Straits Times, 19 May 2004
EDITORIAL
All things in moderation
THE National Wages Council (NWC) has said in its annual recommendation that companies which are recovering and profitable should reward workers with moderate wage increases. Sounding a note of caution at the same time, it has said that the wage rises should continue to lag behind productivity gains; otherwise, they could result in costs going up again. The mood inherent in the NWC's call on Monday is upbeat, certainly when compared to the fact that it comes after two years during which wage restraint was urged. That it is realistic as well is reflected in employers' willingness to increase pay packets by as much as 4 per cent. Monday saw the Government raising Singapore's growth forecast for this year by no less than two percentage points to between 5.5 and 7.5 per cent. The economy has grown by a delightful 7.5 per cent in the first quarter, from the same period a year earlier. The good news notwithstanding, the cautionary note in the NWC's call for moderate wage rises is explained by the fact that while short-term improvements are occurring in the economy, the longer term will be determined by Singapore's success in restructuring itself to meet the challenges of an evolving international economy. In fact, even in the short term, 'rising' is not necessarily a good word, witness rising oil prices, concerns that United States interest rates could rise, and fears that China's boom may be headed for a hard landing.
The NWC plays a concrete role in ensuring that Singaporeans keep the larger picture in mind. A changing world demands that they adjust their expectations, lifestyles and mindsets. Of immediate importance is the need for wage reform to succeed by focusing on the monthly variable component (MVC) of workers' pay. The MVC gives companies the all-important flexibility to cut wages to survive tough times - and reward workers when the going gets easier. However, the statistics are not reassuring. Last year, only 44 per cent of unionised companies adopted the MVC; for non-unionised firms, the take-up rate was only 4.4 per cent. If employers behave this way, how can employees be expected to make the mental adjustments necessary for Singapore to remain competitive?
It is good that the NWC, a crucial part of this country's tripartite system that brings together management, labour and the Government, has emphasised the MVC's usefulness, encouraging employers to build it up to 10 per cent of total wages. It must be added in the same breath, however, that companies should play fair with their employees and reward them when they can. Wage reforms, and economic restructuring for that matter, depend ultimately on the degree of trust that exists between employees and employers.
Tripartism, which underpinned labour relations at a time of high growth, will, if anything, be even more important as Singapore weathers global storms. There was a time when good news, year after year, was the justification for the tripartite system of industrial relations. When the news is not so good, the danger is that tripartism's value will not be self-evident. But the Government's mediatory role in keeping labour and capital engaged and on speaking terms cannot be over-emphasised. The adversarial style of industrial relations evident in some countries ultimately does not protect workers when it chokes off the investment that provides jobs. Singapore is too small and vulnerable to afford the luxury of militant unionism even in uncertain times.