Report on Wage Practices 2016 release

Overview

1. The proportion of profitable firms declined from 79% in 2015 to 76% in 2016. As the majority of firms had put in place a wage system that gave flexibility to adjust wages according to business conditions, wage increase continued to moderate. The proportion of employees who received total wage increase also declined from 77% in 2015 to 75% in 2016. These are the key findings from the “Report on Wage Practices 2016” released by the Manpower Research and Statistics Department, Ministry of Manpower.
   
   Main Findings
   
   There were fewer profitable establishments in 2016
   
   
2. The proportion of profitable establishments declined from 79% in 2015 to 76% in 2016. The decline was observed across major industries. The proportion of establishments with similar profits as a year ago declined (2015: 29%, 2016: 23%), while those which did not do as well as the previous year (2015: 38%, 2016: 41%), or incurred losses (2015: 21%, 2016: 24%) rose. The proportion of those that were more profitable was largely unchanged (2015: 12%, 2016: 13%).
   
   More establishments cited firm performance and market conditions as considerations for wage increase and bonuses
   
   
3. At least 90% of establishments cited establishment and employee performance as determinants of wage increases and bonuses in 2016. Comparing 2016 with 2015, the proportion of establishments which cited establishment performance and market conditions rose.
   
   The proportion of employees covered under a flexible and performance-based wage system remained high in 2016
   
   
4. 90% of private sector employees now work in establishments that have some form of flexible wage system, the highest since 2004. Having a narrow maximum-minimum salary ratio remained the most common wage recommendation adopted by establishments, followed by linking variable bonus to Key Performance Indicators (e.g. firm profitability and productivity) and including a Monthly Variable Component in the wage structure.
   
   Total wage increase continued to moderate
   
   
5. Total wage growth (including employer CPF contributions) moderated from 4.9% in 2015 to 3.1% in 2016. This reflected a moderation in basic wage growth, as bonus payments were similar.
   
   Wage increases remained closely tied to profitability
   
   
6. More profitable firms continued to give higher total and basic wage increases than less profitable ones. Profitable firms also gave larger bonuses (of at least 2 months in quantum on average) compared with loss-making firms (1.31 months).
   
   Smaller proportion of establishments raised wages in 2016 than a year ago, resulting in a slightly lower proportion of employees with an increase in total wage
   
   
7. The proportion of establishments that raised total wage in 2016 (58%) was lower than a year ago (64%). Nevertheless, 75% of employees received an increase in total wage, compared with 77% in 2015.
   
   For More Information
   
   
8. The report is available online on the Ministry of Manpower’s website at http://stats.mom.gov.sg/Pages/Home.aspx.