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.

Companies that have cut down their workforce in 2016

  • Tripda

    Rocket Internet's carpooling app, Tripda announced earlier this month that they would be organising a global shutdown of the platform.

  • Autodesk

    Autodesk a design-focused software announced early month that they will be laying off 925 positions, around 10 per cent of their entire workforce.

  • Yahoo

    Recently tech giant Yahoo confirmed that would be shedding 15 per cent of their entire workforce, and its also exploring other "strategic alternatives".

  • Yahoo

    Employees in Yahoo's Singapore office were notified of the layoffs on Feb 18.

  • Rakuten

    e-commerce platform Rakuten announced in Feb 2016 that they would be shutting down all their operations in Malaysia, Singapore and Indonesia.

  • Rakuten

    The platform probably faced a significant number of challenges in Malaysia, and they will be withdrawing to focus their efforts in countries like Japan and Taiwan.

  • Bombardier

    Bombardier will be cutting their workforce by about 7000 over the next two years.

  • Bombardier

    They will be cutting 580 jobs from their Belfast operation this year and potentially another 500 the following year.

  • Shell

    Multinational oil and gas company, Royal Dutch Shell operates in more than 70 countries and employ more than 94,000 people worldwide.

  • Shell

    Given the fact that oil prices have dropped by almost 70 per cent in less than two years, the company has already started cutting 10,000 jobs to try and recover from all their losses.

  • Devon Energy

    Devon Energy, a US oil producer, mentioned that 700 people would lose their jobs by the end of the Feb 18, 2016, and this is all in response to the current commodity price environment.

  • Top Glove

    Malaysian company Top Glove is currently the world's largest maker of natural rubber gloves with operations in 27 countries. The company announced that they would cut their foreign labour by 5 per cent due to rising costs and increasing automation.

  • Barclays

    Some 100 Barclays employees in Singapore were axed on Jan 21 in a drastic cost-cutting exercise which saw the bank exit multiple businesses across Asia.

  • Standard Chartered

    Global bank Standard Chartered had laid off a number of people in Singapore late last year as it axed 15,000 jobs globally.

  • Standard Chartered

    Its previous workforce globally was at 86,000, and currently employs about 7,000 staff in Singapore.

  • HSBC

    HSBC has announced that they will be freezing salaries and freezing hiring in 2016 globally in the battle to cut costs, affecting 3,000 Singapore employees.

  • Resorts World Sentosa

    According to a report on Straits Times, more than 30 employees at Resorts World Sentosa (RWS) have been laid off earlier in February.

  • Resorts World Sentosa

    However, the lay offs was due to overstaffing and it is not an isolated case. There are currently about 12,000 people working at Resorts World Sentosa.

  • Maersk

    Maersk Line, one of the world's top container shipping companies, recently merged its Singapore and Hong Kong regional offices. Last November, it also shared new plans to reduce its network capacity and announced that it will be cutting 4,000 jobs.

  • STMicroelectronics

    STMicroelectronics will cut about 1,400 jobs and close its loss-making set-top box business, including 670 in Asia.

  • Goldman Sachs

    Goldman Sachs has been reducing the size of its investment-banking team in Singapore by about 30 per cent compared with the start of last year, according to a report from Bloomberg.

  • Credit Suisse

    Credit Suisse announced 4,000 job cuts globally, although no layoffs are expected in the Asia-Pacific region yet.

  • Royal Bank of Scotland

    Royal Bank of Scotland has also announced that they could be cutting as many as 80 per cent of the jobs in its investment banking unit over the next 4 years, and last year laid off "hundreds" in Singapore.

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

  • The gloomy outlook in 2016 is expected to result in higher retrenchment figures, a slowdown in employment and horrible news for a whole bunch of industries.
  • NTUC has spoken: They predict that in the first quarter of 2016, 234 workers in unionised companies could be retrenched, a 31 per cent increase from the first quarter of 2015.
  • No matter how useful you think you are to your company, there's a chance your boss thinks of you, yes you, as an unnecessary cost-especially if he can just dump all your work on the guy in the next cubicle.
  • Job hopping is nothing new in Singapore, and while the employment market is still pretty robust, don't quit without another job lined up unless you're okay with the fact that it's probably going to be harder to find a new one than it was last year.
  • Employers are going to find it harder to justify hiring a new guy, so you definitely don't want to be job hunting desperately at that time.
  • If you're a business owner and haven't bothered correcting certain inefficiencies, this is the time to do it, as you could be in for some tough times.
  • While businesses across the board are likely to feel the pinch, if you're in particularly vulnerable industries like tourism and manufacturing, now is the time to see if there are more efficient, more streamlined and cheaper ways to do what you do.
  • Even if you don't find yourself unceremoniously retrenched, if your company is badly affected you can expect a smaller (or even no) bonus, as many people did during the 2008 recession, or even a pay cut.
  • This is not exactly the best time to start a designer bag collection or plan a lavish shopping trip to the factory outlets in California.
  • Everyone's investment mix is different, but if you're a stock investor who buys and holds for the long-term, this may be a good year to monitor stock prices more closely.
  • At this point, many stocks are quite heavily undervalued, and property prices are still on the decline. It's anyone guess when they'll rebound, but for now, investors should pay attention.


This article was first published on June 03, 2016.
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