NON-PAYMENT OF INCENTIVE PAY (Particulars)

Dr Wong Kwei Cheong asked the Minister for Finance (a) what is the total number of employees affected by the cut in the half-month incentive pay recently announced by the Government; (b) what will be the total savings; and (c) whether the cut will further aggravate the recession by reducing the purchasing power of a sizeable proportion of the working population.

The Minister for Finance (Dr Hu Tsu Tau): Mr Speaker, Sir, following consultations with the public sector unions, the Government had recently announced that the incentive pay for 1986 will be withdrawn in respect of monthly-rated public employees. The matter will continue to be pursued with the daily-rated unions.

The estimated number of public sector employees affected, including both monthly-rated and daily-rated employees, would be 142,444. The total savings is estimated to be $113,158,530.

Withdrawal of the incentive payment is a form of wage restraint adopted by Government following consultation with the public sector unions. This measure would keep the public sector wage bill at its current level. It is presently a preferred form of wage restraint to freezing of annual increments. The incentive payment amounts to 4% of the annual wage bill and is equivalent to the annual increment in the public sector. Hence, withdrawing the incentive payment would hold down the public sector wage cost at its current level to the same extent as cessation of the annual increments. It is a measure preferred by the Government and the unions. Since withdrawal of the incentive payment does not really reduce public sector wage costs, there should in fact be no reduction in purchasing power of the public officers.

Dr Wong Kwei Cheong: Sir, may I ask the Minister if the Government is also planning to cut partially or even completely the 13th month AWS payment of Government employees?

Dr Hu Tsu Tau: Mr Speaker, Sir, there is no present intention.

Mr Jeyaretnam: Sir, may the Minister tell us whether this proposal to cut the half month incentive pay for daily-rated employees has been fully discussed with the union?

Dr Hu Tsu Tau: Mr Speaker, Sir, I have said that this issue is still under consultation.