A tightening labour market is expected, given the growth in total employment rate by 34,000^* and falling unemployment rates in the first quarter of 2010. The NWC has noted that the tightening labour market will place upward pressure on wages given that many employees have accepted wage freezes and cuts during the economic downturn.

The NWC has also noted that labour productivity has contracted in the last three years, which resulted in wages outpacing productivity growth. There is thus a pressing need to raise productivity to ensure that wage gains are sustainable.

To ensure the sustainability of the growth and recovery of Singapore’s economy as well as labour productivity, the NWC has issued some guidelines to help companies achieve sustainable growth and competitiveness in the strong economic recovery.

Key guidelines include:

• Granting sustainable wage increases, taking into account company performance and prospects, paying greater attention to low wage workers

• Enhancing flexibility in wage structures

• Reducing reliance on low skilled foreign manpower, engaging unions/employees in ensuring sustainable productivity growth and formulation of Key Performance Indicators (KPIs)

• Helping vulnerable segments of the workforce to enhance employability while working with unions/employees in implementation of re-employment policies and systems

* Preliminary