Real wages up 4.2% in 2018, but face squeeze this year

Better pay for more with strong employment growth last year, but gloomy prospects in 2019

Real total wages also rose at a faster pace of 4.2 per cent last year, up from 3.2 per cent in 2017. PHOTO: ST FILE

More employees in Singapore received wage increases last year, as the economy and labour market remained healthy.

But economists painted a far gloomier picture for the current year, with mounting trade tensions and slower growth prospects.

Last year, growth in real total wages - which accounts for inflation of 0.4 per cent - picked up again after two consecutive years of slowing down.

They rose by 4.2 per cent on average last year, up from 3.2 per cent in 2017, said the Report on Wage Practices released by the Manpower Ministry yesterday. This includes higher bonuses of 2.06 months of basic wage last year, up from two months.

Better pay last year came on the back of strong employment growth, despite Singapore's economy slowing to 3.1 per cent growth last year from 3.7 per cent in 2017.

Economists said the strong wage growth probably did not factor in the slowdown in the second half of the year.

OCBC Bank head of treasury research and strategy Selena Ling said: "Companies started the year positive and typically make plans for manpower requirements and bonus payouts then."

Still, as a result of firms' improved profitability, the proportion that raised wages last year hit 67 per cent, up from 65 per cent in 2017.

The proportion of firms that cut wages also fell to 9 per cent last year from 12 per cent previously.

Overall, the share of employees who received a pay bump rose to 81 per cent last year from 78 per cent in 2017. Their average raise last year, at 5.8 per cent, was also higher than 2017's average hike of 5.1 per cent.

But for workers who received pay cuts last year, the cuts were deeper - 4.3 per cent last year compared with 3.9 per cent the year before.

The industries which posted the highest nominal wage growth last year were financial and insurance services, and professional services. On the other hand, manufacturing, food and beverage services and retail trade saw similar or moderated wage growth compared with the year before.

Low-wage workers were not left out. About six in 10 companies gave pay hikes to their low-wage employees last year, similar to the share that did so the year before.

The ministry's report is based on a survey conducted from Dec 18 last year to March 19 this year, which covered some 5,300 private sector firms with at least 10 employees.

In all, these firms had 1.2 million employees, including 584,100 local full-time workers with at least one year in service and 187,900 with less than a year of service or doing part-time work. The rest were foreigners.

Ms Ling and CIMB Private Banking economist Song Seng Wun said they expect poorer nominal wage growth this year.

Mr Song said there may be more businesses cutting wages as well.

But he said workers in modern services and in jobs related to digitisation should still do well, as the Smart Nation initiative continues to be rolled out.

Ms Ling was also positive about wage prospects in certain sectors such as infocommunications, healthcare and education, which are still trying to fulfil manpower needs.

National Trades Union Congress assistant secretary-general Patrick Tay said the unions should monitor their respective sector's performance closely and ensure employers reward their employees with wage increases in line with the firms' performance, productivity gains and employees' contributions.

"This is especially for the case of the manufacturing sector, where productivity was higher than wage growth over the last five years," he said in a Facebook post yesterday.

The National Wages Council will release its annual wage guide-lines today.

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A version of this article appeared in the print edition of The Straits Times on May 30, 2019, with the headline Real wages up 4.2% in 2018, but face squeeze this year. Subscribe