Singapore Payroll News - National Wages Council guidelines for July 2005 to June 2006

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The Government has accepted the National Wages Council (NWC)'s wage and wage-related guidelines for the year from July 2005 to June 2006.

Among the key recommendations from the guidelines are the following:

Companies should grant built-in wage increases if such an increase is sustainable, but make greater use of the variable bonus payment to reward workers for their contributions. The granting of bonus payments should be closely linked to the company's and employees' performance, based on objective and fair criteria, in line with the principles of the flexible wage system. Companies which do not have a performance management system linked to employee rewards are urged to quickly put this in place.
Where a built-in wage increase is granted to workers, companies and unions should use the increase to build up the Monthly Variable Component (MVC) where the target has not been reached.
Companies that are granting wage increases should give higher increases for low wage workers.
Companies should continue with efforts in wage restructuring and recommends that companies implement all three of the key recommendations for a more robust performance-based and flexible wage system. For this purpose, it is recommended that the tripartite partners, led by the Ministry of Manpower (MOM), continue to drive the implementation of wage restructuring across all sectors and companies.

The three key recommendations are
1. introduce the MVC in the wage structure and work towards a wage structure of 70% basic wage, 10% MVC and 20% Annual Variable Component (AVC),
2. narrow the maximum-minimum salary ratio for employees to an average of 1.5 or less, and
3. implement variable bonus linked to Key Performance Indicators (KPIs).
Companies should link employee rewards closely with corporate and individual performance based on key performance indicators (KPIs), formulated by management in consultation with unions/workers.
The Government and service providers are urged to moderate non-wage costs such as rentals, telecommunication and utility charges, transport costs and government fees.