Fewer bosses give low-wage staff a raise as their numbers dip

Total wage growth in 2014 eases as economy softens, although lower inflation lifts real wages, according to MOM report


FEWER employers gave low-wage workers a raise last year as their numbers dip, according to the Ministry of Manpower's Report on Wage Practices, 2014.

Total wage growth at the same time eased as the economy softened, though lower inflation lifted real wages, the report released on Thursday revealed.

The practice of linking pay to performance meanwhile hit a decade-high, with the share of private-sector employers having put in place some form of the flexi-wage model jumping to 85 per cent.

Some 5,200 companies with a total 1.27 million employees on their payrolls were surveyed for the report. And it was found that only 59 per cent of the companies with low-wage workers - those earning S$1,000 or below monthly in basic salary - raised these employees' pay in 2014, down from 77 per cent in 2013.

This is near the percentage - 60 per cent - in 2012, when the National Wages Council first introduced quantitative guidelines to give the earnings of low-wage workers a push. Since then, thanks to the wage increments given to these workers, the share of full-time low-wage workers fell from 9.8 per cent in 2012 to 6.8 per cent last year.

Among employers who kept the salary of the low-wage workers flat last year, half indicated they were already paying the workers the market rate, while others cited poor business and high business costs as reasons.

Low-wage workers who got a raise in 2014 saw their basic pay rose by an average 14.2 per cent, higher than the 8.4 per cent increment for all rank and file staff, according to the report.

Overall, total wages, including bonuses, jumped an average 4.9 per cent in the private sector last year. While this was lower than the 5.3 per cent hike in 2013, workers were still better off in 2014 because real wages increased 3.9 per cent, against 2.9 per cent in the previous year - thanks to lower inflation.

Employees in administrative & support, real estate, financial & insurance and community, social & personal services got a raise of more than 4.9 per cent in nominal terms in 2014.

"Bonuses (also known as the annual variable component) was unchanged at 2.21 months in 2014," the report said. "Its share of total wages also remained stable at 15.6 per cent."

But labour productivity growth, which averaged 0.7 per cent yearly over the past decade, still lagged behind the rise in real total wages at 1.9 per cent yearly in the same period, the report noted.

Labour productivity dipped 0.8 per cent last year, after a flat 0.3 per cent growth in 2013.

Total wage hike eased in 2014 even though the labour market stayed tight, with the jobless rate creeping up barely from 1.9 per cent in 2013 to 2.0 per cent in 2014.

But the report indicated that last year's economic growth slowed from 4.4 per cent in 2013 to 2.9 per cent - and the percentage of profitable companies slipped from 84 to 82 per cent.

"Over the last decade, the proportion of profit-making firms has generally increased, barring cyclical declines," it said.

The higher share of employers practising flexi-wage payments extended the flexi-wage system - launched nationally with the wage restructuring proposals in January 2004 - to 89 per cent of the workers in the private sector.

"Having a narrow maximum-minimum salary ratio remained the most common wage recommendation adopted, followed by linking variable bonus to key performance indicators and having the monthly variable component in the wage structure," the report said.

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes