Download 2_SNTUC National Wage Council by Anna Koh

NATIONAL WAGES
COUNCIL (NWC)
Presented by Anna Koh
Industrial Relations Officer
Development : Pre NWC
In the 50s
In the 70s
• Communist
activities prevalent
• Many strikes 
Manhour loss
• Low productivity
• In 1959 PAP came
into power
• Industrialisation Period
• Full employment, tight labour market
• Union-led wage negotiation  Wage
disputes & industrial unrest
• Feb 1972, NWC was formed
Advisory body on wages
adjustments
•
•
•
In the 60s
In 1961, NTUC was formed. In 1965, S’pore gained
independence. Political isolation & economic uncertainty
IR Act , Employment Act established in 1968 to attract
investment & manage labour cost
There were wage restraint due to labour surplus
Development : Post NWC
Fm 72 ~ 80
•
•
•
•
•
Real GDP growth, inflation rate kept to acceptable level, tight labour
market
Substantial wage  industrial harmony, industrial stoppages
absent
Focus on  ops efficiency, productivity, disacourage job hopping
to ensure industrial discipline
Tied rewards to performance. Wage  in 2 tier
Skills Development Fund created to compel workers’ training &
to push for switch to value add investment
In the 80s
•
•
•
Economic restructuring, hi value chain industry emerged
Up to 85, NWC encouraged rewards tied to performance. Wage
standstill in the 85 recession. Post 85, qualitative wage guideline
Recommended a flexible wage system. Reward based on
performance, profit & productivity. Wage  lags productivity growth
Why Formed NWC

Stabilise
Labour
Market

Ensure
Employers &
Unions are
represented

 Time loss
in
negotiation

Promote
Business
Growth

Recommendations
based on economic
performance,
projected trends /
outlook

Set Guidelines on
wage 
implementation

Enhance
Workers’
Morale

Bring about
national
economic
growth
Objectives of NWC
Formulate &
issue guidelines
on wages policy
Recommend
adjustments in
wage structure
Advise suitable
incentive system
NWC Structure

Focus on
 wages
while
addressing
Tripartite, spectrum of 

negotiating &
related
• Has no statutory
advisory body concerns
power or
• Has
@ national
restraint
representatives
level
fm employers,
• No legislation to
unions & govt.
govern Council
• Draws admin
assist fm MOM
Role of NWC
 Gives recommendations on wage
policy wage negotiation & guide
wage adjustment implementation
 Formulated guidelines are then
submitted to govt for acceptance
before announcement in Jun/Jul
each yr
 A consultative platform for orderly
wage increases for employees
How NWC Draws Out
Guidelines
Global /
Regional
Outlook
Economic
Prospect /
Domestic Market
Growth
Employment
Situation /
Labour Market
Changes
Productivity
Growth
Labour
Productivity
Inflation /
Consumer Price
Index
Nominal / Real
Wages
Sought Public
Views
International
Competitiveness
Principles For a Effective
NWC
Nonconfrontational
processes of
consultation,
conciliation &
arbitration
Consensus &
unanimous
approach to
decision-making
Tripartite
consultative /
cooperative
arrangement
Noninterference
in specific
negotiations
& disputes
Shared
responsibility,
burden &
commitment
How Guidelines Are Used
1
• Used by unionised & non
unionised companies
2
• Used by Unions & Employers as
basis for wage negotiation
3
• Served as reference point to
decide amount for wage 
4
Before
1985
After
1985
• Quantitative
Guidelines
• Qualitative
Guidelines
Why Guidelines Are Widely
Accepted
1
• Seen as neutral, unbiased,
fair & credible
2
3
• Govt willing to make
legislative changes to effect
the recommendations
• MOM uses guidelines to
settle wage disputes via
conciliation
4
• Court of law uses guidelines
as basis for judgement
5
• Onus of proof is needed for
not following the
Guidelines
Wage Policy Considerations
1
To  real wages of workers
through higher
productivity
2
To ensure that real built-in
wage  to lag behind
productivity 
3
Global economic trends +
S’pore economic conditions +
company performance 
Wage adjustment + maintain
competitiveness
What is a Flexible & Performance
Based Wage System
 A wage system that has a sizeable
variable component that enables
companies to adjust wage costs
quickly in a severe business downturn
 It will enable companies to :
 Reward employees with bigger bonus in good
times
 Adjust and better manage wage costs in bad
times
Recommendations by Tripartite
Taskforce on Wage Restructuring
Increase Flexibility –
By Expanding Variable Components
AVC MVC
Rank &
File
70
20
10
Variable
AVC + MVC
Mid Mgt
& Execs
60
Basic
40
AVC + MVC
Senior
Mgt
50
20
50
40
60
80
100
120
Recommendations : Linking
Bonuses to KPIs
 Companies to build up the Annual
Variable Component (AVC) & link
it to KPIs
 This will motivate and encourage
employees to achieve set targets
 KPIs can be at company-wide level,
departmental level & individual
level
Recommendations : MVC For
Timely Wage Adjustment
 Companies to build up the Monthly
Variable Component (MVC) from future
wage  and/or from basic wages
 MVC gives flexibility to enable
companies to make timely wage cost
adjustment in response to business
environment changes
 Draw up clear guidelines / KPIs on how
to cut, restore MVC, in consultation with
Union / employees.
Recommendations : Enhance
Competitiveness
 To ensure employees are paid for
the job value, rewarded based on
productivity & their contribution
 Move away from seniority-based
wage system by closing the gap
between the salary max-min ratio
to 1.5 or less
Benefits of a Flexible &
Performance Based Wage System
How Employees Benefit
1
Reward & recognition for
contribution
2
Better job security during
downturn
3
Upside for higher rewards in good
times
4
Enhance cost competitiveness &
employability
Benefits of a Flexible &
Performance Based Wage System
How Companies Benefit
1
Enhance competitiveness
2
Motivate employees to give their best
for the company
3
Flexibility to make timely wage cost
adjustment
Benefits of a Flexible &
Performance Based Wage System
How Economy Benefits
1
More competitive
2
Promotes high productivity
3
Lower unemployment rate during
downturn
4
Better prepared to ride on
opportunities in upturn
NWC Guidelines 2012/ 2013 :
Recommendations
Raise Real Wages Over Long Term
Built-in Wage  for low wage
employees
@ least $50 wage for
employees earning $1000 &
less
Raising Productivity
Inclusive Growth &
Reemployment
Summary
1. Raising Real Wages over the Long
Term

Real wage should increase in line with
productivity growth over the long term.
2. Built-in Wage Increase and Variable
Component


Grant built-in wage increase and variable
component .
Prevailing labour market conditions, business
performances and prospects, and workers’
contribution.
Summary
3.
4.
Higher Built-in Wage Increase for
Low Wage Worker
 Include dollar quantum and percentage
wage increase.
 Workers earning basic salary up to
$1,000, to receive built-in wage increase
of at least $50.
Coping with inflation
 One-off lump sum payment to help low wage
workers
Summary
5. Raising Productivity


Management to spearhead productivity drive at
the workplace.
Share gains from productivity improvement with
workers.
6. Inclusive Growth & Re-employment




Best Sourcing.
WTS Scheme.
Rights and Obligations under CPF Acts.
Fair remuneration for re-employed older workers.