Wage Policies and Tripartism A Great Workforce A Great Workplace Wage Policies and Tripartism Sim Li Chuan Labour Relations & Workplaces Division 2 Aug 2011

Policies to Ensure Competitive Wages

. NWC was mooted by Dr Albert Winsemius, a World Bank Economic Advisor to Singapore, in the early 1970s, to help Singapore in its industrialization programme. He suggested bringing together the 3 social partners to formulate wage guidelines to achieve orderly wage increases in line with industrialization and economic growth…

Overview of the National Wages Council (NWC) Tripartite advisory body formed in Feb 1972 to provide for orderly wage adjustments in line with Singapore’s long-term economic and social development NWC reviews wages and wage trends yearly in relation to the economy’s performance and prospect Recommendations are arrived at by consensus Just a bit of history, the NWC was formed some 38 years ago in Feb 1972, at a time when Singapore was undergoing a period of rapid industrialisation, which had resulted in rising wage expectations. There were concerns that high wage expectations would lead to serious industrial disputes, which could dampen the investment climate and adversely affect the economic progress of Singapore. As such, the NWC was set up to formulate wage guidelines to be in line with long-term economic growth, so that Singapore’s economic and social development would not be undermined. - Wages and wage trends are reviewed annually in relation to the economic performance and prospect. - And recommendations made by the NWC are arrived at by consensus.

NWC – Composition 2011/2012 Employee Representatives Chairman: Prof Lim Pin, Professor of Medicine, NUS Employee Representatives National Trades Union Congress Amalgamated Union of Public Employees Food, Drinks & Allied Workers Union Healthcare Services Employees Union National Transport Workers’ Union Singapore Teachers’ Union Singapore Port Workers Union United Workers of Electronic & Electrical Industries United Workers of Petroleum Industry Employer Representatives Singapore National Employers Federation Singapore Business Federation American Chamber of Commerce in Singapore Japanese Chamber of Commerce & Industry, Singapore Singaporean-German Chamber of Industry & Commerce Singapore Chinese Chamber of Commerce & Industry Singapore Indian Chamber of Commerce & Industry Singapore Malay Chamber of Commerce & Industry Government Representatives Ministry of Manpower Public Service Division Ministry of Trade & Industry Economic Development Board Singapore Workforce Development Agency

Contributions of the NWC NWC Guidelines provide a basis for wage negotiations and help prevent/ minimise wage disputes, foster labour-management cooperation at company level, and bring about industrial harmony and tripartite partnership Ensure that workers are rewarded with wage increase/ bonus payment in good years and allow companies to freeze or reduce wages in difficult years to stay viable and preserve jobs Laid down an important principle for wage negotiations – wage increase should lag behind productivity growth to maintain and enhance competitiveness

NWC Average Nominal Wage Increases and Economic Growth (1974-2010) Moderate Wage Increase (1972-78) High Wage Growth (1979-84) Wage Restraint (1985-87) Qualitative Wage Guidelines (1988 onwards) Wage restraint guidelines in 1998, 2001 and 2009 due to economic downturn Note that no productivity growth is shown in chart. But as productivity growth = GDP / total labour hours, it is clear that wage increases have lagged behind productivity growth here also.

CPF Scheme CPF Scheme The Central Provident Fund (CPF) is a fully funded social security savings scheme for Singaporeans. Under the CPF Act, employers and employees must make the stipulated contributions to the Fund each month. The CPF is for: Retirement savings Home ownership Affordable healthcare

Contribution (% of wage) CPF Scheme CPF Scheme CPF contribution rates from Sept 1, 2011: Lower CPF contribution rates for older workers aimed at increasing their employability by reducing their fixed wage costs. Employee age (years) Contribution (% of wage) Employer Employee Total 50 and below 16 20 36 Above 50 to 55 12 18 30 Above 55 to 60 9 12.5 21.5 Above 60 to 65 6.5 7.5 14 Above 65 5 11.5 Source: CPF website

Conclusion The NWC has provided a reference point for wage negotiations in order to minimise or prevent wage disputes. It has ensured that the labour market has maintained its competitiveness by moderating wages according to the business cycle. The CPF scheme has been used as a policy device to enhance the wage competitiveness of older workers.

Policies to Ensure Positive Employment Relations

History of Industrial Relations in Singapore No. of Strikes and disputes No. of Man Days Lost 1,000,000 946,354 No. of man days lost 875,000 845,637 750,000 625,000 500,000 410,889 388,219 No. of strikes 375,000 250,000 125,000 0,000 2009 2011 No. of strikes No. of man days lost

Stages of Development in Industrial Relations 50s & 60s 70s & 80s 90s & 2000 2010 and Future Adversarial Relationship Mutual Tolerance Cooperative Relationship Synergistic Partnership ?

Factors Contributing to Industrial Harmony Sound Legal Framework & Dispute Resolution Mechanism Employment Act Industrial Relations Act Central Provident Fund Act Retirement Age Act Industrial Harmony Economic Growth Job Creation Reasonable/ Enlightened Management Positive Unionism Tripartite Partnership Approach Alignment of Interests of employers and workers in Good/Bad Times

Industrial Relations Act Sound Legal Framework Employment Act Regulates rights and obligations of employers and employees Sets minimum employment terms Harmonises the interests between employers and workers in employment Industrial Relations Act Lays down procedures for collective bargaining, conciliation and arbitration Provides legal framework for dispute resolution between employers and trade unions Prevents & minimises disputes Facilitates negotiations & dispute resolution to avoid industrial actions

Dispute Resolution Mechanism MOM provides conciliation and mediation service for both unionised and non-unionised workers to help resolve disputes amicably

PROCEDURES FOR SETTLEMENT OF INDUSTRIAL DISPUTES (Unionised Employees) SNEF (Employers Federation) Voluntary Arbitration Compulsory Arbitration Employer Collective Bargaining Conciliation at MOM Arbitration at IAC Union NTUC (Trade Unions Congress)

Procedures for Settlement of Employment Disputes (Non-Unionised Employees) PROCEDURES FOR SETTLEMENT OF EMPLOYMENT DISPUTES (Non-Unionised Employees) Claim Lodged with MOM No settlement Adjudication by Commissioner for Labour (Labour Court) Conciliation Settlement Agreement reached and dispute resolved Appeal to High Court if dissatisfied

Procedures for Settlement of Industrial Disputes (Tripartite Mediation) MOM accepts the case and mediates the dispute with assistance from Tripartite Mediation Advisors (TMAs) to facilitate an amicable settlement PME (Non-Ordinary Member) with employment dispute PME seek assistance from Trade Union or Federation Dispute settled? Yes Case closed No PME can pursue non-salary claim via civil suit Trade Union or Federation verifies if PME meets eligibility criteria spare Salary claim? No Yes Trade Union or Federation lodges dispute with MOM through TMOL* Adjudication by Labour Court (salary claims only)

Reasonable / Enlightened Management Sharing of information Consultation with unions Fair rewards for workers Implementation of enlightened HR practices

Positive Unionism Objectives of trade unions: Promote good IR Improve working conditions Raise productivity for benefit of workers, employers and economy Long-term interests over short-term gains Work with management to achieve win-win outcome

Conclusion Strong tripartite partnership has been Singapore’s competitive advantage in meeting economic, employment, and industrial relations challenges. Tripartite dispute mechanisms have enabled Singapore to maintain positive employment relations.

Thank you Purpose of Tripartite Mediation Eligibility of PME A Great Workforce A Great Workplace Purpose of Tripartite Mediation Eligibility of PME Types of Disputes Employers Rights to Object Snapshot of PME Framework Workflow of PME Framework Anticipated Issues Thank you