PUBLIC SERVICE (VARIATION OF 1984 ANNUAL WAGE INCREASES) BILL

3.35 pm

Order for Second Reading read.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Government has decided that wage restraint in the public sector should continue for another year with effect from 1st July 1987. The Ministry of Finance (Public Service Division) met with the public sector staff unions and associations in January this year and they reached a consensus that the wage restraint measure to be adopted by the public sector for the second year shall be (in addition to the withdrawal of the Incentive Payment) a reduction of the 1984 National Wages Council wage increase by 30% for all monthly-rated officers and by 10% for the daily-rated employees.

As the payment of NWC wage increases is embodied as an express term in letters of appointment, legislation has to be introduced to effect the reduction of the 1984 NWC wage increase. Hence this Bill is now being introduced in Parliament. The Bill will not involve Government in any extra financial expenditure.

In this connection, I would like to inform Members that the reduction of the 1984 wage increases applies to all employees in the public service, including those in any statutory body or authority, those on contract and part-time employment, as well as holders of political office and Members of Parliament. Other holders of public office whose remuneration is provided for under the Constitution have also consented to have their 1984 NWC wage increase reduced.

Sir, I beg to move.

Question proposed.

Encik Othman bin Haron Eusofe (Geylang Serai): Mr Deputy Speaker, Sir, this wage restraint measure in the public service is implemented now at a time when the economy is showing signs of strong recovery. The economic growth for the first quarter of 1987 is now revised to 7%. And we have heard that the second quarter growth will also be around this figure. This quick turnaround is possible because of the effectiveness of the measures like wage restraint, reduction in employer's CPF contribution by 15% points as well as external factors. Further, the recovery is broad based. Except for the construction sector, all other sectors are growing.

Now the question arises, and this is asked by many public servants: why, with the economy now showing strong recovery, is there a need to continue with this wage restraint measure in the public sector? The public sector unions agreed to this measure in January 1987 when the economy was still in recession. I think public service union leaders are responsible and they are prepared to accept any measure to help the economy come out of the recession. Now the economy is growing strongly. Are such counter-recessionary measures still necessary? And for this purpose even low salaried public service employees, like the daily-rated employees and the Division 4 employees, have to make sacrifices. They had made sacrifices in 1985 by forgoing their NWC increases. There was in 1986 the withdrawal of the incentive payments. Now, is it still necessary for them to continue to endure more sacrifices? Those in the maximum of their salary scales will, in fact, suffer a pay cut since they do not have any annual increment. In the private sector, with the labour market tightening up, free market forces have caused wages to go up, especially starting wages, as employers compete for workers.

I would like to ask the Minister to re-examine this wage restraint measure, particularly for the low wage earners in the public service. We want to introduce flexibility in our wage system. During time of good economic or business performance, workers should be able to enjoy better wages for the hard work, for the sacrifices, for their contribution to enable the economy to recover. And it is only fair since they have taken a responsible and positive attitude.

Another measure which I would like to ask the Minister to consider is whether in the event our economic growth this year exceeds the earlier forecast of 4-5%, whether public servants would be given an additional one- time lump sum payment on top of the usual non-pensionable annual payment of one month salary. I would like to ask the Minister to give an assurance that this would be given careful consideration by his Ministry.

Dr Richard Hu Tsu Tau: Mr Deputy Speaker, Sir, I would like to thank the Member for Geylang Serai for his comments. But I should like to point out that it is premature to assume that the year as a whole would turn out to be so buoyant that we can abandon the wage restraint measures recommended and agreed earlier this year. I would prefer to urge a somewhat more conservative approach. The first quarter was strong indeed, 7%, and indications are that the second quarter is likely to be reasonably good. But for the year as a whole I would prefer to withhold premature comment until we see how things appear nearer the end of this year.

The recovery has been strong in a number of sectors, particularly, electronics. However, there are still quite a few sectors which are depressed. Construction is one which has been mentioned. Others include the hotel industry. I think mostly the retail business is still depressed and it is only in some sectors of the manufacturing and financial services where you see strong growth. Overall, we have relatively uneven growth with prospects for stronger growth extending to other sectors in the second half. So my belief is that the measures Government has taken, which form part of the wage restraint measures accepted by the public at large, should be maintained until we see more clearly how the year progresses.

On the second question as to whether additional payment might be made, it is certainly something we can take into consideration. Again, I would prefer not to make any promises in advance.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee; reported without amendment; read a Third time and passed.