The Tripartite Task Force on Wage Restructuring (TTF) today brought together 110 CEOs and HR Directors, as well as 20 union leaders, to garner their support and commitment to implementing flexible wages as a competitive advantage for companies in the global economy. Response to the half-day seminar, a first in a series of activities planned to encourage companies to adopt a flexible and competitive wage system (Annex A), reflected a strong commitment by all to tackle what is inherently a difficult exercise.

2 Addressing both management and unions, Dr Ng said that CEOs needed to take the lead and be deeply involved in the wage restructuring process, as fundamental changes to the pay structure were core to a company’s competitiveness and part of its operating strategy. HR directors could help to develop the details of the wage structure, but the overall strategic direction must be provided by the CEO. Dr Ng also acknowledged that “wage restructuring will necessitate a new understanding between employers and employees”. For this relationship to be strengthened, he urged employers to recognise sacrifices that employees make in bad times by rewarding them appropriately in good times. “It must go both ways,” he said. “With a flexible and competitive wage structure, companies would be able to remain viable and preserve jobs in a severe business downturn. A flexible and competitive wage system would also enable companies to attract talent and retain their cost competitiveness. Shared pains and gains - this is the spirit and the philosophy which is important.” Dr Ng stressed that communication and leadership-by-example would be essential for the successful implementation of flexible wages.

3 Ms Yong Ying-I, Chairman of the Tripartite Taskforce on Wage Restructuring (Annex B), explained how the TTF has been approaching the challenge of developing a flexible and competitive wage system. Acknowledging that wage restructuring was not about a prescriptive one-size-fits-all model, she said the task force first developed a generic wage model for deliberation by the working groups from four selected sectors to test its applicability in different industry. The experience has helped the TTF to better understand the challenges that companies and unions in each sector faced.

4 “We see implementation involving the building of a gradual consensus. Consensus is a journey, not an activity, and certainly not about producing a report,” said Ms Yong. “Hence, the TTF has planned a series of dialogues with various stakeholders, including today’s seminar, to gather feedback. The views and suggestions will be taken into consideration in formulating the recommendations of TTF and this will ensure wage restructuring could be more effectively implemented in different sectors.”

5 Responses from unionists and CEOS participating in the seminar were encouraging. Mr Lim Boon Heng, Secretary General for the National Trade Union Congress said, “Singapore workers will need to ensure a regular basic income. But they will accept wage restructuring if their management can lead by example.” Deputy Secretary General Matthias Yao added: “Companies must be able to look at their cost structures and determine how much flexibility they need to survive a downturn. Wage variability is like a spring that will help companies absorb the shock of sudden downturns.”

6 Speaking for employers, Mourad Mankarios, CEO and Chairman of Philips Electronics, remarked: “The matter of wage restructuring is not only the task of the HR community, but a management responsibility. CEOs must be involved to ensure that the measures are sustainable for good and bad times.” Mr Stephen Lee, President of the Singapore National Employers’ Federation, said to fellow CEOs: “If you put wage restructuring off today, you will have to deal with it tomorrow. It is inevitable.”

7 Dr Ng Eng Hen also revealed that the Government will help companies to restructure wages. It is recognised that wage restructuring is technically complex to implement, and that CEOs and their HR directors may need help. Details on how it will assist companies will be released later. On helping companies achieve greater competitiveness, Dr Ng said: “I am not suggesting that wage restructuring is the magic bullet. We have cut other costs, like telecoms, utilities and land. We are actively building the skills of our workforce and the next generation coming into the workforce. We are actively growing new industries, from biotech, healthcare and education to financial services, high value-added chemicals and textiles. We are improving conditions for entrepreneurs and for businessmen in the region to work in and through Singapore. Wage restructuring is one pillar of many in our strategy, but it is a key pillar.”
___________________________________________________________________

Annex A

Background on flexible wage systems

1 Wage restructuring is about making the wage system more flexible to better respond to changing business conditions. With a nimble wage system, companies achieve flexibility and competitiveness, and employees enjoy greater job security, the best possible system of compensation and rewards, and a good understanding about how their wages may fluctuate with performance. It is not about cutting wages and is integral to Singapore’s long-term strategy to stay competitive in fast-changing economic conditions.

2 Wage restructuring represents a new understanding between employers and employees. Employees accept the need to have wages that are reflective of their market value and linked to both their individual performance and that of the company. Employers in turn have a wage structure that adjusts flexibly with business conditions and the value created by employees. Employees would then be able to earn competitive yet stable wages and enjoy greater job security (and financial/income security), as companies resort less to head count cuts to survive bad times. Wages that reward performance and differentiate for performance also motivate workers to do their best.

3 For this relationship to be healthy, employers should recognize sacrifices that employees make in bad times by rewarding workers appropriately in good times. By working together for the long term, employees and employers commit themselves to building a future of job security and sustainable growth.

Annex B

Background on the Tripartite Taskforce on Wage Restructuring (TTF)

In May 2003, the Government accepted the National Wages Council’s recommendation to appoint a tripartite task force to drive the process of wage restructuring to make wages in Singapore more flexible and competitive. The TTF, headed by PS (Manpower), Ms Yong Ying-I, has been working on developing a generic wage model, recommendations on “how to do” wage restructuring and the implementation options for wage flexibility. The TTF has closely consulted the various industry sectors and companies to identify and address the actual problems of implementing of wage restructuring. The TTF will release its report and hold a national wage restructuring conference early next year.