NATIONAL WAGES COUNCIL (Second tier payment)

Mr Goh Chee Wee asked the Minister for Communications and Minister for Labour if he has assessed the impact of the introduction of the second tier award as recommended by the National Wages Council; is he aware that the implementation of the second tier award has created a great deal of dissatisfaction among the employees and has therefore become a demotivating and demoralizing factor; and what measures he would recommend to improve upon the scheme to ensure that the original objective of motivating the workers to excel through a proper performance appraisal and reward system could be achieved.

Mr Ong Teng Cheong: Mr Speaker, Sir, annually officials from my Ministry meet employers, employers' organizations and trade unions to obtain feedback on the implementation of the NWC recommendations. My Ministry is therefore aware of the problems arising from the implementation of these recommendations.

The NWC second tier award recommendation is now in its second year of implementation. During the first year, there were some teething implementation problems. This was partly because companies were not forewarned that the recommendation would contain a second tier payment to reward above average workers. They were caught unprepared and many did not have a proper performance appraisal system to assess the workers. Even where employers had appraisal systems, these had to be modified for the purpose of the second tier payment. As a result there were many complaints from workers and unions that workers were not assessed objectively and that supervisors were biased.

To resolve this problem, the National Productivity Board conducted courses on performance appraisal to equip supervisors and middle management on the proper method of appraising their workers for award of the second tier.

In the second year, less problems were encountered because the standard of performance appraisal has improved. Nevertheless from the feedback obtained, the second tier award appears to be more a demotivating than a motivating factor. Furthermore, employers and unions claimed that it worked against teamwork.

The second tier wage increase, however, has some positive effects. For one thing it has succeeded in propagating the wide-spread use of proper performance appraisals to identify the meritorious workers within a company.

I would like to inform the Member for Boon Lay that the problems relating to the implementation of the second tier wage increase will be brought to the attention of the National Wages Council for its deliberation in its coming session.