Fewer firms profitable in 2015 due to weaker economy: MOM

Fewer firms profitable in 2015 due to weaker economy: MOM

SINGAPORE - Softer economic conditions resulted in a double whammy for companies and workers in 2015 - the number of firms that made a profit shrank that year, while fewer staff enjoyed salary increments.

Including bonuses and employer Central Provident Fund (CPF) contributions, the total wage growth in the private sector remained stable at 4.9 per cent last year, similar to the rate in 2014.

Real total wages, both including and excluding CPF, grew by 5.4 per cent last year - up from 3.9 per cent in 2014 - after accounting for negative inflation.

These were some of the key findings from the Manpower Ministry's (MOM) latest report on wage practices in Singapore, which is produced once a year by its Manpower Research and Statistics Department.

The report, made public on Thursday morning, showed that 79 per cent of the 5,100 firms polled were profitable last year, down from 82 per cent in 2014.

Profitable firms gave out larger bonuses of at least two months in quantum, compared with the 1.53 months given by loss-making firms.

Nearly four in 10 companies (38 per cent) indicated that they did not perform as well as the year before, up from 32 per cent in the preceding year.

About a fifth of those surveyed (21 per cent) incurred losses in 2015, higher than the 18 per cent that reported being in the red the year before.

This meant that just 64 per cent of businesses gave their workers a wage increase last year, compared to 72 per cent in 2014. The wage increase also declined to 5.6 per cent in 2015, from 6 per cent in 2014.

The proportion of firms that kept wages unchanged from the previous year was 25 per cent, up from 20 per cent in 2014.

More of them slashed wages too, with 11 per cent doing so in 2015, up from 7.7 per cent a year earlier. The wage declines were also steeper at -4.7 per cent in 2015, compared to -3.9 per cent the year before.

Among the companies with staff earning a monthly basic salary of up to S$1,100 in 2015, 46 per cent raised the wages of those employees. This was a fall from the 59 per cent that did so in 2014 for employees earning up to S$1,000.

About a fifth, or 18 per cent, gave increments equal to or more than the National Wages Council's recommended built-in wage increase of S$60 in 2015, compared to 31 per cent a year ago.

Of the firms that did not increase wages, half of them explained that they were already paying their workers the market rate, while others gave reasons such as poor business and high business costs.

A small number cited poor employee performance (4.9 per cent) or that wages were locked-in under existing contracts with clients (1.2 per cent).

"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 MOM report said.

Around 90 per cent 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 among companies in Singapore, covering two out of every three private sector employees in December 2015.

This was followed by linking variable bonus to key performance indicators (52 per cent) and having the monthly variable component (32 per cent) in the wage structure.

The full 46-page report can be downloaded from the MOM's website: stats.mom.gov.sg/Pages/Home.aspx.

5 things Singaporeans should do in the economic slowdown

leeuwen@sph.com.sg


This article was first published on June 03, 2016.
Get The Business Times for more stories.

Purchase this article for republication.

BRANDINSIDER

SPONSORED

Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.