The National Wages Council (NWC) released its guidelines for 2013/2014 on May 31, calling for an increase in real wages by boosting productivity.
The report noted average real wages have increased by 1.6% per year between 2002 and 2012, exceeding the growth in real total wages of 1.2% per annum.
However, the NWC added labour productivity has dropped 0.4% yearly as "economic growth was driven primarily by employment".
"The NWC recommends that real wage increases should be in line with productivity growth over the long term. Real wage increases need to be sustainable and not erode the long term competitiveness of our economy," the report said.
Acknowledging salaries will increase in a tight labour market, the NWC urged employers to utilise the Wage Credit Scheme to help manage rising labour costs while still being able to retain and develop workers.
"This frees up resources for businesses to invest in productivity. It will also mitigate inflationary pressure arising from businesses passing on higher wage costs," the report said.
"The Wage Credit Scheme also encourages companies to share productivity gains with their employees. These will enable wages to rise in a sustainable manner."
Additionally, this year's guidelines called for employers to help lower-income workers raise their skills, employability and income.
Suggestions by the NWC to support these workers include built-in wage increments and one-off lump sum payments for companies which are doing well.
But the NWC added it understood these recommendations may be challenging to meet for SMEs, and therefore encouraged small organisations to tap on government resources and assistance schemes such as the Quality Growth Programme to improve productivity and bottom lines.
To read the NWC's guidelines in full, click here.