COUNTRY REPORT FOR SINGAPORE

Transcription

1 COUNTRY REPORT FOR SINGAPORE - By s Federation - Performance of Singapore s Economy 1. Singapore s economy grew by 4.1% in 2013, up from the 1.9% in The growth was led by the financial sector which expanded by 10.6%. The manufacturing sector grew by 1.7%. 2. The global economy is expected to improve modestly in 2014 but tightness in the labour market could rein on growth in some sectors. Hence, the Singapore s Ministry of Trade and Industry projects that GDP of Singapore would grow by between 2% and 4% in Inflation 3. Singapore s inflation was 2.4% in 2013, down from the 4.6% in Due to the decrease in cost pressures from accommodation and car prices, the inflation rate for 2014 is expected to be 1.5% to 2.5%. Table 1: Real GDP Growth and Inflation Rate GDP Growth (%) CPI (%) Source: Singapore Ministry of Trade and Industry, MTI Productivity 4. After declining for six consecutive quarters since the last quarter of 2011, productivity began to grow from the second quarter of Nonetheless, productivity growth was flat in 2013, after contracting by 2.1% in Over the ten-year period of 2002 to 2012, real basic and total wage increased by 0.8% per annum and 1.3% per annum. The real wage increases were supported by productivity which grew by 1.9% per annum over the same period. 1

2 Chart 1: Productivity and Real Wage Indices Productivity Growth Real Basic Wage Real Total Wage Source: Singapore Ministry of Manpower Labour Market 6. Employment grew by 136,200 in 2013, higher than the 129,100 in Seven in ten jobs were in the service sector while employment in the Manufacturing sector only grew by 5,300. Table 2: Employment Change in Singapore Employment Change ( 000) Source: Singapore Ministry of Manpower, MOM 7. Unemployment rate in Singapore fell 1.9% in 2013 from 2.0% in Resident unemployment rate remained constant at 2.8%. Table 3: Unemployment Rate in Singapore Unemployment Rate (%) Resident Unemployment Rate (%) Source: Singapore Ministry of Manpower, MOM 8. As the Singapore economy continues to restructure, the number of workers retrenched increased from 9670 in 2012 to 10,540 in Professionals, managers and executives formed two-thirds of the retrenched workers. 9. Despite of this, the labour market in Singapore remains tight with 144 job vacancies for every 100 job seekers, the highest since Key contributing factors 1 Source: Report on Labour Market, Singapore Ministry of Manpower. 2

3 to the tight labour markets included low unemployment rate, tightening of foreign manpower policy and continued job creation. Wage Guidelines and Main Labour Market Changes National Wage Council (NWC) Guidelines 2013/ The recommendations for NWC guidelines 2012/13 are as follow: Raising real wages for workers by improving productivity Higher wages for low wage workers Give At Least $60 in Built-In Wage Increases to Workers Earning Up to $1,000Raising Productivity 11. The full NWC Guidelines is appended at Annex A. Enhanced Marriage and Parenthood Package 12. The fertility rate of Singapore was 1.29 in 2012, about the same as the 1.28 in 2008 when the maternity leave and childcare leave were extended to 16 weeks and 6 days respectively. The citizen workforce was projected to shrink from around 2020 without immigrants. As this affects the sustainability of businesses, employers have a stake in helping Singapore raise its birth rate. 13. After consultation with the tripartite partners, the Government announced the implementation of the enhanced Marriage and Parenthood Package. With effect from 1 May 2013, employers are to provide eligible employees with: a. 2 days of Government-Paid Extended Child Care Leave annually for working parents with children aged 7-12 years. Parents with at least one child below the age of 7 years will continue to have 6 days of Child Care Leave; b. 4 weeks of Government-Paid Adoption Leave for working mothers; c. 1 week of Government-Paid Paternity Leave for working fathers; and d. 1 week of Government-Paid Shared Parental Leave where working fathers can share 1 week of the working mother s Maternity Leave entitlement. 14. The maternity protection period for employees who are retrenched or dismissed without sufficient cause will be extended to cover the full term of pregnancy. 3

4 Employment Act 15. With effect from 1 April 2014, the Employment Act was amended and the main amendments are as below: a. The salary threshold for non-workmen, such as clerical staff and frontline service staff, to be covered under the working hours-related provisions (Part IV) of the EA will be raised from a basic monthly salary of $2,000 to $2,500, in line with increases in salary levels. This will benefit about 150,000 workers. b. In addition to the salary protection currently accorded to them, PMEs earning a basic monthly salary of up to $4,500 will be covered under the general provisions of the EA, including sick leave benefits and protection against unfair dismissal. This will benefit about 300,000 PMEs. c. A 25% sub-cap will be imposed for deductions to employees' salaries for accommodation, amenities and services, to prevent excessive deductions to their salaries. This is within the existing 50% total cap for authorised deductions. d. The non-eligibility period for retrenchment benefits will be reduced to two years from three years, in line with shorter employment tenures. This will take effect on 1 April e. In the past, in the event of a company restructuring, unions can only represent employees transferred to another company if the pre-existing collective agreement with the original employer remains valid. After the amendments, the validity of the collective agreement will be extended for 18 months after the date of transfer, or until the expiry of the collective agreement, whichever is later. f. Though the salary threshold of non-workmen will be increased to $2,500, the overtime rate payable for non-workmen will be capped at the salary level of $2,250 to help employers manage costs. g. PMEs earning up to $4,500 will need to have served with the same employer for at least 12 months to be eligible to seek redress against unfair dismissal, where notice is given. h. Employers will be allowed the additional option to grant time-off in-lieu for PMEs who are required to work on public holidays, subject to mutual agreement. In the absence of mutual agreement, at least half a day off in-lieu has to be granted. 4

5 i. Employers will not be obliged to grant paid sick leave and bear medical examination expenses of employees for Singapore cosmetic consultations National and Employer procedures, such as mole removal or nose jobs. j. Itemised payslips would be made compulsory within the next two years. A Tripartite Guidelines on issuance of itemised payslips was issued to guide employers, in particular the SMEs. Fair Consideration Framework 16. The new Fair Consideration Framework will be effective from 1 August The aims of the new rule are to ensure Singaporeans are considered for jobs fairly and improve job matching. 17. Employers who are making employment pass applications must advertise the job vacancy on a new jobs bank administered by the Singapore Workforce Development Agency (WDA). The advertisement must be open to Singaporeans, comply with the Tripartite Guidelines on Fair Employment Practices, and run for at least 14 calendar days. 18. Employers with 25 or less employees and jobs which pay a fixed monthly salary of S$12,000 or above are exempted from the advertising requirements. Prepared by: s Federation Date: April

6 Annex A NATIONAL WAGES COUNCIL SINGAPORE NATIONAL WAGES COUNCIL (NWC) GUIDELINES 2013/2014 Economic Performance and Labour Market in In 2012, the Singapore economy grew by 1.3%, moderating from the 5.2% growth in Total employment increased by 129,100 or 4.0% in 2012, slightly above the growth of 122,600 or 3.9% in The overall unemployment rate remained at a low of 2.0%, unchanged from 2011; while the unemployment rate for residents fell slightly to 2.8%, from 2.9% in The Consumer Price Index (CPI) rose by 4.6% in 2012, easing from the 5.2% increase in 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. CPI less imputed rentals on OOA inflation, a measure which relates more directly to the actual cash spending of households, was lower at 3.6%. 3 Reflecting slower GDP growth and continued robust employment creation, labour productivity contracted by 2.6% in 2012, after rising by 1.3% in Basic wages of employees in the private sector grew by 4.5% in 2012, comparable to the increase of 4.4% in Taking into account bonuses (annual variable component) and employer Central Provident Fund (CPF) contributions, total wages in the private sector increased by 4.2%, lower than the gain of 6.1% in This was on account of the decline in bonuses from 2.32 months of basic wages in 2011 to 2.19 months in 2012, given the weaker economic conditions. 2 Ministry of Trade and Industry (MTI), Economic Survey of Singapore, Ministry of Manpower (MOM), Labour Market, MOM, Survey on Annual Wage Changes,

7 5 Accounting for CPI-All Items inflation, real basic wages declined by 0.1% while real total wages 5 fell by 0.4%. When adjusted using CPI Singapore less imputed rentals National OOA Employer inflation, basic wages rose by 0.9%, and total wages 4 by 0.5% in real terms in Outlook for While Singapore s economic growth eased to 0.2% on a year-on-year basis in the first quarter of 2013, it is expected to see a gradual improvement for the rest of the year. Global macroeconomic conditions have stabilised since late 2012, although uncertainties remain. Singapore s externally-oriented sectors are expected to improve on the back of a recovery in external demand, whereas growth in construction and some key services sectors should continue to provide support to overall GDP. Barring downside risks, Singapore s GDP is expected to grow by 1% to 3% this year. 6 7 The Monetary Authority of Singapore (MAS) forecasts that the 2013 CPI-All Items inflation will be between 3% and 4%, and that more than half of this will be accounted for by imputed rentals on OOA and car prices. 7 NWC Wage Guidelines for 2013/2014 Raising Real Wages for Workers by Improving Productivity 8 Over the long term, average real wage increases have been supported by productivity growth. Over the decade from 2002 to 2012, labour productivity grew by 1.6% per annum, exceeding the growth in real total wages 4 of 1.2% per annum. In the immediate post-sars years, labour productivity grew strongly on the back of robust GDP growth. However, in the last 5 years, labour productivity shrank by 0.4% per annum as economic growth was driven primarily by employment. 8 9 The NWC recommends that real wage increases should be in line with productivity growth over the long term. Real wage increases need to be sustainable and not erode the long term competitiveness of our economy. 10 The NWC notes that the Quality Growth Programme was introduced in the 2013 Budget to drive the restructuring of our economy towards quality growth driven by productivity and innovation. To help companies through this period of restructuring, the 5 Total wages include bonuses and estimates of employer CPF contributions. 6 MTI, Economic Survey of Singapore, 1Q13. 7 MAS Monetary Policy Statement, 12 April Data from the Department of Statistics (DOS) and MOM. 7

8 Quality Growth Programme includes a 3-year $5.3 billion Transition Support Package which comprises: Productivity and Innovation Credit (PIC) Singapore bonuses, Corporate National Income Employer Tax rebates, and the Wage Credit Scheme (WCS). 11 The NWC applauds NTUC s efforts in championing the Progressive Wage Model (PWM) to improve the job prospects and income of workers in a variety of industries. The NWC is heartened to see strong employer support for the initiative in these industries and exhorts companies to implement the PWM as soon as possible. Companies in other industries should also adopt the progressive wages concept and provide a clear progression path for their workers to upskill and upgrade. PWMs will allow companies to make better use of manpower and pay higher wages, commensurate with larger job scopes and higher productivity levels. The NWC therefore recommends that management work with their unions and workers to develop and implement appropriate progressive wage models for their companies. 12 The NWC notes that in a tight labour market, wages are likely to rise. The Wage Credit Scheme helps companies manage rising labour costs while still allowing employers to retain, develop and train workers. This frees up resources for businesses to invest in productivity. It will also mitigate inflationary pressure arising from businesses passing on higher wage costs. The Wage Credit Scheme also encourages companies to share productivity gains with their employees. These will enable wages to rise in a sustainable manner. 13 Companies should take concerted steps to tap on the Quality Growth Programme. Businesses will have to approach restructuring with greater urgency, as wages continue to face upward pressures. The NWC strongly urges companies and their management teams to lead the drive for productivity and, with the support of the unions, upgrade their operations and invest in their workers. 14 Improved productivity will benefit companies and enable our workers to enjoy real wage increases. The NWC urges employers to share productivity gains fairly with workers and in a sustainable manner. 15 Taking into account the challenging business conditions, tight labour market, and economic growth forecast of 1% to 3%, the NWC further recommends that: a) companies give built-in wage increases to workers, taking into account the companies business performance and prospects; and b) companies reward employees with variable wage components where appropriate, in line with their performance and workers contribution. 8

9 Higher Wages for Low-Wage Workers 16 The NWC notes the continued efforts by the Government, union and employer groups to help low-wage workers raise their skills, employability and incomes. In particular, the Government has introduced various financial support measures including the $200 million Workfare Training Support (WTS) Scheme and the $100 million Inclusive Growth Programme (IGP). The higher Workfare Income Supplement (WIS) cash and CPF payouts from January 2013, accompanied by the changes in the CPF contribution rates for low-wage workers from 2014, and other Government transfers including the additional GST Voucher Special Payment, on top of the regular GST Vouchers, will also help supplement the disposable income and CPF savings of this group. 17 The NWC notes that the unions, employers and the Government have developed a PWM for the cleaning sector and the Government is supporting its roll-out by procuring only from accredited cleaning companies which have adopted progressive wages. A progressive wage requirement will also be introduced in a licensing framework for all cleaning companies in The NWC recognises that helping low-wage workers improve their skills, employability and income requires concerted and multi-faceted intervention by the Government and key stakeholders. To complement these efforts, the NWC recommends that companies pay special attention to this group in their annual wage adjustment exercise, given that the income growth of low-wage workers has lagged the rest of the workforce. 9 To help the low-wage workers, the NWC recommends that: a) companies grant these workers a built-in wage increase in the form of a dollar quantum and a percentage. This will give the low-wage workers in the company a proportionately higher built-in wage increase; and b) companies that are doing well also grant these workers an additional oneoff lump sum payment to help them better cope with the cost of living. 9 MOM, Labour Force in Singapore,

10 Give At Least $60 in Built-In Wage Increases to Workers Earning Up to $1, Last year, the NWC made the recommendation for at least $50 built-in wage increases for low-wage workers earning a basic monthly salary of up to $1,000. The NWC notes that as of December 2012, almost 6 in 10 of private establishments gave wage increases to their employees earning a monthly basic salary of up to $1000. This comprised nearly half (48%) of private establishments that had given (40%) or decided to give (8.1%) a built-in wage increase, and those that provided other forms of wage increases (11%). 10 Specifically, about three in ten gave at least $50 built-in wage increases. While this is a positive step forward, the NWC is of the view that we can build further on the momentum generated. 20 To give this group of workers continued focus and attention, the NWC therefore recommends that companies employing workers earning a basic monthly salary of up to $1,000 grant these workers a built-in wage increase of at least $ The NWC recognises that some companies, particularly the Small and Medium Enterprises (SMEs), may find it challenging to meet the above mentioned recommendations. The NWC urges these companies to earnestly consider how to make good use of Government assistance schemes such as the Quality Growth Programme to improve their productivity and bottomlines, so that their employees can also benefit from sustainable wage increases. 22 In addition, many low-wage workers work in industries where outsourcing practices are widespread. Employers of such workers are often locked into multipleyear contracts where there may be limited room to make yearly wage adjustments. The NWC calls on employers and service buyers in these industries to make a special effort to uplift the pay of the low-wage workers and incorporate NWC wage recommendations into outsourced service contracts. Buyers of outsourced services should also factor the annual wage adjustments for the workers into their contracts, or allow for the contract values to be adjusted accordingly. Other NWC Recommendation 10 Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance. MOM, Survey on Annual Wage Changes,

11 23 To contain business costs in this period of economic restructuring, the NWC also urges the Government and companies to continue to look at ways to reduce nonwage costs. Application of NWC s Recommendations 24 The NWC recommendations cover the period from 1 July 2013 to 30 June These recommendations are applicable to all employees management, executives, professionals and rank-and-file employees, unionised and non-unionised companies in both public and private sectors. This includes workers who have been re-employed. 26 To facilitate wage negotiation, companies should share relevant information, such as company performance and business prospects, with employees and their representatives. 11

12 Table 1: Wage Changes in 2011 and 2012 s Federation Annex Total Wages (including employer CPF contributions) - Nominal 6.1 % 4.2 % - Real 0.9 % (1.9 %) -0.4 % (0.5 %) Basic Wages - Nominal 4.4 % 4.5 % - Real -0.8 % (0.2 %) Annual Variable 2.32 months of Component (i.e. bonuses) basic wages -0.1 % (0.9 %) 2.19 months of basic wages Source: Survey on Annual Wage Changes, MOM Notes: (1) Real wage changes are deflated by Consumer Price Index (CPI) for all items at 2009 prices (2009=100). Figures in brackets are deflated by CPI less imputed rentals on owner-occupied accommodation at 2009 prices (2009=100). (2) Total wages (including employer CPF contributions) comprise basic wages, annual variable component (i.e. bonuses) and estimates of employer CPF contributions. Basic wages and annual variable component (i.e. bonuses) exclude employer CPF contributions. 12