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Old 29th July 2010, 12:00 AM   #1 (permalink)
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Exercise wage flexibility even in times of high growth: PM

Exercise wage flexibility even in times of high growth: PM
By S Ramesh | Posted: 28 July 2010 1106 hrs


SINGAPORE: Prime Minister Lee Hsien Loong has cautioned employers to ensure that wages remain flexible, even though the Singapore economy is expected to achieve record growth this year.

Mr Lee was speaking at a conference of employers and trade union leaders where he also emphasised the need to improve worker productivity.

He said the 13 percent jump in productivity reported in the first quarter was "a blip".

The conference on Wednesday was organised by the Singapore National Employers Federation (SNEF), which is celebrating its 30th anniversary this year.

With the economy buoyant, Prime Minister Lee praised workers, employers and government for working together to save jobs during the recent downturn.

An obvious concern is to ensure that the lessons of the downturn are not lost.

Prime Minister Lee said: "We should not lock in higher wages which may be justified this year, but will cause us difficulties if conditions changed, which at some point surely will. Wage settlements should also factor in the 1% increase in CPF contribution rates this year.

"Mr Lim Swee Say (labour chief) has already reminded workers to split any wage increases this year between the basic salary, the monthly variable component and the annual variable component.

"So to be flexible you need to be flexible in your jobs, in your wages but especially in your mindsets. It's the most basic and critical flexibility, because we are in a dynamic environment, you cannot tell exactly what the demands will be.

"They (management and staff) need to quickly hoist in new situations when conditions change, often unexpectedly, and be able to respond. They cannot simply go strictly by what is explicitly spelt out in employment contracts, or worse, work to rule."

Prime Minister Lee emphasised that Singapore's flexible wage systems proved their worth during the recent downturn when more than half of companies froze wages and many reduced bonuses. And along with SPUR and the Jobs Credit scheme, these had helped companies manage their costs and hold on to most of their workers.

Good economic growth and a tight labour market may drive wages up.

Stephen Lee, president of SNEF, said: "One of the key concerns that I have would be this fierce competition for available workforce. Because the demand is more than the supply, you drive costs up and you build them into the basic (wages)....you drive costs up in a very rigid way.

Beyond wages affecting competitiveness, the fear is that during good growth, the need to boost productivity could be forgotten.

Prime Minister Lee said: "In 1Q, our productivity jumped 13%. This is a cyclical increase, the result of a tight labour market and more overtime work. It is the reverse of what happened last year, when productivity actually shrank, we had a negative number. We cannot be satisfied with this one-off blip, but must persevere to raise our productivity on a sustained basis in good years and bad."

"To raise productivity, firms must either use fewer resources to produce the same value, or else deploy the same amount of resources in different ways to generate more value," said Mr Lee.

"Singa pore businesses cannot expect to save costs by employing more low-cost workers. Instead, firms must utilise resources efficiently, develop new markets and innovate."

Prime Minister Lee added: "New markets overseas, as well as untapped domestic market niches, present new business opportunities. Companies which can spot such unmet needs, and design products and services to meet them, will gain a valuable first-mover's advantage. In dynamic Asia, new markets are constantly opening up. The challenge for CEOs is to identify them, and move in before others do."

In line with this, the SNEF will launch a new initiative on Productivity and Trust Leadership, aimed at chief executives. This will benefit its 2,000 members who employ over 600,000 workers in Singapore.

The SNEF will work with the Singapore Management University to run Productivity Leadership seminars for CEOs.

The SNEF will also develop workshops to help SMEs hire, retain and develop talent.

In addition, it is coming up with a Trust Leadership programme, in close consultation with the Manpower Ministry and the labour movement, drawing on Singapore's strong tripartite relationship.

http://www.channelnewsasia.com/stori...071911/1/.html

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