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90% of Singaporeans were under flexible wage systems in 2015

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Flexible wages are fast becoming popular in Singapore today, as firms shift compensation strategies to suit a softer economic climate.

That was among the key findings of a report released by the Manpower Research and Statistics Department, Ministry of Manpower (MOM).

Specifically, the report added 90% of private sector employees were under some form of flexible wage system in 2015, the highest since 2004.

Having a narrower maximum-minimum salary ratio remained the most common wage recommendation adopted, covering two in three (66%) private sector employees in December 2015.

This was followed by linking variable bonus to key performance indicators (52%) and having the monthly variable Component (MVC) (32%) in the wage structure.

“As most firms had put in place some form of flexible and performance-based wage system that gave flexibility to adjust wages according to the prevailing business climate, the proportion of employers that gave wage increases to their employees fell in 2015,” the report stated.

The report also highlighted real wages in Singapore rose 5.4% last year amid negative inflation, after taking into account the 0.5% fall in consumer prices in 2015 – compared to 3.9% a year ago.

Nominal total wages in the private sector grew by 4.0% in 2015, lower than the 4.9% increase in 2014.

When employer Central Provident Fund (CPF) contributions were factored in however, growth in total wages remained stable at 4.9% in 2015, due to the increase in employer CPF contributions in 2015.

This was despite the fact that the proportion of firms that were more profitable than a year ago declined, and those which were less profitable or incurred losses increased.

64% of private establishments raised the total wages of their employees in 2015, down from 72% in 2014. Correspondingly, there was an increase in the proportion of firms which kept wages unchanged from the previous year (2015: 25%, 2014: 20%), and to a smaller extent, cut wages (2015: 11%, 2014: 7.7%).




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