THE National Wages Council faces a tough task in deciding wage guidelines for this year, analysts said yesterday.

It will have to strike a balance between forces pulling in different directions.

Elaborating on the conundrum facing the council, Citigroup economist Kit Wei Zheng said: 'Inflation is quite high, so they will want wage increases of at least 5 per cent to match the inflation rate.

'But the economy is likely to slow down, so there is limited room for employers to give wage increases like last year's.'

Add to this a labour market still hungry for workers and Mr Kit, like most analysts, foresees the council recommending a 'moderate' wage increase, lower than last year's.

The council, headed by Professor Lim Pin, gives annual wage guidelines which are closely watched by the private and public sectors, as they are one of the clearest and earliest indicators of any wage changes and bonuses that employees can expect this year.

As a prelude to its recommendations, the council yesterday asked for feedback from the public and organisations by April 25.

It is seeking comments 'on wage and wage-related matters, including issues related to the employment and employability of older and low-wage workers', the council said in a statement.

In their comments yesterday, analysts said that caution from the NWC against big pay hikes was almost inevitable despite the sterling performance of the economy so far.

Between January and last month, the economy grew by 7.2 per cent. The unemployment rate also fell to a 10-year low of 2.1 per cent.

Said Standard Chartered Bank economist Alvin Liew: 'It's a fairly tough call. With a tight labour market, wages will be kept elevated.'

But with a looming slowdown, the council may take a 'precautionary' stance.

It will seek to improve wage flexibility, calling for a bigger portion of pay packets to be made variable, he said.

But for low-wage workers, human resource experts like Mr Peter Lee expect the council to recommend bigger pay hikes for them.

Said Mr Lee, the managing consultant of Remuneration Data Specialists: 'They need it to cope with inflation.'

But rising wage costs will also add to inflation, the analysts acknowledged. Inflation this year is likely to be between 5 and 5.5 per cent.

Another issue the NWC is likely to focus on is the fall in value of the output of each individual worker, or labour productivity. Again, this means the council may 'rein in' wage growth, said Mr Kit.

Views to the NWC can be sent by e-mail (mom_lrd@mom.gov.sg), fax (6535-4811) or snail mail to National Wages Council, Labour Relations Department, Level 4, Ministry of Manpower, 18 Havelock Road, Singapore 059764.