Many companies retained workers during recession and need not ramp up hiring now that demand has picked up
THE economy may be booming at a record pace and trade figures are through the roof but workers are still waiting for the effects to be felt in the form of fatter pay packets.
Employers and unionists believe the rapidly improving climate will eventually trickle down to the shopfloor, but not just yet.
Wage rises this year are tipped to be under 5 per cent, despite stellar economic growth of between 13 and 15 per cent.
Sakae Holdings chief executive Douglas Foo said that while there has been high gross domestic product growth, 'some retailers are still not feeling that the whole thing has come to the ground level yet'.
'We are looking at wage increases, but it depends on how competitive the labour market is, and it will be tied in with productivity measures.'
It seems to be largely a problem of supply. Many companies held on to workers during the recession thanks to schemes such as Jobs Credit, so they have not needed to ramp up hiring to meet demand.
'Just as the recession didn't really harm the average Joe, neither is the rebound from the recession helping him,' said economist Manu Bhaskaran, of Centennial Asia Advisors.
UniSIM labour economist Randolph Tan does not believe the 13 to 15 per cent economic growth expected this year will be reflected in wage increases.
Mr Tan said the surge in manufacturing has served to take up the slack of excesses in production and manpower capacity, so wage levels might rise only 3 to 5 per cent this year.
National Trades Union Congress deputy secretary-general Halimah Yacob has picked up the same signals, telling The Straits Times that wage increases of between 3 and 4 per cent are being anticipated in talks going on now with employers and unions in the electronics industry.
Mr Bhaskaran said that the economic growth has been concentrated in capital-intensive manufacturing segments like pharmaceuticals, which do not generally employ many Singaporeans.
The pharmaceutical industry contributes the highest value-added to manufacturing, but employs less than 5,000 workers compared with 76,000 in electronics, or 19 per cent of the manufacturing force.
There are also many multinational companies with a very high foreign share of profits, so 'it's not surprising that the portion of growth that boosts the well-being of ordinary folks may not be high', said Mr Bhaskaran.
Right now, workers in the electronics sector seem to be benefiting the most.
There have been negotiations this month between unions and electronics firms for wage increases, said Mr Francis Lim, president of the United Workers of Electronic and Electrical Industries.
The trickle-down effect may be more muted in services, which make up 65 per cent of the economy. This sector grew 11.4 per cent in the second quarter from the same period a year ago.
While the opening of the two integrated resorts has boosted tourism and retail sales, it has also made it harder to find workers, so companies are making do with what they have.
But while the cash is not flowing into pay packets as fast as workers would like, union leaders and industry chiefs say it is only a matter of time. 'It looks promising,' said NTUC's Madam Halimah. As the economy grows stronger, there will be more jobs chasing workers, she added.
'So there will be better opportunities for them. We do expect the gains to be shared with the workers, otherwise the companies won't be able to retain the workers.'
Mr Phillip Overmyer, chief executive of the Singapore International Chamber of Commerce, said: 'Generally, when we have good, strong years, we have good, strong bonuses at the end of the year.'
Source: Straits Times, 15 Jul 2010