WAGE REFORM (Status report)

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WAGE REFORM:

(Status report): 10.

Mdm Ho Geok Choo asked the Acting Minister for Manpower if he will give an update on (a) the status of the wage reform exercise, including its related salary reviews, that was commissioned some months back; (b) the resources used for this exercise in terms of the experience of the people involved and the types of industries and companies that were invited to participate in the exercise; and (c) the take-up rate of companies embracing the new wage reform formula.

The Acting Minister for Manpower (Dr Ng Eng Hen): Mr Speaker, Sir, in response to the National Wage Council's call for companies to restructure their wage systems to improve wage flexibility and competitiveness, the Government set up a Tripartite Taskforce in July last year to review our existing wage systems. The Taskforce, chaired by my Permanent Secretary, comprises key representatives from the Singapore National Employers' Federation, the National Trades Union Congress and the Government. The Taskforce also drew on the expertise of a resource panel of experienced HR managers.

To tap the resources and experience of the industry, the Taskforce set up four working groups in the chemical, land transport, electronics and hotel sectors. The working groups were co-chaired by senior CEO/Human Resource Directors and union leaders recognised as leaders in

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these sectors. The working groups have finalised their respective studies and have submitted their findings and recommendations to the main Taskforce. We intend to form working groups for other industry sectors later.

To gather feedback on the implementation of a flexible and competitive wage system, the Taskforce has conducted seminars and talks on wage restructuring for CEOs, HR practitioners, HR consultants and union leaders of various sectors. The response from the industries and unions has been very encouraging. There were clear consensus and readiness among the employers and union leaders to restructure their wage systems to improve their flexibility and competitiveness.

The Taskforce will be releasing its recommendations by end January this year at a National Tripartite Conference. The conference will discuss the features of the flexible wage system, how wage payment should be tied to company and individual performance instead of the length of employment in a company. My Ministry will assist companies and unions to promote the implementation of a performance-based wage system to replace the seniority-based wage system. We will also monitor closely the take up rate of the companies for these initiatives.

Mdm Ho Geok Choo: Can the Minister enlighten the House on how can we ensure sustainability of growth in companies in the restructuring of the wage system? My second question is: how can we build the element of flexibility such that we can trigger cuts and restoration readily? Thirdly, how can we convince employers, employees and unions to embrace the restructuring system at a faster rate?

Dr Ng Eng Hen: Sir, these are the very issues that are discussed at the various seminars and workgroups. While the

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Taskforce will attempt to create common platforms for the various groups to understand what we are talking about and to have common aspects, ultimately whether a company grows depends on its management and its ability to enhance its inherent resource. We understand, and we recognise, that various companies will have individual challenges, and it is not up to this Taskforce to be able to help companies grow. We can create the structures and the environment for them to speed up change.

Having said that, I must say there have been congruence and agreement among the principals. In fact, the union leaders, NTUC in particular, have been driving and pushing for these wage reforms because they understand fully well where flexibility is a means towards reducing retrenchments when the times are hard. So the impediment is not in the unions. The impediment is equally sometimes and even more so in terms of employers, and we are trying to bring them on board. And I think many of them have come around to understand that flexibility will help their competitiveness and also improve their companies' performance.

We will have this National Tripartite Conference. But we recognise that the implementation phase will be longer than this. Following that, my Ministry, together with the Workforce Development Agency and the unions, will go to the ground and help the individual companies reform their wage structures.