Workfare in place, wages are either stagnating or even declining in some cases, raising questions over chances of social mobility in Singapore

IN Singapore's yearbook of manpower statistics, 2013, published by the Ministry of Manpower (MOM), it is revealed that the real total annual wages declined by 0.4% and the real basic annual wages fell by 0.1% last year, while accounting for CPI-all items inflation.

In fact, as detailed below, such negative percentage changes in annual wages has been witnessed in three of the last five years.

Importantly, even though the median gross monthly income (including CPF contributions for employees) of full-time employed residents, which includes permanent residents and Singapore citizens, has risen slightly during the last half-decade, the overall affect is diminished by corresponding rise in inflation. This is leading to negative growth in real wages.

Median gross monthly income of full-time employed residents and Singapore citizens, Source: Comprehensive Labour Force Survey, MOM

According to MOM, the Consumer Price Index (CPI) rose by 4.6% in 2012, and “the two largest contributors to CPI-all items inflation last year were accommodation costs, particularly imputed rentals on owner-occupied accommodation (OOA), and car prices”.

151,000 earn < S$1,000/month

The situation is all the more precarious for over 151,000 low-income workers, constituting about 10% of the total full-time resident employees in Singapore, and earning a basic income of S$1,000 and below every month. According to MOM's labour force survey, the average basic monthly salaries of these workers was around S$770 in June, 2012.

To help such workers, the National Wage Council (NWC) recommended a S$50 built-in wage increase for low-wage workers earning a basic monthly salary of up to S$1,000 in mid-2012.

But the results have not been very encouraging so far.

As informed by the acting minister for manpower Tan Chuan-Jin to Parliament in July this year, only three in 10 private employers gave at least S$50 built-in wage increases to workers earning a monthly basic salary of $1,000 and below, in 2012. “There were also 12.5% employers who gave built-in wage increases to low wage workers, although the amount was less than $50,” he told.

Even though, the ministry doesn't have a breakdown of occupation of workers who had received the recommended pay rise, Tan indicated that “establishments in real estate services (70%), professional services (70%) and manufacturing (60%) were the most likely to give a built-in wage increase”.

Government's role

Acknowledging the role played by the government as the largest employer, Tan said, “All Division IV and III civil servants, who typically perform operational support functions and clerical duties, will receive an additional wage increase on top of their annual increment in 2013. Division IV civil servants will receive an additional wage increase of S$70 per month while Division III civil servants, who typically earn more than S$1,200 per month, will receive an additional wage increase of $40 per month.”

Moreover, he added, the government will also play its part as a service buyer. “The Ministry of Finance (MoF) has asked government agencies to include, in relevant government tenders for services, a clear statement that tenderers should adhere to the NWC’s recommendations on wage increment for their workers and to factor such costs into their bid price. In addition, the MoF is looking into incorporating, as a tender evaluation criterion, the tenderers’ track record as employers with good employment practices. Particular attention will be paid to the procurement of services that employ low-wage workers. This is to clearly signal to contractors that the government will lean in favour of contractors with good employment practices, including paying decent wages for workers.”

National Wages Council

The National Wages Council, set up in 1972, is a tripartite body comprising representatives from the employers, the trade unions and the government. The council meets every year to formulate wage guidelines in line with Singapore's social development and long-term economic growth. While NWC wage guidelines are not mandatory, MOM says that these “are widely referred to by companies in both the unionised and non-unionised sectors. They are also gazetted under the Employment Act and form the basis for wage negotiations between unions and management”.