MONTHLY VARIABLE COMPONENT IN WAGE SYSTEM (Progress of implementation)

Mr Ahmad Mohd Magad asked the Minister for Manpower whether he can provide an update on the progress of companies which have incorporated a monthly variable component in their wage system and what the Government intends to do to accelerate the pace of implementation by more companies.

Dr Lee Boon Yang: Mr Speaker, Sir, in 1999, the National Wages Council recommended the adoption of a monthly variable component to further enhance the flexibility of our wage structure. Since then the Singapore National Employers' Federation, National Trades Union Congress and my Ministry have jointly formulated a set of tripartite guidelines and also conducted briefings, workshops and seminars to help promote the implementation of the monthly variable component.

In its 2000-2001 wage guidelines, the National Wages Council specifically recommended that, with economic recovery, companies granting wage increases of more than 3% should set aside at least 3% of the wage increase as the monthly variable component; while companies granting wage increase of up to 3% should set aside the entire wage increase as the monthly variable component.

We have achieved positive results in the unionised sector. A recent survey by my Ministry on the monthly variable component implementation in the private sector shows that 29% of the unionised companies have implemented the monthly variable component as at end of 2000. On average, these companies set aside some 2.69 percentage points of their wage increases as a monthly variable component. However, the non-unionised sector has yet to adopt this measure. Only 2.4% of non-unionised companies have implemented the monthly variable component as at end of 2000.

Sir, given the usefulness of the monthly variable component in helping companies to enhance cost competitiveness in a business downturn and in preserving jobs for the workers, my Ministry will continue to work closely with the employers and trade unions to step up the implementation of the monthly variable component.