Joint Press Statement
By The Singapore Business Federation and The Singapore
National Employers Federation on The 2003 National Wages
Council Guidelines.
Introduction
1. The Singapore Business Federation and the Singapore National
Employers Federation strongly endorse the 2003 NWC guidelines.
When closely followed, the guidelines will help companies not
only to survive the economic downturn and save jobs for workers,
they will put companies in a stronger competitive position when
the economy recovers.
Competitiveness and Wage Restructuring
2. A key recommendation of the NWC is for companies to restructure
their wage system without delay.
In the five years (1993-1997) before the Asian financial
crisis of 1997, productivity grew 24.2% while real wages
rose 27.5%.
In the five years (1998-2002) after 1997, productivity
rose 6.5%. But real wages rose 13.5%.
Thus while productivity growth after 1997 slowed down
to one quarter the growth rate in the five years before,
real wages only slowed down by half.
As a result, the gap between productivity and wages in
some companies is still significant. This has made these
companies uncompetitive and the jobs of many of their employees
at risk.
Wage restructuring is therefore urgently needed to improve
cost- competitiveness and to lessen the risk of more job
losses.
SBF and SNEF therefore strongly support the NWC recommendation
calling on companies to restructure their wages quickly.
We also welcome the call for government to set up a task
force to monitor the pace of wage restructuring.
3. The average MVC in wages is about 4.5%, less than half that
recommended by the NWC in 1998 and this is only in 500 to 700
companies that have implemented the MVC. This is because more
than 50% of companies have frozen wages over the last 3 years.
We therefore support the NWC recommendation that more than 2%
of basic wages be used to further build up the MVC expeditiously.
This will further enhance wage flexibility.
Wage Cuts
4. Companies that have been directly affected by SARS have already
implemented various cost cutting measures, including wage cuts
among managers and executives, and in some cases workers as
well. Many companies with the support of their unions have requested
their employees to take unpaid leave. This is also a wage reduction
measure. SBF and SNEF strongly supports the call for management
and executives to take the lead in implementing wage cuts to
help their companies survive the crisis and to save jobs.
Wage Freeze
5. Companies must aim to hold wage costs down to save jobs.
From the overall productivity-wage link perspective, there is
no compelling reason for companies to generally raise wage levels.
Despite a 4.2% productivity increase last year, the 2002 productivity
level is still below that in 2000. As recommended by NWC, for
the companies that are performing well, they can reward good
performance through variable payments. We encourage companies
not to build these payments into base wages to narrow the productivity
wage gap.
Conclusion
6. In view of the very uncertain economic outlook SBF and SNEF
call on all companies to follow closely the NWC recommendations
to help them manage their wage costs and to save jobs. With
strong tripartite cohesion, and the cooperation of employers
and their unions and workers, we can use the current economic
downturn to quickly revamp our wage system to enhance the competitiveness
of our workforce so as to be able to create more jobs for workers,
and to make companies more resilient to volatilities in the
future.
