report on wage practices 2015

Report on Wage Practices

2015

Manpower Research and Statistics Department

Singapore

June 2016

COPYRIGHT NOTICE REPORT ON WAGE PRACTICES 2015 © Manpower Research and Statistics Department Ministry of Manpower Republic of Singapore All rights reserved. Further reproduction of this material is prohibited without the written permission of the copyright holder. Application to reproduce any part of this publication should be addressed to: Director Manpower Research and Statistics Department Ministry of Manpower 18 Havelock Road #05-01 Singapore 059764 Republic of Singapore Email: [email protected] In citation, please credit the source when you extract and use the information/data from the publication.

MISSION

To provide timely and reliable

national statistical information on the labour market

to facilitate informed decision-making within the government and community-at-large

Statistical activities conducted by the Manpower Research and Statistics Department are governed by the

provisions of the Statistics Act (Chapter 317). The Act guarantees the confidentiality of information collected

from individuals and companies. It spells out the legislative authority and responsibility of the Director,

Manpower Research and Statistics Department. The Statistics Act is available in the Singapore Department

of Statistics website at www.singstat.gov.sg.

http://www.singstat.gov.sg/

CONTENTS

Page

Notations and Abbreviations ................................................................................................. i

Highlights ............................................................................................................................ ii

1 Overview .................................................................................................................... 1

2 Background ................................................................................................................ 1

Part 1 Annual Wage Changes

3 General Wage Trends ................................................................................................ 5

4 Wage Changes and Profitability .................................................................................. 8

5 Wage Changes by Type of Employees ..................................................................... 10

6 Wage Increases for Employees Earning Up To $1,100 ............................................. 12

Part 2 Wage Flexibility

7 Adoption of Wage Restructuring Recommendations ................................................. 19

Annex: Statistical Charts and Tables

Survey Coverage and Methodology

MANPOWER RESEARCH AND STATISTICS DEPARTMENT, MINISTRY OF MANPOWER i

Notations - : nil or negligible

s : suppressed

Abbreviations AVC : Annual Variable Component

AWS : Annual Wage Supplement

CPF : Central Provident Fund

CPI : Consumer Price Index

CPI (OOA) : Consumer Price Index excluding imputed rentals on owner-occupied accommodation

DOS : Department of Statistics

GDP : Gross Domestic Product

incl. : Including

KPI : Key Performance Indicator

MOM : Ministry of Manpower

MTI : Ministry of Trade and Industry

MVC : Monthly Variable Component

NRAF : Non Rank-and-File

NWC : National Wages Council

p.a. : Per Annum

PWM : Progressive Wage Model

RAF : Rank-and-File

Cat A : Establishment was profitable and did much better than in the previous year

Cat B : Establishment was profitable and did as well as in the previous year

Cat C : Establishment was profitable but did not do as well as in the previous year

Cat D : Establishment incurred a loss

MANPOWER RESEARCH AND STATISTICS DEPARTMENT, MINISTRY OF MANPOWER ii

HIGHLIGHTS Overview

Total wage growth (including bonuses) in the private sector eased amid softer economic

conditions. However, real wages increased at a faster pace in 2015 than the previous year,

due to negative inflation. Fewer firms were profitable in 2015 compared to 2014, as the

proportion of firms that were more profitable than a year ago declined, and those which were

less profitable or incurred losses increased. As most firms had put in place some form of

flexible and performance-based wage system that gave flexibility to adjust wages according to

the prevailing business climate, the proportion of employers that gave wage increases to their

employees fell in 2015.

Main Findings

Amid softer economic conditions, total wages in the private sector rose by 4.0% in 2015,

down from the 4.9% increase in 2014. Including employer CPF contributions, the growth in

total wages remained stable at 4.9% in 2015, with the increase in employer CPF contribution

rate in 2015. However, as overall inflation was negative, real total wages (including employer

CPF contributions) rose at a faster pace of 5.4% in 2015, compared with 3.9% a year ago.

79% of private establishments reported that they were profitable in 2015, down from the 82%

in 2014. Specifically, the proportion of establishments which were more profitable1 (2015:

12%, 2014: 16%), or as profitable (2015: 29%, 2014: 34%) declined. On the other hand,

establishments which were profitable but did not do as well as the previous year (2015: 38%,

2014: 32%), or incurred losses (2015: 21%, 2014: 18%) rose.

Most employers put in place some form of flexible and performance-based wage system.

Specifically, 90% of private sector employees were under some form of flexible wage system

in 2015, the highest since 2004. Having a narrower maximum-minimum salary ratio remained

the most common wage recommendation adopted, covering two in three (66%) private sector

employees in December 2015. This was followed by linking variable bonus to Key

Performance Indicators (KPI) (52%) and having the Monthly Variable Component (MVC)

(32%) in the wage structure.

A smaller proportion of establishments raised wages in 2015 than a year ago. 64% of private

establishments raised the total wages of their employees in 2015, down from 72% in 2014.

There was an increase in the proportion of firms which kept wages unchanged from the

previous year (2015: 25%, 2014: 20%), and to a smaller extent, cut wages (2015: 11%, 2014:

7.7%).

Among the private establishments with employees earning a monthly basic salary of up to

$1,100 in 2015, 46% granted wage increases to those employees. This was lower than the

59% in 2014 for employees earning up to $1,000. Specifically, 18% gave increments equal to

or more than the NWC’s recommended built-in wage increase of $60 in 2015, compared to

1 Compared to the previous year’s profits

MANPOWER RESEARCH AND STATISTICS DEPARTMENT, MINISTRY OF MANPOWER iii

31% a year ago.2 Among firms that did not grant wage increases, half indicated that they were

already paying the workers the market rate, while others cited poor business and high

business costs as reasons.

2 Over the year, the proportion of full-time resident employees earning a basic monthly salary of up to $1,100 is estimated to have

decreased from 8.2% in 2014 to 6.9% in 2015. Source: Comprehensive Labour Force Survey and Occupational Wage Survey, Manpower Research and Statistics Department, MOM

MANPOWER RESEARCH AND STATISTICS DEPARTMENT, MINISTRY OF MANPOWER 1

Report on Wage Practices 2015

1 Overview

1.1 Wages continued to grow in 2015. While the pace moderated from a year ago amid

softer economic conditions, real wages grew faster due to negative inflation. Fewer firms were

profitable in 2015 compared to 2014, as the proportion of firms that were more profitable than a

year ago declined, and those which were less profitable or incurred losses increased. As most

firms had put in place some form of flexible and performance-based wage system that gave

flexibility to adjust wages according to the prevailing business climate, the proportion of employers

that gave wage increases to their employees fell in 2015.

1.2 The findings are based on data from the Survey on Annual Wage Changes3 which

effectively covered 5,100 private establishments each with at least 10 employees. The survey

yielded a survey response rate of 92%. The survey coverage and methodology are in Annex 2.

2 Background

2.1 The Singapore economy grew at a more moderate pace in 2015 compared with a year

ago (Chart 1). Inflation eased from 1.0% in 2014 to -0.5% in 2015.4 Unemployment remained low

and broadly unchanged since 2011, even though total employment growth has slowed to 32,300

or 0.9%, from the 3 to 4% growth between 2010 and 2014.5

3 Data on annual wage change from the survey refer to the change in wages paid to full-time resident employees in continuous

employment of at least one year. This is the only source that provides breakdown of total wage changes into changes in basic wages and bonuses for three categories of employees, namely the rank-and-file, junior management and senior management.

4 Measured using Consumer Price Index (CPI) for all items. Similarly, CPI excluding imputed rentals on owner-occupied

accommodation (OOA), which relate more to the actual spending of households, eased from a 1.2% growth to 0.1% in 2015. 5 Local employment growth was flat (700 or 0.0%) in 2015, after growing strongly in 2014 (96,000 or 4.4%) and 2013 (82,900 or 4.0%)

while foreign employment gains continued to moderate since 2011 (2015: 31,600 or 2.3%; 2014: 2.6%; 2013: 4.2%; 2012: 5.9%; 2011: 7.6%).


Chart 1: Key Economic Indicators, 2005 ‒ 2015

(A) Annual Change in GDP

(B) Unemployment Rate (Annual Average)

Sources : GDP - Department of Statistics, MTI Unemployment - Manpower Research and Statistics Department, MOM


Proportion of profitable establishments declined amid softer economic conditions

2.2 As economic conditions softened, the proportion of profitable establishments continued

to decline from 82% in 2014 to 79% in 2015. There was a corresponding decline in the proportion

of employees working in profitable establishments, from 89% in 2014 to 87% in 2015 (Chart 2).

Specifically, the proportion of establishments with higher (2015: 12%, 2014: 16%) or similar profits

(29%, 34%) compared to the previous year declined. On the other hand, establishments which

were profitable but did not do as well as the previous year (2015: 38%, 2014: 32%), and firms that

incurred losses (21%, 18%) rose over the same period (Chart 3).

Chart 2: Distribution Of Establishments And Employee Coverage By Profit Status, 2005 ‒ 2015

Establishments

Employee Coverage

Source : Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM

Note: Based on private sector establishments that disclosed their profitability status in 2015.


Chart 3: Distribution Of Establishments And Employee Coverage By Detailed Profit Status, 2014 And 2015

Establishments

Employee Coverage


Notes: (1) Based on private sector establishments that disclosed their profitability status in 2014 and 2015.

(2) Figures may not sum up to 100% due to rounding.

(3) Cat A to C pertain to profitable establishments, while Cat D pertain to loss-making firms.


Part I Annual Wage Changes

3 General Wage Trends

Wage increases moderated in 2015, but real wage growth picked up pace due to negative

inflation

3.1 Amid softer economic conditions, total wage growth (comprising of basic wages and

bonuses) declined from 4.9% in 2014 to 4.0% in 2015. This was due to a moderation in basic

wage growth from 4.9% in 2014 to 4.2% in 2015, and lower bonus payment, from 2.21 months of

basic wages to 2.17 months. When employer CPF contributions were included, total wage growth

remained stable in 2015 at 4.9%, due to an increase in employer CPF contributions in 2015.6

3.2 Due to negative inflation, real total wages, both including and excluding CPF, grew at a

faster pace (Chart 4).

6 The main employer CPF contribution rate rose from 16.0% in 2014 to 17.0% in 2015.


Chart 4: Annual Change In Total And Basic Wages, 2005 – 2015

Nominal

Real*


Note: * ‒ Deflated by Consumer Price Index (CPI) for all items at 2014 prices (2014 = 100). Figures in brackets are deflated by CPI less imputed rentals on owner-occupied accommodation at 2014 prices (2014 = 100).


Chart 5: Annual Variable Component, 2005 – 2015


3.3 There was a broad-based moderation in wage growth across industries. Similar to

2014, wage growth was higher among employees in administrative & support services, financial &

insurance, and community, social & personal services (Chart 6).

Chart 6: Total And Basic Wage Change By Industry, 2014 And 2015


Note: Figures pertain to total and basic wage change in 2015. Figures in brackets are that for 2014.


4 Wage Changes and Profitability

Fewer establishments raised total wages in 2015 than a year ago; those that did so gave a

smaller quantum of increase

4.1 64% of establishments raised the wages of their employees in 2015, down from 72% in

2014.7,8 The wage increase also declined to 5.6% in 2015 from 6.0% in 2014.

4.2 On the other hand, the proportion of establishments that cut total wages (2015: 11%,

2014: 7.7%) or kept it unchanged (25%, 20%) in 2015 increased from 2014. The wage declines

were also steeper at -4.7% in 2015, compared to -3.9% the year before (Chart 7).

4.3 Similar findings were observed based on basic wage changes (Annex 1 ‒ Chart 1).

Chart 7: Distribution Of Establishments And Employee Coverage By Total Wage Change

And Extent Of Total Wage Change, 2014 and 2015

(A) Distribution By Total Wage Change

Establishments Employee Coverage

(B) Extent of Total Wage Change Among Establishments

With Wage Cut With Wage Increase

Source : Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM Note: Figures may not sum up to 100% due to rounding.

7 They employed 77% of private sector employees, down from 83% a year ago.

8 The proportion of establishments that gave wage increases to their employees (2015: 64%, 2014: 72%) was lower than the proportion

of profitable establishments (2015: 79%, 2014: 82%) as not all profitable firms gave wage increases.


Wage increases and bonuses remained closely related to profitability

4.4 Profitable firms continued to give higher total and basic wage increases than less

profitable ones (Chart 8). Profitable firms also gave larger bonuses of at least 2 months in

quantum compared with the 1.53 months given by loss-making firms (Chart 9). In general, wage

increases had slowed across profitable and non-profitable firms.

Chart 8: Total And Basic Wage Change By Detailed Profit Status, 2014 And 2015


Note : (1) Based on private sector establishments that disclosed their profitability status in 2014 and 2015.

(2) Cat A to C pertain to profitable establishments, while Cat D pertain to loss-making firms.

Chart 9: Annual Variable Component By Detailed Profit Status, 2014 And 2015


Note : (1) Based on private sector establishments that disclosed their profitability status in 2014 and 2015. (2) Cat A to C pertain to profitable establishments, while Cat D pertain to loss-making firms.

Category A : Firm was profitable and did much better than in the previous year

Category B : Firm was profitable and did as well as in the previous year

Category C : Firm was profitable but did not do as well as in the previous year

Category D : Firm incurred a loss


5 Wage Changes by Type of Employees

Wages grew for both RAF and non-RAF employees, although at a slower pace than 2014

5.1 Total wages rose for both rank-and-file (RAF) and non-RAF employees in 2015,

though at a slower pace than in 2014. The moderation in wage growth was broad-based across

industries (Annex 1 – Table 1). As wage growth for RAF employees moderated more than non-

RAF employees, their total wage increases (3.9%) lagged their non-RAF counterparts (4.1%) in

2015. This was unlike the previous two years, when wage growth was higher among RAF

employees (Chart 10). Basic wage growth for RAF (4.0%) employees also lagged the non-RAF

(4.4%).

5.2 In general, the pay structure of non-RAF employees were more variable than RAF

employees. Bonuses for RAF employees (1.85 months) remained lower than non-RAF (senior

management: 2.56 months, junior management: 2.47 months) (Chart 11).

Chart 10: Total And Basic Wage Change By Type Of Employees, 2014 And 2015


Note : Non-rank-and-file comprise junior and senior management


Chart 11: Annual Variable Component As A Proportion Of Total Annual Wages, 2014 And 2015

Annual Variable Component in Months of

Basic Wage

2014 2015

2.21

(0.0%)

2.17

(-1.8%)

1.90 (-2.1%)

1.85 (-2.6%)

2.53

(1.2%)

2.50

(-1.2%)

2.51 (1.2%)

2.47 (-1.6%)

2.59

(1.6%)

2.56

(-1.2%)


Notes: (1) Figures in brackets refer to percentage change in annual variable component over the year.

(2) Non-rank-and-file employees comprise junior and senior management employees.


6 Wage Increases for Employees Earning Up To $1,100

6.1 Starting from its 2012/2013 guidelines, the National Wages Council (NWC) gave focus

to low-wage workers with three rounds of quantitative wage recommendations for those earning a

basic monthly salary of up to $1,000. The recommended minimum built-in wage increase was $50

in 2012, and $60 in 2013 and 2014. To provide continued focus to those at the lower end, the

NWC recommended that employers grant a built-in wage increase of at least $60 to workers

earning a basic monthly salary of up to $1,100 in its 2015/2016 guidelines, raising the minimum

threshold from previous years.

Proportion of establishments that gave/intended to give wage increases to employees

earning up to $1,100/$1,000 declined, including those that gave NWC’s recommended built-

in wage increase of at least $60

6.2 46% of private establishments with employees earning up to $1,100 monthly in basic

salary gave/intended to give wage increases to these employees in 2015. This was lower than the

59% that gave/intended to give employees earning up to $1,000 in 2014. The decline was due to a

drop in proportion of establishments which gave NWC’s recommended built-in wage increase of at

least $60 from 31% in 2014 to 18% in 2015.9 The proportion of establishments that gave an

increase of less than $60 (2015: 15%, 2014: 15%), provided other forms of wage increases10

(7.6%, 8.3%) or had not decided on the details (5.4%, 4.5%) was broadly comparable to a year

ago (Chart 12).

6.3 Among the 54% of private establishments that did not grant wage increases, almost

half (25%) indicated that they were already paying market rate. Other reasons include not

performing well (20%) or business/wage cost would be impacted (12%). A minority cited poor

employee performance (4.9%) or wages were locked in under existing contracts with clients

(1.2%).

9 Over the year, the proportion of full-time resident employees earning a basic monthly salary of up to $1,100 is estimated to have

decreased from 8.2% in 2014 to 6.9% in 2015. Source: Comprehensive Labour Force Survey and Occupational Wage Survey,

Manpower Research and Statistics Department, MOM

10 Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.


Chart 12: Distribution Of Establishments By Whether They Gave Wage Increase To Employees Earning Basic Monthly Salary Of $1,000 (2014)/ $1,100 (2015) And Below


Notes: (1) Based on private sector establishments with employees earning basic monthly salary of $1,000 (2014)/ $1,100 (2015) and

below.

(2) * Figures for reasons for not providing wage increase to these employees will not sum up as multiple reasons were allowed.

The residual ‘other reasons’ is not reflected in the table.

(3) Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.

2014

Based on workers with $1,000 & below basic salary

Other Forms Of Wage Increase

Not Decided

On Details Other Forms Of Wage Increase

Not Decided

On Details

2015

Based on workers with $1,100 & below basic salary


Profitable firms remained more likely to give built-in wage increase

6.4 Expectedly, the proportion of profitable (in Category A to C) establishments which gave

wage increases to employees earning up to $1,100 was higher than non-profitable (Category D)

ones. Profitable establishments were also more likely to give at least $60 built-in wage increase

(Table 1).

Administrative & support services continued to lead in giving at least $60 built-in wage

increase recommended by NWC

6.5 More than one in three (35%) of establishments in administrative & support services

gave at least $60 built-in wage increase to their employees earning up to $1,100 in 2015,

significantly higher than in other industries (10% to 24%). This was driven by the security sector,

where more establishments raised the basic wages of their low-wage employees to meet the

requirements of the Progressive Wage Model (PWM), that will be made mandatory from

September 201611 (Table 1).

11

The Progressive Wage Model (PWM) for the Security sector was introduced in October 2014, following recommendations by the Security Tripartite Cluster (STC). Under the PWM, the basic monthly salary for a full-time security officer would be $1,100. To ensure

that there is uniform adoption of the PWM, compliance with the wage and training requirements will be one of the licensing conditions for security agencies. The Police Licensing and Regulatory Department (PLRD) will be incorporating the PWM in its existing licensing framework for security agencies. Based on the feedback from industry players, the Government has provided a lead time of two years

for the industry to comply with the PWM training and wages requirements. From 1 September 2016, security agencies must ensure their security officers receive the required training and are paid wages that are in line or higher than the progressive wage levels specified in the PWM. More information are available at:

https://www.ntuc.org.sg/wps/portal/up2/home/searchresultsdetails/news?WCM_GLOBAL_CONTEXT=/Content_Library/ntuc/home/about%20ntuc/newsroom/media%20releases/3bd06f1b-acf4-464f-b38d-add73243e377




Table 1: Distribution Of Establishments By Whether They Gave Wage Increase To Employees Earning Basic Monthly Salary Of $1,100 And Below, 2015

Per Cent

Yes

No Sub-

Total

Had

Given

Built-In

Wage

Increase

Quantum of

Built-In Wage

Increase Not Yet

Decided

On Details

Provided

Other

Forms Of

Wage

Increase*

Less

Than

$60

$60 &

More

Total 46.5 33.4 14.9 18.5 5.4 7.6 53.5

By Profit Status

Cat A 49.3 43.3 15.5 27.7 1.1 4.9 50.7

Cat B 50.6 35.4 13.5 21.9 4.5 10.7 49.4

Cat C 46.1 32.7 15.4 17.3 5.5 7.9 53.9

Cat D 40.3 27.4 15.5 11.9 8.5 4.3 59.7

By Industry

Manufacturing 41.3 27.2 13.5 13.7 2.0 12.1 58.7

Construction 45.4 30.4 12.0 18.4 7.4 7.6 54.6

Services 48.1 36.2 16.2 20.0 5.8 6.1 51.9

Wholesale & Retail Trade 43.6 32.0 14.1 17.9 5.2 6.4 56.4

Transportation & Storage 42.4 28.7 18.6 10.1 2.1 11.6 57.6

Accommodation & Food Services 54.4 38.1 14.1 24.0 9.7 6.6 45.6

Information & Communications s s s s s s s

Financial & Insurance Services s s s s s s s

Real Estate Services 59.8 55.4 36.6 18.8 - 4.5 40.2

Professional Services s s s s s s s

Administrative & Support Services 63.1 52.3 17.6 34.6 1.4 9.5 36.9

Community, Social & Personal Services 39.3 33.4 19.8 13.6 4.6 1.3 60.7


Notes: (1) Based on private sector establishments with employees earning basic monthly salary of $1,100 and below.

(2) Figures for reasons for not providing wage increase to these employees will not sum up as multiple reasons were allowed.

(3) * — Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.

(4) s: Data suppressed due to small number covered.

(5) -: nil or negligible

(6) The residual ‘other reasons” is not reflected in the table.


Among firms with employees performing outsourced work and earning basic monthly

salary of up to $1,100, more than four in ten extended NWC’s recommended wage increase

to these workers

6.6 In its 2015/2016 guidelines, the NWC recognised that many low-wage workers are

employed in outsourced work, and urged employers and service buyers to make special efforts to

incorporate NWC wage recommendations into the contracts of these workers.

6.7 68% of private establishments with employees performing outsourced work and earning

a basic monthly salary of up to $1,100 gave/intended to give wage increases to these employees

in 2015, of which 42% gave NWC’s recommended wage increment of at least $60 (Chart 13). The

adoption rate (48%) was higher in administrative & support services, which hired the majority

(77%) of such workers.

6.8 32% of establishments did not give wage increments to those earning up to $1,100

employed in outsourced work. Among them, many indicated they were already paying market rate

(19%), and/or were constrained by contractual agreements (14%).

Chart 13: Distribution Of Establishments By Whether They Gave Wage Increase To Employees Performing Outsourced Work And Earning Basic Monthly Salary Of $1,100 And

Below, 2015


Notes: (1) Based on private sector establishments with outsourced employees earning basic monthly salary of $1,100 and below.

(2) * Figures for reasons for not providing wage increase to these employees will not sum up as multiple reasons were allowed.

The residual ‘other reasons’ is not reflected in the table.

(3) Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.

Other Forms Of Wage Increase

Not Decided On Details

Per Cent


With PWM, outsourced workers enjoyed higher wage increases than regular employees

6.9 Among employees earning a basic monthly salary of up to $1,100, those under

outsourced service contracts received higher payouts (median: $81, mean: $100) than all

employees as a whole (median: $64, mean: $84). This was because workers on outsourced

service contracts typically worked in the cleaning and security sectors with progressive wage

models. Employees earning up to $1,100 under outsourced service contracts also received higher

basic wage gains of 11.7%, compared with all employees earning up to $1,100 (9.5%) and all RAF

in these establishments (6.0%) (Table 2).


Table 2: Quantum Of Built-in Wage Increase For RAF And Employees Earning Basic Monthly Salary Of $1,100 And Below, 2015


Notes: (1) Data for employees earning ≤ $1,100 and RAF are based on establishments with employees earning basic monthly salary of $1,100

and below and gave built-in wage increase to these employees in 2015.

(2) Data for outsourced employees earning ≤ $1,100 are based on establishments with outsourced employees earning basic monthly

salary of $1,100 and below and gave built-in wage increase to these employees in 2015.

(3) s: Data suppressed due to small number covered.

(4) -: nil or negligible

Outsourced Employees Earning Basic Monthly Salary of $1,100 and Below

Employees Earning Basic Monthly Salary of $1,100 and Below

RAF (Overall)

Dollar Quantum ($) Basic Wage Increase (%)

Dollar Quantum ($) Basic Wage Increase (%)

Basic Wage Increase (%)

Median Mean Mean Median Mean Mean Mean

Total 81 100 11.7 64 84 9.5 6.0

By Profit Status

Category A s s s 81 78 8.9 5.9

Category B 72 103 11.7 60 86 9.6 6.7

Category C 100 181 22.1 65 94 10.6 5.5

Category D s s s 50 67 7.5 5.1

By Industry

Manufacturing s s s 53 64 6.9 4.4

Construction s s s 60 81 9.1 5.2

Services 81 103 12.1 80 89 10.1 6.5

Wholesale & Retail Trade

- - - 66 73 8.0 5.1

Transportation & Storage s s s 50 78 10.4 4.0

Accommodation & Food Services

s s s 60 79 8.1 6.4

Information & Communications

- - - s s s s

Financial & Insurance Services

- - - s s s s

Real Estate Services s s s s s s s

Professional Services - - - s s s s

Administrative & Support Services

81 109 12.9 81 102 12.0 9.8

Community, Social & Personal Services

s s s 80 80 8.3 5.1


Part II Wage Flexibility12

7 Adoption of Wage Restructuring Recommendations

7.1 This section of the report updates the progress of employers in restructuring their wage

system to be more flexible and performance-based, as guided by the wage restructuring

recommendations released in January 2004.13 Specifically, employers are encouraged to

implement the following key wage recommendations:

(1) implement variable bonus linked to Key Performance Indicators (KPI)14;

(2) introduce the Monthly Variable Component (MVC) in wage structure;

(3) narrow the maximum-minimum salary ratio for the majority of their employees to

average of 1.5 or less.15

Nine in ten employees under some form of wage flexibility in 2015

7.2 In line with tripartite recommendations to restructure wages and boost

competitiveness, a large majority of firms have adopted flexi wage recommendations.16 As of

December 2015, 90%17 of private sector employees were working in establishments which had at

least one of the recommended flexible wage components (Chart 14).

7.3 83% of employees working in small and medium establishments employing 25 to 199

employees were covered by at least one flexible wage component, up from 72% in 2004.

However, it remained lower than the 94% for large establishments, though the gap had narrowed.

Details are in Annex 1 ‒ Chart 2.

12

Data pertain to private sector establishments each employing at least 25 workers.

13 The recommendations were made by the Tripartite Taskforce on Wage Restructuring representing employers, workers and the

government. Recognising that establishments may require different forms of wage flexibility to meet their specific circumstances, employers may choose to implement only the recommendations that are relevant to them.

14 In the survey, establishments are considered to have implemented variable bonus linked to KPI, if they have formulated and

communicated to their employees, the KPI for the payment of the variable bonus. 15

In the survey, establishments are considered to have implemented this recommendation if they have narrowed the salary ratio t o 1.5

or less, decided to/in the process of narrowing the salary ratio or all along have a maximum-minimum ratio of 1.5 or less. 16

Establishments are considered to have some form of flexible wage system when they have adopted at least one key wage recommendation.

17 One in ten (10%) private sector employees were not covered by any of the key wage recommendations. 8.7% were working in

establishments that were satisfied with their wage flexibility. See Annex 1 – Table 4.


Chart 14: Proportion Of Employees With Some Form Of Wage Flexibility, 2004 – 2015


Narrowing maximum-minimum salary ratio remained the most common wage

recommendation adopted

7.4 Having a narrower maximum-minimum salary ratio remained the most common wage

recommendation adopted, covering two in three (66%) private sector employees in December

2015.18 This was followed by linking variable bonus to KPI (52%) and MVC (32%) (Chart 15)19.

The average maximum-minimum salary ratio of rank-and-file (RAF) employees in the private

sector (1.47) remained below the 1.50 target, and was lower than that for the junior management

(1.59) (Chart 16).

7.5 Establishment’s adoption of various forms of wage flexibility vary by firm size. While

larger establishments were more likely to adopt the MVC in its wage structure and link variable

bonus link to KPI, SMEs were more receptive to narrowing the maximum-minimum salary ratio

(Chart 17).

18

These employees worked in establishments that had narrowed/were narrowing their maximum-minimum salary ratio to 1.5 or less.

19 The take-up rate for MVC has broadly stabilised at about one third of the private sector workforce since 2007.


Chart 15: Proportion Of Employees In Establishments That Implemented Wage Restructuring

Recommendations, 2004 – 2015


Note : Establishments can implement more than one key wage recommendation.


Chart 16: Average Maximum-Minimum Salary Ratio Of Rank-And-File Employees And Junior Management, 2004 – 2015



Chart 17: Proportion Of Establishments With Wage Restructuring Recommendations Implemented,

2004 – 2015

Source : Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM Note : Establishments can implement more than one key wage recommendation.

MANPOWER RESEARCH AND STATISTICS DEPARTMENT, MINISTRY OF MANPOWER A1

Annex 1

Table 1: Total And Basic Wage Change By Industry, 2014 And 2015

Per Cent

Industry (SSIC 2010) Period Total Wage Change Basic Wage Change

Total RAF NRAF Total RAF NRAF

Total 2015 4.0 3.9 4.1 4.2 4.0 4.4

2014 4.9 5.1 4.7 4.9 5.1 4.7

Manufacturing 2015 3.1 2.7 3.5 3.8 3.5 4.1

2014 4.9 4.6 5.2 4.3 4.3 4.3

Construction 2015 3.1 2.8 3.4 3.3 3.0 3.6

2014 3.8 3.7 3.8 3.8 3.7 3.9

Services 2015 4.3 4.3 4.3 4.4 4.3 4.5

2014 5.0 5.4 4.6 5.1 5.4 4.8

Wholesale & Retail Trade

2015 3.3 3.3 3.3 3.7 3.6 3.8

2014 4.4 4.9 3.8 4.5 4.6 4.4

Transportation & Storage

2015 4.3 4.5 4.0 3.6 3.5 3.8

2014 3.8 3.7 4.1 4.3 4.2 4.4

Accommodation & Food Services

2015 3.2 3.1 3.4 3.2 3.1 3.4

2014 3.7 3.7 3.7 3.9 3.9 3.9

Information & Communications

2015 2.5 0.9 3.2 4.0 4.0 4.1

2014 4.7 5.4 4.4 4.6 4.8 4.6

Financial & Insurance Services

2015 5.4 4.8 5.6 5.3 4.7 5.5

2014 5.9 5.8 6.0 5.6 4.9 5.8

Real Estate Services 2015 4.1 4.0 4.3 4.4 4.3 4.5

2014 6.8 8.3 4.1 6.7 7.8 4.8

Professional Services 2015 3.7 3.1 4.0 4.2 3.6 4.5

2014 4.0 3.4 4.3 4.4 4.0 4.6

Administrative & Support Services

2015 6.5 7.3 3.6 6.3 7.0 3.7

2014 8.6 9.5 5.0 8.5 9.5 4.7


2015 5.1 5.1 5.2 5.1 5.0 5.2

2014 5.4 5.8 4.9 5.4 5.6 5.1



Table 2: Annual Variable Component By Industry, 2014 And 2015

Months of Basic Wage

Industry (SSIC 2010) Period

Months of Basic Wage

Total RAF NRAF

Total 2015 2.17 1.85 2.50

2014 2.21 1.90 2.53

Manufacturing 2015 2.42 2.18 2.67

2014 2.54 2.32 2.75

Construction 2015 1.40 1.15 1.67

2014 1.46 1.25 1.69

Services 2015 2.18 1.84 2.52

2014 2.19 1.84 2.54

Wholesale & Retail Trade 2015 1.96 1.70 2.30

2014 1.99 1.71 2.33

Transportation & Storage 2015 2.49 2.45 2.60

2014 2.39 2.35 2.48

Accommodation & Food Services 2015 1.11 0.98 1.36

2014 1.10 0.92 1.45

Information & Communications 2015 2.27 1.92 2.41

2014 2.45 2.39 2.47

Financial & Insurance Services 2015 3.38 3.05 3.45

2014 3.37 2.90 3.47

Real Estate Services 2015 1.92 1.54 2.53

2014 2.08 1.71 2.78

Professional Services 2015 2.05 1.73 2.20

2014 2.02 1.80 2.12

Administrative & Support Services 2015 1.14 1.05 1.49

2014 1.14 0.95 1.86


2015 2.37 2.26 2.50

2014 2.46 2.36 2.58



Chart 1: Distribution Of Establishments And Employee Coverage By Basic Wage Change And Extent Of Basic Wage Change, 2014 and 2015

(A) Distribution By Basic Wage Change

Establishments Employee Coverage

(B) Extent of Basic Wage Change Among Establishments

With Wage Cut With Wage Increase

Source : Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM Notes: (1) s: Data suppressed due to small number covered.

(2) Figures may not sum up to 100% due to rounding.


Chart 2: Proportion Of Employees By Number Of Key Wage Recommendations Implemented, 2004 – 2015



Table 3: Proportion Of Employees With Some Form Of Wage Flexibility By Industry, 2014 and 2015

Per Cent

Industry (SSIC 2010)

Period

Some Form of Wage

Number of Key Wage Recommendations Implemented

Flexibility

(A) + (B) + (C) Three (A) Two (B) One (C)

Total 2015 89.6 14.5 31.3 43.7

2014 89.5 15.3 30.2 43.9

Manufacturing 2015 91.2 17.4 31.4 42.4

2014 91.0 18.3 27.2 45.5

Construction 2015 83.0 4.4 11.5 67.1

2014 81.3 4.9 14.1 62.2

Services 2015 91.1 16.9 37.6 36.6

2014 91.0 16.8 35.4 38.8

Wholesale & Retail Trade 2015 90.4 9.9 34.6 45.9

2014 90.5 11.1 32.8 46.6

Transportation & Storage 2015 92.8 24.6 44.5 23.8

2014 94.9 16.6 46.6 31.7

Accommodation & Food Services 2015 92.3 29.1 22.6 40.6

2014 92.7 26.9 21.5 44.3

Information & Communications 2015 88.9 6.4 48.6 33.9

2014 93.0 6.4 46.9 39.7

Financial & Insurance Services 2015 92.2 9.9 47.6 34.6

2014 86.3 12.2 43.5 30.7

Real Estate Services 2015 97.0 18.4 35.9 42.7

2014 91.0 25.8 25.7 39.4

Professional Services 2015 89.8 14.9 34.1 40.8

2014 88.2 19.2 32.1 36.9

Administrative & Support Services 2015 87.0 15.2 26.1 45.7

2014 86.3 13.2 23.1 50.0


2015 92.2 21.5 44.4 26.3

2014 94.5 21.8 41.6 31.0

Source : Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM Note : Figures may not sum up due to rounding.


Chart 3: Proportion Of Employees In Establishments With Some Form Of Wage Flexibility Or Were Satisfied With Their Wage Flexibility Even Though Their Establishments Did Not Implement Any Key

Wage Recommendations, 2004 – 2015


Table 4: Proportion Of Employees In Establishments That Did Not Implement

Any Key Wage Recommendations, 2014 And 2015

Source : Survey on Annual Wage Changes, Manpower Research and Statistics Department, MOM Note: Figures may not sum up due to rounding

Period

Did Not Implement Any

Key Wage Recommendation

Satisfied/Not Satisfied With Level of Flexibility

in Wage System

Satisfied Not

Satisfied

All Industries 2015 10.4 8.7 1.7

2014 10.5 9.1 1.4

By Establishment Size

25-199 Employees

2015 17.4 14.3 3.1

2014 15.5 12.7 2.8

200 or More Employees

2015 6.0 5.2 0.8

2014 7.0 6.5 0.5

Per Cent


Table 5: Proportion Of Employees In Establishments By Key Wage Recommendations And Industry, 2014 And 2015

Per Cent

Industry (SSIC 2010)

Period

With Maximum-Minimum

Salary Ratio

With MVC

With Variable Bonus

Linked to KPI

Total 2015 65.9 32.5 51.5

2014 65.5 33.1 51.8

Manufacturing 2015 66.9 32.6 57.9

2014 65.4 33.3 56.2

Construction 2015 78.4 10.7 14.2

2014 73.4 12.0 19.9

Services 2015 61.6 39.4 61.5

2014 63.4 38.3 58.4

Wholesale & Retail Trade 2015 65.1 25.5 54.3

2014 68.6 23.6 53.3

Transportation & Storage 2015 65.8 52.9 67.9

2014 60.1 50.4 64.2

Accommodation & Food Services 2015 88.2 34.1 50.8

2014 89.1 33.3 45.7

Information & Communications 2015 53.3 19.4 77.6

2014 53.0 18.1 81.5

Financial & Insurance Services 2015 28.2 53.2 78.2

2014 29.1 50.1 74.9

Real Estate Services 2015 82.9 40.6 46.0

2014 77.8 37.8 52.7

Professional Services 2015 55.6 32.6 65.4

2014 60.7 34.0 63.9

Administrative & Support Services 2015 77.7 27.1 38.7

2014 77.2 24.5 34.1

Community, Social & Personal Services 2015 52.8 56.2 70.4

2014 59.3 58.1 62.3



Annex 2

SURVEY COVERAGE AND METHODOLOGY SURVEY ON ANNUAL WAGE CHANGES, 2015 Introduction

The Survey on Annual Wage Changes, 2015 was conducted by the Manpower Research and Statistics Department of the Ministry of Manpower under the Statistics Act (Chapter 317). The survey fieldwork was conducted from 18 December 2015 to 29 February 2016. Objective

The survey was conducted to obtain information on the extent of wage changes and wage restructuring in 2015. Coverage The survey covered private sector establishments with at least 10 employees. All unionised establishments were surveyed. For the non-unionised sector, all establishments with 250 or more employees were surveyed. A systematic random sample was then drawn from the remaining establishments stratified by industry and employee size. This sampling methodology yielded an effective sample of 5,100 private establishments, of which 1,000 were unionised and 4,100 were non-unionised. These establishments employed 1,281,300 employees which included 598,300 full-time employees on the Central Provident Fund (CPF) scheme with at least 1 year in service (comprising 293,100 rank-and-file employees, 235,900 junior and 69,300 senior management staff). The survey response rate was 92%. The results were weighted to reflect the population of private sector establishments with at least 10 employees by using expansion factors based on sampling fraction. Methodology

The survey was conducted using mail questionnaires. Respondents could submit their returns

online, by post, email or fax, with clarifications made over the phone.

Reference Period

The reference period for the survey was from November/December 2014 to November/December 2015.


Data Collected

The establishments were asked to provide information on the average basic wage change, Annual Wage Supplement (AWS) and variable bonus to employees in 2015. The information collected pertains to full-time employees on the CPF scheme who had been with the establishment for at least one year as at 30 Nov 2015. The establishments were also surveyed on the progress of wage restructuring in terms of whether they had adopted the three key recommendations of the Tripartite Taskforce on Wage Restructuring namely:

(i) introduce Annual Variable Component (AVC) such as variable bonus in the wage system that is linked to Key Performance Indicators (KPI) i.e. have formulated, communicated and explained to their employees the KPI for the payment of the variable bonus;

(ii) introduce the monthly variable component (MVC) in the wage structure; and (iii) narrow the maximum-minimum salary ratio for majority of their employees to an average of

1.5 or less. Other information collected include establishments’ satisfaction with the level of flexibility of the wage system and maximum-minimum salary ratio of the job that has the largest number of employees among full-time employees. Since 2012, additional questions were asked to determine whether establishments gave a built-in wage increase to employees earning a monthly basic salary of up to $1,000 and the quantum given. In 2015, the same questions were asked but the basic salary level was raised to $1,100 and coverage was extended to include outsourced workers. Analysis

The first part of the report on the extent of wage changes in private sector in 2015 is based on private establishments with at least 10 employees. The second part of the report on wage restructuring is based on private establishments with at least 25 employees, unless otherwise specified. This is to be comparable with figures for the Inaugural Survey on Wage Restructuring as at June 2004. Classification

The industries of the surveyed firms were classified according to the Singapore Standard Industrial Classification (SSIC) 2010.


Reliability of Data

In a sample survey, inferences about the target population are drawn from the data collected from

the sample. Errors due to extension of the conclusions based on one sample to the entire

population are known as sampling errors. The sampling error of an estimate is the extent of

variation between the estimated value obtained from a sample and the actual value from the

population. Factors influencing the sampling error include the sample size, the sample design,

method of estimation, the variability of the population and the characteristics studied.

A common measure of the sampling error of an estimate is its standard error, which is a measure

of the variation among the estimates derived from all possible samples. An alternative measure is

the relative standard error of an estimate which indicates the standard error relative to the

magnitude of the estimate. A sample estimate and an estimate of its standard error can be used

to construct an interval that will, at specified levels of confidence, include the true value. By

statistical convention, the confidence level has been set at 95 per cent.

Estimates of the sampling variability of selected indicators are as follows:

Estimate Standard

Error

Relative

Standard

Error (%)

95% Confidence

Interval

Lower Upper

Total Wage Change (Incl employer CPF)^ 4.9% 0.05%-pt 1.1% 4.8% 5.0%

Total Wage Change (Excl employer CPF)^ 4.0% 0.05%-pt 1.3% 3.9% 4.1%

Basic Wage Change^ 4.2% 0.03%-pt 0.8% 4.1% 4.3%

Variable Component^ (Months of basic wage) 2.17 0.01 0.60% 2.14 2.19

Proportion of establishment with employees earning up to $1,100 that gave/ intended to give basic wage increase to these employees* (%)

46.5% 1.8%-pts 3.8% 42.9% 50.0%

Note: (1) ^ Wage growth pertains to wage increases granted by private sector establishments (with at least 10 employees) to

full-time employees on CPF Scheme who were in continuous employment for at least a year. (2) * Quantum of basic wage increase is available. Data includes establishments that had given other forms of basic

wage increase.


Estimate Standard

Error

Relative

Standard

Error (%)

95% Confidence

Interval

Lower Upper

Proportion of employees in establishments that implemented at least one key wage recommendation

89.6% 0.5% 0.6% 88.5% 90.6%

Proportion of employees in

establishments that

implemented the key wage

recommendations

Variable Bonus linked

to KPI 51.5% 2.0% 3.9% 47.5% 55.5%

Monthly Variable

Component 32.5% 1.3% 3.9% 29.9% 35.0%

Narrowed Maximum-

Minimum Salary

Ratio

65.9% 1.4% 2.1% 63.2% 68.7%


Concepts and Definitions

Local employees This refers to Singapore Citizens and Permanent

Residents

Rank-and-File Employees: This includes employees who are in technical, clerical, sales, service, production, transport, cleaning and related positions. They are not employees in managerial or executive positions.

Junior Management Staff: This refers to executives and managers who do not hold senior managerial responsibilities. They do not have substantial influence over hiring, firing, promotion, transfer, reward or discipline of employees.

Basic Wage: This refers to the total basic pay before deduction of the employees’ CPF contributions and personal income tax. It excludes employers’ CPF contributions, bonuses, overtime payments, commissions, allowances (e.g. shift, food, housing and transport), other monetary payments and payments-in-kind.

Basic Wage Adjustment: This usually comprises wage adjustments and built-in increments such as annual (or service), merit and NWC increments. Promotional increments are excluded.

Annual Wage Supplement (AWS): This refers to the annual payment usually made at year-end and is commonly known as the 13th month allowance.

Variable Bonus: This refers to the payment given on top of the (AWOS or 13th month allowance. It includes incentive payments and ‘ang pows’, but excludes AWS. The variable bonus is usually linked to company and/or individual performance and may vary from year to year. It may be paid in a lump sum or divided into several payments over the year; in which case the several payments should be added together.

Annual Variable Component: This usually consists of 2 components i.e. AWS, and variable bonus. Generally, the annual variable component is linked to company’s profitability.


Monthly Variable Component (MVC): This refers to the component of monthly basic wage that can be adjusted easily and quickly to meet changing business conditions. It should attract CPF, overtime pay, allowances, etc. The MVC can be built-up through wage increase or ‘hived off’ from basic wage. Establishments can also implement a cut in basic wage by reducing MVC.

Maximum-Minimum Salary Ratio If your establishment does not have a pre-determined maximum-minimum salary structure, the maximum-minimum salary ratio can be computed based on the maximum and minimum salary that your establishment is prepared to pay your full-time employees in the job that has the largest number of employees.

Seniority-based wage system: This refers to the practice of granting wage increase based on seniority/years in service rather than the value of the job.

Market Conditions: This can refer to a country’s economic performance, industry’s and/or transnational organisation’s performance (in the case of multi-national corporation).

Quality Growth Programme: This was introduced in Singapore Budget 2013 to help businesses upgrade, create better jobs and raise productivity. One of the support packages in this programme is the Wage Credit Scheme (WCS). Under the WCS, the Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below in 2013 – 2015. Only Employers are eligible for the co-funding.

Employees earning $1,100 and below:

This generally refers to employees who earned a monthly basic wage of $1,100 or less on a full-time basis in 2014.


Formulae

Basic Wage Change in 2015

End 2015 Basic Wage – End 2014 Basic Wage

= x 100%

End 2014 Basic Wage

Total Wage Change in 2015

2015 Total Wage – 2014 Total Wage

= x 100%

2014 Total Wage

where Total Wage = Annual Basic Wage + Annual Variable Component (i.e. Annual Wage

Supplement and Variable Bonus)

FEEDBACK FORM

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