retrenchment.

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Ms Foo then raised the concern that the NWC guidelines give too much discretion to employers, and might send a signal which results in "more widespread wage cuts than necessary". She asked how to guard against the potential of abuse by opportunistic firms.

In reply, Mrs Teo said that the NWC has to consider the opposite risk of having guidelines that are too prescriptive. She noted that the NWC had deliberated on whether to have sector-specific guidelines, prescribing a range of adjustments that would be applicable on a sectoral basis.

But "after intense deliberation", the conclusion was that even sectoral guidelines would be "too one-size-fits-all", as even companies within the same sector have been affected by Covid-19 to different degrees.

In a separate reply to Bukit Panjang MP Liang Eng Hwa and Workers' Party MP for Sengkang Jamus Lim, Senior Minister of State for Manpower Zaqy Mohamad gave details of low-wage workers and Workfare Income Supplement recipients.

Mr Zaqy noted that the International Labour Organization's definition of earnings does include contributions of employees to social security and pension schemes. He said that Singapore considers personal income to include CPF contributions and Workfare payouts, as these can be used for necessities including healthcare and housing.

Including Workfare and Central Provident Fund (CPF) contributions, about 30,000 Singaporean full-time employees receive less than S$1,300 per month, as do 22,000 self-employed persons.

Their occupations include office clerks, food and beverage workers, cleaners, and shop salespersons.

Half of them are in households where the per capita household income is above S$1,300, implying that they are not the primary breadwinners and have alternative means of support, said Mr Zaqy.

From the launch of Workfare in 2007 till 2019, over S$6.8 billion has been disbursed to 890,000 workers under the scheme.

In the past three years, an average of 400,000 workers receive Workfare annually. Of these, 11 per cent are aged 35 to 44, 21 per cent are aged 45 to 54, and 18 per cent are aged 55 to 59. The remainder, or just under half of all Workfare recipients, are aged 60 and above.

During the same period, the average Workfare payout received annually was about S$1,560, while the maximum was S$3,600.