Skip to main content

Advertisement

Advertisement

Real wages grew at slower pace as more firms suffered losses last year

SINGAPORE — With the tepid economic conditions denting firms’ profits, the real wages of workers here grew at a slower pace last year, compared with 2015.

SINGAPORE — With the tepid economic conditions denting firms’ profits, the real wages of workers here grew at a slower pace last year, compared with 2015. 

The Ministry of Manpower’s (MOM) yearly report on wage practices released on Tuesday (May 30) showed that real wages rose 3.6 per cent last year, compared with 5.4 per cent in 2015, after factoring in inflation and employer Central Provident Fund contributions. This is the weakest growth since 2013. 

The report also showed that the proportion of establishments that raised total wages dipped from 64 per cent to 58 per cent between 2015 and last year. Still, three-quarters of employees saw their total wages go up, comparable to the 77 per cent in 2015. 

The weaker wage growth came as more firms suffered losses in 2016 for the third successive year. Nearly one in four (24 per cent) were in the red, up from 21 per cent in 2015 and around 18 per cent in 2014.

Among the rest, a smaller proportion of firms (22.6 per cent) did as well as in the year before, a six-percentage-point decline. Those that raked in higher profits were in the minority — 13 per cent, up 1 percentage point.

Meanwhile, firms that pruned total wages also climbed, from 11 per cent to 17 per cent, with steeper wage declines of 5 per cent last year compared with 4.7 per cent in 2015. 

Across industries, only workers in transport and storage (5.1 per cent) and information and communications (2.7 per cent) saw faster wage growth, mainly among rank-and-file employees.

The manufacturing (1.7 per cent), construction (2.1 per cent) and accommodation and food services (2.3 per cent) industries saw the slowest wage growth. 

On annual variable bonus payouts, the report found a largely similar picture between 2015 (at 2.17 months of basic wage) and last year (2.16 months). 

The financial and insurance services (3.28 months), transportation and storage (2.68 months), and community, social and personal services (2.39 months) industries handed out the largest bonuses. At the lowest end of the spectrum were accommodation and food services (1.13 months), administrative and support services (1.25 months) and construction (1.45 months). 

Commenting on the findings, Association of Small and Medium Enterprises president Kurt Wee noted that wage growth has not been matched by productivity gains over the years. 

For instance, labour productivity, measured by the value-added per worker, rose by 1 per cent last year, based on the Ministry of Trade and Industry’s 2016 Economic Survey. 

Mr Wee hopes that the economic and trade situation will improve over the next few quarters. This, in turn, would spur productivity. “We hope that employers and employees would be able to find better synergy to improve labour-productivity gains, so wage increases can be justified,” he said. 

CIMB Private Banking economist Song Seng Wun said the slower wage growth was consistent with weak economic growth last year, particularly in the services sector. Growth was also “uneven” and came from a “fairly narrow” base, with only a “handful of industries” turning in better performance.

With anaemic output growth, productivity numbers were also “nothing to shout about”, and this translated into lower wage growth, he said. Noting that a turnaround will happen only when there is “broad-based” recovery, Mr Song said the slump in wages should bottom out this year and could improve next year once the pick-up in orders is sustained. 

On low-wage workers, the MOM report showed that a smaller pool of firms (40 per cent) granted or intended to dish out wage increases last year to those earning a basic wage of up to S$1,100 a month. This is a 6-percentage-point fall from 2015. The main reasons they cited for not granting wage rises? Poor business, and their workers’ salaries were already at “market rate”.

Despite this, a larger pool of firms (21 per cent) adhered to the quantum recommended by the National Wages Council of an increase of at least S$50 last year, compared with 18 per cent in 2015, when the recommended quantum was at least S$60. 

Overall, nine in 10 employees in the private sector were working in companies with at least one of the council’s recommended flexible wage components, such as performance-based variable bonuses — the highest since 2004.

The Singapore economy grew 2 per cent last year, a shade better than the 1.9 per cent in 2015. It is forecast to expand between 1 and 3 per cent this year, and barring downside risks, the Government expects growth to be better than last year. 

The findings from the MOM report were based on data from a survey involving 4,800 private establishments, each with at least 10 employees.

Read more of the latest in

Advertisement

Advertisement

Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.