Report on Wage Practices, 2012

Manpower Research and Statistics Department Singapore

June 2013

COPYRIGHT NOTICE Brief extracts from the report may be reproduced for noncommercial use, provided the source is acknowledged. Request for extensive reproduction should be made to: Director Manpower Research and Statistics Department Ministry of Manpower 18 Havelock Road Singapore 059764 Fax: Email: 6317 1804 mom_rsd@mom.gov.sg

Manpower Research and Statistics Department

MISSION

To provide timely and reliable national statistical information on the labour market to facilitate informed decision-making within the government and community-at-large

Statistical activities conducted by the Manpower Research and Statistics Department are governed by the provisions of the Statistics Act (Chapter 317). The Act guarantees the confidentiality of information collected from individuals and companies. It spells out the legislative authority and responsibility of the Director, Manpower Research and Statistics Department. The Statistics Act is available in the Singapore Department of Statistics website at www.singstat.gov.sg.

CONTENTS

Page NOTATIONS AND ABBREVIATIONS i

HIGHLIGHTS............................................................................................................................. ii 1 2 Introduction...................................................................................................................... 1 Background ..................................................................................................................... 1

Part I Annual Wage Changes 3 4 5 6 Overview ......................................................................................................................... 3 Total And Basic Wage Changes ..................................................................................... 6 Annual Variable Component ........................................................................................12 Built-in Wage Increase for Employees Earning Basic Monthly Salary of Up To $1,000 .......................................................................17

Part II Wage Flexibility 7 8 9 10 11 Overview .......................................................................................................................20 Adoption of Key Wage Recommendations ...................................................................20 Implementation of Flexible Wage Components............................................................25 Information Sharing .......................................................................................................36 Conclusion.....................................................................................................................39

Statistical Appendix : Statistical Charts and Tables Annex: Survey Coverage and Methodology

NOTE This Report on Wage Practices covering wage flexibility and annual wage changes replaces the Report on Wages previously released at end June. Data on occupational wages previously published in the Report on Wages will continue to be available online at http://www.mom.gov.sg/mrsd/publication

Notations
s : : nil or negligible suppressed

Abbreviations
AWS CPF CPI DOS GDP MOM MTI MVC NRAF NWC RAF ULC Cat A Cat B Cat C Cat D : : : : : : : : : : : : : : : Annual Wage Supplement Central Provident Fund Consumer Price Index Department of Statistics Gross Domestic Product Ministry of Manpower Ministry of Trade and Industry Monthly Variable Component Non Rank-and-File National Wages Council Rank-and-File Unit Labour Cost Establishment was profitable and did much better than in the previous year Establishment was profitable and did as well as in the previous year Establishment was profitable but did not do as well as in the previous year Establishment incurred a loss

HIGHLIGHTS
Annual Wage Changes
Amid the tight labour market, total wages (including employer CPF contributions) in the private sector rose by 4.2% in 2012. This was lower than the growth of 6.1% in 2011, reflecting the weaker economic conditions in 2012. After adjusting for inflation using the Consumer Price Index (CPI) for all items, real total wages (including employer CPF contributions) declined by 0.4% in 2012, after rising by 0.9% in 2011. When adjusted using CPI less imputed rentals on owner-occupied accommodation (OOA), which relates more directly to the actual cash expenditures of households, real total wages (including employer CPF contributions) rose by 0.5%, after increasing by 1.9% in 2011. Over the long term, real wage increases have been supported by productivity growth. Labour productivity grew on average by 1.6% per annum, exceeding the growth in real total wages (including employer CPF contributions) of 1.2% per annum over the decade from 2002 to 2012 . In the immediate post-SARS years, labour productivity grew strongly on the back of robust GDP growth. However, in the last 5 years, labour productivity shrank by 0.4% per annum as economic growth was driven primarily by employment.

Wage Flexibility

A large majority of employees in the private sector were under some form of flexible wage system, following a general uptrend in the implementation of flexible wage measures recommended by the tripartite partners representing employers, workers and the government in 2004. In December 2012, 87% of private sector employees were working in establishments which had at least one of the flexible wage components recommended by the tripartite partners. This was comparable to the 86% in the year before and notably higher than the 76% in June 2004. Having a narrow maximum-minimum salary ratio was the most common wage recommendation adopted, with nearly two in three (65%) private sector employees working in establishments with this flexible wage component. This was followed by linking variable bonus to Key Performance Indicators (KPI) (49%) and having the Monthly Variable Component (MVC) (34%) in the wage structure.

ii

Report on Wage Practices, 2012

Introduction

1.1 This report examines employers adoption of a flexible wage system and changes in their employees wages in 2012. The findings are based on data from the Survey on Annual Wage Changes carried out from December 2012 to March 2013 which effectively covered 4,694 private establishments each with at least 10 employees. This yielded a survey response rate of 90%. The survey coverage and methodology are explained in Annex 1. 2 Background

Economic growth slowed, though employment creation remained high 2.1 Singapores real gross domestic product (GDP) grew by 1.3% in 2012, moderating from the 5.2% growth in 2011 (Chart 1). Inflation as measured by the change in consumer price index (CPI) for all items was 4.6% in 2012, easing from the 5.2% in 2011. Excluding imputed rentals on owneroccupied accommodation (OOA), which do not involve actual cash expenditures, inflation was 3.6% in 2012, lower than the 4.2% in 2011. 2.2 Total employment increased by 129,100 or 4.0% in 2012, slightly above the growth of 122,600 or 3.9% in 2011. With high employment creation, the overall unemployment rate remained at a low of 2.0% in 2012, while the unemployment rate for residents dipped to 2.8% from 2.9% in 2011.

Chart 1: Key Economic Indicators, 2000-2012

(A) Change in GDP, CPI and Employment
Per Cent 15

10

-5

-10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 GDP CPI (CPI exc l. Imputed rentals on owner- oc c upied ac c ommodation) Employment 9.0 1.3
(1.7)

- 1.2 1.0
(1.0)

4.2 - 0.4

4.6 0.5

9.2 1.7
(2.0)

7.4 0.5
(0.6)

8.6 1.0
(1.1)

9.0 2.1
(2.2)

1.7 6.6
(5.5)

- 0.8 0.6
(-0.4)

14.8 2.8
(3.3)

5.2 5.2
(4.2)

1.3 4.6
(3.6)

(-0.3) (0.7)

5.3

0.0

- 1.1 - 0.6

3.3

5.1

7.6

9.4

8.1

1.3

3.9

3.9

4.0

(B) Unemployment Rate (Annual Average)

Per Cent 6

5 4

3 2

1 0
Overall Resident

2000 2.7 3.7

2001 2.7 3.7

2002 3.6 4.8

2003 4.0 5.2

2004 3.4 4.4

2005 3.1 4.1

2006 2.7 3.6

2007 2.1 3.0

2008 2.2 3.2

2009 3.0 4.3

2010 2.2 3.1

2011 2.0 2.9

2012 2.0 2.8

Sources : CPI, GDP - Department of Statistics, MTI Employment, Unemployment- Manpower Research and Statistics Dept, MOM

PART I 3

ANNUAL WAGE CHANGES Overview

Growth in wages slowed, amid weaker economic conditions 3.1 Amid the tight labour market, total wages (including employer CPF contributions) in the private sector rose by 4.2% in 2012. This was lower than the growth of 6.1% in 2011, reflecting the weaker economic conditions in 2012 (Chart 2). 3.2 Excluding employer CPF contributions, total wages (comprising basic wages and bonuses) of private sector employees rose by 3.8% in 2012, after increasing by 5.3% in 2011.1 The total wage rise in 2012 stemmed from a 4.5% increase in basic wages, which more than offset the decline in bonuses (also known as annual variable component) from 2.32 months of basic wages in 2011 to 2.19 months in 2012.
Chart 2: Change In Total And Basic Wages, 2000-2012
Per Cent 9 8 7 6 5 4 3 2 1 0 -1 Total Wages (incl employer CPF contributions) Total Wages Basic Wages 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 8.1 6.6 4.9 5.2 1.1 2.9 0.0 0.0 1.8 0.8 1.5 1.2 1.6 3.6 2.7 4.3 4.3 3.1 4.5 4.5 3.6 6.6 5.9 4.3 4.9 4.2 4.4 -0.4 -0.4 1.3 5.7 5.5 3.9 6.1 5.3 4.4 4.2 3.8 4.5

The data collected from the Survey on Annual Wage Changes refer to the change in wages paid to full-time resident employees in continuous employment of at least one year. This is the only source that provides breakdown of total wage changes into changes in basic wages and bonuses, and for three caregories of employees namely the rank-and-file, junior management and senior management.

Wage gains weighed down by inflation 3.3 After adjusting for inflation, real total wages (including employer CPF contributions) declined by 0.4% in 2012, after rising by 0.9% in 2011. The adjustment for inflation was made using the CPI for all items. When adjusted using CPI less imputed rentals on OOA, which relates more directly to the actual cash expenditures of households, real total wages (including employer CPF contributions) rose by 0.5%, after increasing by 1.9% in 2011. 3.4 Excluding employer CPF contributions, real total wages declined by 0.8%, while real basic wages dipped by 0.1% in 2012. When adjusted for inflation using CPI less imputed rentals on OOA, the real total and basic wage changes were positive at 0.2% and 0.9% respectively (Chart 3).
Chart 3: Change In Real Total And Basic Wages, 2000-2012
Per Cent

10

-5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Real Total Wages (incl employer CPF contributions) Real Total Wages Real Basic Wages 6.8
(6.4)

4.2 0.1 1.9

0.4 0.4 2.2

0.3 1.0 0.7

-0.1 1.9 1.0

3.8 3.8 2.6

3.5 3.5
(3.4)

4.5 3.8 2.2

-1.7 -2.4 -2.2

-1.0 -1.0 0.7

2.9 2.7 1.1

0.9 0.1 -0.8

-0.4
(0.5)

(4.1) (0.3) (0.1) (-0.4) (3.7) (3.4) (0.1) (0.3) (0.8) (1.6) (3.7)

(4.4) (-0.6) (0.0) (2.4) (1.9) (3.7) (-1.3) (0.0) (2.2) (1.1)

5.3
(4.9)

-0.8
(0.2)

3.6
(3.2)

2.6

-0.1
(0.9)

(1.9) (2.1)

(0.5) (0.7) (2.5)

(2.5) (2.1) (-1.1) (1.7) (0.6) (0.2)

Notes: (1) Real wage changes were deflated by Consumer Price Index (CPI) for all items. Figures in brackets refer to real wages deflated by CPI less imputed rentals on owner-occupied accommodation. (2) Basic wages exclude employer CPF contributions.

Over the long term, real wage increases have been supported by productivity growth 3.5 Amid slower GDP growth and continued high employment creation, labour productivity contracted by 2.6% in 2012, after rising by 1.3% in 2011 and 11% in 2010, reflecting the volatility in year-to-year change in labour productivity (Chart 4). Over the decade from 2002 to 2012, labour productivity grew on average by 1.6% per annum, exceeding the growth in real total wages (including employer CPF contributions) of 1.2% per annum (Table 1). In the immediate post-SARS years, labour productivity grew strongly on the back of robust GDP growth. However, in the last five years, labour productivity shrank by 0.4% per annum as economic growth was driven primarily by employment2.
Chart 4: Change In Labour Productivity And Real Wages, 2000-2012
Per Cent 15

10

-5

-10
Labo ur P ro ductivity Real Total Wages (incl employer CP F co ntributio ns)

2000 4.8 6.8 (6.4)

2001 -4.5 4.2 (4.1)

2002 5.7 0.4 (0.3)

2003 5.9 0.3 (0.1)

2004 7.4 -0.1 (-0.4)

2005 2.9 3.8 (3.7)

2006 1 .9 3.5 (3.4)

2007 0.3 4.5 (4.4)

2008 -7.3 -1 .7 (-0.6)

2009 -3.4 -1 .0 (0.0)

201 0 1 1 .1 2.9 (2.4)

201 1 1 .3 0.9 (1.9)

201 2 -2.6 -0.4 (0.5)

Source : Department of Statistics, MTI (For Productivity Data) Note: Figures in brackets refer to real wages deflated by CPI less imputed rentals on owner-occupied accommodation.

Table 1: Annualised Change In Labour Productivity And Real Total Wages, 2002 to 2012
% p.a.

Period Labour Productivity Real Total Wages (incl. employer CPF contributions)

Annualised from 2002-2012 (10 years) 1.6 % 1.2 % (1.5 %)

Note: Figures in brackets refer to real wages deflated by CPI less imputed rentals on owner-occupied accommodation.

On average, real GDP grew by 4.3% per annum while employment grew by 4.7% per annum over the five years from 2007 to 2012.

Total and Basic Wage Changes

Wage Changes by Type of Employees Wage gap between RAF and non-RAF employees narrowed 4.1 Total wages rose for all three categories of employees in 2012, though lower than the increases in 2011. Junior (JM) and senior management (SM) employees had higher total wage gains (JM: 4.2%; SM: 3.8%) than rank-and-file (RAF) employees (3.7%). While the total wage gain for RAF continued to lag non-RAF, the gap narrowed to 0.4%-point in 2012 from 1.2%-point in 2011. 4.2 Rank-and-file (RAF) employees saw higher basic wage gains in 2012 (4.3%) than in 2011 (4.0%), following the National Wages Council (NWC) recommendation to give a built-in wage increase of at least $50 to low-wage employees earning basic monthly salary of up to $1,000. In contrast, junior and senior management employees experienced lower basic wage increases (JM: 4.9%; SM: 4.0%) than in 2011 (JM: 5.1%; SM: 4.3%). (Chart 5). This was the first time that basic wage growth increased over the year for RAF while it slowed for junior and senior management, since comparable data were first collected in 1998.
Chart 5: Total And Basic Wage Change, 2011 and 2012

Note : Non-rank-and-file comprise junior and senior management

Distribution of Establishments by Wage Change Two in three establishments raised total wages, but the quantum of increase was smaller 4.3 Despite the more subdued economic conditions, the proportion of private establishments that raised total wages of their employees was unchanged at 68% in 2012. However, the average quantum of wage increase in these establishments at 5.8% was lower than 6.6% in 2011. The proportion of establishments that cut wages in 2012 (9.0%) was broadly comparable to 2011 (8.5%), with the quantum of wage cut at 4.4% and 4.3% respectively. The proportion that froze total wages was 24%, broadly unchanged from a year ago (23%) (Chart 6).
Chart 6: Distribution Of Establishments By Wage Change And Extent Of Wage Change (A) Total Wage Change
Distribution of Establishments by Total Wage Change, 2011 and 2012

Extent of Total Wage Change of Establishments Which Cut or Increased Total Wages, 2000 - 2012
Per Cent

68.1% 67.5%

12.0 8.0 4.0 0.0

23.4% 23.5% 8.5%9.0%

Firms Which Cut Total Wages

-4.0 -8.0 -12.0

2000 -2.9 8.3

2001 -5.4 5.4

2002 -7.0 4.8

2003 -5.0 5.2

2004 -4.6 5.9

2005 -4.5 5.9

2006 -3.4 5.8

2007 -3.1 7.5

2008 -5.5 6.6

2009 -6.2 4.8

2010 -4.3 7.6

2011 -4.3 6.6

2012 -4.4 5.8

Wage Cut

No Change 2011

Wage Increase 2012

Firms Which Increased Total Wages

(B) Basic Wage Change

Distribution of Establishments by Basic Wage Change, 2011 and 2012
Per Cent
12.0

Extent of Basic Wage Change of Establishments Which Cut or Increased Basic Wages, 2000 - 2012

68.9% 69.2%
8.0 4.0

30.3% 30.1%

0.0

-4.0

0.8% 0.7%
Wage Cut No Change Wage Increase

-8.0

-12.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -5.8 5.8 -6.6 4.7 -6.0 3.8 -5.2 3.1 -5.6 3.7 -6.2 4.0 -5.2 4.3 -3.5 5.0 -4.9 5.3 -4.8 3.8 -5.6 4.7

Firms Which Cut Basic Wages Firms Which Increased Basic Wages

s
5.0

s
5.2

Notes:

2012 2011 (1) s: Data suppressed due to small number covered. (2) Figures may not sum up to 100% due to rounding.

Distribution of Establishments by Profit Status Majority of establishments were profitable 4.4 Although economic conditions weakened in 2012, slightly over eight in ten (82%) private establishments were profitable, unchanged from a year ago (Chart 7). This proportion remained higher than during the recessionary years in 2009 (79%) and 2001 (65%). Generally, the proportion of loss-making firms has been trending downward over the last decade.
Chart 7: Proportion Of Profitable And Loss-Making Establishments, 2000-2012
Per Cent 100 90 80 70 60 50 40 30 20 10 0
P ro fitable Firms Lo ss-making Firms 2000 73.5 26.5 2001 2002 2003 2004 2005 2006 2007 2008 2009 64.9 35.1 66.3 33.7 70.7 29.3 75.4 24.6 80.6 1 9.4 81 .4 1 8.6 84.9 1 5.1 81 .0 1 9.0 79.4 20.6 201 0 85.1 1 4.9 201 1 82.4 1 7.6 201 2 82.3 1 7.7

4.5 The distribution of establishments by profit status was fairly similar in the last two years. In 2012, about half (49%) of private establishments either outperformed (Category A) or were as profitable as in the preceding year (Category B), comparable to 2011 (50%). Establishments that were profitable but did not do as well as in the previous year (Category C) rose marginally from 32% to 33%. The share of loss-making establishments (Category D) was unchanged at 18% (Chart 8).

Chart 8: Distribution Of Establishments By Profit Status, 2011 And 2012

Per Cent

Cat A: Firm was profitable and did much better than in the previous year

16.8

16.6

Cat B: Firm was profitable and did as well as in the previous year

32.6

33.8

Cat C: Firm was profitable but did not do as well as in the previous year

32.0

32.9

Cat D: Firm incurred a loss

17.6

17.7

0 2011

20 2012

40

60

80

100

Notes: (1) Based on private sector establishments that disclosed their profitability status in 2011 and 2012. (2) Figures may not sum up to 100% due to rounding.

Wage Change by Profit Status Wage changes were correlated with profitability 4.6 Wage changes were correlated with profitability of firms, more so for total than basic wage changes, reflecting the closer link between bonuses and business profitability. The more profitable Category A establishments gave the largest total wage increase of 5.3%, followed by Category B establishments 4.4%, Category C at 2.9% and Category D at 2.6%. In terms of basic wage increases, the range was not as wide from 4.8% for Category A to 3.5% for Category D establishments (Chart 9).

Chart 9: Total And Basic Wage Change By Profit Status For All Employees, 2011 And 2012
Total Wage Change
Cat A Cat B Cat C Cat D Cat A

Basic Wage Change

Cat B Cat C Cat D

6.3% 5.3%

5.6% 4.4%

4.7% 2.9% 3.4% 2.6%

4.7% 4.8%

4.8% 4.6%

4.1% 4.4%

3.1% 3.5%

2011

2012

4.7 The majority of establishments raised wages, led by Category A (83%) and followed by Category B (69%), Category C (65%) and Category D (55%) establishments. Less than half (46%) of loss-making Category D establishments either froze or cut wages (Chart 10).

Chart 10: Distribution Of Establishments By Total Wage Change And Profit Status, 2012
Per Cent
82.7 69.4 64.7 54.5 Cat A Cat B 31.7 23.9 24.6 5.0 6.7 10.7 13.8 12.2 Cat C Cat D

Wage Cut

No Change

Wage Increase

Note: Figures may not sum up to 100% due to rounding.

Category A : Firm was profitable and did much better than in the previous year Category B : Firm was profitable and did as well as in the previous year Category C : Firm was profitable but did not do as well as in the previous year Category D : Firm incurred a loss

Wage Change by Industry All industries gave wage increases 4.8 All industries gave wage increases to their employees in 2012, though the increases were more restrained than in 2011 (Appendix Table 1). Establishments paying above-average basic and total wage increases were from financial & insurance (5.1%, 4.4%), community, social & personal (5.0%, 3.9%), administrative & support (4.8%, 4.7%), information & communication (4.6%, 4.7%), real estate (4.6%, 4.4%) and professional (4.7%, 3.8%) services (Chart 11). 4.9 On the other hand, construction (3.6%, 3.7%), manufacturing (4.3%, 3.7%) and accommodation & food services (3.4%, 3.4%) gave below-average basic and total wages. The latter was weighed down by food & beverage (F&B) services (3.1%, 3.2%) as accommodation services gave higher wage increases (4.4%, 4.4%).

10

Chart 11: Total And Basic Wage Change By Industry, 2012

Total Wage Increase (%)
Quadrant 1 Above-Average Total Wage Increase; Below-Average Basic Wage Increase Quadrant 2 Above-Average Total And Basic Wage Increases

Quadrant 4 Below-Average Total And Basic Wage Increases

Quadrant 3 Below-Average Total Wage Increase; Above-Average Basic Wage Increase

Basic Wage Increase (%)

11

Annual Variable Component

Bonuses declined in 2012, amid the slower economic growth 5.1 Amid slower economic growth, the private sector paid out an annual variable component (comprising the annual wage supplement and variable bonus) averaging 2.19 months of basic wages in 2012, down 5.6% from the 2.32 months in 2011. Consequently, the annual variable component formed a smaller share of total wages at 15.4% in 2012, than 16.2% in 2011 (Chart 12).

Chart 12: Annual Variable Component, 2000-2012

Proportion of Total Wage (%)
20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Proportion (All) Quantum (All)

Months of Basic Wage

2000 15.9 2.27

2001 14.5 2.03

2002 12.9 1.77

2003 12.8 1.76

2004 13.5 1.87

2005 14.7 2.06

2006 15.4 2.18

2007 16.4 2.36

2008 16.1 2.31

2009 14.2 1.99

2010 15.3 2.17

2011 16.2 2.32

2012 15.4 2.19

5.2 All three categories of employees received lower bonuses in 2012. The bonus payout was higher for senior (2.56 months or 17.6% of total wages) and junior management (2.50 months or 17.2%) than RAF (1.90 months or 13.7% of total wages) (Chart 13). Typically, the variable component would be higher for management staff as a greater share of their pay package is flexible and tied to performance.

12

Chart 13: Annual Variable Component As A Proportion Of Total Annual Wages, 2011 And 2012
Annual Variable Component in Months of Basic Wages 2011 2012 2.32 2.19 (+6.9%) (-5.6%) 2.06 (+7.3%) 2.63 (+5.6%) 2.62 (+4.8%) 2.67 (+8.1%) 1.90 (-7.8%) 2.52 (-4.2%) 2.50 (-4.6%) 2.56 (-4.1%)

All

15.4% 16.2% 13.7% 14.7% 17.4% 18.0% 17.2% 17.9% 17.6% 18.2% 2011 2012

Rank-and-File Non-Rank-andFile Junior Management Senior Management

Notes: (1) Figures in brackets refer to percentage change in annual variable component over the year. (2) Non-rank-and-file employees comprise junior and senior management employees.

5.3 The proportion of private establishments that gave more than one month of annual variable component was similar to the preceding year at 44% though proportionately fewer establishments paid out more than two months of bonuses (Chart 14). The share of establishments which did not pay any annual variable component or paid less than one month declined from 36% in 2011 to 34% in 2012. One in five (20%) of establishments did not pay bonuses. These establishments gave their employees an average basic wage increase of 3.3% in 2012, higher than the 2.5% in 2011. A large majority (85%) of them were small establishments with less than 50 employees. Nearly all (98%) of these small establishments that did not pay variable component to their employees did not have variable bonus and/or Annual Wage Supplement as part of their wage structure.

13

Chart 14: Distribution Of Establishments By Quantum Of Annual Variable Component Paid, 2011 And 2012
Per Cent

None > 0 to 0.5 months

20.2 7.5 6.5 8.0 6.7 19.9 21.3 12.1 8.8

0 10 2011

21.0

Quantum Paid

> 0.5 to < 1 month 1 month > 1 to 2 months >2 to 3 months > 3 months

21.9 22.9

13.1

10.0
20 2012 30 40

Note : Figures may not sum up to 100% due to rounding.

Annual Variable Component by Profit Status Bonus payout linked to profitability 5.4 The profitable Category A (2.34 months of basic wages) and Category B (2.38 months) gave out about the same quantum of bonus in 2012. Category C (2.15 months) establishments paid out a lower quantum of bonus while the loss-making Category D establishments gave the least (1.36 months) (Chart 15).

14

Chart 15: Annual Variable Component By Profit Status, 2011 And 2012
Months of Basic Wage

Cat A: Firm was profitable and did much better than in the previous year

2.34

2.41

Cat B: Firm was profitable and did as well as in the previous year

2.38

2.44

Cat C: Firm was profitable but did not do as well as in the previous year

2.15

2.40

Cat D: Firm incurred a loss

1.20

1.36

0.00

1.00
2011

2.00
2012

3.00

4.00

Note : Based on private sector establishments that disclosed their profitability status in 2011 and 2012.

Annual Variable Component by Industry Most industries gave lower bonuses

5.5

Nearly all industries paid lower annual variable component than in 2011 (Table 2). Financial & insurance services which typically has a high annual variable component in its wages, continued to give the largest payout of 3.12 months in 2012, though this was 6.9% lower than the 3.35 months in 2011. In contrast, administrative & support services continued to pay the lowest annual variable component averaging less than one month (0.97 month), down 7.6% from 2011 (1.05 months). Only accomodation & food services paid out more bonuses (1.31 months) than in 2011 (1.20 months). Employees in accommodation services (2012: 2.71 months, 2011: 2.65 months) had notably higher bonuses than in F&B services (2012: 1.00 month, 2011: 0.84 month).

15

Table 2: Annual Variable Component By industry, 2011 And 2012

Months of Basic Wages

Months of Basic Wages Industry (SSIC 2010) Period 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Total 2.19 2.32 2.54 2.62 1.42 1.59 2.17 2.31 2.15 2.19 2.35 2.88 1.31 1.20 2.32 2.39 3.12 3.35 1.90 2.08 2.09 2.29 0.97 1.05 2.36 2.46 RAF 1.90 2.06 2.38 2.44 1.10 1.36 1.85 2.01 1.82 1.91 2.34 2.88 1.22 1.08 2.42 2.40 2.94 3.28 1.43 1.47 1.80 2.07 0.86 0.92 2.23 2.30 NRAF 2.52 2.63 2.72 2.82 1.85 1.82 2.52 2.65 2.57 2.54 2.39 2.90 1.47 1.42 2.28 2.38 3.17 3.37 2.99 3.37 2.25 2.41 1.41 1.61 2.52 2.67

ALL INDUSTRIES Manufacturing Construction Services Wholesale & Retail Trade Transportation & Storage Accommodation & Food Services Information & Communications Financial & Insurance Services Real Estate Services Professional Services Administrative & Support Services Community, Social & Personal Services

16

Built-in Wage Increase For Employees Earning Basic Monthly Salary Of Up To $1,000

6.1 While noting the ongoing efforts by the government, union and employer groups to help low wage workers raise their employabilty and incomes3, the NWC in its 2012/13 guidelines recommends that establishments grant employees earning a basic monthly salary of up to $1,000, a built-in wage increase of at least $50. For companies that are doing well, the NWC recommends that they give these workers a larger increase. Almost six in ten establishments gave wage increases to their employees earning basic monthly salary of up to $1,000, including nearly three in ten which gave at least $50 built-in wage increase 6.2 As of December 2012, almost six in ten private establishments with employees earning a monthly basic salary of up to $1,000 gave wage increases to these employees. This comprised nearly half (48%) of private establishments that had given (40%) or decided to give4 (8.1%) a built-in wage increase, and those that provided other forms of wage increases (11%) comprising one-off special payment, additional bonus and/or additional allowance. Specifically, about three in ten (28%) gave at least $50 built-in wage increases (Chart 16).
Chart 16: Distribution Of Establishments By Whether They Gave Built-In Wage Increase To Employees Earning Basic Monthly Salary Of $1,000 And Below, 2012

Provided other forms of wage increase (11.2%) Already paying market rate (20.4%)

*
At least $50 (27.7%) Did not give BWI to employees earning up to $1,000 (51.6%) Had given BWI to employees earning up to $1,000 (40.2%)

Estab not performing well (16.6%)

Less than $50 (12.5%)

Business cost impacted (12.2%) Decided to give, quantum undecided (8.1%)

Wages locked in client's contracts (2.9%)

Notes: (1) Based on private sector establishments with employees earning basic monthly salary of $1,000 and below. (2) Figures for reasons for not providing built-in wage increase to these employees will not sum up as respondents can give multiple reasons. (3) * Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.

3 The NWC notes the ongoing efforts by the Government, union and employer groups to help low-wage workers raise their employability and incomes through various measures including the Workfare Training Support (WTS) Scheme and the Inclusive Growth Programme (IGP). Government transfers such as the Workfare Income Supplement (WIS) have also helped to supplement the disposable income and CPF savings of this group. 4 Have decided to give built-in wage increase but have not yet decided on the quantum.

17

Profitable firms more likely to give built-in wage increase 6.3 In line with the NWC recommendation, more profitable firms gave built-in wage increases to their employees earning up to $1,000 than less profitable or loss-making firms. 64% of Category A establishments that were more profitable than in the preceding year gave/decided to give4 the built-in wage increase compared with 37% among loss-making Category D establishments (Table 3).

Table 3: Distribution Of Establishments By Whether They Gave Built-In Wage Increase To Their Employees Earning Basic Monthly Salary Of $1,000 And Below, 2012
Per Cent

Yes Quantum Estab SubTotal Had Given Less than $50 Not Yet Decided On Quantum SubTotal Provided other forms of wage increase* Already paying market rate

No Estab not perform -ing well Business/ wage costs will be impacted Wages locked-in under existing contracts signed with clients
2.9

$50 & More

Total By Profit Status Cat A Cat B Cat C Cat D

48.4

40.2

12.5

27.7

8.1

51.6

11.2

20.4

16.6

12.2

63.6 52.5 44.5 36.8

49.0 43.4 39.8 28.1

11.0 13.1 14.6 8.0

38.0 30.3 25.3 20.2

14.6 9.2 4.6 8.7

36.4 47.5 55.5 63.2

9.1 12.7 13.0 5.7

19.1 24.1 20.8 12.8

1.7 3.2 17.5 53.4

11.1 11.0 12.9 14.0

1.9 2.8 3.7 2.1

Notes : (1) Based on private sector establishments with employees earning basic monthly salary of $1,000 and below. (2) Figures for reasons for not providing built-in wage increase to these employees will not sum up as respondents can give multiple reasons. (3) * Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance. (4) The residual other reasons is not reflected in the table.

18

6.4 Establishments in real estate services (70%), professional services (70%), manufacturing (60%) and community, social & personal services (52%) were more likely to give/decided to give4 a built-in wage increase to their employees earning $1,000 and below (Table 4). The converse was true for establishments in construction (40%) and transportation & storage (39%).
Table 4: Distribution Of Establishments By Whether They Gave Built-In Wage Increase To Their Employees Earning Basic Monthly Salary Of $1,000 And Below By Industry, 2012
Per Cent

Yes Quantum Establishment SubTotal Had Given Less than $50 Not Yet Decided On Quantum SubTotal Provided other forms of wage increase* Already paying market rate

No Estab not perform -ing well Business/ wage costs will be impacted Wages locked-in under existing contracts signed with clients
2.9 3.0 2.8 2.9 1.0 1.7 S S 5.6 2.2 11.5

$50 & More

Total Manufacturing Construction Services

48.4 59.9 39.5 47.2 45.8 38.7 45.2 s s 70.1 70.4 42.2

40.2 44.5 27.8 41.4 38.4 35.2 37.3 s s 54.2 60.6 37.4

12.5 16.2 4.6 13.1 13.8 7.4 16.3 s s 11.1 16.4 8.8

27.7 28.3 23.2 28.4 24.6 27.8 21.1 s s 43.1 44.2 28.6

8.1 15.4 11.7 5.8 7.4 3.5 7.9 s s 16.0 9.7 4.8

51.6 40.1 60.5 52.8 54.2 61.3 54.8 s s 29.9 29.6 57.8

11.2 7.0 8.3 12.9 16.6 29.3 10.1 s s 17.4 6.2 10.0

20.4 15.4 24.2 20.4 14.4 30.5 23.9 s s 25.0 10.2 22.7

16.6 11.2 23.1 17.0 17.2 5.0 26.0 s s 0.7 17.7 15.5

12.2 8.0 9.7 13.4 15.7 16.1 10.7 s s 2.1 2.2 19.2

Wholesale & Retail Trade Transportation & Storage Accommodation & Food Services Information & Communications Financial & Insurance Services Real Estate Services Professional Services Administrative & Support Services Community, social & personal services

51.8

51.8

13.5

38.3

0.1

48.2

5.8

25.7

13.4

9.9

2.7

Notes: (1) Based on private sector establishments with employees earning basic monthly salary of $1,000 and below. (2) Figures for reasons for not providing built-in wage increase to these employees will not sum up to sub-total as respondents can give mulitiple reasons. (3) * Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance. (4) s: Data suppressed due to small number covered. (5) The residual other reasons is not reflected in the table.

19

PART II 7

WAGE FLEXIBILITY Overview

7.1 This section of the report updates the progress of employers in restructuring their wage system to be more flexible and performance based. Data on wage flexibility pertain to private sector establishments each employing at least 25 workers.5 7.2 Tripartite partners representing employers, workers and the government in January 2004 made the following recommendations for employers to implement a flexible wage system to ensure competitiveness, as well as enhanced income and employability for workers: (1) implement variable bonus linked to Key Performance Indicators (KPI)6; (2) introduce the Monthly Variable Component (MVC) in wage structure; (3) narrow the maximum-minimum salary ratio for the majority of their employees to average of 1.5 or less.7 Recognising that establishments may require different forms of wage flexibility to meet their specific circumstances, employers may choose to implement only the recommendations that are relevant to them. 8 Adoption of Key Wage Recommendations

Large majority of employees under some form of wage flexibility in 2012 8.1 There has been a general uptrend in the implementation of wage flexibility, resulting in a large majority of employees in the private sector being under some form of flexible wage system.8 In December 2012, 87% of private sector employees were working in establishments which had at least one of the flexible wage components recommended by the tripartite partners. This was comparable to the 86% in the year before and notably higher than the 76% in June 2004. 8.2 Both small and medium enterprises with 25 to 199 employees (SMEs) (from 63% in June 2004 to 81% in December 2012) and large establishments with at least 200 employees (from 85% to 92%) saw improvements in employees covered by at least one recommended flexible wage

This is to be comparable with June 2004 figures from the Inaugural Survey on Wage Restructuring. In the survey, establishments are considered to have implemented variable bonus linked to KPI, if they have formulated and communicated to their employees, the KPI for the payment of the variable bonus. 7 Establishments can decide on appropriate ratio for different jobs and industries. In the survey, establishments are considered to have implemented this recommendation if they have narrowed the salary ratio to 1.5 or less, decided to/in the process of narrowing the salary ratio or all along have a maximum-minimum ratio at 1.5 or less. 8 Establishments are considered to have some form of flexible wage system when they have adopted at least one key wage recommendation.
6

20

components. While SMEs continued to lag large establishments in implementation, the gap has narrowed (Chart 17). 8.3 In December 2012, 15% of private sector employees were in establishments that had a fully flexible wage system comprising all three key wage recommendations. Including employees in establishments with two recommendations (30%), some 45% of private sector employees had at least two wage recommendations in their wage structure, down slightly from 46% in December 2011, but higher than the 39% in June 2004 (Chart 17). 8.4 Transportation & storage (92%), community, social & personal services (92%) and accommodation & food services (91%) had among the highest share of employees with some form of wage flexibility, while construction (77%) had the least. Details are in Appendix - Table 2.

21

Chart 17: Proportion of Employees by Number of Key Wage Recommendations Implemented, 2004 2012
Per Cent

1 Wage Recommendations

2 Wage Recommendations

All 3 Wage Recommendations

83.3 83.7 83.6 85.1 82.6 81.1 81.3

89.1

85.7 87.2

All Industries

75.6 49.2 43.5 47.3 46.1 46.0 45.0 45.3 48.8 46.4 44.9

39.1

22.0 21.4 20.8 19.3 15.0 12.4

17.0 17.0 18.4 16.8 15.4

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Dec 08

Dec-09

Dec-10

Dec-11

Dec-12

90.2 90.1 88.6 90.4 89.9 89.2 89.7

94.3 90.7

91.8

By Establishment Size

85.0 72.9 72.1 63.1 73.4 76.9 75.0 78.6 81.9 78.880.6 59.6 64.1 63.1 60.0 58.5 59.5 58.2 62.5 61.6 58.2

68.3

52.8 24.5 21.2 28.9 28.5 26.6 27.7 30.1 25.3 25.7 25.0 26.0

Dec-12

Dec-09

Dec-10

Dec-11

32.2 32.6 31.0 29.1 25.5 25.1 27.0 24.1 19.1 8.2 5.7 3.64.3 6.0 5.4 6.1 5.8 6.5

24.4

22.2 5.5

6.2

Dec-09

Dec-10

Dec-11

Dec-12

Dec-11

Dec-09

Dec-09

Dec-10

Dec-11

25-199 Employees 200 Employees

Dec-12

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Dec-12

Dec-10

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Dec-12

Dec-09

Dec-10

Dec-11

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

22

Establishments that had not implemented any key wage recommendations were largely satisfied with flexibility of their existing wage system 8.5 One in eight (13%) employees in the private sector were working in establishments that did not implement any of the key wage recommendations (Table 5). The majority of them, representing 11% of all private sector employees, were working in establishments that were satisfied with their wage flexibility.
Table 5: Proportion of Employees in Establishments That Did Not Implement Any Key Wage Recommendations, 2011 and 2012 (December)
Per Cent

Period

Did Not Implement Any Key Wage Recommendation 12.8 14.3 19.4 21.2 8.2 9.3

Satisfied/Not Satisfied With Level of Flexibility in Wage System Not Satisfied Satisfied

2012 2011 By Establishment Size 2012 25-199 Employees 2011 200 or More 2012 Employees 2011 All Industries
Note: Figures may not sum up due to rounding

10.6 11.2 15.3 15.4 7.4 8.1

2.1 3.1 4.1 5.7 0.8 1.2

23

8.6 Overall, nearly all (98%) private sector employees were working in establishments that had either some form of wage flexibility (87%) or were satisfied with their wage flexibility even though their establishments did not implement any key wage recommendations (11%) (Chart 18).
Chart 18: Proportion of Employees In Establishments With Some Form of Wage Flexibility Or Were Satisfied With Their Wage Flexibility Even Though Their Establishments Did Not Implement Any Key Wage Recommendations, 2004 2012 (December)

100%

93.2%

94.3%

94.7%

95.5%

94.9%

95.7%

96.7%

96.9%

97.9%

11.8% 80%

13.2%

11.4%

11.8%

11.3%

10.5%

7.6%

11.2%

10.6%

60% 83.3% 83.7% 83.6% 85.1% 89.1% 85.7% 87.2%

40%

81.3%

81.1%

20%

0% 2004 2005 2006 2007 2008 2009 2010 2011 2012

Satisfied Even Tho ugh Establishments Did No t Implement Any Key Wage Reco mmendatio ns With At Least One Key Wage Reco mmendatio n

8.7 The remaining 3.9% of establishments that were not satisfied with the flexibility of their wage system but did not implement the tripartite recommendations employed only 2.1% of the workforce. Many of them, representing 2.6% of all establishments reported that they would not be implementing the wage features recommended by tripartite partners. These establishments employed only 1.5% of private sector employees and were mainly SMEs (covering 94% of establishments in this category or 2.5% of all establishments).

24

Table 6: Proportion Of Employees In Establishments That Did Not Implement Any Key Wage Recommendations And Not Satisfied With Wage Flexibility By Intention To Implement, December 2012
Per Cent

All Industries By Establishment Size 25-199 Employees 200 or More Employees

Not Satisfied With Wage Flexibility 2.1 4.1 0.8

Intention to Implement Wage Recommendations Yes 0.1 0.2 0.1 No 1.5 2.8 0.6 Not Aware 0.5 1.1 0.1

Note: Figures may not sum up due to rounding.

Implementation of Flexible Wage Components

Narrowing maximum-minimum salary ratio was the most common wage recommendation adopted 9.1 In December 2012, nearly two in three (65%) private sector employees were in establishments that had a narrow maximum-minimum salary ratio, up from 63% in December 2011 and 52% in June 2004. This was the most common flexible wage recommendation adopted, followed by linking variable bonus to KPI. Nearly half (49%) of private sector employees had a wage system that linked variable bonus to KPI, down from the year before (52%), but still higher than in June 2004 (42%). The MVC was the least common flexible wage component, with only one in three (34%) private sector workforce having it in their wage structure, broadly unchanged since 2007. 9.2 Large establishments continued to lead in adopting the MVC and variable bonus linked to KPI. On the other hand, SMEs fared better in narrowing the maximum-minimum salary ratio (Chart 19).

25

Chart 19: Proportion of Employees by Key Wage Recommendations, 2004 2012

Per Cent

Maximum-Minimum Salary Ratio

MVC

Variable Bonus Linked to KPI

All Industries

59.3 52.2

59.6 60.8

64.4 60.2 62.4 57.8 59.0

65.1 52.8 62.5 33.5 32.9 39.4 36.0 37.2 34.7 33.8 34.7 34.7 34.8 33.8 53.6 54.2 47.1 42.0 57.2 51.9 54.1 53.7 51.7

48.6

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-09

Dec-12

Dec-10

Dec-11

Dec-09

Dec-10

Dec-11 Dec-11

By Establishment Size

64.8 67.2 60.8 63.7 62.1 62.5 58.1 62.2 55.5 56.8 62.4 62.4 57.4 56.6 57.6 52.1 57.5 47.8

66.0

71.2 54.150.6 51.5 49.3 49.4 49.7 49.8 48.8 47.7 49.8 47.3 19.3 15.4 16.5 14.2 13.9 14.2 14.0 15.3 13.6 14.2 14.1

68.1 62.3 70.5 67.5 64.6 68.0 54.1 33.8 29.1 26.1 31.4

66.9

71.6

68.0 63.5

59.9

60.9

36.4 35.8 31.5 34.2

37.3

29.0 27.1

Dec-09

Dec-10

Dec-11

Dec-09

Dec-10

Dec-11

Dec-12

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Dec-12

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Dec-09

Dec-10

25-199 Employees

200 Employees

Note : Figures do not sum up to 100% as establishments can implement more than one key wage recommendation.

Dec-12

Dec-12

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

Jun 04 Dec 04 Jun 05 Dec 05

Dec 06

Dec 07

Dec 08

26

Maximum-Minimum Salary Ratio Seven in ten establishments had narrowed/were narrowing their maximum-minimum wage ratio to 1.5 or less 9.3 The proportion of establishments that had narrowed/were narrowing the wage ratio for the same job to 1.5 or less had been generally trending upwards from 47% in June 2004 to 66% in December 2011 and further to 70% in December 2012. In 2012, these establishments employed 65% of private sector employees, up from 63% a year ago and 52% in June 2004 (Chart 20).

Chart 20: Proportion of Employees and Establishments That Had Narrowed or Were Narrowing the Maximum- Minimum Salary Ratio to 1.5 or Less, 2004 - 2012 Employee
Employee
60.8 59.6 60.2 62.4 57.8 59.0 64.4 62.5 65.1 56.5 47.1 56.5 53.0 58.0

Establishment
Establishment
61.6 57.7 62.3 67.6

Per Cent

66.3

70.2

59.3

All Industries

52.2

Dec-07

Dec-08

Dec-09

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

By Establishment Size

Dec-12

60.8 55.5 57.6 47.8

63.7 64.8 56.8 52.1

62.1

62.5 62.4

58.1

62.2

67.2 62.4

66.0

71.2 50.1

59.0

58.9

60.6

61.3

60.2 61.8

59.8

61.2 62.4

67.9 65.3

66.7 63.0

70.8 65.8

57.5

57.4

56.6

59.9

60.9 46.7

56.2 56.2 51.9

57.6

57.4

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-04

Dec-05

Dec-08

Dec-09

Dec-11

25-199 Employees

200 Employees

9.4 On average, establishments had a maximum-minimum salary ratio of 1.50 for their rankand-file (RAF) workers, compared with the 1.51 in December 2011 and 1.59 in December 2004. In 2012, the ratio was higher in large (1.55) establishments than the SMEs (1.44). Among establishments that were narrowing or had narrowed the salary range of their RAF employees, the maximum-minimum salary ratio was expectedly lower at 1.39 in 2012 (Chart 21).

Dec-12

Dec-06

Dec-07

Dec-10

Jun-04

Jun-05

Jun-05

Jun-04

Dec-12

Dec-04

Dec-05

Dec-06

Dec-10

Dec-11

Jun-04

Jun-04

Jun-05

Jun-05

27

Chart 21: Average Maximum-Minimum Salary Ratio of the Rank-and-File, 2004 2012 (December)
Total Had Narrowed / Were Narrowing

All Industries

1.59

1.56

1.54

1.55

1.58

1.56

1.52

1.51

1.50

1.47

1.48

1.45

1.43

1.43

1.41

1.40

1.40

1.39

Dec-08

Dec-09

Dec-10

Dec-04

Dec-05

Dec-06

Dec-07

Dec-11

By Establishment Size

1.63

1.58

1.57

1.58

1.62

1.59

1.55

1.55

1.55

1.55

1.53

1.50

1.49

1.49

1.46

1.45

1.45

1.44

1.55

1.52

1.51

1.50

1.54

1.52

1.48

1.47

1.44

1.37

1.38

1.36

1.34

1.35

1.35

1.34

1.34

1.33

Dec-05

Dec-08

Dec-09

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

25-199 Employees

200 Employees

9.5 Junior management (1.63) continued to have a higher maximum-minimum ratio than RAF (1.50) in 2012. Among establishments that were narrowing or had narrowed the salary range of their junior management, the maximum-minimum salary ratio was 1.47 (Chart 22).

Dec-12

Dec-12

Dec-04

Dec-06

Dec-07

Dec-10

Dec-11

Dec-12

Dec-04

Dec-05

Dec-06

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-07

28

Chart 22: Average Maximum-Minimum Salary Ratio of Junior Management, 2004 2012 (December)
Total Had Narrowed / Were Narrowing

All Industries

1.68

1.70

1.72

1.67

1.70

1.80

1.62

1.61

1.63

1.58

1.60

1.59

1.54

1.51

1.49

1.48

1.51

1.47

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-04

Dec-08

Dec-09

Dec-10

By Establishment Size

1.73

1.75

1.73

1.73

1.75

1.93

1.67

1.66

1.70

1.65

1.68

1.65

1.60

1.57

1.54

1.52

1.57

1.53

1.61

1.59

1.68

1.58

1.62

1.59

1.54

1.54

1.50

1.48

1.46

1.46

1.45

1.43

1.42

1.41

1.41

1.38

Dec-04

Dec-05

Dec-06

Dec-11

Dec-05

Dec-04

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

25-199 Employees

200 Employees

Dec-12

Dec-12

Dec-07

Dec-08

Dec-09

Dec-10

Dec-12

Dec-05

Dec-06

Dec-07

Dec-11

29

Variable Bonus Linked to KPI Large establishments more likely to link variable bonus to KPI 9.8 Close to three in ten (28%) private establishments had adopted the recommendation to formulate and communicate to their employees KPIs for the payment of variable bonus, down from 30% in December 2011 (Chart 23). The adoption of this wage recommendation was more prevalent in large establishments (54%) than SME (24%). 9.9 By employee count, 49% of private sector employees were in establishments that had variable bonus linked to KPI. Industries such as financial & insurance services (77%), information & communications (73%) and professional services (60%) had among the highest share of employees with variable bonus linked to KPI. On the other hand, the employee coverage in construction (18%), administrative & support services (29%) and real estate services (37%) were significantly below the overall average (Appendix Table 3). 9.10 While not having a set of KPIs for the payment of variable bonus, another 19% of private establishments employing 17% of employees, used indicators such as annual profit, revenue and productivity as general reference for payment of variable bonus and communicated these to their employees. This was up from 17% of establishments employing 14% of employees in December 2011.

30

Chart 23: Proportion of Employees and Establishments That Formulated and Communicated KPI for Payment of the Variable Bonus, 2004 2012
Per Cent Employee Establishment

All Industries

42.0

53.6 54.2 47.1

52.8

51.9

54.1

53.7

57.2

51.7 (65.5) 48.6 (65.9) 32.1 33.7 36.2 35.0 36.5 29.6 (46.6) 27.7 (46.8)

29.4 33.1 31.8 25.9

Dec-05

Dec-07

Dec-10

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

70.5

By Establishment Size

68.1 62.3 54.1 29.1 26.1

67.5

64.6

68.0

66.9

71.6

68.0 (79.4)

63.5 (79.4) 50.9 41.8

54.2 56.7

57.0 50.9

58.6

58.3

62.9

57.0 54.4 (70.9) (71.0)

33.8

31.4

31.5

34.2

36.4

35.8

37.3

29.0 (46.3)

27.1 (46.3)

26.9 23.8

30.1 28.3

28.5

30.9

33.2

31.9

33.0

25.9 (43.3)

24.0 (43.4)

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Jun-04

Jun-05

Dec-05

Dec-06

Dec-10

Dec-11

25-199 Employees

200 Employees

Note: Figures in parenthesis pertain to private sector establishments that had either formulated and communicated a set of KPIs or used and communicated indicators such as annual profit, revenue and productivity as a general reference for payment of variable bonus.

Dec-12

Dec-04

Dec-07

Dec-08

Dec-09

Jun-04

Jun-05

Dec-12

Dec-04

Dec-06

Dec-08

Dec-09

Dec-11

Jun-05

Jun-04

Jun-04

Jun-05

31

Monthly Variable Component One in seven establishments covering one in three private sector employees had MVC 9.11 One in seven (14%) private establishments had implemented the MVC, covering one in three (34%) private sector employees in December 2012, down from the corresponding 16% and 35% the year before. However, this was substantially higher than the 4.1% of private establishments covering only 9.6% of employees in 1999, when the recommendation was first introduced. Large establishments (32%) were more likely to implement MVC than SMEs (11%) (Chart 24). Community, social & personal services (58%) and financial & insurance services (56%) 9.12 continued to have the highest coverage of employees, with at least half of their workforce having MVC in their wage structure. In contrast, construction (11%), information & communications (17%), administrative & support services (23%) and wholesale & retail trade (24%) had the least coverage (Appendix Table 3).

Chart 24: Proportion of Employees and Establishments With MVC, 1999 2012
Employee Establishment
Per Cent

All Industries

39.4 32.9 22.4 17.3 24.7 27.9 33.5 36.0

37.2 34.7 33.8 34.7 34.7

34.8 33.8

4.1 9.6

6.3

13.7 14.2 8.1 9.4 10.1

18.7 15.5

16.9

15.3

15.5

14.8

14.4

15.6

13.6

Dec-02

Dec-99

Dec-00

Dec-01

Dec-03 Jun-04 Dec-04 Jun-05 Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-00

Dec-01

Dec-03 Jun-04 Dec-04 Jun-05 Dec-05

Dec-06

Dec-09

Dec-10

Dec-99

Dec-02

Dec-07

Dec-08

Dec-11
35.2

By Establishment Size

36.4 27.3 15.0 3.9 6.5 8.5

51.5 49.8 54.1 50.6 49.3 47.3 39.4 43.2

49.4

49.7

49.8

48.8 47.7

37.0 35.8 30.2 26.2 28.2 19.4 10.4 3.4 4.9 6.4 10.9 7.4 7.9

41.6 37.2 37.9

33.7

35.9

35.1

34.7

32.1

14.1 14.2 9.310.4

19.3 15.4 16.5 14.2 13.9 14.2 14.0 15.3 13.6

15.6 14.0 11.2 12.5

12.3

12.7

12.1

11.6 12.9

11.0

Dec-99

Dec-02

Dec-03 Jun-04 Dec-04 Jun-05 Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-00

Dec-01

Dec-99

Dec-00

Dec-02

Dec-03 Jun-04 Dec-04 Jun-05 Dec-05

Dec-06

Dec-08

Dec-10

25-199 Employees

200 Employees

Dec-12

Dec-01

Dec-07

Dec-09

Dec-11

Dec-12

32

MVC As A Proportion Of Monthly Basic Wages Close to 30% of total wages in MVC establishments were variable 9.13 Establishments with MVC on average set aside 9.9% of monthly basic wages as MVC for majority of their employees in 2012, comparable to 10% in 2011. This was substantially higher than the 2.6% in December 2000 when the data were first collected (Chart 25).

Chart 25: MVC as a Proportion of Monthly Basic Wages in Establishments With MVC, 2000 2012 (December)
Per Cent 12.0 10.0 8.1 8.0 6.0 4.0 2.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 3.8 2.6 4.0 5.4 6.8 9.0 9.2 9.7 9.6 10.0 10.0 9.9

9.14 Establishments with MVC typically paid higher-than-average annual variable component (2.94 months of basic wages in 2012) than non-MVC establishments (1.91 months). As such, MVC establishments had 28% of total wages that was variable (annual variable component: 20% and MVC: 8.0%)9 compared with non-MVC establishments at 14% of total wages. Including non-MVC establishments, the variable share of total wages amongst all private establishments was 20%, comprising an annual variable component of 16% and MVC of 3.3% in 2012.

The tripartite partners recommended a target of 30% comprising 20% in annual variable component and 10% in MVC.

33

Triggers for MVC Cuts/Restoration 9.15 The MVC was introduced to enable companies to adjust monthly wages in response to changes in the business environment without having to wait till the end of the year to adjust the Annual Variable Component. The ability to trigger MVC cuts and restorations through clear and appropriate indicators/guidelines is therefore important. As of December 2012, about 63% of employees in MVC establishments had indicators/guidelines in their wage structure for the cut and restoration of MVC, up from 61% in December 2011, after stabilising at 59% from 2008 to 2010.

Table 7: Distribution Of Employees With MVC By With/Without Indicators/Guidelines For The Cut And Restoration Of The MVC, 2011 And 2012 (December)
Per Cent

Period All By Establishment Size 25-199 Employees 200 or More Employees 2012 2011 2012 2011 2012 2011

Yes 63.4 61.2 66.4 62.2 62.8 61.0

No 36.6 38.8 33.6 37.8 37.2 39.0

Note : Figures may not sum up to 100% due to rounding.

Majority of establishments did not wish to implement or were not aware of the MVC 9.16 As of December 2012, 14% of establishments had implemented MVC while another 0.6% had decided to or were in the process of implementation and 9.0% were still considering (Table 8). Nearly two in three (65%) establishments had no intention of implementing and a further 10% were unaware of this flexible wage component. Nearly all these establishments with no intention or were unaware of the MVC were SMEs (91%).

34

Table 8: Distribution of Establishments and Employees in Establishments by Intention to Implement MVC, December 2012 Establishment Count
Per Cent

Total

With MVC

Decided/ in the Process of Implementation 0.6

Still Under Consideration

Previously With MVC But Was Later Removed 1.1

No Wish to Implement 65.3

Not Aware of MVC 10.4

All

100.0

13.6

9.0

By Establishment Size 25-199 100.0 Employees 200 or More 100.0 Employees

11.0 32.1

0.5 0.7

9.2 7.8

1.1 0.9

66.7 55.2

11.5 3.1

Employee Count
Per Cent

Total

With MVC 33.8

Decided/ in The Process of Implementation 0.5

Still Under Consideration 6.7

Previously With MVC But Was Later Removed 0.9

No Wish to Implement 53.1

Not Aware of MVC 5.0

All

100.0

By Establishment Size 25-199 100.0 13.6 Employees 200 or More Employees 100.0 47.7

0.5 0.5

9.0 5.1

1.2 0.7

65.9 44.3

9.9 1.6

Note : Figures may not sum up due to rounding.

35

10

Information Sharing

Majority of employees were working in establishments that shared information 10.1 Overall, slightly over three in four (76%) employees were working in establishments that shared information on their companys performance with their employees in 2012, comparable over the last few years. The corresponding percentages were higher for employees working in larger establishments (88%) than the SMEs (59%) (Chart 26).

Chart 26: Proportion of Establishments and Employees That Share Information With Employees, 1999 2012 (December)
Per Cent

Employee

Establishment

70.1 71.3

74.7 74.4

78.2

78.5 76.1 77.8 75.9 76.9 75.2 75.8 76.3 76.0 63.9 62.8 63.2 62.5 63.5 60.8 60.2 61.3 59.3

All Industries

59.3 58.8 53.3 54.2

58.5

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-00

Dec-01

Dec-02

Dec-03

Dec-06

Dec-07

Dec-08

Dec-99

Dec-04

Dec-05

Dec-09

Dec-10

Dec-11
Dec-11

85.2 86.9

89.5 88.2 90.1 89.3 88.4 88.3

87.8 85.3 86.8 85.5 86.4 87.1 76.5 77.9

83.3 79.0

83.4 82.2 81.9 81.0

77.1

79.7 79.4 77.8 79.2 79.7

By Establishment Size

64.7 60.0 59.8 54.2 54.6 60.5

62.9 64.3 62.7 64.4 61.3 61.3 61.4

59.0 50.8 51.7

61.7 57.2 56.6 55.7

60.1 60.7 60.2 61.3 58.2 57.8 58.8 56.5

Dec-99

Dec-00

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-08

Dec-10

25-199 Employees

200 Employees

Dec-12

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-06

Dec-07

Dec-09

Dec-12

36

Information sharing more prevalent among establishments with a flexible wage system 10.2 Information sharing continued to be more prevalent among establishments with a flexible wage system. 62% of establishments with at least one wage recommendation shared information with their employees compared with 47% of establishments without any wage recommendations (Table 9).

Table 9: Proportion of Establishments and Employees in Establishments That Shared Information With Employees by Type of Wage System, December 2012
Per Cent

All Establishments Establishment Count All By Establishment Size 25-199 Employees 200 or More Employees 56.5 79.7 59.0 87.8 59.3 Employee Count 76.0

With at Least One Wage Recommendation Establishment Employee Count Count 62.3 79.0

No Wage Recommendation Establishment Employee Count Count 47.3 55.9

59.2 81.9

62.1 89.3

46.2 62.0

46.3 71.7

10.3 Overall, one in three (32%) private establishments shared information at least annually (Chart 27). In terms of employee coverage, close to half (46%) of private sector employees were working in such establishments. This information sharing was more prevalent in large establishments than the SMEs (Table 10).

Table 10: Distribution of Establishments and Employees by Frequency of Information Sharing, December 2012 Establishment Count
Per Cent

All Establishments Total Regularly Annually Half-yearly Quarterly Monthly As and when necessary Others 59.3 31.8 13.5 5.2 8.3 4.8 27.3 0.2

By Establishment Size 25-199 Employees 56.5 29.3 12.8 4.9 6.9 4.7 27.0 0.2 200 or More Employees 79.7 50.3 18.7 7.2 18.9 5.4 29.2 0.3

37

Employee Count
Per Cent

All Establishments Total Regularly Annually Half-yearly Quarterly Monthly As and when necessary Others 76.0 45.7 15.3 7.3 19.1 4.0 30.2 0.2

By Establishment Size 25-199 Employees 59.0 31.1 13.1 5.2 8.3 4.5 27.7 0.2 200 or More Employees 87.8 55.8 16.7 8.8 26.5 3.7 31.9 0.1

Note : Figures may not sum up due to rounding.

Chart 27: Proportion of Establishments and Employees That Shared Information at Least Annually, 1999 2012 (December)
Per Cent

Employee

Establishment

All Industries

39.8 36.4 36.5 38.1 36.2

45.9 47.5 45.7 45.3 46.2 46.4 45.7 43.8 45.4 36.8 33.5 35.4 32.7 31.2 30.9 32.8 31.8 31.3 31.8

24.3 24.7

28.4 28.0

Dec-05

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-00

Dec-01

Dec-03

Dec-06

Dec-09

By Establishment Size

47.5 46.5 48.5

55.8 55.7 56.7 56.4 55.8 53.4 53.9 52.8 55.0 48.0 43.5 40.3 39.8 44.0 42.8 45.8

49.8 48.7 47.9 49.8 50.3 46.1 47.3 47.7 46.1

33.3 30.5 32.5 27.9 28.4 24.6 25.8

35.9 37.0

32.7 31.2 31.9 32.4 31.1 22.5 23.1 27.0 26.5

29.7 29.7 31.4

33.6 35.3

30.7 29.0 28.8 30.5 29.3

Dec-99

Dec-00

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-01

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-10

Dec-11

25-199 Employees

200 Employees

Dec-12

Dec-12

Dec-99

Dec-02

Dec-04

Dec-05

Dec-07

Dec-08

Dec-10

Dec-11

38

11

Conclusion

11.1 The tight labour market continued to raise workers wages, but the pace of increase moderated in 2012, amid the weaker economic conditions. After adjusting for inflation using Consumer Price Index (CPI) for all items, real wages dipped in 2012, but increased slightly when adjusted using CPI less imputed rentals on OOA. Over the long term, real wage increases have been supported by productivity growth. 11.2 A large majority of employees in the private sector were under some form of flexible wage system in 2012, following the general uptrend in the implementation of flexible wage measures recommended by the tripartite partners in 2004. Having a narrow maximum-minimum salary ratio was the most common flexible wage recommendation adopted, followed by linking variable bonus to KPI and the MVC.

39

APPENDIX
Table 1: Total And Basic Wage Change By Industry, 2011 And 2012
Per Cent

Industry (SSIC 2010) ALL INDUSTRIES Manufacturing Construction Services Wholesale & Retail Trade Transportation & Storage Accommodation & Food Services Information & Communications Financial & Insurance Services Real Estate Services Professional Services Administrative & Support Services Community, Social & Personal Services

Period 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

Total Wage Change Total 3.8 5.3 3.7 4.1 3.7 4.2 3.9 5.6 4.5 4.6 1.7 7.4 3.4 4.5 4.7 4.6 4.4 9.1 4.4 5.5 3.8 5.6 4.7 3.7 3.9 5.0 RAF 3.7 4.7 3.6 4.0 2.9 3.6 3.8 5.0 4.4 4.3 1.9 7.1 3.2 4.5 4.5 4.3 4.2 8.1 4.9 4.9 3.7 5.2 4.8 3.5 3.8 4.3 NRAF 4.1 5.9 3.8 4.4 4.9 4.9 4.1 6.3 4.7 5.0 1.4 8.1 3.7 4.4 4.8 4.8 4.5 9.4 3.3 6.8 3.8 5.9 4.2 4.4 4.2 6.0

Basic Wage Change Total 4.5 4.4 4.3 4.0 3.6 3.9 4.6 4.5 4.2 4.1 4.7 3.8 3.4 3.8 4.6 4.5 5.1 7.4 4.6 4.1 4.7 5.0 4.8 3.5 5.0 4.2 RAF 4.3 4.0 4.2 3.8 2.8 3.4 4.5 4.0 4.2 4.0 5.0 3.8 3.3 4.0 4.4 4.2 5.0 6.0 4.6 3.8 4.5 5.0 4.9 3.4 4.8 4.0 NRAF 4.6 4.9 4.5 4.3 4.7 4.4 4.6 5.1 4.1 4.4 3.9 3.9 3.5 3.4 4.6 4.7 5.2 7.7 4.6 4.6 4.9 5.1 4.4 3.9 5.1 4.4

40

Table 2: Proportion of Employees With Some Form of Wage Flexibility by Industry, 2011 And 2012 (December)
Per Cent

Industry (SSIC 2010)

Some Form of Wage Period Flexibility (A) + (B) + (C)

Number of Key Wage Recommendations Implemented Three (A) 15.4 16.8 20.0 19.5 4.5 6.7 16.6 18.0 9.8 10.8 24.5 26.6 29.8 29.5 3.8 2.4 12.8 29.0 17.7 16.2 21.8 21.4 14.5 14.4 14.4 11.0 Two (B) 29.5 29.6 26.0 30.8 13.6 11.3 34.7 33.6 37.5 37.0 41.2 38.3 25.8 19.7 43.8 40.0 52.1 38.9 23.5 27.4 20.9 28.1 13.0 16.1 42.1 44.8 One (C) 42.3 39.3 43.8 36.9 59.2 57.5 37.7 36.0 41.3 40.6 26.6 27.9 35.0 41.5 42.1 46.5 24.9 18.8 47.2 38.9 41.0 38.1 55.5 53.3 35.8 28.4

ALL INDUSTRIES Manufacturing Construction Services Wholesale & Retail Trade Transportation & Storage Accommodation & Food Services Information & Communications Financial & Insurance Services Real Estate Services Professional Services Administrative & Support Services Community, Social & Personal Services

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

87.2 85.7 89.8 87.2 77.3 75.5 89.0 87.6 88.7 88.4 92.4 92.8 90.6 90.6 89.7 88.9 89.7 86.7 88.4 82.5 83.6 87.6 82.9 83.8 92.3 84.2

Note : Figures may not sum up due to rounding.

41

Table 3: Proportion of Employees in Establishments by Key Wage Recommendations and Industry, 2011 And 2012 (December)
Per Cent

Industry (SSIC 2010)

Period

ALL INDUSTRIES Manufacturing Construction Services Wholesale & Retail Trade Transportation & Storage Accommodation & Food Services Information & Communications Financial & Insurance Services Real Estate Services Professional Services Administrative & Support Services Community, Social & Personal Services

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

With MaximumMinimum Salary Ratio 65.1 62.5 64.8 65.0 71.2 66.5 64.0 60.4 68.7 64.8 82.7 67.6 86.3 83.9 50.6 48.5 34.2 50.2 77.5 66.9 56.0 55.9 72.5 73.2 51.1 38.5

With MVC

33.8 34.8 35.5 36.3 10.9 12.6 38.9 39.3 24.0 26.0 49.1 51.0 38.5 40.1 17.2 11.1 56.1 53.9 33.2 40.1 31.7 33.1 23.3 25.9 58.1 57.8

With Variable Bonus Linked to KPI 48.6 51.7 55.6 55.6 17.7 21.1 54.0 57.4 53.2 56.2 50.9 65.8 51.2 45.3 73.4 74.0 77.1 79.6 36.6 35.3 60.3 69.5 29.0 29.7 53.8 54.5

42

ANNEX 1

SURVEY COVERAGE AND METHODOLOGY

SURVEY ON ANNUAL WAGE CHANGES, 2012 Introduction The Survey on Annual Wage Changes, 2012 was conducted by the Manpower Research and Statistics Department of the Ministry of Manpower under the Statistics Act (Chapter 317). The survey fieldwork was conducted from 18 December 2012 to 4 March 2013. Objective The survey was conducted to obtain information on employers wage practices relating to the adoption of flexible wage measures and the payment of basic wage increases and bonuses in 2012. Coverage The survey covered a sample of private sector establishments with at least 10 employees. Some 4,694 private establishments responded to the survey. These establishments employed 1,169,400 employees which included 582,000 full-time employees on the Central Provident Fund (CPF) scheme with at least one year in service (comprising 300,800 rank-and-file employees, 222,100 junior and 59,000 senior management staff). The survey response rate was 90%. The results were weighted to reflect the population of private sector establishments with at least 10 employees by using expansion factors based on sampling fraction.

Methodology The survey was conducted online, with clarifications made over the phone. Respondents could also submit their returns by post, email or fax.

Reference Period The reference period for the survey was from November/December 2011 to November/December 2012.

A-1

Data Collected The establishments were asked to provide information on the average basic wage change, Annual Wage Supplement (AWS) and variable bonus to employees in 2012. The information collected pertains to full-time employees on the CPF scheme who had been with the establishment for at least one year as at 30 Nov 2012. The establishments were also surveyed on the adoption of the three key recommendations of the Tripartite Taskforce on Wage Restructuring namely: (i) (ii) (iii) introduce Annual Variable Component (AVC) such as variable bonus in the wage system that is linked to Key Performance Indicators (KPI) i.e. have formulated, communicated and explained to their employees the KPI for the payment of the variable bonus; introduce the monthly variable component (MVC) in the wage structure; and narrow the maximum-minimum salary ratio for majority of their employees to an average of 1.5 or less.

Other information collected include establishments satisfaction with the level of flexibility of the wage system, the percentage of monthly basic wages set aside to form the monthly variable component, and maximum-minimum salary ratio of the most common job. The survey included new questions to determine whether establishments gave a built-in wage increase in 2012 to employees earning a basic monthly salary of up to $1,000 in 2011. Analysis The first part of the report on annual wage changes is based on private establishments with at least 10 workers. The second part of the report on wage flexibility is based on private establishments with at least 25 workers, unless otherwise specified. This is to be comparable with figures for the Inaugural Survey on Wage Restructuring as at June 2004. Classification The industries of the surveyed firms were classified according to the Singapore Standard Industrial Classification (SSIC) 2010. Reliability of Data In a sample survey, inferences about the target population are drawn from the data collected from the sample. Errors due to extension of the conclusions based on one sample to the entire population are known as sampling errors. The sampling error of an estimate is the difference between the estimated value obtained from a sample and the actual value from the population. Factors influencing the sampling error include the sample size, the sample design, method of estimation, the variability of the population and the characteristics studied. The most common measure of the sampling error of an estimate is its standard error, which is a measure of the variation among the estimates derived from all possible samples. An alternative measure is the relative standard error of an estimate which indicates the standard error relative to the
A-2

magnitude of the estimate. A sample estimate and an estimate of its standard error can be used to construct an interval that will, at specified levels of confidence, include the actual value. About 68, 95 and 99 per cent of estimates from all possible samples will fall within the interval defined by one, two or three standard errors respectively on either side of the estimate. By statistical convention, the confidence level has been set at 95 per cent. Estimates of the sampling variability of selected indicators are as follows:
Standard Error ( %-pts) Relative Standard Error (%) 95% Confidence Interval Lower 86.5% Upper 88.0%

Estimate

At least one recommendation Proportion of employees in establishments that implemented at least one key wage recommendation by number of recommendations implemented Three recommendations Two recommendations One recommendation Variable Bonus linked to KPI Proportion of employees in establishments that implemented the key wage recommendations Monthly Variable Component Maximum-Minimum Salary Ratio

87.2%

0.4%

0.4%

15.4%

0.2%

1.2%

15.0%

15.8%

29.5% 42.3% 48.6%

0.4% 0.6% 0.5%

1.3% 1.3% 0.9%

28.7% 41.2% 47.7%

30.3% 43.4% 49.5%

33.8%

0.3%

1.0%

33.1%

34.4%

65.1%

0.5%

0.7%

64.2%

66.0%

A-3

Concepts and Definitions Rank-and-File Employees: This includes employees who are in technical, clerical, sales, service, production, transport, cleaning and related positions. They are not employees in managerial or executive positions. This refers to executives and managers who do not hold senior managerial responsibilities. They do not have substantial influence over hiring, firing, promotion, transfer, reward or discipline of employees. This refers to the total basic pay before deduction of employee CPF contributions and personal income tax. It excludes employer CPF contributions, bonuses, overtime payments, commissions, allowances (e.g. shift, food, housing and transport), other monetary payments and payments-in-kind. This refers to the annual payment usually made at year-end and is commonly known as the 13th month allowance. This refers to the payment given over and above the AWS or 13th month allowance. It includes incentive payments and ang pows, but excludes AWS. The variable bonus is usually linked to company and/or individual performance and may vary from year to year. It may be paid in a lump sum or divided into several payments over the year; in which case the several payments should be added together. This usually consists of two components i.e. AWS, and variable bonus. Generally, the annual variable component is linked to companys profitability.

Junior Management Staff:

Basic Wages:

Annual Wage Supplement (AWS):

Variable Bonus:

Annual Variable Component:

A-4

Monthly Variable Component (MVC):

This refers to the component of monthly basic wages that can be adjusted expeditiously in response to changing business conditions. It should attract CPF, overtime pay, allowances, etc. The MVC can be built-up through wage increase or hived off from basic wages. Establishments can also implement a cut in basic wages by introducing the cut as a reduction in MVC.

Formulae Basic Wage Change in 2012 End 2012 Basic Wages End 2011 Basic Wages x 100% End 2011 Basic Wages

Total Wage Change in 2012 2012 Total Wages 2011 Total Wages = 2011 Total Wages where Total Wages = Annual Basic Wages + Annual Variable Component (i.e. Annual Wage Supplement and Variable Bonus) x 100%

Total Wages (including employer CPF contributions) comprise basic wages, annual variable component (i.e. bonuses) and estimates of employer CPF contributions.

A-5

FEEDBACK FORM Report Title: Report on Wage Practices, 2012 1. How would you rate this report in terms of : Excellent Good a) Relevance to your work b) Providing useful insights on prevailing labour market trends/development c) Ease of understanding 2. Which area(s) of the report do you find most useful? Please provide reasons. Average Poor

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Just Released
Report on Wage Practices, 2012
Date of Release: 05 Jun 2013 This report examines employers adoption of a flexible wage system and changes in their employees wages in 2012. Topics covered include total and basic wage changes, bonuses and wage flexibility. Title

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Employment Situation, First Quarter 2013

Date of Release: 30 Apr 2013 This quarterly release provides preliminary estimates of key indicators on the manpower situation covering unemployment, employment and redundancy.

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