The National Wages Council (NWC) was formed by the government in February 1972 as a tripartite advisory body on wage adjustments.^[1] Prior to its establishment, wage adjustments were negotiated according to the bargaining power of trade unions and management. This informal arrangement gave rise to industrial disputes and strikes.^[2] As Singapore embarked on a programme of rapid industrialisation in the 1970s, an acute labour shortage added pressure on employers to increase wages. The government was concerned that wage increases would outpace national productivity gains, which would lead to higher costs of doing business and the erosion of Singapore’s competitiveness in the global economy.^[3]

To address the issue of rising wages, then Minister for Finance Hon Sui Sen proposed the establishment of a national wages council in June 1971 as a solution to stabilise the labour market.^[4] The tripartite advisory body, which comprised representatives from trade unions, employers and the government, would formulate guidelines on wage policy, recommend wage adjustments that are in tandem with Singapore’s economic performance and prospects, and advise on incentive schemes that would spur operational efficiency and productivity.^[5]

The first council comprised a chairman and nine members – three each from the National Trades Union Congress (NTUC), employers’ organisations and the government. Lim Chong Yah, who was then the dean of the Faculty of Arts and Social Sciences and head of the Economics Department at the University of Singapore, was appointed as the council’s first chairman, and he served in this post until 2001.^[6] To ensure neutrality in discussions and deliberations, the chairman of the NWC is not a representative from the government, union or management.^[7]

The NWC’s recommendations are derived based on the principle of tripartite consensus reached during deliberations and in collective agreements. Through consultation and arbitration with stakeholders, the interests of all parties are protected. The NWC, therefore, facilitates stronger ties and alliances between institutions, and provides a non-confrontational approach to tackling differences and seeking acceptable solutions.^[8] In making its recommendations on wage adjustments, the NWC takes into consideration factors such as economic performance, growth and prospects, productivity, Singapore’s international competitiveness, the local employment market, inflation, as well as regional and world economic climate and outlook.^[9]

The recommendations of the NWC are guidelines that are meant to serve as a basis for wage negotiations and discussions on labour issues between employers and employees.^[10] Though the recommendations are not binding, these are generally accepted by the largest employer in Singapore, which is the Singapore Civil Service.^[11]

Based on its annual recommendations, the NWC has played a significant economic role by pre-empting industrial action and successfully converting confrontation into cooperation.^[12] The NWC and its work have also resulted in a decrease in time-consuming union negotiations and provided workers with an incentive to improve productivity.^[13] In addition, the wage guidelines recommended by the NWC are based on the performance and growth rates of the national economy as a whole.^[14] The long-term effect of pegging wages to economic performance not only acts as a market stabilising force but also enhances economic development.^[15]

References
1. National Wages Council (Singapore) & Singapore Ministry of Labour. (1992). 21 years of the National Wages Council (1972–1992) (p. v).  Singapore: SNP Publishers for Ministry of Labour. Call no.: RSING 354.595700835 NAT.
2. National Wages Council (Singapore) & Singapore Ministry of Labour, 1992, p. vii.
3. National Wages Council (Singapore) & Singapore Ministry of Labour, 1992, p. vii; Chew S. B., & Chew, R. (1998). Tripartism in Singapore: The National Wages Council. In Lim, C. Y., & Chew, R. (Eds.) Wages and wages policies: Tripartism in Singapore (pp. 95–96). Singapore: Singapore: River Edge, N.J.: World Scientific. Call no.: RSING 331.295957 WAG.
4. Tan, W. L. (1972, February 8). Wages council set up. The Straits Times, p. 1. Retrieved from NewspaperSG.
5. National Wages Council (Singapore) & Singapore Ministry of Labour, 1992, p. vii.
6. ‘Getting to know you’ at wages council inaugural. (1972, February 19). The Straits Times, p. 13. Retrieved from NewspaperSG; Teh, H. L. (2001, March 30). Lim Pin named chairman of National Wages Council. The Business Times, p. 8. Retrieved from NewspaperSG.
7. National Wages Council (Singapore) & Singapore Ministry of Labour, 1992, p. x.
8. Chong, T. (Ed.). (2010). Management of success: Singapore revisited (p. 73). Singapore: Institute of Southeast Asian Studies. Call no.: RSING 959.57 MAN.
9. National Wages Council (Singapore) & Singapore Ministry of Labour, 1992, p. x.
10. National Wages Council (Singapore) & Singapore Ministry of Labour, 1992, pp. v & ix.
11. Chew, R. (1998). Output, employment and wage determination in Singapore. In Lim, C. Y. & Chew, R. (Eds.) Wages and wages policies: Tripartism in Singapore (p. 230). Singapore: Singapore: River Edge, N.J.: World Scientific. Call no.: RSING 331.295957 WAG; National Wages Council (Singapore) & Singapore Ministry of Labour, 1992, p. x.
12. Turnbull, C. M. (2009). A history of modern Singapore, 1819–2005 (p. 310). Singapore: NUS Press. Call no.: RSING 959.57 TUR-[HIS].
13. Singapore: Journey into nationhood (p. 107). (1998). Singapore: National Heritage Board: Landmark Books. Call no.: RSING 959.57 SIN-[HIS].
14. Nair, C. V. D. (Ed.). (1982). Not by wages alone: Selected speeches and writings of C. V. Devan Nair, 1959–1981 (p. 5). Geneva: International Labour Office. Call no.: RSING 959.57 NAI-[HIS].
15. Ho, K. L. (2010). Political consolidation in Singapore: Connecting the party, the government and the expand state. In Chong, T. (Ed.) Management of success: Singapore revisited (p. 73). Singapore: Institute of Southeast Asian Studies. Call no.: RSING 959.57 MAN.

The information in this article is valid as at 2014 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.