SINGAPORE — With inflation easing, real wages rose 2.9 per cent last year, improving on the 0.4 per cent decline in 2012, the Ministry of Manpower (MOM) said in its annual report on wage practices yesterday.

Overall, from 2003 to 2013, the growth in real total wages (including employer Central Provident Fund contributions) was 1.5 per cent per annum, broadly in line with labour productivity increase of 1.4 per cent per annum.

The report also attributed the higher wage increases given by employers in the private sector last year to improving economic conditions and a tightening labour market.

The economy grew by 3.9 per cent last year — compared with 2.5 per cent in 2012. Inflation, as measured by the change in consumer price index for all items, eased to 2.4 per cent last year, from 4.6 per cent in 2012.

Total employment increased by 136,200 or 4.1 per cent last year.

“The growth was mainly driven by locals, as the increase in foreign employment continued to slow amid tightened foreign manpower controls,” the report said.

As of December, 77 per cent of private establishments with employees earning a monthly basic salary of up to S$1,000 gave, or intended to give, wage increases to these employees last year — up from 60 per cent in 2012, the report said. This included 57 per cent of establishments that gave at least S$60 built-in wage increase, as recommended by the National Wages Council last year.

The report also noted a general uptrend in the implementation of flexible wage measures since 2004, when the recommendations on wage restructuring were released.

As of December, 86 per cent of employees in the private sector worked in establishments that had some flexible wage components.

Some of the more widely-adopted measures included having a narrow maximum-minimum salary ratio, linking variable bonus to Key Performance Indicators, and having a Monthly Variable Component in the wage structure.

Responding to the report, Ms Cham Hui Fong, assistant secretary-general at the National Trades Union Congress (NTUC), said yesterday: “To ensure wage growth is sustainable and progressive, the labour movement will be relentless in our push for Progressive Wage Model (PWM) to be pervasive in all sectors and for all workers. This will not only raise productivity and upgrade skills, our workers can also look forward to better wages and better career progression.”

“Ultimately, the end goal in mind is for our workers to benefit from real — and continuous — wage growth. We also call on employers to tap the various funding schemes and programmes to achieve higher productivity growth,” Ms Cham added.