Employers in Singapore called on to hike wages amid inflation

Wage guidelines for lower-wage workers have been set between 5.5% and 7.5% with the goal of narrowing the pay gap.
By: | November 16, 2022

Singapore’s National Wages Council (NWC) has called on employers to raise wages for workers amid inflation.

However, it recognised that businesses are facing increasing costs and uncertain business prospects, so any wage increases should be “fair and sustainable”. For instance, businesses that have performed well but face uncertain economic prospects may moderate built-in wage increases, but still reward employees with variable payments, NWC said.

The tripartite body, comprising representatives from employers, trade unions and the government, also set out wage guidelines for lower-wage workers in a move to narrow the pay gap.

Under the new guidelines, which cover the period from 1 December to 30 November next year, lower-wage workers should expect a built-in wage hike between 5.5% to 7.5% next year. This will apply to those who are earning a gross monthly wage of up to $2,200, which covers about a fifth of full-time employed residents.

To fund wage hikes for lower-wage workers, firms can tap into the Progressive Wage Credit Scheme, which was first introduced in Budget 2022 and covers funding of S$3.5 billion (US$2.6 billion) over five years.

READ: Job security outweighs salary for employees in Singapore

The NWC also urged employers to consider introducing a flexible wage system that includes a fixed component, which is the fixed basic monthly pay, and a variable component, which includes a monthly variable component or an annual variable component, built into the gross salary.

This will ensure employers can restore wages quickly when business recovers, or cut wages during periods of economic uncertainty. It also gives employees greater job security as companies can cut costs instead of jobs, the NWC explained.