Wage Reform & Tripartism : A Test of Trust At Work - Civil Service ...

Wage Reform And Tripartism: A Test Of Trust At Work13“The Flexible Wage System will continue to be animportant tool for us to use to respond quickly to thechanging conditions.”storms, such as the economic uncertainties arisingfrom the September-11 attacks, war in Iraq andSARS. It allowed the Civil Service to make rapidand timely adjustments to Civil Service pay inresponse to the crises. In November 2001, inresponse to the economic uncertainty, Ministersand senior civil servants again led by example,taking wage cuts of up to 10%. In July 2003, afurther 10% wage cut was taken off the grossmonthly wages of Ministers and senior civilservants. In November 2003, in view of decliningprivate sector salaries as shown by our benchmarkanalysis, the Civil Service re-based the AVC ratefrom 3 /4 month to 1 /2 month. Bearing in mind amonthly salary cut would more directly affect thedaily livelihood of officers, cuts were made to theAVC. As wage levels vary with the economy andlabour conditions, the FWS will continue to be animportant tool for us to use to respond quickly tothe changing conditions.How Far Have We Come With WageRestructuring?SARs necessitated many emergency measuresto cope with the sudden plunge of businessesand job loss. Workers have understood andwitnessed the real threat to their employmentand some companies were forced to make wagesvariable. The unions, particularly the Food, Drinksand Allied Workers Union (FDAWU) supportedthe moves to cut costs such as compulsory nopay-leave,shorter work weeks etc. Wage cutswere also taken by management. Due to thehotels’ close cooperation with the unions, moralewas kept up and trust was preserved betweenworkers and employers. Therefore hotel workerswere not retrenched and the efforts paidoff when business returned and hotels couldramp up their services quickly and economically.From these experiences, hotels have seen thebenefits of restructuring and are committed toimplementing flexible wages.This is however not the case across the board.While most companies recognize the advantagesof a more flexible and competitive wage system,till today many companies have not taken the stepbecause of the lack of expertise and resources.The call for a more flexible and competitive wagesystem was reiterated in the reports of theEconomic Review Committee (ERC) and TripartiteTaskforce on Wage Restructuring (formed in July2003 by NWC recommendation) which submittedits report in Jan 2004. The latter was formed bygovernment, SNEF and NTUC to push for widerimplementation of wage restructuring. TheCompetitive Base Wage System (CBWS) model wasrecommended. This was essentially based on fivewage principles, namely sustainable growth,competitiveness, flexibility, motivation andstability. These are similar to the principles behindthe FWS with the following new principles:• Sustainable growth: The wage structureshould support business sustainability,investment, job creation and betteropportunities for all.• Motivation: Management should incentiviseemployees to give their best and add greatervalue. Management should also take the leadin wage restructuring in bad times.There is a need to extend the efforts to moresectors of the economy as well as to small andmedium-sized companies. The ERC recommendeda 30% variable component (20% AVC and 10%MVC) for rank-and-file employees, 30-40% formiddle management and no less than 40% for topmanagement. The Taskforce also recommendedthat the AVC should reward employees fortheir individual performance as well as theircontribution to company performance. The MVCshould be linked to company performance and byvirtue of it being paid out monthly, allowscompanies to adjust wages when faced with shorttermunexpected economic shocks without havingto wait until the end of the year.