ABSTRACT
Singapore has a unique wage system, which has evolved along with its economic strategy. In the period between 1965 and 1978, the economic strategy was to provide employment by attracting labor-intensive industries. To make Singapore more competitive than its neighbors, it put a restraint on wages. Singapore changed its economic strategy (1979-1984) from being labor-intensive manufacturing to more skill and capital-intensive manufacturing. This phase may be termed as wage correction. The government pushed for phasing out low-wage, labor-intensive industries and attracting high-wage, capital-intensive, and skill-based industries. The third phase of the economic strategy was to be more competitive in the face of increasing competition from the neighboring countries, especially Malaysia. This phase was called wage flexibility and it began in 1985. The flexible wage system has several components:
1 a basic fixed component reflecting the value of the job and to provide stability; 2 an annual wage supplement (AWS) of one month which can be adjusted under special
circumstances; 3 a variable bonus based on the company’s profitability and improved productivity, 4 a service increment each year for loyalty, experience, and length of service.
