Joint Press Statement By The Singapore Business Federation (SBF) And Singapore National Employers Federation (SNEF) On The National Wages Council Guidelines For Jan - June 2003.
Implementation of the Dec 2001 Revised Guidelines
1. The Singapore Business Federation and Singapore National Employers Federation strongly endorse the NWC Wage Guidelines for Jan - June 2003.
2. The Dec 2001 Revised Guidelines for the period Dec 2001 to Dec 2002, issued soon after the Sep 11 2001 attacks, had called for severe wage restraint. The majority of companies which were adversely affected were to cut or freeze wages, in consultation with their unions. Companies which continued to do well were to reward workers with appropriate wage increases .
3. These guidelines were largely followed by companies. In a SNEF survey conducted in September 2002 covering 407 companies, two thirds of the companies confirmed that their business, profitability or prospects were adversely affected by the economic downturn. Up to Sep 2002, half of the surveyed companies had implemented a wage freeze with a small number implementing a basic wage cut. The projected average basic wage adjustment (including wage increase, wage freeze and wage cut) for the same period was 1.77%.
Uncertainty over next 6 months
4. The economy had been showing some signs of improvement. Unfortunately the economic environment has become more uncertain, unclear and volatile. The third quarter GDP growth was 3.9% (year-on-year). However, on a quarter-on-quarter basis, this was a 10.3% decline from the 13.2% growth in the second quarter. MTI has also revised its 2002 growth forecast downwards to 2 to 2.5%. (compared to the forecast of -2 to 2% in Dec 2001 when the NWC revised wage guidelines were issued).
5. At the same time the employment situation has worsened. Total employment fell by 37,000 in the first 9 months of 2002, in contrast to the gain of 14,000 jobs in the same period last year. Although retrenchment has moderated, about 13,000 workers were retrenched in the 1st 9 months of this year. Unemployment rate has hit a high of 4.8% in Sep 2002. The job vacancy to job seeker ratio was 0.36 in June 2002, indicating that there was only 1 job for 3 job seekers.
6. In the same SNEF survey (which was conducted before the Bali Bomb Blast), more than half (54%) of the surveyed companies opined that their business performance would remain about the same as 2002 and another 17% expected their business to get worse. Only 29% of the companies expected their business to perform better. These figures would have taken a turn for the worse since then.
Need to sustain cost competitiveness and save jobs
7. There is therefore a need for companies to continue to manage overall wage costs to sustain cost competitiveness and to save jobs. Real wage increase (1.9%) outstripped productivity growth (-5.4%) by 7.3 percentage points in 2001. Up to Sep 2002, productivity growth was 3.9%. SNEF projects a nominal wage growth of 1.77% over the same period. Despite this, the three-year moving average of the gap between productivity and wage growth has widened in 2002. The Federations therefore strongly support the extension of the Dec 2001 Revised Guidelines for another 6 months to hold down wage costs to narrow the productivity - wage gap to enhance our cost competitiveness.
Flexible wage system
8. SBF and SNEF support NWC's call to companies to make greater efforts to implement the Monthly Variable Component (MVC) and Base up wage system (BUWS). To date, 23% or 400 companies of SNEF's 1,900 members have implemented MVC. Both SBF and SNEF will continue to conduct briefings and workshops to help more of its member companies to implement MVC and BUWS quickly.
9. In companies which have announced wage cuts, senior management and executives have taken the lead, both in terms of taking earlier as well as deeper cuts in their salaries. This is important as management has to set the pace for severe wage restraint.
10. SBF and SNEF are working with NTUC on a joint code to promote responsible employment practices. The Singapore workforce is diverse but employers have always stressed on teamwork at the workplace. Generally there has been no discrimination. However a set of guidelines will help to keep employers and workers more aware of their responsibilities and to be vigilant, and to strengthen efforts to enhance harmony at the workplace.
Conclusion
11. SBF and SNEF are confident that with the support of the labour movement, management, executives and workers, companies will be able to manage their wage costs to save jobs. With strong tripartism, we will ride through the economic uncertainties.
Please let us know via Tel: 6827 6913/02 or 94555789/97838395 or fax: 6827 6807 by
Tues, 19 Nov 02, 12 pm whether you wish to interview Mr Lee and the name of the journalist.
