Private-sector wages rise despite challenging times

Office workers walk to the train station during evening rush hour in the financial district of Singapore on March 9, 2015.
Office workers walk to the train station during evening rush hour in the financial district of Singapore on March 9, 2015.PHOTO: REUTERS

But proportion of private-sector firms giving pay rises fell from 72% in 2014 to 64% in 2015

Companies had a tougher time last year, with a bigger proportion seeing falling profits or even losses.

Of 5,100 firms with 10 or more employees surveyed by the Ministry of Manpower (MOM), 59 per cent said they were less profitable than the year before or incurred losses, up from 50 per cent in 2014.

As a result, the proportion of private-sector employers that gave pay rises to staff dropped from 72 per cent in 2014 to 64 per cent last year.

But total wages still rose in the private sector because of the tight labour market and higher employer Central Provident Fund (CPF) contributions. Including bonuses and employer CPF contributions, total wages rose by 4.9 per cent last year, the same rate as in the year before.

Real total wages grew by 5.4 per cent last year, compared with 3.9 per cent in 2014, after accounting for negative inflation of 0.5 per cent, said MOM's latest Report on Wage Practices released yesterday.

Earlier MOM data showed that for Singaporeans, real median incomes for full-time workers rose 7 per cent last year, including employer CPF contributions.

The industries that saw the strongest growth in total wages last year were administrative and support services (6.5 per cent), financial and insurance services (5.4 per cent), and community, social and personal services (5.1 per cent).

But given the tough economic conditions, some 11 per cent of firms cut wages last year, up from 7.7 per cent a year earlier. The cuts were also steeper at 4.7 per cent, compared with 3.9 per cent the year before.

Overall bonuses were lower last year - the average annual variable component was 2.17 months of basic wages, down from 2.21 months for 2014. Financial and insurance service employees continued to command the highest bonuses at 3.38 months of basic wages.

Economists were less sanguine about salary rises this year, as the labour market has shown signs of slackening. More workers were let go in the first three months of this year, compared with the same period last year, and labour productivity growth is slow.

Given the "sluggish macro-environment and cautious business sentiments", OCBC economist Selena Ling said real wage growth could be around 2 to 3 per cent this year, assuming headline inflation remains negative, at minus 0.4 per cent.

Already, low-wage workers did not get as good a deal last year. Just 46 per cent of private-sector firms with employees earning basic monthly pay of up to $1,100 gave or intended to give them wage increases, down from 59 per cent who did or intended to do so for their workers earning up to $1,000 in 2014.

The salary bar was raised last year to account for rising salaries.

Fewer than two in 10 of the firms with employees earning up to $1,100 surveyed by MOM adopted the National Wages Council's recommended wage increment of at least $60 to these workers.

Those with outsourced workers fared slightly better - 42 per cent adopted the recommendation. Still, three in 10 of these firms did not give any increment at all to these workers, saying they were already paying market rates or constrained by contracts.

SIM University economist and Nominated MP Randolph Tan said firms may feel that the extent to which they can use wage support to raise wages at the lower end of the spectrum has run its course. "The motivation could be fizzling out."

A version of this article appeared in the print edition of The Straits Times on June 03, 2016, with the headline 'Private-sector wages rise despite challenging times'. Print Edition | Subscribe