Navigating the 2025 NWC Wage Guidelines:
What Employers Need to Know
Table of Contents
The 2025 National Wages Council (NWC) has released its recommendations and guidelines. These guidelines provide a clear framework for businesses to align wage increases with productivity growth, ensuring the long-term sustainability of wage improvements in Singapore. (Source: Employers should reward employees with ‘fair and sustainable’ wage increases: National Wages Council – CNA (channelnewsasia.com)
In this article, we will explore the key elements of the NWC’s wage guidelines and offer practical advice on how employers can implement them while enhancing employee productivity and engagement
Understanding the NWC Wage Recommendations
One of the main recommendations of the 2025 NWC guidelines is the salary increase for lower-wage workers (LWWs) earning up to $2,500 per month. Employers are encouraged to provide a wage increase between 5.5% and 7.5%, or at least $100 to $120, whichever is higher. This ensures that LWWs benefit from real wage growth and inflation protection. This recommendation applies specifically to LWWs and not to the rest of the workforce, as reiterated by the Singapore National Employers Federation (SNEF). (Source: SNEF Media Statement on the National Wages Council 2024-2025 Guidelines)
For businesses experiencing strong growth, the NWC suggests offering a higher percentage increase. However, those facing tougher financial conditions may opt for a lower percentage while still meeting the monetary increase threshold. Importantly, companies that improve their financial standing later in the year are encouraged to consider additional salary increments.
What Does This Mean for Employers?
These recommendations underscore the importance of supporting LWWs while balancing it with the financial health of businesses. Employers need to carefully assess their business performance when deciding on wage increases.
For companies enjoying solid growth, offering a higher salary increase can help attract and retain talent, ensuring your workforce remains competitive and motivated. On the other hand, businesses facing uncertainty should still offer increases, but within a manageable range, ensuring they meet at least the recommended monetary increase. This flexibility allows employers to remain compliant while being mindful of their operational circumstances.
If a company’s financial situation improves over time, providing further salary adjustments can demonstrate a commitment to fairness and shared success with employees.
Beyond Wages: Job Redesign and Upskilling
The NWC guidelines extend beyond just wage increases. Employers are also encouraged to focus on job redesign and workforce upskilling. As automation, digital transformation, and changing business models reshape industries, enhancing job roles can improve productivity while empowering employees to take on new responsibilities.
The Productivity Solutions Grant-Job Redesign (PSG-JR) provides funding support for job redesign consultancy services, allowing companies to tap into external expertise to identify areas of improvement, map out new roles, and reskill employees. These projects can be customised to the company’s needs, ensuring that the job redesign efforts align with business goals, whether it’s automating repetitive tasks, optimising workflows, or upskilling staff for new technologies.
By utilising PSG-JR, businesses can:
- Optimise job roles to align with technological advancements.
- Upskill employees to prepare them for new or evolving responsibilities.
- Improve productivity by streamlining operations and reducing manual processes.
- Enhance job satisfaction and employee retention by offering more meaningful and fulfilling work.
As PSG-JR approved consultants, EON Consulting is here to help organisations with job redesign, improving productivity and keeping aligned with the NWC guidelines. For more information on PSG-JR and how your organisation and utilise it, visit our website here.
Integrating PSG-JR with Other Government Initiatives
Employers can combine PSG-JR support with other government programs, such as SkillsFuture initiatives, to create a holistic job redesign and upskilling strategy. This ensures that businesses not only redesign job roles but also provide their employees with the training and career development opportunities needed to succeed in these new roles.
For more information on what is job redesign and its benefits, visit our article here.
In addition, employers should leverage government support, including training subsidies, career conversion programs, and initiatives like the new Overseas Market Immersion Programme, which can help workers gain new skills and broaden their horizons. These programs can ease the financial burden of training while future-proofing your workforce.
Outsourcing and the Progressive Wage Model (PWM)
The NWC guidelines emphasise the importance of outsourcing companies adopting outcome-based contracting in alignment with the NTUC’s Progressive Wage Model (PWM). This recommendation is particularly significant for industries like cleaning, security, and landscaping, where outsourced workers often form a critical part of the workforce.
The PWM is designed to ensure that workers in lower-wage industries are paid fairly and have clear pathways for career progression. It sets wage benchmarks that increase with the worker’s experience, skill acquisition, and productivity. For employers, this means moving away from purely cost-based contracts and instead focusing on delivering value by ensuring outsourced service providers are committed to fair compensation and long-term workforce development.
Why Adopt Outcome-Based Contracting?
Deliverable-based contracting ensures that businesses outsource work based on performance metrics and outcomes rather than solely on the lowest price. By shifting the focus to quality and value, employers can foster a healthier business relationship with service providers. Additionally, it encourages service providers to invest in their workers, ensuring higher standards of service and productivity.
Aligning with the PWM’s principles also supports broader societal goals, such as reducing income inequality and promoting sustainable economic growth. This approach benefits both employers and workers—businesses can secure higher-quality services while workers enjoy better wages and more structured career advancement.
Practical Steps for Employers
Employers outsourcing services should take this opportunity to review their existing contracts to ensure they reflect the PWM’s wage guidelines and career development pathways. This could involve
- setting clear performance expectations,
- encouraging service providers to invest in their workforce’s upskilling, and
- ensuring regular wage increases as outlined by the PWM.
Furthermore, businesses should engage in open discussions with their outsourced partners to ensure alignment with both the spirit and letter of the PWM. Adopting these practices not only helps employers stay compliant with the NWC guidelines but also enhances long-term business sustainability. By fostering a well-compensated and motivated outsourced workforce, companies are more likely to experience higher productivity, reduced turnover, and improved service standards.
In the long run, aligning with the PWM reflects an organisation’s commitment to responsible business practices and contributes to a fairer labor market.
Preparing for the CPF Changes in 2025
Another key consideration in wage planning for 2025 is the upcoming changes to CPF contributions. From January 2025, the CPF monthly salary ceiling will rise, alongside increases in senior worker CPF contributions. Employers should factor these changes into their salary adjustments to ensure compliance with CPF guidelines while balancing the overall compensation package.
These CPF changes are aimed at enhancing retirement adequacy for all workers, particularly seniors. By planning ahead, employers can ensure a smooth transition when these adjustments come into effect.
Conclusion
The 2025 NWC wage guidelines offer a valuable opportunity for employers to demonstrate their commitment to fair wages, employee development, and business sustainability. By implementing the recommended salary increases and focusing on job redesign and upskilling, businesses can enhance workforce satisfaction and productivity, while positioning themselves for future growth.
Employers are encouraged to assess their financial situations carefully, offer fair and competitive wage increases, and tap into government programs to upskill their workers. By taking proactive steps now, companies can not only comply with the NWC guidelines but also build a stronger, more resilient workforce for the future.
Bridging the Performance Gap with Mager & Pipe Model
In today’s competitive business environment, organizations continually seek ways to improve productivity and maintain high standards of performance. Yet, even in a dynamic workforce like Singapore’s, gaps in employee performance can emerge. These gaps represent the difference between expected and actual performance, and understanding their causes is critical for organizational success.
One effective way to address performance gaps is by employing the Mager-Pipe model—a structured approach developed by Robert Mager and Peter Pipe. This model helps identify whether the gap is due to skill deficiencies, environmental factors, or motivation issues, offering practical steps to close these gaps efficiently.
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