flexible wages a competitive advantage in a global economy 30 january 2004 ms yong ying-i, permanent...
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Flexible Wages
A Competitive Advantage
in a Global Economy
30 January 2004
Ms Yong Ying-I, Permanent Secretary(Manpower)
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Where am I today?Should I take part?
Where is Singapore going?
How do I get there?What do I do next?
X
Key Questions
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What I will cover
• Introducing the Tripartite Taskforce
• Explaining the national wage restructuring agenda
• Where does this conference fit in?
• Taskforce recommendations
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Yong Ying-I
Leo Yip
Ng Wai Choong
Ong Yen Her
Stephen Lee
Alexander C Melchers
Christopher James
Koh Juan Kiat
John De Payva
Teo Yock Ngee
Lim Chin Siew
The Tripartite Taskforce
ALSO:
• Sector Working Groups
• HR Resource Persons
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Part I of the Taskforce’s Work
Unclear cost-benefit•It’s hard work & needs CEO’s
close involvement •Not sure about the gains•It’s sensitive; might upset employees & unions
It’s hard to do a.k.a.don’t know how to do
Understanding reasons for slow
progress by employers
It’s easier to retrench or cut basic wages when crisis hits employees will understand
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Part I of the Taskforce’s Work
How does this impact me?• Is it a pay cut?• How will my wages be affected over time?• What must I do to get paid more?• Is my job safe?
Can I trust the company?• Is my boss sincere, or will he use the opportunity to “just cut”?
Understanding employees’ concerns
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Taskforce Report – a “how to” guide
What does a flexible wage structure look like? - i.e. how to structure the
components ?
How to actually adjust wages up and down as business conditions change? - i.e. when and how to make changes
Wage model
“ The devil is in the details”
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Reducing “cost” of implementation
Changing the cost-benefit calculation
• Reducing “sensitivity” of topic:– Legitimize discussion;
openly address implementation fears
• Help HR Dirs design details
• Bring parties together to discuss
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Building consensusBuilding trust
Platforms to share, and to listen to query, and to understand to co-create & move forward together
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Wage Restructuring - national programme
Jun-Nov Developing 03 (a) main wage model
(b) sectoral models for 4 industries
Building consensusOct thru Discussion with
many Jan 04 groups of companies
(CEOs & HR Dirs)
30 Jan 04 National TripartiteConference on WageRestructuringIssue Taskforce report
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National Programme- what happens next?
Implementation - 2004Publicize – nationally & at industry level platforms
Facilitate
1 Tripartite “SWAT team” facilitators to help interested companies clarify concerns
2 Train HR managers how to implement flexible wages
3 Form more sectoral work groups to drive implementation
Track outcomes; publicise
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Increasing Flexibility
Increasing
Competitiveness
• Variable wage structure– 70 fixed: 30 variable– Restructuring allowances– Building in other structures for
flexibility
• How to adjust?– According to corporate & individual
performance
• 1: 1.5 min-max– How to get there– How to move up from min to max– Annual Review; avoid lengthy lock-
in periods in Collective Agreements
Key Recommendations
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20 40 60 80 100 120
50 50
60 40
70 20 10
Senior Mgt
Mid Mgt & Execs
Rank & File
Basic
VariableAVC MVC
AVC + MVC
AVC + MVC
Proposed Wage StructuresAnnual Monthly
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Reducing rigidities by clarifying and collapsing allowances
Proposed Wage Structures
Present Recommended
1. Sectoral workgroup reports give specific examples of how to proceed
2. Allowances should have current-day relevance & motivate performance
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How to trigger wage changes
Key performanc
e indicators
Corporate performanc
e
Individual performanc
e
Rewards
1. Define corporate & individual key performance indicators
2. System to link change in variable component to change in KPIs• Critical to provide upside to motivate
employees
3. Discuss with union; communicate clearly to employees
MVC
AVC
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• Single biggest issue of controversy– Is it needed?
– Is it realistically doable?
• You decide if you need it – if yes, do it– Some industries do need it critically;
others prefer quarterly variable component etc
• Report has detailed guide on how to trigger MVC changes, both cut & restoration– Tie to corporate KPIs
Monthly Variable Component
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Additional Flexibility Options
No-pay Leave
Flexible work
scheduleShorter
workweek
Temporary lay-offs
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$$
$$
Mark
et P
ressu
reImplementing Competitiveness
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Experience + Productivity
$$
$$ Ratio = 1.5
How to reduce ratio to target
Implementing Competitiveness
Seniority-based wages
How to raise frommin to max
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So what’s new?
1. There is tripartite consensus:• What should be the wage structure, in detail• How to implement
2. National Wages Council will adopt model
3. There is a template to follow, & tripartite facilitation to support implementation
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Key Recommendations
Increasing Flexibility
Increasing Competitiveness
Recap
Foundation: good HR; leadership & employee communications
• Variable wage structure– 70 fixed: 30 variable– Restructuring allowances– Deciding on MVC
• How to adjust?– According to corporate &
individual performance• 1: 1.5 min-max
– How to get there– How to move up from min to max– Avoid long lock-in periods; annual
reviews
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Thank You
30 Jan 2004