Acceptance Rate of National Wages Council's Wage Increase Recommendation

Mr Speaker, Sir, MOM conducts an annual survey on wage changes for resident full-time employees that amongst others, captures the extent to which employers have adopted the recommendations in the NWC Guidelines.

The increase in built-in wages of at least $50 for workers earning a basic monthly salary of up to $1,000 was a recommendation in this year's NWC Guidelines, which are effective from this July to June 2013. MOM's findings on its adoption will therefore be available next year.

However, what we do know is that feedback from employers and unions – we have been tracking this closely – shows that based on wage settlements concluded so far, employers have generally been very supportive of giving more to low-wage workers. For example, the Singapore National Employers' Federation (SNEF) conducted a survey on 240 companies in the private sector, employing a total of about 160,000 workers, from May to July 2012. Among the sample pool, 80 companies had workers earning a basic monthly salary of up to $1,000. Of the 50 companies within this group that had decided on the wage increase for these workers at the time of survey, three-quarters granted a wage increase of $50 or more to these workers. For the remaining quarter that gave less than $50, they either had a large number of such workers, or were limited by the tender contracts which had already been signed with their clients.

Also arising from the NWC recommendations, Division 4 civil servants who comprise mainly support staff and junior officers, received a wage increase of $60 in monthly wages in July 2012. The wage increases extended also to those who were earning more than $1,000 a month. The Government upholds the principle of the International Labour Organization Convention No 94, otherwise known as the Labour Clauses (Public Contracts) Convention. The objective of this convention is to ensure that contractors engaged under public contracts provide wages and other conditions of work that are not less favourable than those established by law or collective bargaining for work of a similar character. All companies operating in Singapore including those engaged under public sector contracts are required to comply with Singapore laws. This includes compliance with the basic employment standards stated in labour laws such as the Employment Act and Central Provident Fund Act. The Government enforces the compliance of such labour laws by conducting regular random audits on companies.

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I would like to thank the Acting Minister for his reply. I look forward to hearing the statistics once we enter into the concluding period for the survey. However, if I could ask the Minister for an update for last year's NWC guidelines and recommendations. How do they compare with the previous years? Secondly, with regard to the ILO Convention No 94, there was a response given by the Ministry of Finance last month to a question raised by the hon Member Mr Zainal Sapari on contract variations by public agencies. The response was that the contracts could not be varied because of unfairness to other companies involved in the tender process. However, since we are signatory to the ILO Convention No 94, Article 2 also indicates that this labour clause should be built into all public contracts signed with service providers. As such, I would like to ask the Acting Minister if any of these clauses have been indicated in the pre-tender documents for contracts signed by public agencies, and if it is not included, is there a reason why we have not done so?

Mr Speaker, Sir, I would like to thank the Member for raising the question. This is quite a specific question with details. I would like to request the Member to file a follow-on question. I would be quite happy to provide detailed answers.

Questions for the Minister. I appreciate that our economy and labour market in Singapore must continue to be competitive and nimble. I would like to request whether that can be balanced with some form of suggested industry benchmarking for wages, especially those earning less than $1,000 inclusive of cleaners. Secondly, on the long-term goal of education to promote employability for the next generation, I think we would reap results for that next generation. So in the meantime, what can we do for the present group? Thirdly, is there a suggested policy where Government procurement is concerned, to best source and fair price when awarding contracts which will then have a trickle-down effect of raising wages to the contractor and the sub-contractor.

I would like to thank Mr Christopher de Souza for his concerns and I do share his concerns with the lower wage end of our workforce. Perhaps, let me take the second question first. The Member is right. The Government, in terms of the contracts that we hand out, or the best sourcing approach that we take, it is important for us to pay attention to the details. We should try to lead by example, certainly in terms of how we look after some segments in the workforce. As the Member is aware, we are working on the cleaning sector as well as the security sector. These are two sectors which do employ quite a number of low-wage Singaporeans and we do look at how to work in a range of processes by accreditation. Announcements will be made shortly once they are ready. For accreditation, different requirements will be woven in. The key idea is to make sure that wages can move up for this segment of our population.

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Indeed, as our economy grows, we need to remain nimble, we need to remain competitive. What we have seen quite clearly is that in the course of the last decade, certainly in the last five to six years, particularly at the lower end, with lower wage workers, we have seen real income growth as a result of economic growth. What it meant is that not only jobs were available and employment was good, we have seen wages moving up in that sector. Not tremendous, but I think considering that we went through a major financial crisis, it is not too bad. We need to make sure that we can keep this on a sustainable basis.

Education is a long-term investment that will kick in with time, but importantly right now is how do we deal the present stock of Singaporeans who may be operating at that level. It is a combination of various measures. One, Workfare continues to be important pillar of our efforts. Workfare includes both Workfare Income Supplement (WIS) as well as the Workfare Training Support (WTS). How do we continue to provide accessible, good training so that we can uplift the individual worker? With this, a person does not remain in this segment. He may start off with low wages, but at different stages of his life, he is able to upgrade himself through training with subsidies so that he can upgrade and get on to better wages.

We are going to review Workfare next year. These are important features that we will look at to see how we can continue to strengthen what we believe is a good system and to see how we can continue to help this segment. In any specific terms, with the two industries that we talk about – cleaning and security – we will continue to work closely with the employers and the unions to see how we can uplift wages in the sectors. We are fairly confident we can put in place mechanisms to do that.

Whether we go on a basis of providing recommended wages at every sector – that is not something we are looking at for the moment. We are looking at this particular segment of low-wage earning Singaporeans, looking at the sectors concerned, and then targeting the sectors, and let us see how we can uplift them. We are fairly confident that, in terms of effort put in, we will see movement in the sector.

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