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SCMP Reporter

The Government's 60,000 civil servants are to have their wages frozen for at least the next six months even as economic activity picks up after last year's gruelling recession.

The pay policy, announced after a standard mid-year review, is in line with guidelines issued last November by the National Wages Council (NWC), which recommended 'severe wage restraint' to preserve jobs.

The city-state's Government, which often attempts to influence private-sector decisions by the standards and practices it adopts for its own staff, described the agreement as 'conservative'.

It is less severe, however, than in Hong Kong, where the Government intends to pare civil service pay by between 1.58 per cent and 4.42 per cent from this October. SAR unions have protested against the wage-cut plan.

A statement from the Singapore Prime Minister's office said: 'The recovery is still in its early stages, and there are significant uncertainties in the global and regional outlook.'

It added: 'Also we must be prepared for unemployment to remain high at 5 per cent to 5.5 per cent, even if the economy grows between 2 per cent and 4 per cent this year.'

Singapore's civil servants will, however, receive a discretionary mid-year bonus next month equivalent to half a month's regular pay.

This year's public pay policy contrasts sharply with that issued mid-way through last year.

In June 2001, before ministers had recognised the severity of the impending slowdown, civil servants were awarded a S$30-a-month rise across the board.

They also enjoyed a bonus equal to three-quarters of a month's pay.

Singapore's trade-dependent economy shrank by 2 per cent last year amid a collapse in external demand, especially in the critical hi-tech sector.

Year-on-year changes in gross domestic product have been negative since the second quarter of last year

The latest set of figures, for the January-to-March period of this year, saw GDP slip 1.7 per cent, a far slower rate of contraction than the preceding quarter, when it fell 6.6 per cent.

Most economists expect a return to year-on-year growth in the current quarter as exports to overseas markets pick up.

The jobless rate, 4.5 per cent in March, is seen pushing higher for some months to come.

The Prime Minister's office said it would make a decision on whether to award a second, year-end bonus 'when Singapore's economic performance in the second half of 2002 is clearer'.

In its November guidelines, the NWC said that because of the recession, companies should either cut pay or impose a wage freeze. It also urged more widespread use of a variable component in workers' monthly pay.

The NWC, which comprises representatives from the Government, unions and employers, makes non-binding recommendations on pay that tend to be followed almost without exception in the city-state.



Civil servants' pay freeze sets example