Government is working with NTUC to encourage existing public sector contractors to adopt NWC's recommendations to share productivity gains

Date: 10 September 2012

To ask the Deputy Prime Minister and Minister for Finance: 

Whether a directive can be given to all Ministries and statutory boards to do a contract variation for their cleaning and security contracts to enable workers with a basic salary below $1,000 to receive a minimum of $50 increment in their salary as recommended by the National Wages Council.

Reply by DPM and Finance Minister Tharman Shanmugaratnam:

1. The Government does not generally stipulate in its contracts the wages payable to employees of contractors.  When tendering for projects, contractors would have factored in their workers’ wages in the contract price. Contractors with sound Human Resource practices should factor in expected wage increases over the duration of the contract, so that they can retain their staff.

2. A contract variation may be entered into by mutual agreement between the contracting parties. However, the terms of a contract variation may not be straightforward to negotiate, given that many cleaning contracts are integrated with facility maintenance and other services, and contractors may decide how many staff to deploy for a particular task such as cleaning.

3. Furthermore, a contract variation could be perceived as unfair by companies that were unsuccessful in tendering for Government cleaning and security contracts. They may argue that they had lost the tender by putting in higher bids that factored in reasonable wage increases for their workers, and that they could have won the tender under the revised contractual terms now enjoyed by the winning contractor. 

4. The Government however recognises the impact of contractors’ management practices on the well-being of their workers, in particular low-wage workers. This is why we have made a commitment for the entire public sector to engage only accredited cleaning companies and well-graded security companies for tenders called from early next year. Such companies are expected to have higher service standards, and better trained workers who can earn progressively higher wages.

5. The Government is working with tripartite partners to enhance the cleaning accreditation and security grading schemes. The details of these enhancements, and how they will help increase standards, skills and wages, will be finalised and announced later.

6. As for existing cleaning and security contracts in the public sector, we are working with NTUC to explore how we can strongly encourage public sector contractors to adopt the recommendations of the National Wages Council to reward their workers for productivity improvements.