Daily Lessons from Life 05-06 May 2012 - HR experts recommend pay rise

"HR experts recommend pay rise - CNA 06 May 2012

SINGAPORE: Human resource practitioners have called for salary increments this year, to be built into workers' salaries.

They said such increments, instead of a one-off payment, are more sustainable to meet the rising cost of living in Singapore.

This is in line with calls by the labour movement for the National Wages Council (NWC) to propose a minimum dollar amount, as an increment to the basic pay of low-wage workers.

With a projected inflation rate of between 3.5 and 4.5 per cent this year, there have been concerns about its impact especially on low-wage workers.

Last year, the NWC suggested bosses give a one-off lump-sum payment to help employees offset inflation.

But some observers said that may not be enough this year.

Hays Singapore general manager Chris Mead said: "Certainly, whenever organisations face wage increase pressures, that is a challenge for business.

"However, the solution is to focus on retaining good staff and then on productivity.

"secondly, it is to reward staff on performance-based pay over and above their base salary. So for staff who over perform in their duties, they can have a bonus or a reward for that and then, the company wins as well because they've raised productivity."

Experts agree that is key to any real-wage growth.

So, it will be interesting to see what kind of recommendations the NWC will make this time, given the outlook, for the economy this year is still very uncertain."

Sometimes I seriously wondered what good are the "experts' opinions"!

Lessons for me are:

1. there are some fundamental and universal principles one MUST acknowledge and recognize about wages: a. to keep it to a 'reasonable' level at the FIXED wage level; and b. to have a variable components capped at a 'reasonable' level based on self-funding principle!

Make it clear that whenever we talk about salary and wages, we are talking about FIXED salary and wages. IF there is NO CUT in the Fixed component, there is NO PAY CUT to talk about. Period. Understand? :-)

2. when we talk about 'inflation', again, we need to be VERY SPECIFIC. Does 'inflation' REALLY affect people with a FIXED salary and wages above certain level? I don't think so. The daily necessities should NOT be a burden or an increased burden to these people. Hence, when we talk about the IMPACT of inflation on consumption, we should be focusing on the lower fixed wage folks!

Can we give them a FIXED amount or % increment just because they are lower waged? It depends IF their lower wages are 'reasonable or not' vis a vis their PRODUCTIVITIES!

3. for those 'experts' who said that providing an one-off lump sum payment, or 'band-aid' as one so described, is ineffective are MISSING the point: FIXED salary and wages should be kept to the lowest 'reasonable' level. ONLY when higher performance, and hence, productivity is achieved will the variable BONUSES kick in. It is the ONLY way to make sure that Wage increases tally with Productivity Increases. Simple as that.

May the 'experts' and the government and the rest of the business world and the press START using: Fixed and Variable compensation clearly and regularly!

This may just embed the concepts into the mindset of Singaporeans and Residents!