RANK-AND-FILE workers in Singapore can expect a one-off inflation bonus this year to help them cope with rising prices, with low-wage workers getting more.

The National Wages Council (NWC) has made the recommendation and employer groups have given it their nod of approval.

However, wage increases this year are unlikely to be better than last year's, because the economy is expected to slow, growing by 4 to 6 per cent against last year's 7.7 per cent.

Highlighting this projected slower growth, Professor Lim Pin said yesterday: 'It is only common sense.'

Prof Lim, the NWC chairman, made the comment when he announced the annual wage guidelines, which the Government has accepted.

The NWC recommendations are closely watched by the public and private sectors as they set the direction for wage policies.

The guidelines went down well with both the labour movement and employer groups.

They supported the inflation bonus, or what the NWC called a 'one-off special lump-sum payment'.

Said NTUC deputy secretary-general Heng Chee How, who is also an NWC member: 'The NWC recommendation addresses this (inflation) in a practical, direct and balanced way.'

The Singapore Business Federation and the Singapore National Employers' Federation (SNEF) see the bonus as a way to overcome the possibility of workers pressing for higher basic pay in order to cope with inflation.

The Singapore Chinese Chamber of Commerce and Industry encouraged its members to consider making the payment, 'especially to the low-wage workers'.

This group of workers was also on the minds of the NWC when it urged employers to give 'sustainable' wage increases. For the fourth year running, it suggested that employers give low-wage workers a bigger raise.

However, pay hikes should lag behind productivity gains, it cautioned. In the past two years, the increases have exceeded productivity growth, an outcome that threatens Singapore's competitive edge.

Economists like Mr Kit Wei Zheng of financial firm Citigroup foresee a worker's total pay rising by 5 per cent on average this year, lower than last year's 5.9 per cent.

Taking inflation into account, real wage growth will be 'flat', he said.

Inflation this year is expected to go up to between 5 and 5.5 per cent, due to the global rise in food and fuel prices.When coupled with the looming economic slowdown, these two forces have produced a conundrum.

That is, workers expect higher pay to cope with rising inflation. But pay hikes add to inflation, which can be a threat to companies' profitability amid the current economic uncertainty.

Pointing to the dilemma, Mr Stephen Lee, an NWC member as well as the SNEF president, urged businesses to chip in to address the problem of high inflation 'through the lump-sum payment, so as not to raise built-in wage costs in response to higher inflation.'

The one-off bonus will also add to the relief measures already taken by the Government and the NTUC to help workers, he noted.

These measures include NTUC's food vouchers for union members, as well as the Government's Growth Dividends and the Workfare Income Supplement scheme.

The NWC did not specify an amount for the inflation bonus as it did not want to 'straitjacket' companies into making a payout that they can ill afford, said Prof Lim.

Union leader Bobby Tay believes there will be some 'haggling' to ensure that the amount is not a token sum. 'The payment should be a meaningful amount and it is only fair that employers do their part to help workers.'

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