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Report on Wage Practices 2015

Employment practices
Firms were less profitable in 2015 amid softer economic conditions. Fewer gave wage increases compared to the previous year, and wage increases moderated

Overview

  1. Amid softer economic conditions, nominal wages in the private sector grew at a slower pace in 2015. Accounting for negative inflation in 2015, real wage growth picked up pace. Fewer firms were profitable in 2015 compared to 2014. 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. These are the key findings from the “Report on Wage Practices 2015” released by the Manpower Research and Statistics Department, Ministry of Manpower. 

    Main Findings

    Nominal wages grew at a slower pace, while real wages grew faster amid negative inflation

  2. Nominal total wages in the private sector grew by 4.0% in 2015, lower than the 4.9% increase in 2014. When employer Central Provident Fund (CPF) contributions are factored in, growth in total wages remained stable at 4.9% in 2015, due to the increase in employer CPF contributions in 20151. Accounting for the -0.5% CPI inflation2, real total wages including employer CPF contributions rose by 5.4% in 2015, compared to 3.9% a year ago3. 

    Fewer establishments were more profitable than the previous year, while those that were less profitable or incurred losses rose

  3. 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 profitable4  (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.

    The proportion of employees covered under a flexible and performance-based wage system remained high in 2015

  4. 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.

    Smaller proportion of establishments raised wages in 2015 than a year ago

  5. 64% of private establishments raised the total wages of their employees in 2015, down from 72% in 2014. Correspondingly, 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%). 

    For More Information

  6. The report is available online on the Ministry of Manpower’s website at http://stats.mom.gov.sg/Pages/Home.aspx.

FOOTNOTE

  1. The main employer CPF contribution rate rose from 16.0% in 2014 to 17.0% in 2015.
  2. Inflation, as measured by the change in Consumer Price Index (CPI) for all items, fell to -0.5% in 2015 from 1.0% in 2014.
  3. Data pertain to the average wage increases granted by private sector establishments (with at least 10 employees) to full-time resident employees in continuous employment for at least a year.
  4. Compared to the previous year’s profits