Posts Tagged ‘Wage Credit Scheme’

Wage credit story – no credit to ST

In News Reports on May 23, 2014 at 5:27 am

The trouble with G policies is that not many people can remember its intricacies or even link its rationale to implementation. That is, unless you can be bothered to go to original sources and do some research. So what do most people do then? They rely on professional journalists to get their facts right and also to set the facts in some kind of context. So it was with me and the workings of the Wage Credit Scheme as reported in The Straits Times.

The WCS has always been defined as a way to raise workers’ wages, by subsidising their increments. To be sure, it was controversial. The immediate reaction is that some employees, that is, those earning below $4,000 a month would see it as an entitlement. The G gives boss, boss must give me. As it turns out, not many companies do this,  as today’s ST report said.  

What would the ordinary reader think? First, why aren’t employers are not passing the “credit’’ directly to workers, which is what wonderful OCBC did with its $3m?  

The answer lies in the workings of the WCS which is not clearly enunciated in the ST story. Wages must go up FIRST, before the G gives employers any money. So if an employer raised wages by $100 a month, the G will give $40 back to the employer. It is for the employer to do what it wants with the $40, although the hope is that they will put it into programmes that will raise productivity and further raise the salaries of workers.

It is not the case that the money should form 40 per cent of pay increase, with the employer footing the other 60 per cent. If this was the case, the wage would actually go up not by, say, $100, but by $140.

That’s the first thing that should be explained to readers. It is really up to employers to decide what it wants to do with the money – although this itself is controversial. (You would expect some guidelines for employers who have been given taxpayers’ money. If not, it can used to build…. a koi pond? Buy a new Beemer?)

Therefore, ST’s story today really make me do a double-take. My immediate reaction: How can the G be so silly? And how can the bosses be so Machiavellian?

Here is the story:

COMPANIES have received their first payouts from a scheme that subsidises wage increases, but most large firms are unlikely to hand the money directly to employees. (The assumption is that they should. In any case, critical backgrounding is missing. It’s $800million that has gone out to 74,000 employers)

More than 10 prominent Singapore companies were contacted (out of 74,000 companies) about their plans for the first Wage Credit Scheme payout, which went out in March.

While almost all declined comment (sounds fishy), The Straits Times understands that many large companies are planning to channel the funds towards training and skills upgrading for staff. (Is this okay or not?)

Under the Wage Credit Scheme introduced in the 2013 Budget, the Government subsidises 40 per cent of pay rises given to Singaporean workers earning up to $4,000 a month. It expires next year. (This is not enough backgrounding as it makes it sound like future pay rises when it is not. The wage credit is given after employers furnish CPF proof that pay has gone up for a period of time)

The scheme came under the spotlight earlier this week when local lender OCBC Bank announced that it would be handing out its first $3 million payout to about 1,500 staff. (A press statement that the bank issued to make it look good) The bank is believed to be the first major company here to completely disburse the money to workers. (“believed’’ because no one really knows since companies not talking)

Mr Victor Mills, the chief operating officer and acting chief executive of the Singapore International Chamber of Commerce, said firms “should do the most appropriate thing for the companies and their employees”.

“Larger companies usually focus on training and development,” he said. “The point is to increase companies’ capabilities.” (Again, no backgrounding on the aims of WCS and what this has to do with “training and development’’. So far, we only know about pay increases)  

Mr Mills added that the chamber has not found it necessary to issue guidelines to members on how to use the money, as “it is entirely up to them”. (Given that readers have no idea on the way WCS should be used except in terms of “pay rises’’, this makes readers wonder if employers are breaking some rule)

The chamber represents more than 700 global companies here.

The Singapore National Employers Federation said feedback it has received shows that most employers are using the funds to offset higher business and manpower costs.  

The federation “encourages companies to share their productivity gains with employees”, said executive director Koh Juan Kiat. (Productivity gains – not the wage credit)

While human resource experts and unionists back the OCBC move (is this really a good thing given that other employees will ask how come they don’t get the credit?), they are also realistic that not every company will be able to follow suit.

“It is a good gesture of showing appreciation to the staff,” said Mr Erman Tan, president of the Singapore Human Resources Institute, adding: “But only companies that do well have the resources and ability to do it.” (But the reader will say, G already gave you the money – so just give over)

Veteran labour Member of Parliament Yeo Guat Kwang said small and medium-sized enterprises (SMEs) may face difficulties giving the Wage Credit payouts to workers. “Of course we want companies to share the payment with workers, but we are realistic that the SMEs that face cost constraints may not be able to do so,” he said. (But they’ve GOT THE MONEY!)

Mr Zainal Sapari, National Trades Union Congress assistant secretary-general, said low-wage workers will benefit most if firms share the Wage Credit refunds.

“But if the money can be used to raise productivity which leads to sustainable pay increases in the long run which is higher than the one-time payment, then I would prefer firms invest to raise productivity,” he said. (With the proper backgrounding, readers will still be flummoxed by the productivity point. So why call it Wage Credit?)

(Below is the obligatory “ordinary’’ person’s voice of praise)

But at least one worker who got a raise last year is happy with her higher pay. Madam Chua Yam Khen, a cleaner at a polytechnic, saw her monthly pay rising from $850 to $1,000 last year. Part of the increase was subsidised by the Wage Credit. But the 67-year-old does not expect her employer to share the subsidy with her.

“It is up to the boss, but having more money is definitely useful for workers who do not earn much,” she said in Mandarin. (Like it wouldn’t be…)

This is such a badly written story, I can’t even describe it.

So what should it be?

Companies which have received wage credits in return for raising their employees’ pay are planning to plough the money into training programmes. They are unlikely to pass the credit on to workers, as OCBC did with its $3m.

Some $800m have been given out to 74,000 employers, under a Wage Credit Scheme intended to help companies defray part of wage increments and use the credit to raise productivity levels.

Most of the 10 companies contacted declined to say how they would use the credit, a move which (fiction from here…) experts think is to halt employees’ expectations of higher increases because of the extra money.

Under the scheme, employers who have raised salaries of those earning below $4,000 will get 40 per cent of the pay increase back from the G, after furnishing CPF proof of pay. The hope is that the money would help them improve processes or train their workers so that further pay rises can be sustained.




Why is my salary STILL so small?

In Money, News Reports on March 4, 2013 at 2:07 am

I don’t think anyone is going to object to getting a bigger pay packet and it seems that seven in 10 workers might well be made very happy with the Wage Credit Scheme going by what ST reported today.

The question is whether employers will bite – and why not, you say? Well, the worry about what happens after the three years of wage subsidy is up will be on their minds. Can they afford to take up that 40 per cent portion of G-funded wage rises, especially if productivity efforts did not work? Will they clamour for a continuation of that gigantic $3.6 billion package, given that, hmmm, the next general election will be due then? The political pressure will increase for continued help with even more dire scenarios of companies closing shop painted.

Another issue that hasn’t been quite canvassed: The reaction of workers. I think we can expect pressure of another kind, this time on employers to raise pay. Expectations of seven in 10 workers will rise. All will be scrutinising the size of their wage packet and doing their sums on whether they should have got more, given that the G is giving bosses a helping hand. Employers will be doing their sums too with an eye on Year 3, and might well be more careful in doling out pay raises. So expect dashed expectations.

I guess some workers will also argue that since the G is already willing to give 40 per cent and the employer has already thought about a pay rise, then the pay rise should be more than 100 per cent. That way, wages are definitely raised – which is what everyone likes, no? They might not view the G subsidy as an effort to help the companies use the money for productivity improvements. The argument will be: since the G is giving you money, you can afford to give us more.

This will be a pretty short-term view, but mightily important to those earning less than $4,000 a month with children to raise and bills to pay. After the three years, then what? If the company cannot sustain its wage bill on its own steam, then woe betide those who have enjoyed three good years. I can hear the clamour: the scheme should continue or you’ll see how I will vote come 2016.

I think the objectives of the wage credit scheme should be clarified for the common man, to contain expectations that their wages will increase dramatically because of this help. That the effort is more about helping employers to restructure and re-skill their workers so that at the end of three years, both employer and employee will be comfortably off. This means workers must have a clear idea that they in the scheme along with their employers, that they have a stake in making the company work smarter so that they don’t find themselves worse off after three years. It means that within the three years, you don’t going looking for another job because it pays a bit more, that you have an obligation to the taxpayers, really, who are funding your pay increase to give your companies some respite.

Therefore, the objective of the Wage Credit Scheme must be clear and not only directed at employers, some of whom might well game the system for their own ends. It is important as well to reach those seven in 10 workers, not a small number, who will be waiting for a fatter wallet.

READ for a Chef’s Special on how EMPLOYERS might react to the Wage Credit Scheme