Asia

Latest wage guidelines a pragmatic response amid tighter Covid-19 restrictions: Analysts

SINGAPORE – The National Wages Council’s (NWC) recommendations strike a pragmatic balance between encouraging firms that are doing well to boost wages, and preserving flexibility for firms hard hit by fresh Covid-19 restrictions, said industry watchers.

They were responding to the latest guidelines issued by the high-level council on Friday (May 14).

The NWC urged employers that are growing or recovering from the pandemic’s impact to take steps to restore their workers’ wages, reward them fairly through variable payments and bring forward hiring plans.

But employers that face significant cost pressures and poor business prospects can still implement temporary wage cuts, if this means saving jobs, said the tripartite body in issuing an addendum to its current guidelines.

Speaking to The Straits Times on Friday, Singapore International Chamber of Commerce chief executive Victor Mills said NWC’s announcement “makes perfect sense and it is difficult to see what else it could or should have said”, given the ongoing uncertainty.

He observed that the recommendations also have to be seen in tandem with additional government support given in view of the latest safe management measures.

“(The measures) are necessary and the increased Jobs Support Scheme (JSS) and one-month rental waiver will help the F&B industry.”

The Government will increase JSS support for F&B businesses to 50 per cent following the announcement that dining in will be suspended from Sunday.

This is an increase from the 10 per cent support of wages paid up to June 2021.

Hawker stalls and coffee shop tenants of government agencies will also get one month of rental waivers.

A review will be done at the midway point, meaning two weeks after the measures have been implemented, to see if there is a need to adjust them further.

Singapore Business Federation CEO Lam Yi Young said economic and business recovery remains uneven across sectors and companies.

“Today’s announcement on the tightening of safe management measures is a stark reminder that the pandemic is far from over and will weigh down on business sentiments,” he said.

He added that businesses experiencing recovery should look at restoring wage cuts, and rolling back other cost-cutting measures when the situation allows. “Businesses that continue to be adversely impacted by Covid-19 should actively tap on Government support measures to retain their employees.”

Agreeing with Mr Mills, CIMB Private Banking economist Song Seng Wun said the recommendations are practical and pragmatic, given the “stop-start nature of Singapore’s uneven recovery”.

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Mr David Leong, managing director of recruiter PeopleWorldwide Consulting, said that with the latest “severe” restrictions, restoring wages, benefits and entitlements may not be top of the agenda for many firms.

“We may see further job losses if these restrictions persist beyond June 13,” he said, referring to the end-date for the tighter measures, which also include gatherings of no more than two people and working from home as the default.

“Surely this cannot be a good time to advocate wage adjustments. Only a small fraction of business can do well in such times.”

Mr Kurt Wee, president of the Association of Small & Medium Enterprises (Asme), said preserving flexibility is key.

“Asme supports a flexible wage system that will allow employers to continue to keep their workers employed, instead of taking retrenchment as an option.

“Given the current wave of impact from the new restrictions, coupled with expectations of an uncertain second half of the year, this will provide employers with better flexibility.”

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Last year, the NWC, in a rare move, reviewed its wage guidelines for a second time as the coronavirus outbreak took its toll on the labour market. It was only the fourth time since being set up in 1972 that the council had been convened twice in the same year.

Given the evolving situation, the NWC will convene again later in the year to develop guidelines for the period from Dec 1 to Nov 30, 2022.

SBF’s Mr Lam welcomed this, saying it will ensure that the guidelines remain relevant in the evolving Covid-19 landscape.

PeopleWorldwide’s Mr Leong cautioned that retrenchments could go up again if the economic situation worsens in the second and third quarters of this year.

“Singapore must not let our guard down now. Better talk sensibilities into people than dollars and cents,” he said, adding that the Government must be prepared to provide more wage support and other forms of assistance if needed.

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