THE NEWLY PROPOSED BASE-UP WAGE SYSTEM

Abstract

The National Wages Council (Singapore) recommended that companies adopt the base-up wage system in its 1996 guidelines. The system was in fact proposed in early 1996 by the National Trades Union Congress, who represent the different trade unions in Singapore. The problem that prompted the proposal was that the existing seniority-based wage system pays older staff more than the younger ones in the same jobs. This caused feelings of unfair treatment which leads to younger workers to job-hop for better wages. The older workers who are at the maximum of the salary scale find their purchasing power reduced because of inflation. It is proposed that with the base-up system, all workers will be rewarded for productivity gains so that companies can avoid facing industrial relations problems. The new system will also reward workers who have not reached the top of their salary scale according to their experience and loyalty. This academic exercise looks into what are the existing problems of the present system and what the new system can offer. Interviews with selected trade unions and companies who have adopted the system were conducted to obtain their views.