Should I stay or should I go? Big issue for workers amid uneven S’pore wage growth

SINGAPORE — Adeline, a 30-something year old employee in the construction sector, saw her pay remaining stagnant this year amid the prolonged slowdown in the property market.

“I did not receive any increase this year… I suppose this is because the industry is generally quiet. This would definitely have some impact on the employees in the company, and some would probably look to go elsewhere,” said Adeline, who requested that her full name be withheld.

She has been working in the same company over 10 years, and had received a pay increment of 2 to 3 per cent last year. She declined to say if she is considering leaving her company or switching to another industry.

Another employee in a research firm lamented: “The annual bonus is very small and we don’t have the 13th month wage supplement as well.”

The employee, who requested to be identified only as Ms Tang, also noted that many of her colleagues did not get any pay rise.

Many workers are finding themselves in the same situation as Adeline and Ms Tang but some face even worse prospects of having their wages reduced, especially those in the retail trade, oil and gas services, and manufacturing, sectors that have been under pressure in recent years.

Average wage growth in Singapore is expected to slow to between 2.5 and 3 per cent this year from 3.5 per cent last year as employment demand wanes, the central bank’s twice-yearly Macroeconomic Review report showed last month.

However, wage movements will be uneven across sectors, economists said, with pay rises stronger in sectors such as community, social and personal (CSP) services, where vacancy rates are higher; and weaker in sectors with greater slack, such as manufacturing.

WEAK WAGE OUTLOOK FOR RETAIL, F&B, MANUFACTURING

A separate report by the Ministry of Trade and Industry (MTI) showed real wages in the retail trade contracting by 0.8 per cent per year over the past five years from 2010 to 2015.

The F&B sector fared a little better, but gains were muted at 0.6 per cent per year over the same period. Jobs in these sectors include sales assistants, waiters and waitresses.

“These sectors have been facing stagnation in terms of real wage growth as it is low in labour productivity. The growth of wages is very much related to labour productivity growth. For sectors with low productivity, it is hard for them to see wages increase,” said UOB economist Francis Tan.

The disruptive effects of e-commerce are also hurting wage prospects of workers in the retail trade, he added.

“For example, online retail businesses will eat into the earnings of brick-and-mortar shops and this will lead to employers squeezing costs from wherever they can due to the tight margins.”

Even in the manufacturing sector, where the potential for higher productivity may translate into higher wages, some clusters lag behind.

The biomedical manufacturing and general manufacturing industries have been facing negative or weak real wage growth, at minus 0.3 per cent and plus 0.7 per cent, respectively, over the past five years from 2010 to 2015, the MTI data showed.

The former is due to stiff global competition limiting price increases for the goods produced, affecting employee’s salaries, while the latter is due to low labour productivity amid lacklustre external demand, Mr Tan said.

Recruitment firm Kelly Services Singapore expects sectors including oil, gas and petrochemicals, pharmaceuticals and semi-conductors to face slower pay rises for this year.

“This is due to the decline in oil prices and manufacturing demand and we expect this decline to continue in 2016,” noted Mr Foo See Yang, Kelly’s vice-president and country general manager.

CSP, INFOCOMM, TECH SECTORS TO SUSTAIN WAGE GAINS

On a happier note, the wage outlook for those working in the CSP services sectors — such as nurses, healthcare workers and teachers — is bright.

“This sector is low in productivity but there is a social need involved. In a bid to attract people to join the workforce, the pay has to be attractive. Real wage growth for this sector has been growing at close to 3.4 per cent per annum over the period of 2005 to 2015, and the annual increment is likely to maintain at the same pace for this year,” said Mr Tan.

“Nobody wants to work in these sectors. That is why you have to attract more young people by giving scholarships, or attract them with a higher starting pay.

“Even though this sector is labour-intensive and harder to grow productivity, these jobs… have social implications. Nurses, healthcare workers, teachers are important for a society,” he added.

The presence of high-paying sectors such as banking and finance have also helped lift CSP sector’s wages, as the Government and employers need to match salary expectations to remain competitive and to attract youth, he said.

Tech-related sectors, with jobs in the information and communications technology (ICT) and data analytics, will also see stronger wage growth as the Government pushes to develop Singapore into a Smart Nation.

“Home to more than 80 of the top 100 software and service companies, the infocomm industry in Singapore is a key anchor sector for the country’s future economy.

The Government’s efforts such as the 2015 Intelligent Nation Master plan and the National Broadband Network, is driving growth for the industry,” Mr Foo said.

In its report, the central bank said “the Singapore economy will likely see a protracted period of modest growth in the quarters ahead” amid a deterioration in the external environment, as it maintained its growth forecast for this year at 1 to 3 per cent.

“Wage growth will probably stagnate at 2.5 to 3 per cent, as there are no upside surprises seen,” said Mr Tan.

Despite the uncertain outlook, economists do not expect Singapore to suffer from overall wage contraction any time soon, as the economy is not facing a recession like that seen during the 2009 global financial crisis.

“In 2009, redundancies shot up. Wages either got cut or people were laid off, resulting in overall negative wage growth.

“Wages contract during recessions in line with gross domestic product and corporate profits contracting. This is unlikely to happen in Singapore’s case in the near term. We are still doing okay at a slow growth rate but no contraction,” Mr Tan said.